**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         January  31,2006
OR
 
[   ]

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

For the transition periodfrom                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.)

2200 Wilson Blvd., Suite 102-316, Arlington VA 22201(Address ofprincipal executive offices)(Zip code)
(703) 526-0400(Registrant's telephone number, including areacode)

       Indicate by check mark whether theRegistrant (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 forsuch 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 March 16, 2006 the Registranthad a total of 16,824,658 shares of common stock outstanding.
****   

**CHAMPIONS SPORTS, Inc.****FORM 10-QSB**
INDEX
 
       

Page
   
Part I. 

Financial Information
   
Item 1.   Financial Statements
   
Condensed Consolidated Balance Sheet as of
  
January 31, 2006 (Unaudited)
 
3
  
Condensed Consolidated Statements of Operations
  
For the Nine months and Three months ended 
 
January 31, 2006 and January 31, 2005 (Unaudited)
 
4
  
Condensed Consolidated Statements of Cash Flow for the
  
Nine months ended January 31, 2006 and January 31, 2005
 
5
 
(Unaudited)
     
Notes to Condensed Consolidated Financial Statements (Unaudited)

6 - 16
  
Item 2.   Management's Discussions and Analysis
  
of Financial Condition and Results of
  
Operations
 
17 - 22
  
Item 4.   Controls and Procedures

22
   
Part II.

Other Information and Signatures
     
Item 4.   Submission of Matters to a Vote of Security Holders
 
23
 
Item 6.   Exhibits and Reports on Form 8-K
 
23
 
Signatures
 
24
    
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  
 
25

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
27

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
29

**2**   

**CHAMPIONS SPORTS, INC. ANDSUBSIDIARIES**
**CONDENSED CONSOLIDATED BALANCE SHEETS**
**JANUARY 31, 2006 (UNAUDITED)**

**ASSETS**      
**January 31, 2006**  
**(Unaudited)** 
**CURRENT ASSETS**
  
  Cash and cash equivalents

$
21,019   
  Inventories
 
- 
     
**Total current assets**
 
21,019 
     
Property and equipment, net

-  
Deposits
 
- 
     
**TOTAL ASSETS**

$
21,019 
        
**LIABILITIES AND STOCKHOLDERS' (DEFICIT)**     
**CURRENT LIABILITIES**
  
  Accounts payable 

$
71,090   
  Dividend payable on preferred stock

350,460  
  Other accrued expenses
 
273,263 
     
**Total current liabilities**
 
694,813 
        
**COMMITMENTS AND CONTINGENCIES**
     
**STOCKHOLDERS' (DEFICIT)**
  
  Preferred stock, $10 par value; 56,075 shares authorized;
  
 32,450 shares issued and outstanding

324,500  
  Common stock, $.001 par value; 50,000,000 shares authorized 
  
 16,824,658 shares issued and outstanding

16,825  
  Additional paid-in capital

5,922,349  
  Accumulated deficit
 
(6,937,468)
  
**Total stockholders' (deficit)**
 
(673,794)
     
**TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)**

$
21,019 
  

The accompanying notes are an integral part of these condensed consolidatedfinancial statements.**3**   

**CHAMPIONS SPORTS, INC. ANDSUBSIDIARIES**
**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**
**FOR THE  NINE AND THREE MONTHS ENDED JANUARY 31, 2006 AND 2005(UNAUDITED)**         
**NINE MONTHS ENDED** 
**THREE MONTHS ENDED**
**JANUARY 31,** 
**JANUARY 31,**         
**2006** 
**2005** 
**2006** 
**2005**
****
       
**OPERATING REVENUE**
       
 Sales

$
- 

$
- 

$
- 

$
- 

**     Total operating revenue**

- 
 
- 
 
- 
 
- 
        
**COSTS AND OPERATING EXPENSES**
       
 General and administrative

146,803 
 
195,944 
 
24,754 
 
61,543 
        
**     Total costs and operating expenses**

146,803 
 
195,944 
 
24,754 
 
61,543 
        
**LOSS BEFORE OTHER (EXPENSE)**

 (146,803)
 
 (195,944)
 
(24,754)
 
(61,543)
        
**DISCONTINUED OPERATIONS**
       
 Loss from discontinued operations (net of taxes)

(17,676) 
(54,917) 
(3,296) 
(16,168)
 Loss on disposal of assets

 (142,520)
 
- 
 
- 
 
- 

**     Total discontinued operations**

(160,196)
 
(54,917)
 
(3,296) 
(16,168)
        
**NET LOSS BEFORE PROVISION FOR INCOME TAXES**

(306,999) 
(250,861) 
(28,050) 
(77,711)
 Provision for income taxes

- 
 
- 
 
- 
 
- 
        
**NET LOSS APPLICABLE TO COMMON STOCKHOLDERS**

$
 (306,999)

$
 (250,861)

$
 (28,050)

$
 (77,711)
        
**BASIC AND DILUTED LOSS PER COMMON SHARE**
 
 
 
 
 
 
 
 Basic from continuing operations

($0.01)
 
($0.02)
 
($0.00)
 
($0.00)

 Basic from discontinued operations

($0.01)
 
($0.00)
 
($0.00)
 
($0.00)
        
**WEIGHTED AVERAGE NUMBER OF SHARES**
       
**OUTSTANDING**

16,824,658 
 
12,071,035 
 
16,824,658 
 
16,824,658 

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

**CHAMPIONS SPORTS, INC. ANDSUBSIDIARIES**
**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW**
**FOR THE NINE MONTHS ENDED JANUARY 31, 2006 AND 2005(UNAUDITED)**  
**(Reclassified)** 
**2006**

**2005**
   
**CASH FLOW FROM OPERATING ACTIVITIES**
  
**Continuing Operations:**
  
  Net loss

($146,803)

($195,944)

**  Adjustments to reconcile net loss to net cash**
  
**    (used in) operating activities:**
     
**  Changes in assets and liabilities**
  
     Accounts payable

1,620 
(24,542)   
     Other accrued expenses

59,854 

114,328 

     Total adjustments

61,474 

89,786 

**     Net cash (used in) operating activities -operations**

 (85,329)

(106.158)
   
**Discontinued Operations:**
  
  Loss from discontinued operations

 (160,196)

 (54,917)

**  Adjustments to reconcile net loss to net cash**
  
**   provided by operating activities:**
  
    Depreciation and amortization

- 
36,315 
    Loss on disposal of assets

142,520 
- 
**Changes in assets and liabilities**
  
    Accounts receivable

- 
22,189 
    Inventories

18,459 
3,500 
    Deferred revenues
 
35,000 
    Prepaid expenses

- 
(601)
    Deposits

11,052 
- 
    Deferred lease concessions

-

 (2,836)

    Total adjustments

172,031

93,567
   
**  Net cash provided by (used in)**
  
**   operating activities - discontinued operations**

11,835

38,650 
   
**  Net cash (used in) operating activities -**
  
**   continuing and discontinued operations**

 (73,494)

 (67,508)
   
**CASH FLOWS FROM INVESTING ACTIVITIES**
  
**Discontinued Operations:**
  
  Proceeds from sale of assets

10,000 

- 

**     Net cash provided by investingactivities**

10,000 

- 
   
**NET (DECREASE) IN CASH AND CASH EQUIVALENTS**

(63,493)
(67,508)   
**CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD**

84,513 

120,116 
 
 

 

**CASH AND CASH EQUIVALENTS - END OF PERIOD**

$21,019 

$52,608 
   
**SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:**
  
  Cash paid during the period for:
  
     Interest paid

$- 

$- 

     Income taxes paid

$- 

$- 
   
**SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:**
  
  Exercise of common stock option by officer

$0 

$80,000 
   
The accompanying notes are an integral part of these condensed consolidatedfinancial statements.**5**   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS****JANUARY 31, 2006 AND 2005(UNAUDITED)**
**NOTE 1-     ORGANIZATION AND BASIS OFPRESENTATION**

Champions Sports, Inc., (the "Company") a Delawarecorporation, promoted a sport theme restaurant bar concept through Company ownedand licensed operations. The Company sold the rights to the Champions brand toMarriott International, Inc. (Marriott) and became a licensee of ChampionsSports Bar Restaurants. Substantially all memorabilia sales were to Marriott. OnJune 23, 2005, the Company ceased operations for its' only sports bar located inSan Antonio, Texas.  Fixed assets with a net book value of $152,520 were soldfor $10,000 and inventory consisting of primarily restaurant food and beveragewas sold for $3,200.

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 nine months ended January 31, 2006may 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 reclassified its financial statementsto take effect for the disposal of its only operating business.

**6**   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**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. 

**             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 $0 and$36,315 for the nine months ended January 31, 2006 and 2005, respectively.

**             Useof Estimates**

The preparation of consolidated financial statementsin conformity with accounting principles generally accepted in the United Statesof America requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosures of contingent assetsand liabilities at the date of the consolidated financial statements and thereported amounts of revenues and expenses during the reporting period.  Actualresults could differ from those estimates. 

**7**   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
**             Net(Loss) Per Share**

Historical net (loss) per common share is computedusing the weighted average number of common shares outstanding. Diluted earningsper share (EPS) includes additional dilution from common stock equivalents, suchas stock issuable pursuant to the exercise of stock options and warrants. Commonstock equivalents were not included in the computation of diluted earnings pershare when the Company reported a loss because to do so would be antidilutivefor periods presented.  

The following is a reconciliation of the computationfor basic and diluted EPS:
       
**(Reclassified)**     
**January 31,** 
**January 31,**     
**2006**
 
**2005**
        
Net loss
   
$
 (306,999)

$
 (250,861)
        
Weighted-average common shares
     
Outstanding (Basic)
   
16,824,658  
12,071,035         
Weighted-average common stock
     
Equivalents
      
 Stock options
   
-  
- 
 Warrants
   
- 
 
- 
        
Weighted-average common shares
     
Outstanding (Diluted)
   
16,824,658 
 
12,071,035 

Options and warrants outstanding to purchase stockwere not included in the computation of diluted EPS for January 31, 2006 and2005 because inclusion would have been antidilutive.  

**8**   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
**             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 at enactedtax rates expected to be in effect when such amounts are realized orsettled.

**             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. 

**9**   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
**             Stock-BasedCompensation**

Employee stock awards under the Company's compensationplans are accounted for in accordance with Accounting Principles Board OpinionNo. 25 ("APB 25"), "Accounting for Stock Issued to Employees", and relatedinterpretations. The Company provides the disclosure requirements of Statementof Financial Accounting Standards No. 123, "Accounting for Stock-BasedCompensation" ("FAS 123"), and related interpretations. Stock-based awards tonon-employees are accounted for under the provisions of FAS 123 and has adoptedthe enhanced disclosure provisions of FAS No. 148 "Accounting for Stock-BasedCompensation- Transition and Disclosure, an amendment of FAS No. 123".

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 forEquity Instruments that are Issued to Other Than Employees for Acquiring, or inConjunction with Selling, Goods or Services". The fair value of the optionissued is used to measure the transaction, as this is more reliable than thefair value of the services received. The fair value is measured at the value ofthe Company's common stock on the date that the commitment for performance bythe counterparty has been reached or the counterparty's performance is complete.The fair value of the equity instrument is charged directly to compensationexpense and additional paid-in capital.

**10**   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
**             RecentAccounting Pronouncements**
**             ShareBased Payments**

In December 2004, the FASB issued Financial AccountingStandards No. 123 (revised 2004) (FAS 123R), "Share-Based Payment, " FAS 123Rreplaces FAS No. 123, "Accounting for Stock-Based Compenasation", and supersedesAPB Opinion No. 25, "Accounting for Stock Issued to Employees."  FAS 123Rrequires compensation expense, measured as the fair value at the grant date,related to share-based payment transactions to be recognized in the financialstatements over the period that an employee provides service in exchange for theaward.  The Company intends to adopt FAS 123R using the "modified prospective"transition method as defined in FAS 123R.  Under the modified prospectivemethod, companies are required to 1) record compensation cost prospectively forthe unvested portion, as of the date of adoption, of previously issued andoutstanding awards over the remaining vesting period of such awards.  FAS 123Ris effective January 1, 2006.  The Company is evaluating the impact of FAS 123Ron its' results and financial position.

**             InventoryCosts**

In November 2004, the FASB issued Financial AccountingStandards No. 151 (FAS 151), "Inventory Costs - an amendment of ARB No. 43,Chapter 4".  FAS 151 clarifies the accounting for abnormal amounts of idlefacility expense, freight, handling costs and spoilage.  In addition, FAS 151requires companies to base the allocation of fixed production overhead to thecosts of conversion on the normal capacity of production facilities.  FAS 151 iseffective for the Company in 2006.  The Company does not expect FAS 151 to havea material impact on its results or financial statements.  

**11**   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTINGPOLICIES (CONTINUED)**
**             RecentAccounting Pronouncements (Continued)**
**             Exchangeof Non-Monetary Assets**

On December 16, 2004, FASB issued Statement ofFinancial Accounting Standards No. 153, "Exchanges of Non-monetary Assets, anamendment of APB Opinion No. 29, Accounting for Non-monetary Transactions" ("FAS153").  This statement amends APB Opinion 29 to eliminate the exception fornon-monetary exchanges of similar productive assets and replaces it with ageneral exception for exchanges of non-monetary assets that do not havecommercial substance.  Under FAS 153, if a non-monetary exchange of similarproductive assets meets a commercial-substance criterion and fair value isdeterminable, the transaction must be accounted for at fair value resulting inrecognition of any gain or loss.  FAS 153 is effective for non-monetarytransactions in fiscal periods that begin after June 15, 2005.  Theimplementation of this standard did not have a material impact on its financialposition, results of operations or cash flows.

**             Reclassifications**

The loss from discontinued operations for the ninemonths ended January 31, 2005 was reclassified to reflect the sale of theCompany's only operating business activity in the condensed consolidatedstatements of operations in accordance with the provisions of FAS 144. Thereclassification had no effect on net loss for the nine and three-month periodended January 31, 2005.  In addition, certain expenses for the six months endedOctober 31, 2005 were reclassified between discontinued and continuingoperations to conform to the presentation of the nine months ended January 31,2006 presentation.  The reclassifications had no effect on net loss for thethree months ended January 31, 2006.

**12**   

**CHAMPIONS SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 3-**     **COMMITMENTS ANDCONTINGENCIES**
*             Operatingleases*

The Company leased, as tenant, restaurant space underan operating lease, which expired June 30, 2005 and was not renewed. The leaseescalated for increases in the landlord's expenses for increases in the ConsumerPrice Index, and required additional rentals based on a percentage of restaurantsales over a defined amount. The lease granted the Company certain concessions,which were amortized to lease expense over the term of the lease.

Rental expense during the nine months ended January31, 2006 and 2005 was $43,132 and $151,649, respectively.

**NOTE 4-     MARRIOTT LICENSE**

The Company was an exclusive supplier of sportsmemorabilia and a consultant to all new Champions Sports Bars located inMarriott and Renaissance Hotels worldwide.  This agreement was terminated byMarriott effective May 28, 2005. 

**NOTE 5-     OTHER ACCRUED EXPENSES**

This account represents accrued officer's payroll andrelated payroll taxes. 

**NOTE 6-     STOCKHOLDERS' DEFICIT**
**             CommonStock**

The Company has 50,000,000 shares authorized and16,824,658 shares issued and outstanding at January 31, 2006.

There were no issuances of common stock during thenine months ended January 31, 2006 and 2005, respectively.

**             PreferredStock**

The Company has 56,075 shares of preferred stockauthorized and 32,450 shares issued and outstanding at January 31, 2006. 

**13**   

**CHAMPION SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 6-     STOCKHOLDERS' DEFICIT(CONTINUED)**
**             PreferredStock (Continued)**

The Series A preferred stock requires a dividend of 12percent per annum, and the dividends are to be accrued on the Company's book ifnot paid. The dividend may be paid in common stock of the Company at theCompany's discretion. The number of shares comprising the dividend paid incommon stock shall be determined by dividing $1.20 by the closing bid price forthe common stock on the payment date. The Series A preferred stock is preferredin liquidation or dissolution up to the amount of their par value ($10 pershare). The Series A preferred stock in 2004 converted into 15 shares of theCompany's common stock. There were no conversions in 2003.

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 January 31, 2006 and 2005, the deferralwas $0, respectively. Preferred stock dividends in arrears at October 31, 2005aggregated $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.  The remaining accrued dividends areanticipated to be paid in cash or common stock upon successful merger or otherbusiness combination. 

**             CommonStock Options**

The Company in 1993 adopted a stock option plan, whichexpired on August 2, 2002. No options were exercised under the plan. All optionsgranted by the Company were granted pursuant to board resolutions and not underthe stock option plan. 

**NOTE 7-     GOING CONCERN**

As shown in the accompanying condensed consolidatedfinancial statements, the Company has sustained net operating losses for theyears ended April 30, 2005 and 2004 and for the nine months ended January 31,2006 and has sustained large accumulated deficits that raise substantial doubtabout its ability to continue as a going concern. In addition, the Company is insearch of acquiring a business, or finding a suitable merger candidate.

**14**   

**CHAMPION SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 7-     GOING CONCERN (CONTINUED)**

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

The Company's future success is dependent upon itsability 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 8-     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. Deferredincome taxes will be measured based on the tax rates expected to be in effectwhen the temporary differences are included in the Company's consolidated taxreturn. Deferred tax assets and liabilities are recognized based on anticipatedfuture tax consequences attributable to differences between financial statementcarrying amounts of assets and liabilities and their respective taxbases.

At January 31, 2006, deferred tax assets consist ofthe following:

Deferred tax asset

$
2,428,114 
Less:  valuation allowance 
 
(2,428,114)

Net deferred tax asset

$
-0-

At January 31, 2006, the Company had federal netoperating loss carryforwards in the approximate amounts of $6,937,468 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.

**15**   

**CHAMPION SPORTS, INC. AND SUBSIDIARIES****NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)****JANUARY 31, 2006 AND2005 (UNAUDITED)**
**NOTE 9-      DISPOSAL OF BUSINESS**

On June 23, 2005, the Company ceased operations forits' only sports bar located in San Antonio, Texas.  Fixed assets with a netbook value of $152,520 were sold for $10,000 and inventory consisting ofprimarily restaurant food and beverage was sold for $3,200.  The Company'scondensed consolidated financial statements have been reclassified to reflectthis sale as discontinued operations, for all periods presented. Summarizedoperating results of discontinued operations are as follows:
   
January 31, 
January 31,   
2006
 
2005
  
Revenues

$
274,626 

$
1,276,703 
 
Net loss before income taxes       

$
(17,676)

$
 (54,917)
 
Provision for taxes

$
- 
$
-  
Net loss

$
(17,676)

$
54,917)
 
Net loss per share

$
(0.01)

$
 (0.00)
 
Diluted loss per share

$
(0.01)

$
 (0.00)    

**16**   

**Item 2.   Managements Discussion and Analysis of FinancialCondition and Results of Operations**
**There is substantial doubt about the Company's ability tocontinue as a going concern. The Company's independent auditor, for theyear ending April 30, 2005, has expressed substantial doubt that the Company cancontinue as a going concern due to recurring losses and working capitalshortages and that there is no guarantee that the Company will be able to raiseenough capital or generate revenues to sustain its operations. The Company iscontinuing to face grave liquidity and cash problems as of date of the filing ofthis 10-QSB. The Company's Champions sports bar restaurant in San Antonio, Texaswhich provided almost 100 percent of its revenues, ceased its restaurantoperations in June of 2005 after its 16 year old lease expired. The Company doesnot have the resources to open and operate a restaurant in another location. Itis the intention of the Company to continue operations until such time asChampions finds a business opportunity and merges with another company or raisesadditional financing, although there is no assurance that this can be done onterms satisfactory to the Company. The Company is continuing to actively look atvarious business opportunities in order to continue operations. If the Company'sliquidity situation does not improve, the Company might have to discontinue itsbusiness as a going concern.**
**Through January 31, 2006 and currently, the business plan for the Company isto  actively  pursue  opportunities  whereby the Company will primarily  serveas a vehicle for the acquisition of a target business that the Company believeswill have significant growth potential. The Company intends to use its  capitalstock,  to  effect a  business  combination  with a private company  thatdesires to establish a public  trading  market for its  securities whileavoiding  what it may deem to be adverse  consequences  of  undertaking a publicoffering itself, such as time delays, significant expense, loss of votingcontrol and other burdens including significant  professional fees. The businesscombination may be with a financially stable, mature company or a company thatis financially unstable or in its early stages of development or growth.**
**In seeking to attain this business objective, the Company will not restrictits search to any particular industry.  Rather,  the Company  may  investigatebusinesses  of  essentially  any kind or nature and  participate  in any type ofbusiness  that may, in  management's  opinion,  meet the business  objectives asdescribed in this document.  The Company emphasizes that the description in thisdocument of its business objectives is extremely general and is not meant torestrict the discretion of management to search for and enter into potentialbusiness opportunities.**
**The  Company  has not chosen the  particular  business in which the Companywill engage in and has not  conducted  any market  studies  with  respect to anybusiness  or industry to  evaluate  the  possible  merits or risks of the targetbusiness or the particular industry in which the Company may ultimately operate.To the extent  that the  Company  may enter into a business  combination  with afinancially  unstable  company or an entity in its early stage of development orgrowth, including entities without established records of sales or earnings, TheCompany  will become  subject to numerous  risks  inherent in the  business  andoperations of financially  unstable and early stage or potential emerging growthcompanies.  In addition, to the extent that the Company may enter a businesscombination with an entity in an industry characterized by a high level of risk,the Company will become subject to the currently unascertainable risks of thatindustry.  An extremely high level of risk frequently characterizes certainindustries that experience rapid growth. In addition,  although the Company willendeavor  to evaluate  the risks  inherent  in a  particular  industry or targetbusiness,  the Company  cannot give  assurance  that the Company  will  properlyascertain or assess all significant risk factors.****17**   
**The Company  anticipates that target business candidates will be brought toits attention from various  unaffiliated  sources,  including but not restrictedto, investment bankers, venture capitalists, securities broker-dealers,  bankersand other  members of the  financial  community,  who may present  solicited  orunsolicited proposals. Company's officers and directors and their affiliates mayalso bring to the Company's attention target business candidates.  While theCompany does not  presently  anticipate  engaging  the services of  professionalfirms that  specialize  in  business  acquisitions  on any formal or basis,  theCompany may engage such firms in the future, in which event, the Company may paya finder's fee or other  compensation  for such  introductions if they result inconsummated  transactions.  These fees are customarily between 1% and 5% of thesize of the overall transaction, based upon a sliding scale of the amountinvolved.**
**The Company's management will have significant flexibility in identifying andselecting a prospective target business.  In evaluating a prospective targetbusiness, the management will consider, among other factors, thefollowing:**
**- the financial condition and results of operation of the target;**
**- the growth  potential of the target and that of the industry in which thetarget   operates;**
**- the experience and skill of the target's  management and  availability ofadditional personnel; o the capital requirements of the target;**
**- the competitive  position of the target;**
**- the stage of development that the target's products,  processes or servicesare at;**
**- the degree of current or  potential  market  acceptance  of the  target'sproducts,  processes  or  services;**
**- proprietary features and the degree of intellectual property or otherprotection of the target's products, processes or services;**
**- the regulatory environment of the industry in which the targetoperates;**
**- the prospective equity interest in, and opportunity for control of, thetarget; and**
**- the costs associated with effecting the business combination.**
**These criteria are not intended to be exhaustive.  Any evaluation relating tothe merits of a particular business combination will be based, to the extentrelevant, on the above factors as well as other considerations deemed relevantby management in connection with effecting a business combination consistentwith Company's business objective.****18**   
**In connection with Company's  evaluation of a prospective  target business,the Company  anticipates  that it will  conduct due  diligence  review that willencompass, among other things, meetings with incumbent management and inspectionof facilities,  as well as a review of financial or other  information that willbe made available to the Company.**
**The Company will endeavor to structure a business combination so as toachieve the most favorable tax treatment to the Company, the target business andboth of the companies' stockholders.  There can be no assurance, however, thatthe Internal Revenue Service or appropriate state tax authority will agree withthe tax treatment of the business combination.**
**Until the Company is presented with a specific  opportunity  for a businesscombination, the Company is unable to ascertain with any degree of certainty thetime and  costs  required  to  select  and  evaluate  a target  business  and tostructure  and  complete  the  business  combination.   Any  costs  incurred  inconnection  with the  identification  and  evaluation  of a  prospective  targetbusiness with which a business  combination  is not  ultimately  completed  willresult in a loss to the Company and will reduce the amount of capital  otherwiseavailable to complete a business combination.**
**Although the Company intends to carefully scrutinize the management of aprospective target business before effecting a business combination, the Companycannot give assurance that its assessment of the target's management will proveto be correct, especially in light of the possible inexperience of Company'smanagement in evaluating certain types of businesses.  In addition,  the Companycannot  give  assurance  that  the  target's  future  management  will  have thenecessary  skills,  qualifications  or  abilities  to  manage a  public  companyintending  to embark on a program  of  business  development.  Furthermore, thefuture role of Company's officers and directors,  if any, in the target businesscannot  presently be stated with any certainty.  It is possible that one or moreof the Company's officers and directors will remain associated in some capacitywith the Company following a business combination and will devote their effortsto the affairs of the new business combination.  Moreover, the Company cannotgive assurance that its officers and directors will have significant experienceor knowledge relating to the operations of the particular targetbusiness.**
**The Company may seek to recruit additional managers to supplement theincumbent management of the target business. The Company,  however,  cannot giveassurance  that it will be able to  recruit  additional  managers  who  have therequisite  skills,  knowledge or  experience  necessary to enhance the incumbentmanagement.**
**The Company expects to encounter intense competition from other entitieshaving a similar business objective. Many of these entities, including financialconsulting companies and venture capital firms, have longer operating historiesand have   extensive   experience in   identifying   and effecting   businesscombinations, directly or through affiliates. Many of these competitors possesssignificantly greater financial, technical and other resources.  The Companycannot give assurance that it will be able to effectively compete with theseentities.  In the event the Company is unable to compete effectively with theseentities, the Company may be forced to evaluate less attractive prospects for abusiness combination. If the Company is forced to evaluate these less attractiveprospects, the Company cannot give assurance that the stated business objectiveswill be met.****19**   

Results of Operation
       For the nine months ended January 31,2006, the Company's net loss was $306,999 and the net loss for the three monthsended January 31, 2006 was $28,050.  The Company's total assets decreased by$245,525 to $21,019 at January 31, 2006.
       For the nine months ended January 31,2005, the Company's net loss was $250,861 and for the three months ended January31, 2005 was $77,711. 
Revenues
       The Company's total revenues were$0.00 for the three months ended and nine months ended January 31, 2006 and forthe three-month period ended and nine month period January 31, 2006, asreclassified.  The Company ceased operations at San Antonio Champions locationon June 23, 2005. The lease on this location expired on June 30, 2005 and theCompany vacated the premise on that date. The San Antonio location had provided99% of the Company's revenues.  The Company's condensed consolidated financialstatements have been reclassified to reflect this cessation of business asdiscontinued operations, for all periods presented. Summarized operating resultsof discontinued operations are as follows:
  
January 31, 
January 31,  
2006
 
2005
   
Revenues

$
274,626 

$
1,276,703 

Net loss before income taxes    

$
(17,676)

$
 (54,917)

Provision for taxes

$
- 

$
- 

Net loss

$
(17,676)

$
 (54,917)

Net loss per share

$
(0.01)

$
 (0.00)

Diluted loss per share

$
(0.01)

$
 (0.00)

Expenses
       General and administrative expense forthe Company's corporate office was $146,803  for the nine months ended January31, 2006 compared to $195,944 for the nine months ended January 31, 2005.  
Liquidity and Capital Resources
       The Company's cash position as ofJanuary 31, 2006 was $21,019 compared to $84,513 on April 30, 2005. For the ninemonth period, the Company's operations, continuing and discontinued, used$73,494 in cash. The Company met its liquidity needs from its cash reserves. 
       The Company's working capital was anegative $673,794 on January 31, 2006 and a negative $530,367 on April 30, 2005.The Company's working capital is very unfavorable when compared to other publiccompanies.**20**   

Other
       The Company is facing liquidityproblems and is uncertain that it will be able to continue operations without aninfusion of cash.  The Company's liquidity problems have been furtherexasperated by the closing to the Company's San Antonio location.  The Companycontinues to review and evaluate its operations and priorities.  The Company isactively   pursuing merger or acquisition   candidates and other financingpossibilities to meet its liquidity needs.  There is no assurance that theCompany will be able to structure a merger or acquisition, or raise additionalfinancing to continue operations on terms satisfactory to the Company.
**       Furthermore, The Company'sindependent auditor has expressed substantial doubt that the Company cancontinue as a going concern.****21**   

**SPECIAL NOTE REGARDING FORWARD-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, ability to haveaccess 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's futureresults, levels of activity, performance or achievements may not meet theseexpectations.  The Company does not intend to update any of the forward-lookingstatements after the date of this document to conform these statements to actualresults or to changes in the Company's expectations, except as required bylaw.
Item 4     CONTROLS AND PROCEDURES
The Company maintains a set of disclosure controls and procedures designed toensure that information required to be disclosed by the Company in the reportsfiled under the Securities Exchange Act, is recorded, processed, summarized andreported within the time periods specified by the SEC's rules and forms.Disclosure controls are also designed with the objective of ensuring that thisinformation is accumulated and communicated to the Company's management,including the Company's chief executive officer and chief financial officer, asappropriate, to allow timely decisions regarding
required disclosure.
Based upon their evaluation as of the end of the period covered by this report,the Company's chief executive officer and chief financial officer concludedthat, the Company's disclosure controls and procedures are not effective toensure that information required to be included in the Company's periodic SECfilings is recorded, processed, summarized, and reported within the time periodsspecified in the SEC rules and forms.
The Company's board of directors were advised by Bagell, Josephs & Company,L.L.C., the Company's independent registered public accounting firm, that duringtheir performance of audit procedures for 2005 Bagell, Josephs & Company,L.L.C. identified a material weakness as defined in Public Company AccountingOversight Board Standard No. 2 in the Company's internal control over financialreporting.
This deficiency consisted primarily of inadequate staffing and supervision thatcould lead to the untimely identification and resolution of accounting anddisclosure matters and failure to perform timely and effective reviews.
However, the size of the Company prevents us from being able to employsufficient resources to enable us to have adequate segregation of duties withinour internal control system. Management is required to apply its judgment inevaluating the cost-benefit relationship of possible controls and procedures.
       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.**22**   

**Part II.   Other Information**
**Item 4.     Submission of Matters to A Vote ofSecurity Holders**
       None
**Item 6.  Exhibits and Reports on Form 8-K**
       None**23**   

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
 

March 16, 2006**24**   

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 CHAMPIONS SPORTS,INC., a Delaware corporation (the "registrant");
(2) Based on my  knowledge,  this  quarterly  report does not contain any untruestatement of a material fact or omit to state a material fact  necessary to makethe statements made, in light of the  circumstances  under which such statementswere made, not  misleading  with respect to the period covered by this quarterlyreport;
(3) Based on my  knowledge,  the  financial  statements,  and  other  financialinformation  included in this quarterly  report,  fairly present in all materialrespects the financial  condition,  results of operations  and cash flows of theregistrant as of, and for, the periods presented in this quarterly report;
(4) The  registrant's  other  certifying  officers  and I are  responsible  forestablishing and maintaining  disclosure  controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and have:
       (a) Designed such disclosure controlsand procedures to ensure that material information relating to the registrant,including its consolidated     subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this quarterlyreport is being      prepared;
       (b) Evaluated the effectiveness of theregistrant's disclosure controls and  procedures  as of a date  within 90 daysprior to the  filing  date of this  quarterly report (the "Evaluation Date");and
       (c) Presented  in  this  quarterlyreport  our  conclusions   about  the effectiveness  of the  disclosurecontrols  and  procedures  based  on our evaluation as of the EvaluationDate;**25**   

(5) The registrant's  other certifying  officers and I have disclosed,  based onour most recent evaluation, to the registrant's auditors and the audit committeeof the  registrant's  board of directors (or persons  performing  the equivalentfunctions):
       (a) all  significant  deficiencies  inthe design or  operation of internal controls which could adversely affect theregistrant's ability to record,  process,  summarize and report  financial dataand have  identified for the registrant's auditors any material weaknesses ininternal controls; and
       (b) any fraud,  whether or notmaterial,  that involves management or other employees who have a significantrole  in  the  registrant's  internal controls; and
(6) The registrant's  other  certifying  officers and I have  indicated in thisquarterly report whether there were significant  changes in internal controls orin other factors that could significantly affect internal controls subsequent tothe date of our most recent  evaluation,  including any corrective  actions withregard to significant deficiencies and material weaknesses.
Date:  March 16, 2006
By: 
/s/ JAMES MARTELL
  
JAMES MARTELL
  
Chief Executive Officer
 
**26**   

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 CHAMPIONS SPORTS,INC., a Delaware corporation (the "registrant");
(2) Based on my knowledge, this  quarterly  report does not contain any untruestatement of a material fact or omit to state a material fact  necessary to makethe statements made, in light of the  circumstances  under which such statementswere made, not  misleading  with respect to the period covered by this quarterlyreport.
(3) Based on my  knowledge,  the  financial  statements,  and  other  financialinformation  included in this quarterly  report,  fairly present in all materialrespects the financial  condition,  results of operations  and cash flows of theregistrant as of, and for, the periods presented in this quarterly report; 
(4) The  registrant's  other  certifying  officers  and I are  responsible  forestablishing and maintaining  disclosure  controls and procedures (as defined inExchange Act Rules 13a-14 and 15d-14) for the registrant and have:
       (a)  Designed  such  disclosurecontrols  and  procedures  to ensure  that  material information relating to theregistrant, including its consolidated subsidiaries, is  made  known  to  us byothers  within  those  entities, particularly  during  the period in which  thisquarterly  report is being     prepared;
       (b) Evaluated the effectiveness of theregistrant's disclosure controls and procedures  as of a date  within 90 daysprior to the  filing  date of this quarterly report (the "Evaluation Date");and
       (c)  Presented  in  this  quarterlyreport  our  conclusions   about  the effectiveness  of the  disclosurecontrols  and  procedures  based  on our evaluation as of the EvaluationDate;
(5) The registrant's  other certifying  officers and I have disclosed,  based onour most recent evaluation, to the registrant's auditors and the audit committeeof the  registrant's  board of directors (or persons  performing  the equivalentfunctions):
       (a) all  significant  deficiencies  inthe design or  operation of internal controls which could adversely affect theregistrant's  ability to record, process,  summarize and report  financial dataand have  identified for the     registrant's auditors any material weaknessesin internal controls; and**27**   

       (b) any fraud,  whether or notmaterial,  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 have  indicated in thisquarterly report whether there were significant  changes in internal controls orin other factors that could significantly affect internal controls subsequent tothe date of our most recent  evaluation,  including any corrective  actions withregard to significant deficiencies and material weaknesses.
Date:  March 16, 2006
By: 
/s/ JAMES E. McCOLLAM
  
JAMES E. McCOLLAM
  
Chief Financial Officer
 
**28**   
**CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**
In connection with the quarterly report of Champions Sports, Inc. (the"Company") on Form 10-QSB for the nine months ended January 31, 2006 as filedwith the Securities and Exchange Commission on the date hereof (the "Report"),each of the undersigned, in the capacities and on the dates indicated below,hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of theSecurities Exchange Act of 1934; and 

 

2.

The information contained in the Report fairly presents, in all materialrespects, the financial condition and results of operation of the Company. 

Dated: March 16, 2006

By: 
/s/ James M. Martell

  

  

James M. Martell, Chief Executive Officer 

Dated: March 16, 2006

By: 
/s/ James E. McCollam 

  

  

James E. McCollam, Chief Financial Officer 

**29**