**SECURITIES AND EXCHANGE COMMISSION**
**Washington, D.C.  20549**
**FORM 10-QSB**

Mark One

[ X ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 
THE SECURITIES EXCHANGE ACT OF 1934
  
For the quarterly period ended         July 31, 2004    
 
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 itscharter)
Delaware 
52-1401755
(State or other jurisdiction of 
(I.R.S. Employer
organization) 
Identification No.)

Suite 214, 2420 Wilson Blvd., Arlington VA 22201(Address of principalexecutive offices)(Zip code)
(703) 526-0400(Registrant’s telephone number, including areacode)

 Indicate by check mark whether the Registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theRegistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  Yes    x     No       
 
 As of September 13, 2004 the Registrant had a total of 8,824,658 shares ofcommon stock outstanding.

****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES**
**CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
**JULY 31, 2004 AND 2003******   

**CHAMPIONS SPORTS, Inc.****FORM 10-QSB**
INDEX
 
Page
 
Part I. 

Financial Information
   
Item 1.  Financial Statements
   
Condensed Consolidated Balance Sheets as of
 
    July 31, 2004(unaudited) and
  
    April 30, 2004 (audited)

       

4
  
Condensed Consolidated Statements of Operations:
 
    Three months ended  
  
    July 31, 2004, and  July 31, 2003,  (unaudited)   

5
   
Condensed Consolidated Statements of Cash Flows:
 
    Three months ended July 31, 2004, and
 
    July 31,2003 (unaudited)

6
   
Notes to Condensed Consolidated Financial Statements 

7 - 18
  
Item 2.  Management’s Discussions and Analysis of FinancialCondition 
  
and Results of Operations

19
     
Item 4.  Controls and Procedures

21
  
Part II.

Other Information and Signatures
   
Item 4.  Submission of Matters to a Vote of Security Holders

22
  
Item 6.   Exhibits and Reports on Form 8-K

22
   
Signatures
 
23
 
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

24

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

26

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

28

3****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES**
**CONDENSED CONSOLIDATED BALANCE SHEETS**
**JULY 31, 2004 AND APRIL 30, 2004**   
**ASSETS**
**(Restated)**
**(Restated)** 
**July 31,**
**April 30,** 
**2004**

**2004**
 
**(UNAUDITED)**

**(AUDITED)**

**CURRENT ASSETS**
  
Cash and cash equivalents

$       127,131  
$   120,116  
Accounts receivable

       -    
       22,713  
Inventories

       29,323  
       30,349  
Prepaid expenses

       10,886 

       6,750  
   
**Total current assets**

       167,340  
       179,928     
Property and equipment, net

       188,834  
       200,939     
Deposits

       11,052 

       11,052 
   
**TOTAL ASSETS**

 $       367,226  

 $   391,919  
   
**LIABILITIES AND STOCKHOLDERS’ (DEFICIT)**   
**CURRENT LIABILITIES**
  
Accounts payable 

$         92,248  
$      92,758  
Dividend payable on preferred stock

       350,460  
       350,460  
Other accrued expenses

       192,309  
       146,116  
Current portion of deferred lease concession

       1,746  

       2,836  
   
**Total current liabilities**

       636,763 

       592,170 
         
**TOTAL LIABILITIES**

       636,763 

       592,170 
   
**COMMITMENTS AND CONTINGENCIES**
     
**STOCKHOLDERS’ (DEFICIT)**
  
Preferred stock, $10 par value; 56,075 shares authorized;
  
       32,450 shares issued and outstanding,respectively

       324,500  
       324,500  
Common stock, $.001 par value; 50,000,000 shares authorized 
  
       8,824,658  shares issued andoutstanding, respectively

       8,825  
       8,825  
Additional paid-in capital

       5,850,349  
5,850,349  
Accumulated deficit

       (6,453,211)

   (6,383,925)

**       Total stockholders’(deficit)**

       (269,537)

       (200,251)
   
**TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT)**

 $       367,226  

 $    391,919  
   

The accompanying notes are an integral part of these condensed consolidatedfinancial statements.
4****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES**
**Consolidated Statements of Operations**
For the three months ended
July 31,  2004 and 2003 (Unaudited)   
**(Restated)**  
2004

2003

Revenue
  
Food and beverage

$       451,712  
$       532,647  
Merchandise, memorabilia, and consulting fees

       3,153  
       7,163  
Other income

       2,245  

       3,385 
 
       457,092 

       543,195 
   
Costs and expenses
  
Cost of food and beverage sales

       146,115  
       159,052  
Cost of merchandise and memorabilia

       1,462  
       7,562  
Restaurant payroll and related costs

       161,988  
       179,402  
Restaurant occupancy costs

       61,765  
       67,366  
Other restaurant costs

       84,181  
       100,127  
General and administrative

       58,762 
       64,929  
Depreciation and amortization

       12,105  
       12,105  
Interest

- 

       -    
 
       526,378 

       590,543 
   
Operating income (loss) before income tax expense

       (69,286)
       (47,348)      
Income tax expense

       -    

       -    
   
Net loss

       (69,286)
       (47,348)   
Less preferred stock dividends

$                - 

$        (15,938)
   
Net income (loss) available to common
  
Stockholders

 $       (69,286)

 $       (63,286)
   
Basic earnings (loss) per share

$          (0.01)

 $          (0.01)
      
Weighted average of shares outstanding

8,824,658 

8,514,459 
   

The accompanying notes are an integral part of the consolidated financialstatements.
5****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES**
**CONDENSED CONSOLIDATED STATEMETS OF CASHFLOWS**
**For the three months ended July 31,  2004 and 2003(Unaudited)**  
**(Restated)**  
**2004**
**2003**
Cash flows from operating activities:
  
Net loss 

$         (69,286)
$         (47,348)
Adjustments to reconcile net income to net
  
cash provided (used) by operating activities:
  
Depreciation and amortization

       12,105  
       12,104  
Changes in assets and liabilities:
  
       Accounts receivable

       22,713  
       -    
       Inventories

       1,026  
       (3,179)
       Prepaid expenses

       (4,136)
       560  
       Accounts payable

       (510)
       317  
       Other accrued expenses

       46,193 

       14,551 

       Total adjustments 

       77,391 
       24,353    
Net cash provided (used) by
  
operating activities

       8,105  

       (22,995)
   
Cash flows from investing activities:
  
Purchases of property and equipment

       -    

       (2,930)

Net cash (used) by investing activities

       -    
       (2,930)   
Cash flow from financing activities:
  
Principal payment on capital lease

       (1,090)

       (1,817)
   
Net increase (decrease) in cash and
  
cash equivalents

       7,015  
       (27,742)      
Cash and cash equivalents at beginning of year

       120,116 

       195,101 

Cash and cash equivalents at July 31

 $         127,131 

 $         167,359 
   
Supplemental disclosures of cash flow information:
  
Cash paid during the year for interest

       -    

       -    
   

The accompanying notes are an integral part of the consolidated financialstatements.
6****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 1-     ORGANIZATION AND BASIS OFPRESENTATION**

Champions Sports, Inc., (the “Company”) aDelaware corporation, promotes a sports theme restaurant bar concept throughCompany owned and licensed operations. The Company sold the rights to theChampions brand to Marriott International, Inc. (Marriott) and became a licenseeof Champions Sports Bar Restaurants. Substantially all memorabilia sales are toMarriott. At July 31, 2004 and 2003, respectively, the Company through itssubsidiaries, owns and licenses, without a royalty fee, one Champions Sports BarRestaurant in San Antonio, Texas.

The condensed consolidated unaudited interim financialstatements included herein have been prepared, without audit, pursuant to therules and regulations of the Securities and Exchange Commission.  The condensedconsolidated financial statements and notes are presented as permitted on Form10-QSB and do not contain information included in the Company’s annualconsolidated statements and notes.  Certain information and footnote disclosuresnormally included in financial statements prepared in accordance with accountingprinciples generally accepted in the United States of America have beencondensed or omitted pursuant to such rules and regulations, although theCompany believes that the disclosures are adequate to make the informationpresented not misleading.  The results for the three months ended July 31, 2004may not be indicative of the results for the entire year.

These statements reflect all adjustments, consistingof normal recurring adjustments, which in the opinion of management, arenecessary for fair presentation of the information contained herein.

The Company has amended its previously issuedcondensed consolidated financial statements for the three months ended July 31,2004.  The Company has amended these condensed consolidated financial statementsto recognize an additional $40,330 in officer’s compensation and relatedpayroll tax expense for the three months ended July 31, 2004.  This transactionresulted in an increase in net loss applicable to common shares of $40,330 forthe three months ended July 31, 2004 to a net loss of $69,286 as restated, andan increase in the accumulated deficit to $6,453,211.

**NOTE 2-**       **SUMMARY OF SIGNIFICANTACCOUNTING POLICIES**     
                   **Principlesof Consolidation**

The condensed consolidated financial statementsinclude the accounts of the Company and its subsidiaries. All materialintercompany transactions have been eliminated in consolidation.     

7****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 2-       SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
                   **Propertyand Equipment**

Property and equipment are stated at cost.Depreciation and amortization is computed from the date property is placed inservice using the straight-line method over estimated useful lives asfollows:
  
Life
   
Furniture and equipment
 
5-15 years   
Leasehold improvements
 
Remaining term of the lease 	
Depreciation and amortization expense was $12,105 forthe three months ended July 31, 2004 and 2003, respectively. 

                   **Inventories**

Inventories consist of goods and supplies held forsale in the ordinary course of business and are stated at the lower of cost,determined on the first-in-first-out basis, or market. The components ofinventories at July 31, 2004 were asfollows:
  
2004
Restaurant food and beverage

$
       22,188 
Promotional merchandise for sale to
  
 restaurant customers
 
       7,135  
$
       29,323  	
                   **Net(Loss) Per Share**

Historical net (loss) per common share is computedusing the weighted average number of common shares outstanding.  Dilutedearnings per share (EPS) includes additional dilution from common stockequivalents, such as stock issuable pursuant to the exercise of stock optionsand warrants.  Common stock equivalents were not included in the computation ofdiluted earnings per share when the Company reported a loss because to do sowould be antidilutive for periods presented.

8****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 2-       SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
                   **Net(Loss) Per Share (continued)**

The following is a reconciliation of the computationfor basic and diluted EPS:
     
       (Restated)       
**July** 
**July**     
**2004**
 
**2003**
        
Net loss
   
$
       (69,286)

$
       (63,286)
        
Weighted-average common shares
     
Outstanding (Basic)
   
       8,824,658   
       8,514,459          
Weighted-average common stock
     
Equivalents
      
       Stock options
   
-   
-  
       Warrants
   
-  
 
-  
        
Weighted-average common shares
     
Outstanding (Diluted)
   
       8,824,658 
 
       8,514,459 
 	
Options and warrants outstanding to purchasestock were not included in the computation of diluted EPS for July 31, 2004 and2003 because inclusion would have been antidilutive.

                   **Cashand Cash Equivalents**

For purposes of the condensed consolidated statementsof cash flow, the Company considers all highly liquid debt instruments purchasedwith a maturity of three months or less, unless restricted as to use, to be cashequivalents. At various times throughout the periods the Company had amounts ondeposit at financial institutions in excess of federally insured limits.

                   **IncomeTaxes**

The Company has adopted the provisions of Statement ofFinancial Accounting Standards No. 109 (the Statement), Accounting for IncomeTaxes.  The Statement requires an asset and liability approach for financialaccounting and reporting for income taxes, and the recognition of deferred taxassets and liabilities for the temporary differences between the financialreporting bases and tax bases of the Company’s assets and liabilities atenacted tax rates expected to be in effect when such amounts are realized orsettled.  

9****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
                   **FairValue of Financial Instruments**

The carrying amounts of the Company’s financialinstruments, including cash and cash equivalents, accounts payable, and accruedexpenses, approximate fair values because of the short maturities of theseinstruments.

                   **Optionsfor Common Stock**

The Company uses the intrinsic value method to accountfor options granted to executive officers, directors and other key employees forthe purchase of common stock. No compensation expense is recognized on the grantdate, since at that date, the option price equals or is higher than the marketprice of the underlying common stock. The Company discloses the pro forma effectof accounting for stock options under the fair value method. The Company usesthe fair value method to account for options granted to advisors for thepurchase of common stock. 

                   **Stock-BasedCompensation**

Employee stock awards under the Company’scompensation plans are accounted for in accordance with Accounting PrinciplesBoard Opinion  No. 25 (“APB 25”), “Accounting for Stock Issuedto Employees”, and related interpretations. The Company provides thedisclosure requirements of Statement of Financial Accounting Standards No. 123,“Accounting for 

Stock-Based Compensation” (“SFAS123”), and related interpretations.  Stock-based awards to non-employeesare accounted for under the provisions of SFAS 123 and has adopted the enhanceddisclosure provisions of SFAS No. 148 “Accounting for Stock-BasedCompensation- Transition and Disclosure, an amendment of SFAS No.123”.

10****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
                   **Stock-BasedCompensation**

The Company measures compensation expense for itsemployee stock-based compensation using the intrinsic-value method.  Under theintrinsic-value method of accounting for stock-based compensation, when theexercise price of options granted to employees is less than the estimated fairvalue of the underlying stock on the date of grant, deferred compensation isrecognized and is amortized to compensation expense over the applicable vestingperiod. In each of the periods presented, the vesting period was the period inwhich the options were granted. 

The Company measures compensation expense for itsnon-employee stock-based compensation under the Financial Accounting StandardsBoard (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18,“Accounting for Equity Instruments that are Issued to Other Than Employeesfor Acquiring, or in Conjunction with Selling, Goods or Services”.  Thefair value of the option issued is used to measure the transaction, as this ismore reliable than the fair value of the services received.  The fair value ismeasured at the value of the Company’s common stock on the date that thecommitment for performance by the counterparty has been reached or thecounterparty’s performance is complete. The fair value of the equityinstrument is charged directly to compensation expense and additional paid-incapital.

                   **RecentAccounting Pronouncements**

On October 3, 2001, the FASB issued Statement ofFinancial Accounting Standards No. 144, “Accounting for the Impairment orDisposal of Long-Lived Assets”  (“SFAS 144”), that isapplicable to financial statements issued for fiscal years beginning afterDecember 15, 2001.  The FASB’s new rules on asset impairment supersedeSFAS 121, “Accounting for the Impairment of Long-Lived Assets and forLong-Lived Assets to Be Disposed Of,” and portions of AccountingPrinciples Board Opinion 30, “Reporting the Results of Operations.”This Standard provides a single accounting model for long-lived assets to bedisposed of and significantly changes the criteria that would have to be met toclassify an asset as held-for-sale. Classification as held-for-sale is animportant distinction since such assets are not depreciated and are stated atthe lower of fair value and carrying amount.  

11****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
                   **RecentAccounting Pronouncements (continued)**

This Standard also requires expected future operatinglosses from discontinued operations to be displayed in the period (s) in whichthe losses are incurred, rather than as of the measurement date as presentlyrequired. The adoption of SFAS No. 144 did not have a significant impact on theCompany’s results of operations or financial position.

In April 2002, the FASB issued SFAS No. 145,Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No.13, and Technical Corrections.  This statement rescinds SFAS No. 4, ReportingGains and Losses from Extinguishment of Debt, and an amendment of thatstatement, SFAS No. 44, Accounting for Intangible Assets of Motor Carriers, andSFAS No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.This statement amends SFAS No. 13, Accounting for Leases, to eliminateinconsistencies between the required accounting for sales-leaseback transactionsand the required accounting for certain lease modifications that have economiceffects that are similar to sales-leaseback transactions. 

Also, this statement amends other existingauthoritative pronouncements to make various technical corrections, clarifymeanings, or describe their applicability under changed conditions.  Provisionsof SFAS No. 145 related to the rescissions of SFAS No. 4 were effective for theCompany on November 1, 2002 and provisions affecting SFAS No. 13 were effectivefor transactions occurring after May 15, 2002.  The adoption of SFAS No. 145 didnot have a significant impact on the Company’s results of operations orfinancial position.

In June 2003, the FASB issued SFAS No. 146, Accountingfor Costs Associated with Exit or Disposal Activities.  This statement coversrestructuring type activities beginning with plans initiated after December 31,2002.  Activities covered by this standard that are entered into after that datewill be recorded in accordance with provisions of SFAS No. 146.  The adoption ofSFAS No. 146 did not have a significant impact on the Company’s results ofoperations or financial position.

12****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
                   **RecentAccounting Pronouncements (Continued)**

In December 2002, the FASB issued Statement No. 148,“Accounting for Stock-Based Compensation-Transition and Disclosure, anamendment of FASB Statement No. 123”(“SFAS 148”). SFAS 148amends FASB Statement No. 123, “Accounting for Stock-BasedCompensation,” to provide alternative methods of transition for an entitythat voluntarily changes to the fair value based method of accounting forstock-based employee compensation. It also amends the disclosure provisions ofthat Statement to require prominent disclosure about the effects on reported netincome of an entity’s accounting policy decisions with respect tostock-based employee compensation. Finally, this Statement amends AccountingPrinciples Board (“APB”) Opinion No. 28, “Interim FinancialReporting”, to require disclosure about those effects in interim financialinformation. SFAS 148 is effective for financial statements for fiscal yearsending after December 15, 2002. The Company will continue to account forstock-based employee compensation using the intrinsic value method of APBOpinion No. 25, “Accounting for Stock Issued to Employees,” but hasadopted the enhanced disclosure requirements of SFAS 148.

In April 2003, the FASB issued SFAS Statement No. 149,"Amendment of Statement 133 on Derivative Instruments and Hedging Activities",which amends and clarifies financial accounting and reporting for derivativeinstruments, including certain derivative instruments embedded in othercontracts (collectively referred to as derivatives) and for hedging activitiesunder FASB Statement No. 133, Accounting for Derivative Instruments and HedgingActivities.  This Statement is effective for contracts entered into or modifiedafter June 30, 2003, except for certain hedging relationships designated afterJune 30, 2003.  Most provisions of this Statement should be appliedprospectively.  The adoption of this statement did not have a significant impacton the Company’s results of operations or financial position.

In May 2003, the FASB issued SFAS Statement No. 150,"Accounting for Certain Financial Instruments with Characteristics of bothLiabilities and Equity". This Statement establishes standards for how an issuerclassifies and measures certain financial instruments with characteristics ofboth liabilities and equity.  It requires that an issuer classify a financialinstrument that is within its scope as a liability (or an asset in somecircumstances).

13****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
                   **RecentAccounting Pronouncements (Continued)**

This statement is effective for financial instrumentsentered into or modified after May 31, 2003, and otherwise is effective at thebeginning of the first interim period beginning after June 15, 2003, except formandatorily redeemable financial instruments of nonpublic entities, ifapplicable.  It is to be implemented by reporting the cumulative effect of achange in an accounting principle for financial instruments created before theissuance date of the Statement and still existing at the beginning of theinterim period of adoption.  The adoption of this statement did not have asignificant impact on the Company’s results of operations or financialposition.

In November 2002, the FASB issued Interpretation No.45 ("FIN 45"), Guarantor’s Accounting and Disclosure Requirements forGuarantees, Including Indirect Guarantees of Indebtedness of Others.  FIN 45requires a company, at the time it issues a guarantee, to recognize an initialliability for the fair value of obligations assumed under the guarantees andelaborates on existing disclosure requirements related to guarantees andwarranties.  The recognition requirements are effective for guarantees issued ormodified after December 31, 2002 for initial recognition and initial measurementprovisions.  The adoption of FIN 45 did not have a significant impact on theCompany’s results of operations or financial position.

In January 2003, the FASB issued FASB InterpretationNo. 46 ("FIN 46"), Consolidation of Variable Interest Entities, anInterpretation of ARB No. 51.  FIN 46 requires certain variable interestentities to be consolidated by the primary beneficiary of the entity if theequity investors in the entity do not have the characteristics of a controllingfinancial interest or do not have sufficient equity at risk for the entity tofinance its activities without additional subordinated financial support fromother parties.  FIN 46 is effective for all new variable interest entitiescreated or acquired after January 31, 2003.  For variable interest entitiescreated or acquired prior to February 1, 2003, the provisions of FIN 46 must beapplied for the first interim or annual period beginning after June 15, 2003.The adoption of FIN 46 did not have a significant impact on the Company’results of operations or financialposition.14
****   
**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
                   **Reclassifications**

Certain amounts for the three months ended July 31,2003 have reclassified to conform to the presentation of the July 31, 2004amounts.  The reclassifications have no effect on net loss for the three monthsended July 31, 2003.

**NOTE 3-**     **COMMITMENTS ANDCONTINGENCIES**
                   *Operatingleases     *

The Company leases, as tenant, restaurant space underan operating lease which expires June 30, 2005. The lease escalates forincreases in the landlord’s expenses for increases in the Consumer PriceIndex, and requires additional rentals based on a percentage of restaurant salesover a defined amount. The lease grants the Company certain concessions, whichare amortized to lease expense over the term of the lease.

  Rental expense charged to expense duringthe three months ended July 31, 2004 and 2003 was $50,121 and $55,768,respectively. Future minimum payments under the noncancellable restaurant leaseas of July 31, 2004 are asfollows:

2005 
$     128,480 	
**NOTE 4-     CAPITAL LEASE OBLIGATION**

The Company leased equipment under a capital lease.The equipment cost of $32,286 was amortized over its useful life and suchamortization was included in the depreciation and amortization expense for 2003.During 2003, the lease expired and the Company purchased the equipment.

**NOTE 5-     MARRIOTT LICENSE**

The Company is an exclusive supplier of sportsmemorabilia and a consultant to all new Champions Sports Bars located inMarriott and Renaissance Hotels worldwide. 

15****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 6-     OTHER ACCRUED EXPENSES**

This account primarily represents accruedofficer’s payroll and related payroll taxes totaling $147,877 as of July31, 2004.

**NOTE 7-     STOCKHOLDERS’ DEFICIT**
                   **CommonStock**

The Company has 50,000,000 shares authorized and8,824,658 shares issued and outstanding at July 31, 2004.

There were no issuances of common stock during thethree months ended July 31, 2004 and 2003, respectively.

..
                   **PreferredStock**

The Company has 56,075 shares of preferred stockauthorized and 32,450 shares issued and outstanding at July 31, 2004. 

The Series A preferred stock requires a dividend of 12percent per annum, and the dividends are are to be accrued on theCompany’s book if not paid. The dividend may be paid in common stock ofthe Company at the Company’s discretion. The number of shares comprisingthe dividend paid in common stock shall be determined by dividing $1.20 by theclosing bid price for the common stock on the payment date. The Series Apreferred stock is preferred in liquidation or dissolution up to the amount oftheir par value ($10 per share). The Series A preferred stock in 2004 convertedinto 15 shares of the Company’s common stock. There were no conversions in2003.

For each of the nine fiscal years ended April 30,2004, the Company deferred payment of the annual dividend on the Series Apreferred stock. For the quarters ended July 31, 2004 and 2003, the deferral was$0 and $15,938, respectively. Preferred stock dividends in arrears at July 31,2004 aggregated $350,460 ($10.83 per preferred share).  Effective November 2003,pursuant to a board resolution, the Company cancelled its payment and/oraccruing of preferred stock dividends. 

                   **CommonStock Options**

The Company in 1993 adopted a stock option plan, whichexpired on August 2, 2002.  No options were exercised under the plan.  Alloptions granted by the Company were granted pursuant to board resolutions andnot under the stock option plan.  

16****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 8-     STOCK AGREEMENT**

In January 2002, the Company entered into asubscription agreement to sell 4,000,000 shares of common stock to an unrelatedparty at $0.125 per share for a total of $500,000.

The purchaser paid $20,000 at the closing of theagreement and provided a promissory note for $480,000. The note is non-interestbearing and requires twenty-four monthly payments of $20,000 each. The note issecured by the stock issued and the transfer of such stock is restricted untilthe note is paid off. Certain other restrictions regarding the transfer of thestock also exist.

The purchaser paid a total of $55,000 during the yearended April 30, 2002 and $5,000 during the year ended April 30, 2003, and hasdefaulted under the payment terms of the note. The stock has not been issued,and the agreement was cancelled.  

**NOTE 9-     GOING CONCERN**

As shown in the accompanying condensed consolidatedfinancial statements, the Company has sustained net operating losses for thethree months ended July 31, 2004 and 2003, and has sustained large accumulateddeficits. In addition, the Company is in search of acquiring a business, orfinding a suitable merger candidate. 

Management has restructured the Company and iscontinuing to search for a more profitable company to acquire. 

The Company’s future success is dependent uponits ability to achieve profitable operations and generate cash from operatingactivities, and upon additional financing. There is no guarantee that theCompany will be able to raise enough capital or generate revenues to sustain itsoperations.

The condensed consolidated financial statements do notinclude any adjustments that might result from the outcome of thisuncertainty.

**NOTE 10-     PROVISION FOR INCOMETAXES**

Deferred income taxes will be determined using theliability method for the temporary differences between the financial reportingbasis and income tax basis of the Company’s assets and liabilities.Deferred income taxes will be measured based on the tax rates expected to be ineffect when the temporary differences are included in the Company’sconsolidated tax return.  Deferred tax assets and liabilities are recognizedbased on anticipated future tax consequences attributable to differences betweenfinancial statement carrying amounts of assets and liabilities and theirrespective tax bases.

At July 31, 2004, deferred tax assets consist of thefollowing:                             

Deferred tax asset         

$
1,456,000 
Less:  valuation allowance
 
       (1,456,000)

Net deferred tax asset

$
       -0- 

17****   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JULY 31, 2004 AND 2003**
**NOTE 10-     PROVISION FOR INCOME TAXES(CONTINUED)**

At July 31, 2004, the Company had federal netoperating loss carryforwards in the approximate amounts of $4,160,000 availableto offset future taxable income.  The Company established valuation allowancesequal to the full amount of the deferred tax assets due to the uncertainty ofthe utilization of the operating losses in future periods.

**NOTE 11-     RESTATEMENT OF PREVIOUSLY ISSUEDFINANCIAL STATEMENTS**

The Company has amended its previously issuedcondensed consolidated financial statements for the three months ended July 31,2004.  The Company has amended these condensed consolidated financial statementsto recognize an additional $40,330 in officer’s compensation and relatedpayroll tax expense for the three months ended July 31, 2004.  This transactionresulted in an increase in net loss applicable to common shares of $40,330 forthe three months ended July 31, 2004 to a net loss of $69,286 as restated, andan increase in the accumulated deficit to $6,453,211.

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**Item 2.  Managements Discussion and Analysis of Financial Conditionand Results of Operations**
THERE IS SUBSTANTIAL DOUBT ABOUT THE COMPANY’S ABILITY TO CONTINUE AS AGOING CONCERN DUE TO RECURRING LOSSES AND WORKING CAPITAL SHORTAGES, WHICH MEANSTHAT THE COMPANY MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS IT OBTAINSADDITIONAL FUNDING.  THE COMPANY IS ACTIVELY   PURSUING MERGER OR ACQUISITIONCANDIDATES AND OTHER FINANCING POSSIBILITIES TO MEET ITS LIQUIDITY NEEDS.  THEREIS NO ASSURANCE THAT THE COMPANY WILL BE ABLE TO STRUCTURE A MERGER ORACQUISITION, OR RAISE ADDITIONAL FINANCING TO CONTINUE OPERATIONS ON TERMSSATISFACTORY TO THE COMPANY
Results of Operation
       For the three months ended July 31,2004, the Company’s net loss was $69,286. The Company’s total assetsdecreased by $24,693 to $367,226 from $391,919 at April30, 2004.
       For the three months ended July 31,2003, the Company’s net loss was $47,348 and the net loss available tocommon shareholders was $63,286, ($0.01) per common share. The Company’stotal assets decreased by $34,297 to $452,869 from $487,166 at April 30, 2003
Revenues
       The Company’s total revenueswere $457,092 for the three months ended July 31, 2004 versus $543,195 for thethree-month period ended July 31, 2003, a decrease of $86,103 or 15.9% Bycomponent, food and beverage sales decreased 15.2% from the previous year.  Thisdecrease in food and beverage sales is attributed to a decrease in customervolume due a decline in convention and tourism in San Antonio.  Merchandise,memorabilia and consulting revenues were $3,135 for the three months ended July31, 2004 compared to $7,163 for the three months ended July 31, 2003. TheCompany did not provide any consulting services to Marriott International duringthe either of the three month reporting periods.  Other income represented lessthan 1.0% of total revenues for the three months ended July 31, 2004 and2003.
Expenses
       Cost of food and beverage was 32.3%and 29.9% of  related sales for the three months ended July 31, 2004 and 2003.This variance is attributed to an increase in wholesale prices, especially inbeef, poultry and produce. While the Company implemented retail price increasesduring FY 2004, in order to remain competitive, they were not sufficient toabsorb all of the wholesale price increases.  There was no increases in sellingprices during the three month period. Cost of merchandise and memorabilia salesfor the three months ended July 31, 2004  was $3,135 compared to $7,163 in thepreceding year.  Restaurant payroll and related costs  were 35.9% of relatedfood and beverage sales for the three months ended July 31, 2004 and 33.7% forthe three months ended July 31, 2003.  Restaurant occupancy costs were $61,765or 13.7% of food and beverage sales compared to $67,366 or 12.7% of relatedsales during the three months ended July 31, 2003.  This decrease in occupancycosts is attributed to the percentage paid to the landlord in common areacharges and base rent. Other restaurant costs were 18.6% of related food andbeverage sales  for the three months ended July 31, 2004 compared to 18.8% ofrelated sales during the three months ended July 31, 2003. General andadministrative expense for the Company’s corporate office was 12.9% of theCompany’s total revenues for the three months ended July 31, 2004 comparedto 12.2 % of total revenues for the three months ended July 31,2003. The Companyhas amended its previously issued condensed consolidated financial statementsfor the three months ended July 31, 2004.  The Company has amended thesecondensed consolidated financial statements to recognize an additional $40,330in officer’s compensation and related payroll tax expense for the threemonths ended July 31, 2004.  This transaction resulted in an increase in netloss applicable to common shares of $40,330 for the three months ended July 31,2004 to a net loss of $69,286 as restated, and an increase in the accumulateddeficit to $6,453,211.
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       Depreciation and amortization expensewere constant at approximately 2.7% of the Company’s total revenues forthe three months ended July 31, 2004 compared to 2.2% in the comparable period.
Liquidity and Capital Resources
       The Company’s cash position asof July 31, 2004 was $127,130 compared to $120,116 on April 30, 2004. For thethree month period, the Company’s operations provided $8,105 in cash. TheCompany used $1,090 for payment of a capital lease. The Company met itsliquidity needs from its cash reserves and from the cash flow from  its SanAntonio location.
The Company’s cash position as of July 31, 2003 was $167,359 compared to$195,101 on April 30, 20034, a decrease of $27,742.  For the three month period,the Company’s operations used $24,812 in cash in excess of revenues. TheCompany purchased equipment for it San Antonio location for $2,930. The Companymet its liquidity needs during the period from its cash reserves and cash flowprovided from its San Antonio location.
       The Company’s  restated workingcapital was a negative $469,423 on July 31 2004 and a negative $412,242 on April30, 2004. The Company’s working capital when compared to other publiclytraded companies in the restaurant industry is unfavorable.  This is primarilyattributed to the fact that other companies in the industry have multiplelocations with a broader sales base and generate greater cash flows to offsetcorporate overhead expense. In the Company’s current situation, the oneoperating unit has generated cash to cover its operating expense, but has notproduced sufficient cash to offset the corporate overhead costs
Stockholder’s equity was a negative $269,537 as of July 31, 2004 comparedto a negative $200,251 as of April 30, 2004. 
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Other
       The Company is facing liquidityproblems and is uncertain that it will be able to continue operations without aninfusion of cash.  The Company continues to review and evaluate its operationsand priorities.  The Company is actively   pursuing merger or acquisitioncandidates and other financing possibilities to meet its liquidity needs.  Thereis no assurance that the Company will be able to structure a merger oracquisition, or raise additional financing to continue operations on termssatisfactory to the Company. The lease for the Company owed San Antoniorestaurant will expire on June 30, 2005. The landlord has indicated that it willnot be renewed. Consequently, the restaurant will cease operations on that date,furthering the Company’s liquidity problems.
**       Furthermore, The Company’sindependent auditor has expressed substantial doubt that the Company cancontinue as a going concern.**
       **SPECIAL NOTE REGARDINGFORWARD-LOOKING STATEMENTS**
       This document contains"forward-looking statements" (within the meaning of the Private SecuritiesLitigation Act of 1995) that inherently involve risk and uncertainties.  TheCompany generally uses words such as "believe," "may," "could," "will,""intend,"  "expect,"  "anticipate,"  "plan," and similar expressions to identifyforward-looking statements.  One should not place undue reliance on theseforward-looking statements.  The Company’s actual results could differmaterially from those anticipated in the forward-looking statements for manyunforeseen factors, which may include, but are not limited to, changes ingeneral economic conditions, the ongoing threat of terrorism, customeracceptance of products offered, other general competitive factors, ability tohave access to financing sources on reasonable terms and other risks that aredescribed in this document. Although the Company believes the expectationsreflected in the forward-looking statements are reasonable, they relate only toevents as of the date on which the statements are made, and the Company’sfuture results, levels of activity, performance or achievements may not meetthese expectations.  The Company does not intend to update any of theforward-looking statements after the date of this document to conform thesestatements to actual results or to changes in the Company’s expectations,except as required by law.
Item 4.  CONTROLS AND PROCEDURES
       Disclosure controls are proceduresthat are designed with the objective of ensuring that information required to bedisclosed in Company’s reports under the Securities Exchange Act of 1934,such as this Form 10Q-SB, is reported in accordance with the Securities andExchange Commission’s rules.  Disclosure controls are also designed withthe objective of ensuring that such information is accumulated and communicatedto management, including the Chief Executive Officer and Chief Financial Officeras appropriate to allow timely decisions regarding requireddisclosure.
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       Within the 90 days prior to the dateof this report, the Company carried out an evaluation under  the  supervisionand  with  the participation of the Company’s  management,  including theCompany’s Chief  Executive  Officer  and  Chief  Financial  Officer,   ofthe effectiveness of  the  design  and   operation  of  the  Company’sdisclosure  controls  and  procedures  pursuant  to  the  Securities ExchangeAct Rule  13a-14.  Based upon that evaluation, the Chief Executive Officer andChief Financial Officer concluded that the Company’s disclosure controlsand procedures are effective in timely alerting them to material  informationrelating  to the  Company (including  its  consolidated  subsidiaries)  requiredto be in the Company’s periodic SEC filings. There were no significantchanges in the Company’s internal controls or in other factors that couldsignificantly affect these controls subsequent to the date of theirevaluation.
       Certifications of the Chief ExecutiveOfficer and Chief Financial Officer regarding, among other items, disclosurecontrols and procedures are included immediately after the signature section ofthis Form 10Q-SB.
       **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**
       Form 8-K was filed on June 28, 2004relating to a change in the Company’s independent accountant. 
       Form 8-K/A was filed on August 13,2004 amending the Form 8-K filed on June 28, 2004 relating to a change in theCompany’s independent accountant.
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registranthas duly caused this report to be signed on its behalf by the undersignedhereunto duly authorized.
 
**CHAMPIONS Sports, Inc.**
           
/s/ James Martell
  
James Martell
  
Chairman, President and Chief Executive Officer
     
/s/ James E. McCollam
  
James E. McCollam
  
Corporate Secretary, Chief Accounting
  
Officer and Controller
 

September 13, 2004
23****   

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Section 302 Certification
I, JAMES MARTELL, certify that:
(1)  I have reviewed this quarterly report on Form 10Q-SB of CHAMPIONSSPORTS, INC., a Delaware corporation (the "registrant");
(2)  Based on my  knowledge,  this  quarterly  report does not containany untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the  circumstances  underwhich such statements were made, not  misleading  with respect to the periodcovered by this quarterly report;
(3)  Based on my  knowledge,  the  financial  statements,  and  otherfinancial information  included in this quarterly  report,  fairly present inall material respects the financial  condition,  results of operations  and cashflows of the registrant as of, and for, the periods presented in this quarterlyreport;
(4)  The  registrant’s  other  certifying  officers  and I areresponsible  for establishing and maintaining  disclosure  controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:
       (a)  Designed suchdisclosure controls and procedures to ensure that material information relatingto the registrant, including its consolidated     subsidiaries, is made known tous by others within those entities, particularly during the period in which thisquarterly report is being      prepared;
       (b)  Evaluated theeffectiveness of the registrant’s disclosure controls and  procedures  asof a date  within 90 days prior to the  filing  date of this  quarterly report(the "Evaluation Date"); and
       (c)  Presented  in  thisquarterly   report  our  conclusions   about  the effectiveness  of thedisclosure  controls  and  procedures  based  on our evaluation as of theEvaluation Date;
(5)  The registrant’s  other certifying  officers and I havedisclosed,  based on our most recent evaluation, to the registrant’sauditors and the audit committee of the  registrant’s  board of directors(or persons  performing  the equivalent functions):
       (a)  all  significantdeficiencies  in the design or  operation of internal      controls which couldadversely affect the  registrant’s  ability to record,      process,summarize and report  financial data and have  identified for theregistrant’s auditors any material weaknesses in internal controls;and
24****   
       (b)  any fraud,  whether ornot material,  that involves management or other      employees  who  have  asignificant  role  in  the  registrant’s  internal      controls; and
(6)  The  registrant’s  other  certifying  officers and I haveindicated in this quarterly report whether there were significant  changes ininternal controls or in other factors that could significantly affect internalcontrols subsequent to the date of our most recent  evaluation,  including anycorrective  actions with
regard to significant deficiencies and material weaknesses.
Date:  September 13, 2004

By:

/s/ JAMES MARTELL
  
JAMES MARTELL
  
Chief Executive Officer
 

25****   

CERTIFICATION OF CHIEF FINANCIAL OFFICER
Section 302 Certification
I, JAMES E. MCCOLLAM, certify that:
(1)  I have reviewed this quarterly report on Form 10Q-SB of CHAMPIONSSPORTS, INC., a Delaware corporation (the "registrant");
(2)  Based on my knowledge, this  quarterly  report does not containany untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the  circumstances  underwhich such statements were made, not  misleading  with respect to the periodcovered by this quarterly report.
(3)  Based on my  knowledge,  the  financial  statements,  and  otherfinancial information  included in this quarterly  report,  fairly present inall material respects the financial  condition,  results of operations  and cashflows of the registrant as of, and for, the periods presented in this quarterlyreport; 
(4)  The  registrant’s  other  certifying  officers  and I areresponsible  for establishing and maintaining  disclosure  controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and have:
       (a)  Designed  suchdisclosure  controls  and  procedures  to ensure  that     material informationrelating to the registrant, including its consolidated     subsidiaries,  ismade  known  to  us by  others  within  those  entities,     particularlyduring  the period in which  this  quarterly  report is being     prepared;
       (b)  Evaluated theeffectiveness of the registrant’s disclosure controls and     proceduresas of a date  within 90 days prior to the  filing  date of this     quarterlyreport (the "Evaluation Date"); and
       (c)  Presented  in  thisquarterly   report  our  conclusions   about  the effectiveness  of thedisclosure  controls  and  procedures  based  on our evaluation as of theEvaluation Date;
(5)  The registrant’s  other certifying  officers and I havedisclosed,  based on our most recent evaluation, to the registrant’sauditors and the audit committee of the  registrant’s  board of directors(or persons  performing  the equivalent functions):
       (a)  all  significantdeficiencies  in the design or  operation of internal     controls which couldadversely affect the  registrant’s  ability to record,     process,summarize and report  financial data and have  identified for theregistrant’s auditors any material weaknesses in internal controls;and
26****   
       (b)  any fraud,  whether ornot material,  that involves management or other     employees  who  have  asignificant  role  in  the  registrant’s  internal     controls; and
(6)  The  registrant’s  other  certifying  officers and I haveindicated in this quarterly report whether there were significant  changes ininternal controls or in other factors that could significantly affect internalcontrols subsequent to the date of our most recent  evaluation,  including anycorrective  actions with regard to significant deficiencies and materialweaknesses.
Date:  September 13, 2004
By: 
 /s/ JAMES E. McCOLLAM
  
JAMES E. McCOLLAM
  
Chief Financial Officer
 

27****   
**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT****TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**
In connection with the annual report of Champions Sports, Inc. (the "Company")on Form 10-QSB for the three months ended July 31, 2004 as filed with theSecurities and Exchange Commission on the date hereof (the "Report"), each ofthe undersigned, in the capacities and on the dates indicated below, herebycertifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002, that to their knowledge:

1.     The Report fullycomplies with the requirements of Section 13(a) or 15(d) of the SecuritiesExchange Act of 1934; and 

2.     The informationcontained in the Report fairly presents, in all material  respects, thefinancial condition and results of operation of the Company. 

Dated: September 13, 2004

By: 
/s/ James M. Martell

  

  

James M. Martell, Chief Executive Officer 

Dated: September 13, 2004

By: 
/s/ James E. McCollam 

  

  

James E. McCollam, Chief Financial Officer 

28****