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<SEC-DOCUMENT>0001297077-06-000062.txt : 20060913
<SEC-HEADER>0001297077-06-000062.hdr.sgml : 20060913
<ACCEPTANCE-DATETIME>20060913135542
ACCESSION NUMBER:		0001297077-06-000062
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20060731
FILED AS OF DATE:		20060913
DATE AS OF CHANGE:		20060913

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CHAMPIONS SPORTS INC
		CENTRAL INDEX KEY:			0000771856
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-EATING & DRINKING PLACES [5810]
		IRS NUMBER:				521401755
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0430

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-17263
		FILM NUMBER:		061088198

	BUSINESS ADDRESS:	
		STREET 1:		2500 WILSON BLVD
		STREET 2:		SUITE 305
		CITY:			ARLINGTON
		STATE:			VA
		ZIP:			22201
		BUSINESS PHONE:		703-526-04

	MAIL ADDRESS:	
		STREET 1:		1749 OLD MEADOW RD
		STREET 2:		STE 610
		CITY:			MCLEAN
		STATE:			VA
		ZIP:			22102

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	INTERNATIONAL GROUP INC
		DATE OF NAME CHANGE:	19860319
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>champions10qsb_073106.htm
<DESCRIPTION>CSPORTS 07/31/06 10QST
<TEXT>
<html>
<head><meta content="text/html; charset=">
<title>NEOREACH, INC</title>
</head>

<body >
<ul>
</ul>

<p>
<p align="center">
<b>SECURITIES AND EXCHANGE COMMISSION</b><br><font size="2"><b>Washington, D.C.
20549</b></font><p align="center">
<font size="2"><b>FORM 10-QSB</b></font></p>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="589.333186" colspan="1" rowspan="1" >
<p>
<font size="2">Mark One</font></p>
</td>
</tr>
</table></div>
<p>
</p>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="41.333323" colspan="1" rowspan="1" >
<p>
<font size="2">[X]</font></p>
</td>
<td width="413.333230" colspan="1" rowspan="1" >
<p>
<font size="2">QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF</font></p>
</td>
</tr>
<tr valign="top">
<td width="41.333323" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="413.333230" colspan="1" rowspan="1" >
<p>
<font size="2">THE SECURITIES EXCHANGE ACT OF 1934</font></p>
</td>
</tr>
</table></div>
<p>
<p align="center">
<font size="2"><u>For the quarterly period ended        &nbsp;July 31,
2006</u></font><p align="center">
<font size="2">OR</font></p>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="41.333323" colspan="1" rowspan="1" >
<p>
<font size="2">[&nbsp;&nbsp;&nbsp;]</font></p>
</td>
<td width="413.333230" colspan="1" rowspan="1" >
<p>
<font size="2">TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF</font></p>
</td>
</tr>
<tr valign="top">
<td width="41.333323" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="413.333230" colspan="1" rowspan="1" >
<p>
<font size="2">THE SECURITIES EXCHANGE ACT OF 1934</font></p>
</td>
</tr>
</table></div>
<p>
<p align="center">
<font size="2">For the transition period from    <u>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;</u>&nbsp;to    <u>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><p align="center">
<font size="2">Commission file number        <u>
&nbsp;0-17263</u></font><p align="center">
<u>CHAMPIONS SPORTS, INC.</u><font size="2"></font><br><font size="2">(Exact
name of registrant as specified in its charter)</font></p align="center">
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="245.333272" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><u>Delaware</u></font></p align="center">
</td>
<td width="250.666604" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><u>52-1401755</u></font></p align="center">
</td>
</tr>
<tr valign="top">
<td width="245.333272" colspan="1" rowspan="1" >
<p align="center">
<font size="2">(State or other jurisdiction of</font></p align="center">
</td>
<td width="250.666604" colspan="1" rowspan="1" >
<p align="center">
<font size="2">(I.R.S. Employer</font></p align="center">
</td>
</tr>
<tr valign="top">
<td width="245.333272" colspan="1" rowspan="1" >
<p align="center">
<font size="2">organization)</font></p align="center">
</td>
<td width="250.666604" colspan="1" rowspan="1" >
<p align="center">
<font size="2">Identification No.)</font></p align="center">
</td>
</tr>
</table></div>
<p>
<p align="center">
<font size="2"><u>2200 Wilson Blvd., Suite 102-316, Arlington VA
22201</u></font><br><font size="2">(Address of principal executive
offices)</font><br><font size="2">(Zip code)</font><p align="center">
<font size="2"><u>(703) 526-0400</u></font><br><font size="2">(Registrant's
telephone number, including area code)</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark
whether the Registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.  Yes    <u>&nbsp;&nbsp;&nbsp;x&nbsp;&nbsp;&nbsp; </u>&nbsp;&nbsp;No
<u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> </font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of September 8, 2006
the Registrant had a total of 16,824,658 shares of common stock
outstanding.</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b></b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p align="center">
<b>CHAMPIONS SPORTS, Inc.</b><font size="2"><b></b></font><br><b>FORM
10-QSB</b><p align="center">
<font size="2"><u>INDEX</u></font></p>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2"><u>Page</u></font></p>
</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
<p>
<font size="2">Part I. </font></p>
</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Financial Information</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="619.999845" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Item 1.&nbsp;&nbsp;&nbsp;Financial Statements</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="619.999845" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Condensed Consolidated Balance Sheet as of</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">July 31, 2006 (Unaudited)</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">3</font></p>
</td>
</tr>
<tr valign="top">
<td width="619.999845" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Condensed Consolidated Statements of Operations</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">for the three months ended July 31, 2006 and</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">July 31, 2005 (Unaudited)</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">4</font></p>
</td>
</tr>
<tr valign="top">
<td width="619.999845" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Condensed Consolidated Statements of Cash Flow for the</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">three months ended July 31, 2006 and July 31, 2005
(Unaudited)</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">5</font></p>
</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Notes to Condensed Consolidated Financial Statements
(Unaudited)</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">6 - 17</font></p>
</td>
</tr>
<tr valign="top">
<td width="619.999845" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Item 2.&nbsp;&nbsp;&nbsp;Management's Discussions and
Analysis</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;of
Financial Condition and Results of Operations</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">18 - 22</font></p>
</td>
</tr>
<tr valign="top">
<td width="619.999845" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Item 4.&nbsp;&nbsp;&nbsp;Controls and Procedures</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">22</font></p>
</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
<p>
<font size="2">Part II.</font></p>
</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Other Information and Signatures</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Item 4.&nbsp;&nbsp;&nbsp;Submission of Matters to a Vote of
Security Holders</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">23</font></p>
</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Item 6.&nbsp;&nbsp;&nbsp;Exhibits and Reports on Form
8-K</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">23</font></p>
</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
<p>
<font size="2">Signatures</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">24</font></p>
</td>
</tr>
<tr valign="top">
<td width="53.333320" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="499.999875" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="65.333317" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="554.666528" colspan="2" rowspan="1" >
<p>
<font size="2">Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">25</font></p>
</td>
</tr>
<tr valign="top">
<td width="554.666528" colspan="2" rowspan="1" >
<p>
<font size="2">Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">26</font></p>
</td>
</tr>
<tr valign="top">
<td width="554.666528" colspan="2" rowspan="1" >
<p>
<font size="2">Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002</font></p>
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p>
<font size="2">27</font></p>
</td>
</tr>
</table></div>
<p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>2</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>CONSOLIDATED BALANCE
SHEET</b></font><br><font size="2"><b>JULY 31, 2006
(UNAUDITED)</b></font></p align="center">
<div align="center" style="position:relative; left: -1"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><b>ASSETS</b></font></p align="center">
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>CURRENT ASSETS</b></font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash
equivalents</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="79.999980" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">623&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TOTAL
ASSETS</b></font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="79.999980" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">623&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><b>LIABILITIES AND STOCKHOLDERS'
(DEFICIT)</b></font></p align="center">
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2"><b>CURRENT LIABILITIES</b></font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
payable</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">31,754&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividend payable on
preferred stock</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
<p align="right">
<font size="2">350,460&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other accrued
expenses</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">287,342&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Officer loans
payable</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">18,900&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
current liabilities</b></font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">688,456&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>COMMITMENTS AND CONTINGENCIES</b></font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>STOCKHOLDERS' (DEFICIT)</b></font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, $10
par value; 56,075 shares authorized;</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;32,450
shares issued and outstanding</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">324,500&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock, $.001 par
value; 50,000,000 shares authorized;</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16,824,658
issued and outstanding</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">16,825&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in
capital</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
<p align="right">
<font size="2">5,922,349&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated
deficit</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2"> (6,951,507)</font></p>
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders'
(deficit)</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2"> (687,833)</font></p>
</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="17.333329" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="79.999980" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="494.666543" colspan="1" rowspan="1" >
<p>
<font size="2"><b>TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)</b></font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="79.999980" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">623&nbsp;</font></p>
</td>
</tr>
</table></div>
<p>
<p align="center">
<font size="2">The accompanying notes are an integral part of these condensed
consolidated financial statements.</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>3</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS</b></font><br><font size="2"><b>FOR THE THREE MONTHS ENDED JULY
31, 2006 AND 2005 (UNAUDITED)</b></font></p>
<div align="center" style="position:relative; left: -1"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="86.666645" colspan="2" rowspan="1" >
<p align="center">
<font size="2"><b><u>2006</u></b></font></p align="center">
</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="93.333310" colspan="2" rowspan="1" >
<p align="center">
<font size="2"><b><u>2005</u></b></font></p align="center">
</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b> </b></font></p>
</td>
<td width="86.666645" colspan="2" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="93.333310" colspan="2" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" >
<p>
<font size="2"><b>OPERATING REVENUE</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="74.666648" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="75.999981" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
operating revenue</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>COSTS AND OPERATING EXPENSES </b></font></p>
</td>
<td width="86.666645" colspan="2" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="93.333310" colspan="2" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and
administrative</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">17,320&nbsp;</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">69,999&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
costs and operating expenses</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">17,320&nbsp;</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">69,999&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" >
<p>
<font size="2"><b>LOSS BEFORE OTHER (EXPENSE)</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(17,320)</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(69,999)</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" >
<p>
<font size="2"><b>DISCONTINUED OPERATIONS</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from discontinued
operations (net of taxes)</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">(23,331)</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of
assets</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(142,520)</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
discontinued operations</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(165,851)</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" >
<p>
<font size="2"><b>NET (LOSS) BEFORE PROVISION FOR INCOME TAXES</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" >
<p align="right">
<font size="2">(17,320)</font></p align="right">
</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" >
<p align="right">
<font size="2">(235,850)</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for income
taxes</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>NET LOSS APPLICABLE TO COMMON STOCKHOLDERS</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="74.666648" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2"> (17,320)</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="75.999981" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2"> (235,850)</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>BASIC AND DILUTED LOSS PER COMMON SHARE</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="74.666648" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2"> (0.00)</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="75.999981" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2"> (0.01)</font></p>
</td>
</tr>
<tr valign="top">
<td width="621.333178" colspan="6" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="423.999894" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING </b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="74.666648" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2">16,824,658&nbsp;</font></p>
</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="15.999996" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="75.999981" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2">16,824,658&nbsp;</font></p>
</td>
</tr>
</table></div>
<p>
<p align="center">
<font size="2">The accompanying notes are an integral part of these condensed
consolidated financial statements.</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>4</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS</b></font><br><font size="2"><b>FOR THE THREE MONTHS ENDED JULY
31, 2006 AND 2005 (UNAUDITED)</b></font></p>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="center" style="border-bottom:solid windowtext .5pt">
<font size="2"><b>2006</b></font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="center" style="border-bottom:solid windowtext .5pt">
<font size="2"><b>2005</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>CASH FLOW FROM OPERATING ACTIVITIES</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>Continuing Operations:</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="509.333206" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net loss</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2"> (17,320)</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(69,999)</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to
reconcile net loss to net cash </b></font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;provided
by (used in) operating activities</b>:</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets
and liabilities</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease
in accounts receivable</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease
in other current assets</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease
in other assets</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
payable</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right">
<font size="2"> (1,497)</font></p align="right">
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right">
<font size="2">17,147&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
accrued expenses</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">19,774&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
adjustments</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2"> (1,497)</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">36,921&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash (used in)
operating activities operations</b></font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2"> (18,817)</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(33,078)</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>Discontinued Operations:</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss from discontinued
operations</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(165,851)</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to
reconcile net loss to net cash </b></font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;provided
by operating activities:</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss
on disposal of assets</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right">
<font size="2">142,520&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in assets
and liabilities</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">18,459&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deposits</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">11,052&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
adjustments</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">172,031&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash provided by operating activities - discontinued operations</b></font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">6,180&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash (used in) operating activities -</b></font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;continuing
and discontinued operations</b></font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(18,817)</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">(26,898)</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>CASH FLOWS FROM INVESTING ACTIVITIES</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>Continuing Operations:</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from officer
loans payable</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right">
<font size="2">18,900&nbsp;</font></p align="right">
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>Discontinued Operations:</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of
assets</font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">10,000&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
cash provided by investing activities</b></font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">18,900&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">10,000&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>NET INCREASE (DECREASE) IN</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" >
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CASH AND CASH
EQUIVALENTS</b></font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right">
<font size="2">83&nbsp;</font></p align="right">
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" >
<p align="right">
<font size="2">(16,898)</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
<p>
<font size="2"><b>CASH AND CASH EQUIVALENTS -</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="521.333203" colspan="2" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BEGINNING OF
PERIOD</b></font></p>
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">540&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
&nbsp;</td>
<td width="66.666650" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">84,513&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="5" rowspan="1" >
&nbsp;</td>
</tr>
</table></div>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="509.333206" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>CASH AND CASH EQUIVALENTS - END OF PERIOD</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2">623&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="65.333317" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2">67,615&nbsp;</font></p>
</td>
</tr>
</table></div>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="695.999826" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2"><b>SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="695.999826" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid during the
period for:</font></p>
</td>
</tr>
</table></div>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="509.333206" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
paid</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="70.666649" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="65.333317" colspan="1" rowspan="1" bgcolor=#FFF3CE>
<p align="right" style="border-bottom:double">
<font size="2">-&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="509.333206" colspan="1" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
taxes paid</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="70.666649" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="65.333317" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">-&nbsp;</font></p>
</td>
</tr>
</table></div>
<p align="center">
<p align="center">
<font size="2">The accompanying notes are an integral part of these condensed
consolidated financial statements.</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>5</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS </b></font><br><font size="2"><b>JULY 31, 2006 AND 2005
(UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 1-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>ORGANIZATION AND BASIS
OF PRESENTATION</u></b></font></p>
<p style="margin-left:80">Champions Sports, Inc., (the "Company") a Delaware
corporation, promoted a sport theme restaurant bar concept through Company owned
and licensed operations. The Company sold the rights to the Champions brand to
Marriott International, Inc. (Marriott) and became a licensee of Champions
Sports Bar Restaurants. Substantially all memorabilia sales are to Marriott. On
June 23, 2005, the Company ceased operations for its' only sports bar located in
San Antonio, Texas.  Fixed assets with a net book value of $152,520 were sold
for $10,000 and inventory consisting of primarily restaurant food and beverage
was sold for $3,200.</p><p>
</p>
<p style="margin-left:80">The condensed consolidated unaudited interim financial
statements included herein have been prepared, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. The condensed
consolidated financial statements and notes are presented as permitted on Form
10-QSB and do not contain information included in the Company's annual
consolidated statements and notes. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. The results for the three months ended July 31, 2006
may not be indicative of the results for the entire year.</p><p>
</p>
<p style="margin-left:80">These statements reflect all adjustments, consisting
of normal recurring adjustments, which in the opinion of management, are
necessary for fair presentation of the information contained herein.</p><p>
</p>
<p style="margin-left:80">The Company has reclassified its financial statements
to take effect for the disposal of its only operating business.</p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>6</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 2-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</u></b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Principles
of Consolidation</u></b></font></p>
<p style="margin-left:80">The condensed consolidated financial statements
include the accounts of the Company and its subsidiaries. All material
intercompany transactions have been eliminated in consolidation. </p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Property
and Equipment</u></b></font></p>
<p style="margin-left:80">Property and equipment are stated at cost.
Depreciation and amortization is computed from the date property is placed in
service using the straight-line method over estimated useful lives as
follows:</p><p>
</p>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="295.999926" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="199.999950" colspan="1" rowspan="1" >
<p align="center" style="border-bottom:solid windowtext .5pt">
<font size="2">Life</font></p>
</td>
</tr>
<tr valign="top">
<td width="295.999926" colspan="1" rowspan="1" >
<p>
<font size="2">Furniture and equipment</font></p>
</td>
<td width="199.999950" colspan="1" rowspan="1" >
<p align="center">
<font size="2">5-15 years</font></p align="center">
</td>
</tr>
<tr valign="top">
<td width="497.333209" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="295.999926" colspan="1" rowspan="1" >
<p>
<font size="2">Leasehold improvements</font></p>
</td>
<td width="199.999950" colspan="1" rowspan="1" >
<p align="center">
<font size="2">Remaining term of the lease</font></p align="center">
</td>
</tr>
<tr valign="top">
<td width="497.333209" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
</table></div>
<p>
</p>
<p style="margin-left:80">Depreciation and amortization expense was $0 for the
three months ended July 31, 2006 and 2005, respectively. </p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Use
of Estimates</u></b></font></p>
<p style="margin-left:80">The preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United States
of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period.  Actual
results could differ from those estimates. </p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>7</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 2-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</u> (CONTINUED)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Net
(Loss) Per Share</u></b></font></p>
<p style="margin-left:80">Historical net (loss) per common share is computed
using the weighted average number of common shares outstanding. Diluted earnings
per share (EPS) includes additional dilution from common stock equivalents, such
as stock issuable pursuant to the exercise of stock options and warrants. Common
stock equivalents were not included in the computation diluted earnings per
share when the Company reported a loss because to do so would be antidilutive
for periods presented.</p><p>
</p>
<p style="margin-left:80">The following is a reconciliation of the computation
for basic and diluted EPS:</p><p>
</p>
<div align="center" style="position:relative; left: -5"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="77.333314" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="41.333323" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="97.333309" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><b>July 31,</b></font></p align="center">
</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="47.999988" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="95.999976" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><b>July 31,</b></font></p align="center">
</td>
</tr>
<tr valign="top">
<td width="77.333314" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="41.333323" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="97.333309" colspan="1" rowspan="1" >
<p align="center" style="border-bottom:solid windowtext .5pt">
<font size="2"><b>2006</b></font></p>
</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="47.999988" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="95.999976" colspan="1" rowspan="1" >
<p align="center" style="border-bottom:solid windowtext .5pt">
<font size="2"><b>2005</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="77.333314" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
&nbsp;</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="77.333314" colspan="1" rowspan="1" >
<p>
<font size="2">Net loss</font></p>
</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="41.333323" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="97.333309" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2"> (17,320)</font></p>
</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="47.999988" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="95.999976" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">  (235,850)</font></p>
</td>
</tr>
<tr valign="top">
<td width="77.333314" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
&nbsp;</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="221.333278" colspan="3" rowspan="1" >
<p>
<font size="2">Weighted-average common shares</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
&nbsp;</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="149.333296" colspan="2" rowspan="1" >
<p>
<font size="2">Outstanding (Basic)</font></p>
</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
<p align="right">
<font size="2">16,824,658&nbsp;</font></p align="right">
</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
<p align="right">
<font size="2">16,824,658&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="77.333314" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
&nbsp;</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="221.333278" colspan="3" rowspan="1" >
<p>
<font size="2">Weighted-average common stock</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
&nbsp;</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="77.333314" colspan="1" rowspan="1" >
<p>
<font size="2">Equivalents</font></p>
</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
&nbsp;</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="149.333296" colspan="2" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock
options</font></p>
</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
<p align="right">
<font size="2">-&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="149.333296" colspan="2" rowspan="1" >
<p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warrants</font></p>
</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="41.333323" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="97.333309" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="47.999988" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="95.999976" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">-&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="77.333314" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
&nbsp;</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="221.333278" colspan="3" rowspan="1" >
<p>
<font size="2">Weighted-average common shares</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="139.999965" colspan="2" rowspan="1" >
&nbsp;</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="143.999964" colspan="2" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="149.333296" colspan="2" rowspan="1" >
<p>
<font size="2">Outstanding (Diluted)</font></p>
</td>
<td width="71.999982" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="43.999989" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="41.333323" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="97.333309" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">16,824,658&nbsp;</font></p>
</td>
<td width="21.333328" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="47.999988" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="95.999976" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="2">16,824,658&nbsp;</font></p>
</td>
</tr>
</table></div>
<p>
</p>
<p style="margin-left:80">Options and warrants outstanding to purchase stock
were not included in the computation of  diluted EPS for July 31, 2006 and 2005
because inclusion would have been antidilutive.  </p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Cash
and Cash Equivalents</u></b></font></p>
<p style="margin-left:80">For purposes of the condensed consolidated statements
of cash flow, the Company considers all highly liquid debt instruments purchased
with a maturity of three months or less, unless restricted as to use, to be cash
equivalents. At various times throughout  the periods the Company had amounts on
deposit at financial institutions in excess of  federally insured limits.</p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>8</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
</p>
&nbsp;	<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 2-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</u> (CONTINUED)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Income
Taxes</u></b></font></p>
<p style="margin-left:80">The Company has adopted the provisions of Statement of
Financial Accounting Standards No. 109 (the Statement), Accounting for Income
Taxes. The Statement requires an asset and liability approach for financial
accounting and reporting for income taxes, and the recognition of deferred tax
assets and liabilities for the temporary differences between the financial
reporting bases and tax bases of the Company's assets and liabilities at enacted
tax rates expected to be in effect when such amounts are realized or
settled.</p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Fair
Value of Financial Instruments</u></b></font></p>
<p style="margin-left:80">The carrying amounts of the Company's financial
instruments, including cash and cash equivalents, accounts payable, and accrued
expenses, officer loans payable approximate fair values because of the short
maturities of these instruments.</p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Options
for Common Stock</u></b></font></p>
<p style="margin-left:80">The Company uses the intrinsic value method to account
for options granted to executive officers, directors and other key employees for
the purchase of common stock. No compensation expense is recognized on the grant
date, since at that date, the option price equals or is higher than the market
price of the underlying common stock. The Company discloses the pro forma effect
of accounting for stock options under the fair value method. The Company uses
the fair value method to account for options granted to advisors for the
purchase of common stock.</p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Stock-Based
Compensation</u></b></font></p>
<p style="margin-left:80">Employee stock awards under the Company's compensation
plans are accounted for in accordance with Accounting Principles Board Opinion
No. 25 ("APB 25"), "Accounting for Stock Issued to Employees", and related
interpretations.  The Company provides the disclosure requirements of Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123"), and related interpretations.  Stock-based awards to
non-employees are accounted for under the provisions of FAS 123 and has adopted
the enhanced disclosure provisions of FAS No. 148 "Accounting for Stock-Based
Compensation- Transition and Disclosure, an amendment of FAS No. 123".</p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>9</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 2-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</u> (CONTINUED)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Stock-Based
Compensation</u> (Continued)</b></font></p>
<p style="margin-left:80">The Company measures compensation expense for its
employee stock-based compensation using the intrinsic-value method. Under the
intrinsic-value method of accounting for stock-based compensation, when the
exercise price of options granted to employees is less than the estimated fair
value of the underlying stock on the date of grant, deferred compensation is
recognized and is amortized to compensation expense over the applicable vesting
period. In each of the periods presented, the vesting period was the period in
which the options were granted. </p><p>
</p>
<p style="margin-left:80">The Company measures compensation expense for its
non-employee stock-based compensation under the Financial Accounting Standards
Board (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18, "Accounting for
Equity Instruments that are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services". The fair value of the option
issued is used to measure the transaction, as this is more reliable than the
fair value of the services received. The fair value is measured at the value of
the Company's common stock on the date that the commitment for performance by
the counterparty has been reached or the counterparty's performance is complete.
The fair value of the equity instrument is charged directly to compensation
expense and additional paid-in capital.</p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Recent
Accounting Pronouncements</u></b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Share
Based Payments</u></b></font></p>
<p style="margin-left:80">In December 2004, the FASB issued Financial Accounting
Standards No. 123 (revised 2004) (FAS 123R), "Share-Based Payment, " FAS 123R
replaces FAS No. 123, "Accounting for Stock-Based Compenasation", and supersedes
APB Opinion No. 25, "Accounting for Stock Issued to Employees."  FAS 123R
requires compensation expense, measured as the fair value at the grant date,
related to share-based payment transactions to be recognized in the financial
statements over the period that an employee provides service in exchange for the
award.  The Company intends to adopt FAS 123R using the "modified prospective"
transition method as defined in FAS 123R.  Under the modified prospective
method, companies are required to 1) record compensation cost prospectively for
the unvested portion, as of the date of adoption, of previously issued and
outstanding awards over the remaining vesting period of such awards.  FAS 123R
is effective January 1, 2006. The implementation of this standard did not have a
material impact on its financial position, results of operations or cash
flows.</p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>10</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 2-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</u> (CONTINUED)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Recent
Accounting Pronouncements</u> (Continued)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Inventory
Costs</u></b></font></p>
<p style="margin-left:80">In November 2004, the FASB issued Financial Accounting
Standards No. 151 (FAS 151), "Inventory Costs - an amendment of ARB No. 43,
Chapter 4".  FAS 151 clarifies the accounting for abnormal amounts of idle
facility expense, freight, handling costs and spoilage.  In addition, FAS 151
requires companies to base the allocation of fixed production overhead to the
costs of conversion on the normal capacity of production facilities.  FAS 151 is
effective for the Company in 2006.  The implementation of this standard did not
have a material impact on its financial position, results of operations or cash
flows.</p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Exchange
of Non-Monetary Assets</u></b></font></p>
<p style="margin-left:80">On December 16, 2004, FASB issued Statement of
Financial Accounting Standards No. 153, "Exchanges of Non-monetary Assets, an
amendment of APB Opinion No. 29, Accounting for Non-monetary Transactions" ("FAS
153").  This statement amends APB Opinion 29 to eliminate the exception for
non-monetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of non-monetary assets that do not have
commercial substance.  Under FAS 153, if a non-monetary exchange of similar
productive assets meets a commercial-substance criterion and fair value is
determinable, the transaction must be accounted for at fair value resulting in
recognition of any gain or loss.  FAS 153 is effective for non-monetary
transactions in fiscal periods that begin after June 15, 2005.  The
implementation of this standard did not have a material impact on its financial
position, results of operations or cash
flows.</p>&nbsp;	<div align="center" color="#000080" style="position:relative; left: -5"><b>11</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div>&nbsp;	<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 2-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</u> (CONTINUED)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Recent
Accounting Pronouncements</u> (Continued)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Accounting
Changes and Error Corrections</u></b></font></p>
<p style="margin-left:80">In May&nbsp;2005, the FASB issued FAS No.&nbsp;154,
"Accounting Changes and Error Corrections." FAS No.&nbsp;154 replaces Accounting
Principles Board ("APB") Opinion No.&nbsp;20, "Accounting Changes" and FAS
No.&nbsp;3, "Reporting Accounting Changes in Interim Financial Statements." SFAS
No.&nbsp;154 requires retrospective application to prior periods' financial
statements of a voluntary change in accounting principle unless it is
impracticable. APB No.&nbsp;20 previously required that most voluntary changes
in accounting principle be recognized by including the cumulative effect of
changing to the new accounting principle in net income in the period of the
change. FAS No.&nbsp;154 is effective for accounting changes and corrections of
errors made in fiscal years beginning after December&nbsp;15, 2005. The
implementation of this standard did not have a material impact on its financial
position, results of operations or cash flows.</p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Accounting
for Certain Hybrid Financial Instruments</u></b></font></p>
<p style="margin-left:80">In February&nbsp;2006, the ASB issued FAS
No.&nbsp;155, "Accounting for Certain Hybrid Financial Instruments, an amendment
of FASB Statements No.&nbsp;133 and 140." FAS No.&nbsp;155 resolves issues
addressed in FAS No.&nbsp;133 Implementation Issue No.&nbsp;D1, "Application of
Statement 133 to Beneficial Interests in Securitized Financial Assets," and
permits fair value remeasurement for any hybrid financial instrument that
contains an embedded derivative that otherwise would require bifurcation,
clarifies which interest-only strips and principal-only strips are not subject
to the requirements of FAS No.&nbsp;133, establishes a requirement to evaluate
interests in securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial instruments that contain
an embedded derivative requiring bifurcation, clarifies that concentrations of
credit risk in the form of subordination are not embedded derivatives and amends
FAS No.&nbsp;140 to eliminate the prohibition on a qualifying special-purpose
entity from holding a derivative financial instrument that pertains to a
beneficial interest other than another derivative financial instrument. FAS
No.&nbsp;155 is effective for all financial instruments acquired or issued after
the beginning of the first fiscal year that begins after September&nbsp;15,
2006. The Company is currently evaluating the effect the adoption of FAS
No.&nbsp;155 will have on its financial position or results of operations.
</p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>12</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div>&nbsp;	<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 2-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES</u> (CONTINUED)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Recent
Accounting Pronouncements</u> (Continued)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Accounting
for Servicing of Financial Assets</u></b></font></p>
<p style="margin-left:80">In March&nbsp;2006, the FASB issued FAS No.&nbsp;156,
"Accounting for Servicing of Financial Assets, an amendment of FASB Statement
No.&nbsp;140." FAS No.&nbsp;156 requires an entity to recognize a servicing
asset or liability each time it undertakes an obligation to service a financial
asset by entering into a servicing contract under a transfer of the servicer's
financial assets that meets the requirements for sale accounting, a transfer of
the servicer's financial assets to a qualified special-purpose entity in a
guaranteed mortgage securitization in which the transferor retains all of the
resulting securities and classifies them as either available-for-sale or trading
securities in accordance with FAS No.&nbsp;115, "Accounting for Certain
Investments in Debt and Equity Securities" and an acquisition or assumption of
an obligation to service a financial asset that does not relate to financial
assets of the servicer or its consolidated affiliates. </p><p>
</p>
<p style="margin-left:80">Additionally, FAS No.&nbsp;156 requires all separately
recognized servicing assets and servicing liabilities to be initially measured
at fair value, permits an entity to choose either the use of an amortization or
fair value method for subsequent measurements, permits at initial adoption a
one-time reclassification of available-for-sale securities to trading securities
by entities with recognized servicing rights and requires separate presentation
of servicing assets and liabilities subsequently measured at fair value and
additional disclosures for all separately recognized servicing assets and
liabilities. FAS No.&nbsp;156 is effective for transactions entered into after
the beginning of the first fiscal year that begins after September&nbsp;15,
2006. The Company is currently evaluating the effect the adoption of FAS
No.&nbsp;156 will have on its financial position or results of operations.
</p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Reclassifications</u></b></font></p>
<p style="margin-left:80">The loss from discontinued operations for the three
months ended July 31, 2005 was reclassified to reflect the sale of the Company's
only operating business activity in the condensed consolidated statements of
operations in accordance with the provisions of FAS 144. The reclassification
had no effect on net loss for the three-month period ended July 31,2005. The
reclassifications had no effect on net loss for the three months ended July 31,
2006. </p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>13</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div>&nbsp;	<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 3-</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><u>COMMITMENTS AND
CONTINGENCIES</u></b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Operating
leases</u></b></font></p>
<p style="margin-left:80">The Company leased, as tenant, restaurant space under
an operating lease, which expired June 30, 2005 and was not renewed. The lease
escalated for increases in the landlord's expenses for increases in the Consumer
Price Index, and required additional rentals based on a percentage of restaurant
sales over a defined amount. The lease granted the Company certain concessions,
which were amortized to lease expense over the term of the lease.</p><p>
</p>
<p style="margin-left:80">Rental expense during the three months ended July 31,
2006 and 2005 was $105 and $43,132, respectively.</p><p>
<p>
<font size="2"><b>NOTE 4-</b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><u>MARRIOTT
LICENSE</u></b></font></p>
<p style="margin-left:80">The Company was an exclusive supplier of sports
memorabilia and a consultant to all new Champions Sports Bars located in
Marriott and Renaissance Hotels worldwide.  This agreement was terminated by
Marriott effective May 28, 2005. </p><p>
<p>
<font size="2"><b>NOTE 5-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>OTHER ACCRUED
EXPENSES</u></b></font></p>
<p style="margin-left:80">This account represents accrued officer's payroll and
related payroll taxes. </p><p>
<p>
<font size="2"><b>NOTE 6- &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>OFFICER LOANS
PAYABLE</u></b></font></p>
<p style="margin-left:80">For the quarter ended July 2006, the Company received
working capital advances from an officer of the Company which are due on demand
without interest.  </p><p>
<p>
<font size="2"><b>NOTE 7-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>STOCKHOLDERS'
DEFICIT</u> </b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Common
Stock </u></b></font></p>
<p style="margin-left:80">The Company has 50,000,000 shares authorized and
16,824,658 shares issued and outstanding at July 31, 2005.</p><p>
</p>
<p style="margin-left:80">There were no issuances of common stock during the
three months ended July 31, 2006 and 2005, respectively.</p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>14</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div>&nbsp;	<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 7-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>STOCKHOLDERS'
DEFICIT</u> (CONTINUED)</b></font><p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Preferred
Stock </u></b></font></p>
<p style="margin-left:80">The Company has 56,075 shares of preferred stock
authorized and 32,450 shares issued and outstanding at July 31, 2006. </p><p>
</p>
<p style="margin-left:80">There were no issuances of preferred stock during the
three months ended July 31, 2006 and 2005, respectively.</p><p>
</p>
<p style="margin-left:80">The Series A preferred stock required a dividend of 12
percent per annum, and the dividends were accrued on the Company's book if not
paid. The dividend was paid in common stock of the Company at the Company's
discretion. The number of shares comprising the dividend was paid in common
stock and determined by dividing $1.20 by the closing bid price for the common
stock on the payment date. The Series A preferred stock is preferred in
liquidation or dissolution up to the amount of their par value ($10 per share).
The Series A preferred stock in 2004 converted into 15 shares of the Company's
common stock. There were no conversions in 2006 and 2005.</p><p>
</p>
<p style="margin-left:80">For each of the nine fiscal years ended April 30,
2004, the Company deferred payment of the annual dividend on the Series A
preferred stock. For the quarters ended January 31, 2006 and 2005, the deferral
was $0, respectively. Preferred stock dividends in arrears at July 31, 2005
aggregated $350,460 ($10.83 per preferred share). Effective November 2003,
pursuant to a board resolution, the Company cancelled its payment and/or
accruing of preferred stock dividends.  </p><p>
<p>
<font size="2"><b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>Common
Stock Options </u></b></font></p>
<p style="margin-left:80">The Company in 1993 adopted a stock option plan, which
expired on August 2, 2002. No options were exercised under the plan. All options
granted by the Company were granted pursuant to board resolutions and not under
the stock option plan. </p><p>
<p>
<font size="2"><b>NOTE 8-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>GOING
CONCERN</u></b></font></p>
<p style="margin-left:80">As shown in the accompanying condensed consolidated
financial statements, the Company has sustained net operating losses for the
years ended April 30, 2006 and 2005 and for the three months ended July 31, 2006
and has sustained large accumulated deficits that raise substantial doubt about
its ability to continue as a going concern. In addition, the Company is in
search of acquiring a business, or finding a suitable merger candidate. </p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>15</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
</p>
&nbsp;	<p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 8-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>GOING CONCERN</u>
(CONTINUED)</b></font></p>
<p style="margin-left:80">Management has restructured the Company and is
continuing to search for a more profitable company to acquire. </p><p>
</p>
<p style="margin-left:80">The Company's future success is dependent upon its
ability to achieve profitable operations and generate cash from operating
activities, and upon additional financing. There is no guarantee that the
Company will be able to raise enough capital or generate revenues to sustain its
operations. The condensed consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.</p><p>
<p>
<font size="2"><b>NOTE 9-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>PROVISION FOR INCOME
TAXES</u></b></font></p>
<p style="margin-left:80">Deferred income taxes will be determined using the
liability method for the temporary differences between the financial reporting
basis 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 in effect
when the temporary differences are included in the Company's consolidated tax
return. Deferred tax assets and liabilities are recognized based on anticipated
future tax consequences attributable to differences between financial statement
carrying amounts of assets and liabilities and their respective tax
bases.</p><p>
</p>
<p style="margin-left:80">At July 31, 2006 and 2005, deferred tax assets consist
of the following: </p><p>
</p>
<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="185.333287" colspan="1" rowspan="1" >
<p>
<font size="2"> </font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><u>2006</u></font></p align="center">
</td>
<td width="23.999994" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="69.333316" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><u>2005</u></font></p align="center">
</td>
</tr>
<tr valign="top">
<td width="185.333287" colspan="1" rowspan="1" >
<p>
<font size="2">Deferred tax asset</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="71.999982" colspan="1" rowspan="1" >
<p align="right">
<font size="2">2,433,027&nbsp;</font></p align="right">
</td>
<td width="23.999994" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="69.333316" colspan="1" rowspan="1" >
<p align="right">
<font size="2">2,403,212&nbsp;</font></p align="right">
</td>
</tr>
<tr valign="top">
<td width="185.333287" colspan="1" rowspan="1" >
<p>
<font size="2">Less:  valuation allowance</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="71.999982" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="3">(2,433,027)</font></p>
</td>
<td width="23.999994" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="69.333316" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:solid windowtext .5pt">
<font size="3">(2,403,212)</font></p>
</td>
</tr>
<tr valign="top">
<td width="185.333287" colspan="1" rowspan="1" >
<p>
<font size="2">Net deferred tax asset</font></p>
</td>
<td width="17.333329" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="71.999982" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="3">-0-&nbsp;</font></p>
</td>
<td width="23.999994" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="69.333316" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="3">-0-&nbsp;</font></p>
</td>
</tr>
</table></div>
<p>
</p>
<p style="margin-left:80">At July 31, 2006 and 2005, the Company had federal net
operating loss carryforwards in the approximate amounts of $6,951,507 and
$6,866,319 available to offset future taxable income. The Company established
valuation allowances equal to the full amount of the deferred tax assets due to
the uncertainty of the utilization of the operating losses in future
periods</p><p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>16</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p align="center">
<font size="2"><b>CHAMPIONS SPORTS, INC. AND
SUBSIDIARIES</b></font><br><font size="2"><b>NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (CONTINUED)</b></font><br><font size="2"><b>JULY 31, 2006
AND 2005 (UNAUDITED)</b></font><p>
<font size="2"><b>NOTE 10- &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u>DISPOSAL OF
BUSINESS</u></b></font></p>
<p style="margin-left:80">On June 23, 2005, the Company ceased operations for
its' only sports bar located in San Antonio, Texas.  Fixed assets with a net
book value of $152,520 were sold for $10,000 and inventory consisting of
primarily restaurant food and beverage was sold for $3,200.  The Company's
condensed consolidated financial statements have been reclassified to reflect
this sale as discontinued operations, for all periods presented. Summarized
operating results of discontinued operations are as follows
</p>&nbsp;	<div align="center" style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="389.333236" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="29.333326" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="81.333313" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><b>July 31,</b></font></p align="center">
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="77.333314" colspan="1" rowspan="1" >
<p align="center">
<font size="2"><b>July 31,</b></font></p align="center">
</td>
</tr>
<tr valign="top">
<td width="389.333236" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="29.333326" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="81.333313" colspan="1" rowspan="1" >
<p align="center" style="border-bottom:solid windowtext .5pt">
<font size="2"><b>2006</b></font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="77.333314" colspan="1" rowspan="1" >
<p align="center" style="border-bottom:solid windowtext .5pt">
<font size="3"><b>2005</b></font></p>
</td>
</tr>
<tr valign="top">
<td width="614.666513" colspan="5" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="389.333236" colspan="1" rowspan="1" >
<p>
<font size="2">Revenues  </font></p>
</td>
<td width="29.333326" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="81.333313" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">0&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="77.333314" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">273,622&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="389.333236" colspan="1" rowspan="1" >
<p>
<font size="2">Net loss before income taxes    </font></p>
</td>
<td width="29.333326" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="81.333313" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">0&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="77.333314" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2"> (235,850)&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="389.333236" colspan="1" rowspan="1" >
<p>
<font size="2">Provision for taxes</font></p>
</td>
<td width="29.333326" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="81.333313" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">-&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="77.333314" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">-&nbsp;</font></p>
</td>
</tr>
<tr valign="top">
<td width="389.333236" colspan="1" rowspan="1" >
<p>
<font size="2">Net loss  </font></p>
</td>
<td width="29.333326" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="81.333313" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2">0&nbsp;</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="77.333314" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2"> (235,850)</font></p>
</td>
</tr>
<tr valign="top">
<td width="389.333236" colspan="1" rowspan="1" >
<p>
<font size="2">Net loss per share</font></p>
</td>
<td width="29.333326" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="81.333313" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2"> (0.00)</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="77.333314" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2"> (0.01)</font></p>
</td>
</tr>
<tr valign="top">
<td width="389.333236" colspan="1" rowspan="1" >
<p>
<font size="2">Diluted loss per share</font></p>
</td>
<td width="29.333326" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="81.333313" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2"> (0.00)</font></p>
</td>
<td width="35.999991" colspan="1" rowspan="1" >
<p align="right">
<font size="2">$</font></p align="right">
</td>
<td width="77.333314" colspan="1" rowspan="1" >
<p align="right" style="border-bottom:double">
<font size="2"> (0.01)</font></p>
</td>
</tr>
</table></div>
<p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>17</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p>
<font size="2">Item 2.&nbsp;&nbsp;&nbsp;Managements Discussion and Analysis of
Financial Condition and Results of Operations.</font><p>
<font size="2">There is substantial doubt about the Company's ability to
continue as a going concern. The Company's independent auditor, for the year
ending April 30, 2006, has expressed substantial doubt that the Company can
continue as a going concern due to recurring losses and working capital shortage
and that there is no guarantee that the Company will be able to raise enough
capital or generate revenues to sustain its operations. The Company is
continuing to face severe liquidity and cash problems as of date of the filing
of this 10-QSB and has been meeting its working capital needs by receiving
advances from its executive officer, James Martell, in June and July, 2006. The
Company can give no assurance that these advances can continue.  It is the
intention of the Company to continue operations until such time as Champions
finds a new business opportunity, merges with another company or raises
additional financing, although there is no assurance that this can be done on
terms satisfactory to the Company. The Company is pursuing various business
opportunities in order to continue operations. If the Company's liquidity
situation does not improve, the Company might have to discontinue its business
as a going concern. </font><p>
<font size="2">The Company ceased its restaurant operations at San Antonio
Champions location on June 23, 2005. The lease on that location expired on June
30, 2005 and the Company vacated the premise on that date. The Company's
condensed consolidated financial statements have been reclassified to reflect
this cessation of business as discontinued operations for the comparative three
months period ending July 31, 2005.</font><p>
<font size="2">Through July 31, 2006 and currently, the business plan for the
Company is to actively pursue opportunities to initiate new ventures on its own
and also to pursue opportunities whereby the Company will primarily serve as a
vehicle for the acquisition of a target business that the Company believes will
have significant growth potential. The Company intends to use its  capital
stock,  to  effect a new  business or a business combination  with a private
company  that desires to establish a public  trading  market for its  securities
while  avoiding  what it may deem to be adverse  consequences  of  undertaking a
public offering itself, such as time delays, significant expense, loss of voting
control and other burdens including significant  professional fees. The business
combination may be with a financially stable, mature company or a company that
is financially unstable or in its early stages of development or
growth.</font><p>
<font size="2">Through July 31, 2006 and currently, the business plan for the
Company is to actively pursue opportunities whereby the Company will primarily
serve as a vehicle for the acquisition of a target business that the Company
believes will have significant growth potential. The Company intends to use its
capital stock, to effect a  business  combination  with a private company  that
desires to establish a public  trading  market for its  securities while
avoiding  what it may deem to be adverse  consequences  of  undertaking a public
offering itself, such as time delays, significant expense, loss of voting
control and other burdens including significant  professional fees. The business
combination may be with a financially stable, mature company or a company that
is financially unstable or in its early stages of development or
growth.</font><p>
<font size="2">In seeking to attain this business objective, the Company will
not restrict its search to any particular industry.  Rather,  the Company  may
investigate businesses  of  essentially  any kind or nature and  participate  in
any type of business  that may, in  management's  opinion,  meet the business
objectives as described in this document.  The Company emphasizes that the
description in this document of its business objectives is extremely general and
is not meant to restrict the discretion of management to search for and enter
into potential business opportunities.</font><p>
<font size="2">The  Company  has not chosen the  particular  business in which
the Company will engage in and has not  conducted  any market  studies  with
respect to any business  or industry to  evaluate  the  possible  merits or
risks of the target business or the particular industry in which the Company may
ultimately operate. To the extent  that the  Company  may enter into a business
combination  with a financially  unstable  company or an entity in its early
stage of development or growth, including entities without established records
of sales or earnings, The Company  will become  subject to numerous  risks
inherent in the  business  and operations of financially  unstable and early
stage or potential emerging growth companies.  </font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>18</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p>
<font size="2">In addition, to the extent that the Company may enter a business
combination with an entity in an industry characterized by a high level of risk,
the Company will become subject to the currently unascertainable risks of that
industry.  An extremely high level of risk frequently characterizes certain
industries that experience rapid growth. In addition,  although the Company will
endeavor  to evaluate  the risks  inherent  in a  particular  industry or target
business,  the Company  cannot give  assurance  that the Company  will  properly
ascertain or assess all significant risk factors.</font><p>
<font size="2">The Company  anticipates that target business candidates will be
brought to its attention from various  unaffiliated  sources,  including but not
restricted to, investment bankers, venture capitalists, securities
broker-dealers,  bankers and other  members of the  financial  community,  who
may present  solicited  or unsolicited proposals. Company's officers and
directors and their affiliates may also bring to the Company's attention target
business candidates.  While the Company does not  presently  anticipate
engaging  the services of  professional firms that  specialize  in  business
acquisitions  on any formal or basis,  the Company may engage such firms in the
future, in which event, the Company may pay a finder's fee or other
compensation  for such  introductions if they result in consummated
transactions.  These fees are customarily between 1% and 5% of the size of the
overall transaction, based upon a sliding scale of the amount
involved.</font><p>
<font size="2">The Company's management will have significant flexibility in
identifying and selecting a prospective target business.  In evaluating a
prospective target business, the management will consider, among other factors,
the following:</font><p>
<font size="2">- financial condition and results of operation of the
target;</font><p>
<font size="2">- growth  potential of the target and that of the industry in
which the target   operates;</font><p>
<font size="2">- experience and skill of the target's  management and
availability of additional personnel; o the capital requirements of the
target;</font><p>
<font size="2">- competitive  position of the target;</font><p>
<font size="2">- stage of development that the target's products,  processes or
services are at;</font><p>
<font size="2">- degree of current or  potential  market  acceptance  of the
target's products,  processes or services;</font><p>
<font size="2">- proprietary features and the degree of intellectual property or
other protection of the target's products, processes or services;</font><p>
<font size="2">- regulatory environment of the industry in which the target
operates;</font><p>
<font size="2">- prospective equity interest in, and opportunity for control of,
the target; and</font><p>
<font size="2">- costs associated with effecting the business
combination.</font><p>
<font size="2">These criteria are not intended to be exhaustive.  Any evaluation
relating to the merits of a particular business combination will be based, to
the extent relevant, on the above factors as well as other considerations deemed
relevant by management in connection with effecting a business combination
consistent with Company's business objective.</font><p>
<font size="2">In connection with Company's  evaluation of a prospective  target
business, the Company  anticipates  that it will  conduct due  diligence  review
that will encompass, among other things, meetings with incumbent management and
inspection of facilities,  as well as a review of financial or other
information that will be made available to the
Company.</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>19</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<font size="2">The Company will endeavor to structure a business combination so
as to achieve the most favorable tax treatment to the Company, the target
business and both of the companies' stockholders.  There can be no assurance,
however, that the Internal Revenue Service or appropriate state tax authority
will agree with the tax treatment of the business combination.</font><p>
<font size="2">Until the Company is presented with a specific  opportunity  for
a business combination, the Company is unable to ascertain with any degree of
certainty the time and  costs  required  to  select  and  evaluate  a target
business  and to structure  and  complete  the  business  combination.   Any
costs  incurred  in connection  with the  identification  and  evaluation  of a
prospective  target business with which a business  combination  is not
ultimately  completed  will result in a loss to the Company and will reduce the
amount of capital  otherwise available to complete a business
combination.</font><p>
<font size="2">Although the Company intends to carefully scrutinize the
management of a prospective target business before effecting a business
combination, the Company cannot give assurance that its assessment of the
target's management will prove to be correct, especially in light of the
possible inexperience of Company's management in evaluating certain types of
businesses.  In addition,  the Company cannot  give  assurance  that  the
target's  future  management  will  have the necessary  skills,  qualifications
or  abilities  to  manage a  public  company intending  to embark on a program
of  business  development.  Furthermore, the future role of Company's officers
and directors,  if any, in the target business cannot  presently be stated with
any certainty.  It is possible that one or more of the Company's officers and
directors will remain associated in some capacity with the Company following a
business combination and will devote their efforts to the affairs of the new
business combination.  Moreover, the Company cannot give assurance that its
officers and directors will have significant experience or knowledge relating to
the operations of the particular target business.</font><p>
<font size="2">The Company may seek to recruit additional managers to supplement
the incumbent management of the target business. The Company,  however,  cannot
give assurance  that it will be able to  recruit  additional  managers  who
have the requisite  skills,  knowledge or  experience  necessary to enhance the
incumbent management.</font><p>
<font size="2">The Company expects to encounter intense competition from other
entities having a similar business objective. Many of these entities, including
financial consulting companies and venture capital firms, have longer operating
histories and have   extensive   experience in   identifying   and effecting
business combinations, directly or through affiliates. Many of these competitors
possess significantly greater financial, technical and other resources.  The
Company cannot give assurance that it will be able to effectively compete with
these entities.  In the event the Company is unable to compete effectively with
these entities, the Company may be forced to evaluate less attractive prospects
for a business combination. If the Company is forced to evaluate these less
attractive prospects, the Company cannot give assurance that the stated business
objectives will be met.</font><p>
<font size="2"><u>Results of Operation</u></font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the three months
ended July 31, 2006, the Company's net loss was $17,320 and the net loss for the
three months ended July 31, 2005 was $235,850.  The Company's total assets for
the three months ended July 31, 2006 were $623.</font><p>
<font size="2"><u>Revenues</u></font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's total
operating revenues were $0.00 for the three months ended July 31, 2006 and $0.00
for the three-month period ended July 31, 2005.  The Company ceased operations
at San Antonio Champions restaurant location on June 23, 2005 after the lease on
that location expired. The Company's condensed consolidated financial statements
have been reclassified to reflect this cessation of business as discontinued
operations for the comparative three months period ending July 31,
2005.</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>20</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<font size="2"><u>Expenses</u></font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and
administrative expenses were $17,320 for the three months ended June 31, 2006
compared to $69,999 for the three months ended July 31, 2005, which reflected
the expenses of discontinuing the Champions restaurant operations. </font><p>
<font size="2"><u>Liquidity and Capital Resources</u></font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's cash
position as of July 31, 2006 was $623 compared to $540 on April 30, 2006. For
the three month period, the Company's continuing operations used $18,817 in
cash. The Company met its liquidity needs by receiving advances from its
executive officer, James Martell. </font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's working
capital was a negative $687,833 on July 31, 2006 and a negative $670,513 on
April 30, 2006.  The Company's working capital is very unfavorable when compared
to other public companies.</font><p>
<font size="2"><u>Other   </u></font><p>
<font size="2">Risk factors</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The risks and
uncertainties described below are not the only ones facing the Company.
Additional risks not presently known or that the Company currently considers
being insignificant may also impair the Company's business operations in the
future.  The Company's business, financial condition and plan of operations
could be materially adversely affected by any of the following risks.</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is
continuing to incur losses through July 31, 2006 and there is substantial doubt
about the Company's ability to continue as a going concern, which means that the
Company may not be able to continue operations unless it obtains additional
funding, finds a new business opportunity or merges with or is acquired by
another company.   The Company is actively   pursuing merger or acquisition
candidates and other financing possibilities to meet its liquidity needs.  There
is no assurance that the Company will be able to structure a merger or
acquisition, or raise additional financing to continue operations on terms
satisfactory to the Company.</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loss of the
services of the Company's  key employee,  James Martell,  the  Company's
Chairman,  President  and  CEO,  may  have a material adverse affect on the
Company's business, financial condition and its ability to find a new business
opportunity, obtain  additional  funding or structuring a merger or
acquisition.</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company may, in the
future, issue additional shares of the Company's common stock, which would
reduce shareholders' percent of ownership and may dilute their share value. The
Company's Articles of Incorporation authorize the issuance of 50,000,000 shares
of common stock, par value $.001 per share. As of September 8, 2006 the Company
had 16,824,658 shares of common stock issued and outstanding.  The future
issuance of all or part of the remaining authorized common stock may result in
substantial dilution in the percentage of the common stock held by the Company's
then existing shareholders.  The Company may value any common stock issued in
the future on an arbitrary basis. The issuance of common stock for future
services or acquisitions or other corporate actions may have the effect of
diluting the value of the shares held by the shareholders, and might have an
adverse effect on any trading market for the Company's common stock.</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's common
stock may be affected by sporadic or limited trading volume and may fluctuate
significantly.  Although the Company's  common stock has continually  been
trading  publicly  since 1985,  at times  actively,  it can be currently
considered  to be trading on a sporadic or limited  basis on the OTC  Bulletin
Board in comparison to the NASDAQ National Market, the American Stock Exchange,
New York Stock  Exchange and other national  securities  exchanges and there can
be no assurance that an active trading market for the common stock  will
develop.  As a result,  this could  adversely  affect the shareholders'  ability
to sell  their  common  stock  in  short  time periods, or possibly at all.
Therefore, the Company cannot assure that there will be liquidity in the common
stock.  The common stock has experienced, and is likely to experience in the
future, significant price and volume fluctuations, which could adversely affect
the market price of the common stock without regard to the Company's operating
performance.  In addition, the Company believes that factors such as quarterly
fluctuations in the Company's financial results and changes in the overall
economy or the condition of the financial markets could cause the price of the
common stock to fluctuate substantially.</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>21</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company's common
stock is deemed to be "penny stock," which may make it more difficult for
shareholders to resell their shares due to suitability requirements.  The common
stock is a penny stock. Penny stocks generally are equity securities with a
price of less than $5.00 per  share  other  than  securities  registered  on
certain  national securities  exchanges or quoted on the NASDAQ Stock  Market,
provided that current price and volume information with respect to transactions
in  such  securities  is  provided  by the  exchange  or  system.  The Company's
securities may be subject to "penny stock rules" that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established  customers and accredited investors  (generally  those
with  assets in excess of  $1,000,000  or annual  income  exceeding  $200,000
or $300,000  together  with their spouse).  For transactions covered by these
rules, the broker-dealer must make a special suitability determination for the
purchase of such securities and have received the purchaser's written consent to
the transaction prior to the purchase.  Additionally,  for any transaction
involving  a penny  stock,  unless  exempt,  the "penny  stock  rules" require
the  delivery,  prior  to the  transaction,  of a  disclosure schedule
prescribed  by the  Commission  relating  to the penny stock market. The
broker-dealer  also must disclose the commissions  payable to both  the
broker-dealer  and  the  registered  representative  and current  quotations for
the securities.  Finally, monthly statements must be sent disclosing recent
price information on the limited market in penny stocks.  Consequently,  the
"penny stock rules" may restrict the ability of  broker-dealers  to sell
Company's  securities and may have the  effect of  reducing  the level of
trading  activity  of the common stock in the secondary  market.  The foregoing
required penny stock restrictions will not apply to securities if such
securities maintain a market price of $5.00 or greater.  The Company can give no
assurance that the price of its securities will reach or maintain such a
level.</font><p align="center">
<font size="2"><b>SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS</b></font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This document contains
"forward-looking statements" (within the meaning of the Private Securities
Litigation Act of 1995) that inherently involve risk and uncertainties.  The
Company generally uses words such as "believe," "may," "could," "will,"
"intend,"  "expect,"  "anticipate,"  "plan," and similar expressions to identify
forward-looking statements.  One should not place undue reliance on these
forward-looking statements.  The Company's actual results could differ
materially from those anticipated in the forward-looking statements for many
unforeseen factors, which may include, but are not limited to, changes in
general economic conditions, the ongoing threat of terrorism, ability to have
access to financing sources on reasonable terms and other risks that are
described in this document. Although the Company believes the expectations
reflected in the forward-looking statements are reasonable, they relate only to
events as of the date on which the statements are made, and the Company's future
results, levels of activity, performance or achievements may not meet these
expectations.  The Company does not intend to update any of the forward-looking
statements after the date of this document to conform these statements to actual
results or to changes in the Company's expectations, except as required by
law.</font><p>
<font size="2">Item 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Controls and
Procedures</font><p>
<font size="2">The Company maintains a set of disclosure controls and procedures
designed to ensure that information required to be disclosed by the Company in
the reports filed under the Securities Exchange Act, is recorded, processed,
summarized and reported within the time periods specified by the SEC's rules and
forms. Disclosure controls are also designed with the objective of ensuring that
this information is accumulated and communicated to the Company's management,
including the Company's chief executive officer and chief financial officer, as
appropriate, to allow timely decisions regarding required
disclosure.</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>22</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p>
<font size="2">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 concluded that, the Company's disclosure controls and procedures are not
effective to ensure that information required to be included in the Company's
periodic SEC filings is recorded, processed, summarized, and reported within the
time periods specified in the SEC rules and forms.</font><p>
<font size="2">The Company's Board of Directors was advised by Bagell, Josephs,
Levine &amp; Company, L.L.C., the Company's independent registered public
accounting firm, that during their performance of audit procedures for FY 2006,
Bagell, Josephs &amp; Company, L.L.C. identified a material weakness as defined
in Public Company Accounting Oversight Board Standard No. 2 in the Company's
internal control over financial reporting.</font><p>
<font size="2">This deficiency consisted primarily of inadequate staffing and
supervision that could lead to the untimely identification and resolution of
accounting and disclosure matters and failure to perform timely and effective
reviews. However, the size of the Company prevents it from being able to employ
sufficient resources to enable the Company to have adequate segregation of
duties within its internal control system. Management is required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.</font><p>
<font size="2">Certifications  of the Chief Executive  Officer and Chief
Financial Officer regarding,  among other items,  disclosure  controls and
procedures are included immediately after the signature section of this Form
10-QSB.</font><p>
<font size="2"><b>Part II.&nbsp;&nbsp;&nbsp;Other Information</b></font><p>
<font size="2"><b>Item 4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Submission of Matters to
A Vote of Security Holders</b></font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</font><p>
<font size="2"><b>Item 6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits and Reports on
Form 8-K</b></font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</font></p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>23</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p align="center">
<font size="2">SIGNATURES</font><p>
<font size="2">Pursuant to the requirements of Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.</font></p>
<div style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="377.333239" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="251.999937" colspan="1" rowspan="1" >
<p>
<font size="2"><b>CHAMPIONS Sports, Inc.</b></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="641.333173" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="641.333173" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="377.333239" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="251.999937" colspan="1" rowspan="1" >
<p>
<font size="2"><u>/s/ James Martell</u></font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="377.333239" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="251.999937" colspan="1" rowspan="1" >
<p>
<font size="2">James Martell</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="377.333239" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="251.999937" colspan="1" rowspan="1" >
<p>
<font size="2">Chairman, President , CEO and CFO</font></p>
</td>
<td width="11.999997" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="641.333173" colspan="3" rowspan="1" >
<p>
<font size="2">Date: September 8, 2006</font></p>
</td>
</tr>
</table></div>
<p align="center">
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>24</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
<p align="center">
<font size="2">CERTIFICATION OF CHIEF EXECUTIVE OFFICER</font><p align="center">
<font size="2">Section 302 Certification</font><p>
<font size="2">I, JAMES MARTELL, certify that:</font><p>
<font size="2">(1) I have reviewed this quarterly report on Form 10Q-SB of
CHAMPIONS SPORTS, INC., a Delaware corporation (the "registrant");</font><p>
<font size="2">(2) Based on my  knowledge,  this  quarterly  report does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the  circumstances  under
which such statements were made, not  misleading  with respect to the period
covered by this quarterly report;</font><p>
<font size="2">(3) Based on my  knowledge,  the  financial  statements,  and
other  financial information  included in this quarterly  report,  fairly
present in all material respects the financial  condition,  results of
operations  and cash flows of the registrant as of, and for, the periods
presented in this quarterly report;</font><p>
<font size="2">(4) The  registrant's  other  certifying  officers  and I are
responsible  for establishing and maintaining  disclosure  controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such
disclosure controls and procedures to ensure that material information relating
to the registrant, including its consolidated     subsidiaries, is made known to
us by others within those entities, particularly during the period in which this
quarterly report is being      prepared;</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Evaluated the
effectiveness of the registrant's disclosure controls and  procedures  as of a
date  within 90 days prior to the  filing  date of this  quarterly report (the
"Evaluation Date"); and</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Presented  in  this
quarterly   report  our  conclusions   about  the effectiveness  of the
disclosure  controls  and  procedures  based  on our evaluation as of the
Evaluation Date;</font><p>
<font size="2">(5) The registrant's  other certifying  officers and I have
disclosed,  based on our most recent evaluation, to the registrant's auditors
and the audit committee of the  registrant's  board of directors (or persons
performing  the equivalent functions):</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all  significant
deficiencies  in the design or  operation of internal controls which could
adversely affect the registrant's ability to record,  process,  summarize and
report  financial data and have  identified for the registrant's auditors any
material weaknesses in internal controls; and</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any fraud,  whether
or not material,  that involves management or other employees who have a
significant  role  in  the  registrant's  internal controls; and</font><p>
<font size="2">(6) The registrant's  other  certifying  officers and I have
indicated in this quarterly report whether there were significant  changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent  evaluation,  including any
corrective  actions with regard to significant deficiencies and material
weaknesses.</font><p>
<font size="2">Date:  September 8, 2006</font></p align="right">
<div style="position:relative; left: 35"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="329.333251" colspan="1" rowspan="1" >
<p align="right">
<font size="2">By:&nbsp;</font></p align="right">
</td>
<td width="197.333284" colspan="1" rowspan="1" >
<p>
<font size="2"><u>/s/ James Martell</u></font></p>
</td>
<td width="61.333318" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="329.333251" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="197.333284" colspan="1" rowspan="1" >
<p>
<font size="2">James Martell</font></p>
</td>
<td width="61.333318" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="329.333251" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="197.333284" colspan="1" rowspan="1" >
<p>
<font size="2">Chief Executive Officer</font></p>
</td>
<td width="61.333318" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
</table></div>
<p align="center">
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>25</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p align="center">
<font size="2">CERTIFICATION OF CHIEF FINANCIAL OFFICER</font><p align="center">
<font size="2">Section 302 Certification</font><p>
<font size="2">I, James Martell, certify that:</font><p>
<font size="2"> (1) I have reviewed this quarterly report on Form 10Q-SB of
CHAMPIONS SPORTS, INC., a Delaware corporation (the "registrant");</font><p>
<font size="2">(2) Based on my knowledge, this  quarterly  report does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the  circumstances  under
which such statements were made, not  misleading  with respect to the period
covered by this quarterly report.</font><p>
<font size="2">(3) Based on my  knowledge,  the  financial  statements,  and
other  financial information  included in this quarterly  report,  fairly
present in all material respects the financial  condition,  results of
operations  and cash flows of the registrant as of, and for, the periods
presented in this quarterly report; </font><p>
<font size="2"> (4) The  registrant's  other  certifying  officers  and I are
responsible  for establishing and maintaining  disclosure  controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed  such
disclosure  controls  and  procedures  to ensure  that  material information
relating to the registrant, including its consolidated subsidiaries, is  made
known  to  us by  others  within  those  entities, particularly  during  the
period in which  this  quarterly  report is being     prepared;</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Evaluated the
effectiveness of the registrant's disclosure controls and procedures  as of a
date  within 90 days prior to the  filing  date of this quarterly report (the
"Evaluation Date"); and</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)  Presented  in
this  quarterly   report  our  conclusions   about  the effectiveness  of the
disclosure  controls  and  procedures  based  on our evaluation as of the
Evaluation Date;</font><p>
<font size="2">(5) The registrant's  other certifying  officers and I have
disclosed,  based on our most recent evaluation, to the registrant's auditors
and the audit committee of the  registrant's  board of directors (or persons
performing  the equivalent functions):</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) all  significant
deficiencies  in the design or  operation of internal controls which could
adversely affect the  registrant's  ability to record, process,  summarize and
report  financial data and have  identified for the registrant's auditors any
material weaknesses in internal controls; and</font><p>
<font size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any fraud,  whether
or not material,  that involves management or other employees who have a
significant  role  in  the  registrant's  internal controls; and</font><p>
<font size="2">(6) The  registrant's other  certifying  officers and I have
indicated in this quarterly report whether there were significant  changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective  actions with regard to significant deficiencies and material
weaknesses.</font><p>
<font size="2">Date:  September 8, 2006</font></p align="right">
<div style="position:relative; left: 35"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="371.999907" colspan="1" rowspan="1" >
<p align="right">
<font size="2">By:&nbsp;</font></p align="right">
</td>
<td width="185.333287" colspan="1" rowspan="1" >
<p>
<font size="2"><u>/s/ James Martell</u></font></p>
</td>
<td width="30.666659" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="371.999907" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="185.333287" colspan="1" rowspan="1" >
<p>
<font size="2">James Martell</font></p>
</td>
<td width="30.666659" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
<tr valign="top">
<td width="371.999907" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="185.333287" colspan="1" rowspan="1" >
<p>
<font size="2">Chief Financial Officer</font></p>
</td>
<td width="30.666659" colspan="1" rowspan="1" >
&nbsp;</td>
</tr>
</table></div>
<p align="center">
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>26</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p align="center">
<font size="2"><b>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED
PURSUANT TO</b></font><br><font size="2"><b>SECTION 906 OF THE SARBANES-OXLEY
ACT OF 2002</b></font><p>
<font size="2">In connection with the quarterly report of Champions Sports, Inc.
(the "Company") on Form 10-QSB for the three months ended July 31, 2006 as filed
with 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 to
Section 906 of the Sarbanes-Oxley Act of 2002, that to their
knowledge:</font><p>
<font size="2">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Report fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and </font><p>
<font size="2">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operation of the Company. </font></p>
<div style="position:relative; left: 0"><table border=0 cellpadding=0 cellspacing =0 >
<tr valign="top">
<td width="341.333248" colspan="1" rowspan="1" >
<p>
<font size="2">Dated September 8, 2006</font></p>
</td>
<td width="29.333326" colspan="1" rowspan="1" >
<p align="right">
<font size="2">By:&nbsp;</font></p align="right">
</td>
<td width="313.333255" colspan="1" rowspan="1" >
<p>
<font size="2"><u>/s/ James Martell</u></font></p>
</td>
</tr>
<tr valign="top">
<td width="341.333248" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="29.333326" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="313.333255" colspan="1" rowspan="1" >
<p>
<font size="2">James M. Martell, Chief Executive Officer and</font></p>
</td>
</tr>
<tr valign="top">
<td width="341.333248" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="29.333326" colspan="1" rowspan="1" >
&nbsp;</td>
<td width="313.333255" colspan="1" rowspan="1" >
<p>
<font size="2">Chief Financial Officer</font></p>
</td>
</tr>
<tr valign="top">
<td width="685.333162" colspan="3" rowspan="1" >
&nbsp;</td>
</tr>
</table></div>
<p>
</p align="center">
<div align="center" color="#000080" style="position:relative; left: -5"><b>27</b><hr size="3" color="#999999" STYLE="page-break-after: always"> &nbsp; </div><p>
</p>


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