SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB




         Mark One
                           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
           [X ]                     THE SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended         July 31, 1998

                                                     OR

                           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
           [  ]                         THE SECURITIES EXCHANGE ACT OF 1934

         For the transition period from               to

         Commission file number         0-17263


                             CHAMPIONS SPORTS, INC.
                             ----------------------
             (Exact name of registrant as specified in its charter)


                         Delaware               52-1401755
                         ---------------------------------
               (State or other jurisdiction of  (I.R.S. Employer
                      organization)            Identification No.)

                Suite 101,  2500 Wilson  Blvd.,  Arlington VA 22201  
                -----------------------------------------------------
                        (Address of principal executive offices)
                                   (Zip code)

                                 (703) 526-0400
                                 --------------
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes x No

     As of July  14,1998,  the  Registrant  had a total of  8,500,638  shares of
common stock outstanding.








<PAGE>




                             CHAMPIONS SPORTS, Inc.

                                   FORM 10-QSB

                                      INDEX

                                                                   Page

Part I.  Financial Information

                  Item 1.  Financial Statements

                  Consolidated Balance Sheets as of
                    July 31, 1998 (unaudited) and
                    April 30, 1998                                   3

                  Consolidated Statements of Operations:
                    Three months ended
                    July 31, 1998, and  July 31, 1997,
                            (unaudited)                              4

                  Consolidated Statements of Cash Flows:
                    Three months ended July 31, 1998, and
                    July 31,1997 (unaudited)                         5

                  Notes to Consolidated Financial Statements         6

                  Item 2.  Management's Discussions and
                             Analysis of Financial Condition
                             and Results of Operations               7

Part II. Other Information and Signatures

                  Item 4.  Submission of Matters to a Vote
                                  of Security Holders                9

                  Item 6.  Exhibits and Reports on Form 8-K          9

                  Signatures                                        10






                                        2

<PAGE>

<TABLE>
<CAPTION>

                     Champions Sports, Inc. and Subsidiaries
                           Consolidated Balance Sheets

                                                               JULY 31             APRIL 30
                                                                1998               1998
                                                                ----               ----

<S>                                                            <C>                <C>

ASSETS
Current assets
   Cash and cash equivalents                                   $677,660            $631,230
   Certificate of deposit                                                                 -
   Accounts receivable - trade                                      650                 612
   Inventories                                                   51,402              69,594
   Prepaid  expenses                                             11,995               3,850
   Deferred tax asset                                           207,952             207,952
                                                                -------             -------
         Total current assets                                   949,659             913,238

Property and Equipment
   Furniture and Equipment                                      530,531             530,531
   Leasehold improvements                                       570,962             570,962
                                                              1,101,494           1,101,493
   Accumulated depreciation and amortization                  (713,924)           (700,356)
                                                              --------            -------- 
                                                                387,570             401,137
Other assets
   Deposits                                                      13,065              13,065
                                                                 ------              ------


 Total assets                                                $1,350,294          $1,327,440
                                                             ==========          ==========




LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
   Accounts payable                                             $49,642             $42,672
   Dividend payable on preferred stock                          269,160             269,160
   Notes payable                                                      0                   0
   Deferred revenue                                                   0                   0
   Other accrued expenses                                        41,518              48,038
   Deposits                                                      13,065              13,065
   Current portion of deferred lease concession                   4,363               4,363
                                                                  -----               -----
         Total current liabilities                              364,683             364,233

Deferred lease concession (excluding current portion)            24,281              24,644
Note payable, excluding current portion

Commitments and contingencies

Stockholders' equity
   Preferred stock:
    Series A, 12% convertible cumulative,
      par value $10 per share,
      preferred as to dividends and liquidation: 
      650,000 shares authorized 56,075 issued
      and outstanding.                                           560,752             560,752
     Undesignated, par value $10 per share, 150,000
      authorized and unissued.                                         0                   0

   Common stock, par value $.001 per share,

   50,000,000 shares authorized, 8,500,638
    shares issued and outstanding at
    July 31 and April 30, 1996                                    8,501               8,501

    Additional paid-in capital                                5,308,112           5,308,112
    Accumulated deficit                                     (4,916,035)         (4,938,802)
                                                            ----------          ---------- 
          Total stockholders' equity                            961,330             938,563

    Total liabilities and stockholders' equity               $1,350,294          $1,327,440
                                                             ==========          ==========


See notes to consolidated financial statements

</TABLE>
                                
                                        3

<PAGE>


                       CHAMPIONS SPORTS, INC.
                Consolidated Statement of Operations
                             (Unaudited)

                                                              Three months
                                                            ended July 31,
                                                           1998        1997
                                                           ----------------


Revenue
   Food and beverage sales                                $457,512   $437,430
   Merchandise and memorabilia                              83,584      5,079 
   Licensing fees                                                -    130,740
   Interest income                                           6,111      1,016
   Other income                                              8,235      6,873
                                                             -----      -----
                                                          $555,443   $581,138

Expense
   Cost of food and beverage sales                         123,513    120,989
   Cost of merchandise and memorabilia sales                24,686      4,109
   Restaurant payroll and related costs                    150,743    150,916
   Restaurant occupancy costs                               52,494     50,657
   Other restaurant costs                                   90,987     85,578
   General and administrative                               76,686    114,048
   Depreciation and amortization                            13,567     13,567
   Interest expense                                              -        371
                                                            ------        ---
                                                           532,676    540,236

Net Income                                                 $22,767    $40,902
                                                           =======    =======

Less preferred stock dividends                              16,800     16,800

Net income available to common share holders                $5,967    $24,102
                                                            ======    =======

Basic earnings per share                                     $0.00      $0.00

Earnings per common share  - assuming full dilution          $0.00      $0.00

See notes to consolidated financial statements       


                                       4
                                                                                
<PAGE>




                     CHAMPIONS SPORTS, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                Increase (Decrease) in Cash and Cash Equivalents
                       For the three months ended July 31,


                                                               1998       1997
                                                               ----       ----

Cash flows from operating activities:                           
   Net income                                                 $22,767    $40,902
   Adjustments to reconcile net income
   to cash provided by (used ) by operating activities:
    Depreciation and amortization                              13,567     13,567
  Changes in asset and liabilities
    Accounts receivable                                          (38)  (123,402)
    Inventories                                                18,191   (10,471)
    Prepaid expenses                                          (8,145)        511
    Accounts payable                                            6,971      2,153
    Deferred revenue  
    Other accrued expenses                                    (6,520)    (1,621)
    Deferred lease concessions                                  (363)    (1,090)
                                                                ----     ------ 
      Net cash provided (used) by operating activities         46,430   (79,451)

Cash flows from investing activities:
   Purchase of certifcate of deposit
   Purchase of  property and equipment                                  (10,749)
                                                                        ------- 
     Net cash provided by investing activities                          (10,749)


Cash flows from financing activities:
   Repayment of borrowings                                               (7,129)
                                                                         ------ 
     Net cash provided (used)  by financing activities                   (7,129)


Net increase  (decrease) in cash and cash equivalents          46,430   (97,329)

Cash and cash equivalents at beginning of year                631,230    244,961
Cash and cash equivalents at July 31                          677,660    147,632

                                       5
                                                       

<PAGE>
                                                      



                             CHAMPIONS SPORTS, INC.

                   Notes to Consolidated Financial Statements

                                  July 31, 1998

Summarized Financial Information

Company or group of companies for which report is filed:

CHAMPIONS Sports, Inc. and Subsidiaries

The consolidated balance sheet as of July 31, 1998, the consolidated  statements
of operations and the consolidated statements of cash flows for the three months
ended July 31, 1998 and July 31,1997 have been prepared by the company,  without
audit. In the opinion of management,  all adjustments (which include only normal
recurring  adjustments)  necessary  to present  fairly the  financial  position,
results of  operations  and  changes  in cash flow at July 31,  1998 and for all
periods presented have been made.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been omitted. It is suggested that these consolidated  financial statements
be read in conjunction with the financial  statements and notes thereto included
in the Company's  10-KSB as of April 30, 1998. The results of operations for the
period  ended July 31,  1998 are not  necessarily  indicative  of the  operating
results for the full year.


                                       6
                                                  

<PAGE>




     Item 2.  Managements  Discussion  and Analysis of Financial  Condition  and
Results of Operations

Results of Operation

         For the three month  period  ended July 31,  1998,  the  Company's  net
income was  $22,767,  net income  available  to common  shareholders  was $5,967
($0.00 per common share)  versus net income of $40,902 and net income  available
to common shareholders of $24,102 ($0.00 per common share). The Company's assets
increased to $1,350,294 at July 31, 1998 from $1,327,440 at April 30, 1998.


Revenues

         The Company's  total  revenues were $555,443 for the three months ended
July 31, 1998 versus  $581,138 for the three month period ended July 31, 1998, a
decrease of $25,695 or 4.42%.  By component,  food and beverage sales  increased
4.6% from the  previous  year for the three  months  ended July 31,  1998.  This
increase  in food and  beverage  sales is  attributed  to a increase in customer
volume as there were no material  price  increases  for menu items.  Merchandise
sales for the three months  ended July 31, 1998 were $83,584  compared to $5,079
during the comparable  period in the prior year.  This increase is attributed to
the Company providing  memorabilia to one Marriott Champions location during the
quarter.  For the  three  months  ended  July 31,  1997,  the  Company  recorded
licensing  fees of $130,740.  In November  1997,  the Company sold the Champions
brand and trademark to Marriott  International and no longer receives  licensing
fees.  Interest  income was 1.1% of the  Company's  total revenue for the period
ended July 31, 1998 compared to less than 1% in the  comparable  period in 1997.
Other income  represented  1.5% and 1.2% of the company's  total revenue for the
three months ended July 31, 1998 and 1997.


Expenses

         Cost of food and  beverage  was  27.0% of  related  sales for the three
months ended July 31, 1998 compared to 27.7% for the three months ended July 31,
1997. Cost of merchandise  and memorabilia  sales for the nine months ended July
31,  1998 was  $24,686  compared  to $4,109 in the  preceding  year.  Restaurant
payroll and related costs were 32.9% of related food and beverage  sales for the
three  months  ended July 31, 1997 and 34.5% for the three months ended July 31,
1997.  Restaurant  occupancy  costs  remained  constant  at 11.5 % of  food  and
beverage sales for both comparable periods. Other restaurant costs also remained
constant  during both periods at  approximately  20% of food and beverage sales.
General  and  administrative  expense  for the  Company's  corporate  office was
$76,686 for the three  months  ended July 31, 1998  compared to $114,048 for the
three months ended July 31, 1997. Depreciation and amortization expense remained
constant at $13,567 during the three months ended July 31, 1998 and 1997.



Liquidity and Capital Resources

         The Company's  cash position on July 31, 1998 was $677,660  compared to
$631,230 on April 30, 1998,  an increase of $46,430.  For the three months ended
July 31, 1998, the Company operating activities provided $46,430 in cash. During
the three  months  ended July 31,  1998,  the  Company did not use any funds for
investing. During the three months ended July 31, 1997, the Company's operations
used $79,451 in cash, purchased equipment for $10,749 and repaid debt of $7,129.
Company met its cash needs  during the three months ended July 31, 1998 and 1997
from its revenues and from cash flow from its San Antonio, Texas operation.

                                       7

                                                    

<PAGE>



         The Company's working capital was $584,976 on July 31 1998 and $549,005
on April 30, 1998.

         Stockholder's  equity was  $961,330  as of July 31,  1998  compared  to
$938,563 as of April 30, 1998.

         The Company is actively pursuing merger/acquisition  candidates.  There
is no  assurance  that  the  Company  will be  able to  structure  a  merger  or
acquisition on terms satisfactory to the Company.


Other

         This document contains "forward-looking statements" (within the meaning
of the Private Securities  Litigation Act of 1995) that inherently involve risks
and  uncertainties.  The Company's  actual results could differ  materially from
those anticipated in these forward-looking  statements as a result of unforeseen
external factors.  These factors may include, but are not limited to, changes in
general economic  conditions,  customer acceptance of products offered and other
general competitive factors.



YEAR 2000

     The  Company has taken  appropriate  measures by  purchasing  software  and
computer  equipment that is compliant with  identifying the year 2000.  However,
the Company  relies on outside  vendors  and  financial  institutions  for other
service and there is no assurance that these vendors and financial  institutions
will be able to meet the year 2000 requirements.

                                       8

<PAGE>





Part II.   Other Information

Item 4.  Submission of Matters to A Vote of Security Holders

         None



Item 6.  Exhibits and Reports on Form 8-K

         None.



                                       9

<PAGE>




                                   SIGNATURES

Pursuant to the requirements of Securities  Exchange Act of 1934, the registrant
has duly  caused  this  report  to be signed  on its  behalf by the  undersigned
hereunto duly authorized.

                                    CHAMPIONS Sports, Inc.




                                    ---------------------
                                    James Martell
                                    Chairman, President and
                                    Chief Executive Officer





                                    -------------------------
                                    James E. McCollam
                                    Corporate Secretary, Chief Accounting
                                    Officer and Controller


September 14, 1998


                                       10
                                                     
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