U.S. Securities and Exchange Commission
                             Washington, D.C. 20549
                                   Form 10-QSB

(Mark One)
X    Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the quarterly  period ended September 30, 1999

____ Transition report pursuant to 13 or 15(d) of the Securities Exchange Act of
     1934 for the transition period from _____________ to _____________ .

Commission File No. 1-4385

                          DUNES HOTELS AND CASINOS INC.
           (Exact name of business issuer as specified in its charter)

             NEW YORK                                  11-1687244
(State or other jurisdiction or            I.R.S. Employer Identification No.
incorporation or organization)

       4600 Northgate Boulevard, Suite 130, Sacramento, California 95834
                    (Address of principal executive offices)

                                 (916) 929-2295
                          (Issuer's telephone number)

                                 NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since
last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  exchange  Act during the past 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 or the past 90 days.   Yes X    No

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable  date:  6,375,096 shares of common stock,
$.50 par value as of October 29, 1999.

Transitional Small Business Disclosure Format (check one):  Yes     No X

<PAGE>2


                          DUNES HOTELS AND CASINOS INC.

                         QUARTERLY REPORT ON FORM 10-QSB

                     FOR THE PERIOD ENDED SEPTEMBER 30, 1999

                                      INDEX

                                                                           Page
Part 1. Financial Information

     Item 1. Financial Statements

     Consolidated Condensed Balance Sheets                                 3
     September 30, 1999 and December 31, 1998

     Consolidated Condensed Statements of Operations                       5
     for the three months ended September 30, 1999
     and 1998

     Consolidated Condensed Statements of Operations                       6
     for the nine months ended September 30, 1999
     and 1998

     Consolidated Condensed Statements of Cash Flows                       7
     for the nine months ended September 30, 1999
     and 1998

     Notes to Consolidated Condensed Financial                             8
     Statement

     Item  2. Management's Discussion and Analysis of
     Financial Condition and Results of Operations                         11

Part II.  Other Information

     Item 1. Legal Proceedings                                             16
     Item 2. Changes in Securities                                         16
     Item 3. Defaults Upon Senior Securities                               16
     Item 4. Submission of Matters to a Vote of Security Holders           16
     Item 5. Other Information                                             16
     Item 6. Exhibits and Reports on Form 8-K                              16

     Signatures                                                            17


<PAGE>3

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                      CONSOLIDATED CONDENSED BALANCE SHEET

                    SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                             (Dollars in thousands)

                                     ASSETS

<TABLE>
<CAPTION>


                                                                        September        December
                                                                        30, 1999         31, 1998
                                                                      ------------      ----------
                                                                       (Unaudited)

<S>                                                                   <C>               <C>
Cash and cash equivalents                                             $      3,875      $    3,120

Marketable securities                                                          785             828

Receivables
    Trade                                                                       22               9
    Related party, less allowance of $1,899 in 1999 and 1998                    37              37
    Real estate sales                                                          426             369

Inventory of real estate held for sale                                       3,542           3,950

Prepaid expenses                                                               147             115

Property and equipment, less accumulated depreciation
    and amortization, 1999, $697; 1998, $598                                 3,147           3,228

Real estate investment                                                                         544

Other assets                                                                     3               3
                                                                      ------------      ----------
                                                                      $     11,984      $   12,203
                                                                      ============      ==========


</TABLE>


                                  (continued)



<PAGE>4

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                CONSOLIDATED CONDENSED BALANCE SHEET (CONTINUED)

                    SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                             (Dollars in thousands)

                      LIABILITIES AND SHAREHOLDERS' EQUITY



<TABLE>
<CAPTION>


                                                                        September        December
                                                                        30, 1999         31, 1998
                                                                      ------------      ----------
                                                                       (Unaudited)

<S>                                                                   <C>               <C>

Accounts payable                                                      $         39      $       25

Accrued expenses                                                               206             185

Due to former minority interest                                                320             320

Income taxes                                                                   307             307

Short-term debt                                                                                 49

Long-term debt and capital lease obligation                                  1,525           1,875

Accrued preferred stock dividends in arrears                                 1,299           1,245
                                                                      ------------      ----------
                                                                             3,696           4,006
                                                                      ------------      ----------

Shareholders' equity
    Preferred stock - authorized 10,750,000 shares ($.50 par);
        issued 10,512 shares Series B $7.50 cumulative preferred
        stock, outstanding 9,610 shares in 1999 and 1998, aggregate
        liquidation value $2,446 including dividends in arrears                  5               5

    Common stock - authorized 25,000,000 shares ($.50 par);
        issued 7,799,780 shares, outstanding 6,375,096 shares
        in 1999 and 1998                                                     3,900           3,900

    Capital in excess of par                                                25,881          25,881

    Deficit                                                                (19,498)        (19,589)
                                                                      ------------      ----------
                                                                            10,288          10,197
    Treasury stock at cost;  Preferred - Series B, 902 shares
        Common 1,424,684 shares in 1999 and 1998                            (2,000)         (2,000)
                                                                      ------------      ----------

        Total shareholders' equity                                           8,288           8,197
                                                                      ------------      ----------
                                                                      $     11,984      $   12,203
                                                                      ============      ==========

</TABLE>


The accompanying notes are an integral part of these condensed financial
statements.

<PAGE>5

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                 THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                    (Dollars in thousands, except per share)

                                    UNAUDITED


<TABLE>
<CAPTION>

                                                                          1999         1998
                                                                      ----------    ----------
<S>                                                                 <C>            <C>
Revenues
    Sales of real estate                                              $    1,208    $      128
    Rental income, agricultural properties                                    10            11
    Drying and storage revenues                                               54            58
                                                                      ----------    ----------
                                                                           1,272           197
                                                                      ----------    ----------
Cost and expenses
    Cost of real estate sold                                                 293           122
    Cost and expenses of rental income                                         1             1
    Cost of drying and storage revenues                                       75            71
    Selling, administrative and general
        Corporate                                                            162           158
        Real estate operations                                                75            67
    Loss on real estate investments                                                        100
    Depreciation                                                              33            33
                                                                      ----------    ----------
                                                                             639           552
                                                                      ----------    ----------

Gain/(loss) before other credits (charges) and income taxes                  633          (355)

Other credits (charges)
    Interest and dividend income                                              63            65
    Interest expense                                                         (42)          (55)
    Loss on marketable securities, net                                       (28)          (11)
    Other                                                                      4           (23)
                                                                      ----------    ----------
                                                                              (7)          (24)
                                                                      ----------    ----------

Gain/(loss) before income taxes                                              626          (379)

Income taxes                                                                                (9)
                                                                      ----------    ----------

Net gain/(loss)                                                       $      626    $     (388)
                                                                      ==========    ==========

Weighted average number of shares outstanding                          6,375,096     6,375,096

Gain/(loss) per common share                                          $     0.10    $    (0.06)
                                                                      ==========    ==========

</TABLE>


The accompanying notes are an integral part of these financial statements

<PAGE>6

                               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                              CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

                               NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                  (Dollars in thousands, except per share)

                                                 UNAUDITED


<TABLE>
<CAPTION>

                                                                          1999         1998
                                                                      ----------    ----------
<S>                                                                 <C>            <C>

Revenues
    Sales of real estate                                              $    1,986    $      383
    Rental income, agricultural properties                                    36            41
    Drying and storage revenues                                              147           114
                                                                      ----------    ----------
                                                                           2,169           538
                                                                      ----------    ----------
Cost and expenses
    Cost of real estate sold                                               1,010           380
    Cost and expenses of rental income                                         3             3
    Cost of drying and storage revenues                                      225           290
    Selling, administrative and general
        Corporate                                                            506           589
        Real estate operations                                               183           167
    Loss on real estate investment                                                         100
    Depreciation                                                              99            96
                                                                      ----------    ----------
                                                                           2,026         1,625
                                                                      ----------    ----------

Gain/(loss) before other credits (charges) and income taxes                  143        (1,087)

Other credits (charges)
    Interest and dividend income                                             176           186
    Interest expense                                                        (131)         (145)
    Loss on marketable securities, net                                       (43)          (19)
    Other                                                                     11          (164)
                                                                      ----------    ----------
                                                                              13          (142)
                                                                      ----------    ----------

Gain/(loss) before income taxes                                              156        (1,229)

Income taxes                                                                 (12)          (11)
                                                                      ----------    ----------

Net gain/(loss)                                                       $      144    $   (1,240)
                                                                      ==========    ==========

Weighted average number of shares outstanding                          6,375,096     6,375,096

Gain/(loss) per common share                                          $     0.02    $    (0.20)
                                                                      ==========    ==========

</TABLE>



The accompanying notes are an integral part of these financial statements

<PAGE>7

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

                  NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                             (Dollars in thousands)

                                    UNAUDITED

<TABLE>
<CAPTION>

                                                                          1999         1998
                                                                      ----------    ----------
<S>                                                                 <C>            <C>

Cash flows from operating activities:
    Net cash provided by (used in) operating activities               $      643    $     (832)
                                                                      ----------    ----------

Cash flows from investing activities:
    Decrease (increase) in investments                                       587           (52)
    Increase in notes receivable                                            (101)          (76)
    Purchase of equipment                                                    (18)         (131)
                                                                      ----------    ----------
                                                                             468          (259)
                                                                      ----------    ----------

Cash flows from financing activities
    Decrease in long-term debt                                              (350)         (263)
    (Decrease) increase in short-term debt                                   (49)           20
                                                                      ----------    ----------
                                                                            (399)         (243)
                                                                      ----------    ----------

Increase (decrease) in cash and cash equivalents                             712        (1,334)

Cash and cash equivalents, beginning of period                             3,948         4,299
                                                                      ----------    ----------

Cash and cash equivalents, end of period                              $    4,660    $    2,965
                                                                      ==========    ==========


</TABLE>


The accompanying notes are an integral part of these condensed financial
statements.


<PAGE>8

                          DUNES HOTES AND CASINOS INC.

                        QUARTERLY REPORT ON FORM 10-QSB

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999


1.   Basis of presentation:

     The  financial  information  included  herein is unaudited;  however,  such
     information reflects all adjustments (consisting solely of normal recurring
     adjustments) which are, in the opinion of management,  necessary for a fair
     statement of results of operations for the interim periods.

     The results of operations for the nine months ended September 30, 1999, are
     not necessarily indicative of the results to be expected for the full year.
     A more detailed discussion of the Company's financial position is described
     in the Company's Form 10-KSB for the year ended December 31, 1998.

2.   Consolidation:

     The accompanying  consolidated  condensed financial  statements include the
     accounts  of the  Company  and its  wholly-owned  subsidiaries  Continental
     California  Corporation  (Continental),  M&R Corporation  (MRC),  and MRC's
     subsidiary M&R Investment  Company,  Inc. (MRI) and MRI's  subsidiaries SHF
     Acquisition   Corporation  (SHF)  and  Southlake  Acquisition   Corporation
     (Southlake),  after elimination of all material  inter-company balances and
     transactions.

3.   Control of registrant:

     John B. Anderson (Anderson), the Company's allegely controlling stockholder
     and former Chairman of the Board of Directors of the Company,  and entities
     owned or controlled by him (Anderson  Entities) own approximately 67.2 % of
     the Company's common stock. See Note 11(b) in the Company's Form 10-KSB for
     the year ended December 31, 1998 regarding  litigation between Anderson and
     the Federal Deposit  Insurance  Corporation (the FDIC). Each entity related
     or  controlled by Anderson  will  hereinafter  be identified as an Anderson
     Entity.  As  discussed,  Anderson's  ownership in the Anderson  Entities is
     currently subject to litigation.

     In May 1999, the FDIC solicited bids for the sale of a portion of its loan,
     together with the underlying  security,  and a part of the judgment against
     Anderson.  Included in the package was  3,000,000  shares of the  Company's
     common stock (the  Shares).  The  successful  bidder was General  Financial
     Services,  Inc.

     On June 3, 1999,  General  Financial  Services,  Inc., and GFS Acquisition,
     Inc.  (collectively  GFS)  filed a  Schedule  13D with the  Securities  and
     Exchange  Commission  which  stated that GFS intends to exercise its rights
     under the judgment and security documents.  Subsequently,  GFS attempted to
     transfer  the Shares to itself but Mr.  Anderson  objected,  claiming  that
     there was no change in ownership of the Shares.


<PAGE>9

                          DUNES HOTES AND CASINOS INC.

                        QUARTERLY REPORT ON FORM 10-QSB

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999


3.   Control of registrant (continued):

     On July 6, 1999,  the Company  filed a  Complaint  In  Interpleader  in the
     Superior Court of California,  County of Yolo and deposited the Shares with
     the Court. The State Action was filed against GFS, Anderson and the FDIC to
     resolve  conflicting  claims  concerning  who has the power to transfer and
     otherwise  dispose  of the  Shares  and by whom  voting  and  other  rights
     connected  with the Shares  may be  exercised.  On July 26,  1999 the State
     Action was  removed to the United  States  District  Court for the  Eastern
     District of  California  and on September 20, 1999 was  transferred  to the
     United States District Court for the District of Nevada (The Nevada Federal
     Action) where it is now pending.

     The Company is unable to predict the outcome of the Nevada  Federal  Action
     and has no ownership  interest in the shares.  However,  the Nevada Federal
     Action may result in a change of control of the  Company.  A more  detailed
     discussion is described in the Company's Form 8-K filed on July 21, 1999.

     On July 9, 1999,  GFS filed a  complaint  against the Company in the United
     States  District Court Northern  District of New York (the New York Federal
     Action) seeking,  among other things, a permanent  injunction requiring the
     Company to give possession of the Shares to GFS. The Federal Court issued a
     temporary  restraining order which restrained the Company from disposing of
     the Shares or  transferring  or disposing any of its assets  outside of the
     ordinary  course of  business.  The  Company  opposed the action and relief
     sought.  On October  12, 1999 the Federal  Court  dismissed  the action and
     dissolved the temporary restraining order.

4.   Contingencies:

     (a)  As of September  30, 1999,  there were no material  legal  proceedings
          pending  against the Company.  Subsequent to September  30, 1999,  see
          Note 3 above  regarding  legal  proceedings  that may have a  material
          adverse effect on the Company.

     (b)  SHF was advised in 1991 of possible  contamination at Sam Hamburg Farm
          of approximately 5,000 cubic yards of contaminated earth. The Company,
          through its chemical and toxic clean-up  consultant,  has been working
          with the California State  Environmental  Protection Agency in seeking
          alternate  means to the  disposal in toxic dump sites of the  chemical
          and toxic-laden soil.


<PAGE>10

                          DUNES HOTES AND CASINOS INC.

                        QUARTERLY REPORT ON FORM 10-QSB

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999



          Because of the ongoing  testing,  the State has not imposed a disposal
          date upon the Company. Cost of disposal is estimated at $100 per cubic
          yard or approximately $500,000. However, if on-site remediation can be
          achieved,  it is estimated  that the cost will be between  $90,000 and
          $115,000.  The Company is unable to predict  when the ongoing  testing
          will be  complete  or  what  the  outcome  of  these  tests  will  be.
          Accordingly,  the estimates could materially change as the testing and
          remediation work continues.

     (c)  The  Company  had  received  a  notice  from the  State of  California
          Franchise  Tax Board  (FTB)  wherein  the FTB  stated  that one of the
          Company's  subsidiaries owed California franchise tax of approximately
          $316,000,  plus  approximately  $350,000  in  penalties  and  interest
          resulting from the foreclosure  sale of certain real property owned by
          the  subsidiary.  The Company  appealed this matter to the  California
          State Board of Equalization  (SBE) which ruled in favor of the Company
          on one point and ruled in favor of FTB on another. Both sides appealed
          and the SBE agreed to rehear the case in July 1999. In September  1999
          the SBE ruled in favor of the  Company  on all  points  and in October
          1999 the SBE withdrew it's assessment.

     (d)  The Company has been  notified  that the FTB is examining its 1995 tax
          return.   The  FTB  is   questioning   the   Company's   reporting  of
          approximately  $7,700,000  of  income  as being  exempt  from the 9.3%
          California tax. The Company disagrees with the FTB and plans to oppose
          any assessment of additional taxes or interest.

5.   Income/(loss) per common share:

     Income/(loss)   common  share  has  been   computed  by  dividing  the  net
     income/(loss),  plus  the  accrued  dividends  applicable  to the  Series B
     Preferred stock ($54,000), for the nine months ended September 30, 1999 and
     1998 by the number of shares  outstanding  (6,375,096)  as of September 30,
     1999 and 1998. Dividends on non-convertible  preferred stock, Series B, are
     deducted  from  income or added to the loss  applicable  to common  shares.
     Dividends  on the  Company's  Series B  Preferred  stock have not been paid
     since  the  first  quarter  of 1982.  The  Company  is in  arrears  on such
     dividends in the amount of  approximately  $1,299,000  as of September  30,
     1999.  The Company has no present  intention to pay dividends on either its
     common or preferred shares.


<PAGE>11

                          DUNES HOTELS AND CASINOS INC.

                         QUARTERLY REPORT ON FORM 10-QSB

                     FOR THE PERIOD ENDED SEPTEMBER 30, 1999


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Certain    information    included   herein   contains   statements   that   are
forward-looking,  such as  anticipated  liquidity  requirements  for the  coming
fiscal year,  anticipated  sources of liquidity for the coming fiscal year,  and
potential changes in control of the Company.  Such  forward-looking  information
involves important risks and uncertainties that could  significantly  affect the
Company's   financial   condition  and  future  results  of   operations,   and,
accordingly, such future financial condition and results of operation may differ
from those expressed in any forward-looking  statements made herein. These risks
and  uncertainties  include,  but are not  limited to,  those risks  relating to
actual costs necessary to clean-up certain real property chemical contamination,
real estate market conditions and general economic conditions,  the abilities of
certain  third  parties to obtain  financing  and  otherwise  perform under real
estate  purchase  agreements,  and the outcome of certain  litigation  and other
risks.  The Company  cautions  readers  not to place undue  reliance on any such
forward-looking statements, and, such statements speak only as of the date made.

YEAR 2000 ISSUE

The Company has addressed the possible  exposures  related to the impact of Year
2000  issues.  The  internal  computer  systems  for key  financial  information
processing  and  operational  equipment  relating  to  the   computer-controlled
conveyors  at the  grain  drying  facility  have  been  assessed.  It  has  been
determined that accounting software is Year 2000-certified.  Computer systems at
the grain drying  facility,  which was built in 1997,  are also  compliant.  The
dryer as well as conveyor equipment can also be operated manually.

In the two main segments that the Company operates, real estate and agriculture,
neither segment is dependent on computer applications.  The agricultural segment
relating to the grain drying  facility will have the current  year's grain dried
and stored prior to the Year 2000,  thereby  avoiding any  processing  equipment
problems should one occur.  During the coming year of 2000,  grain shipments out
of the warehouse will be by individual  trailer units  alleviating any potential
shipment stoppages. The Company feels that these operations will not be affected
by Year 2000 issues.

<PAGE>12

                          DUNES HOTES AND CASINOS INC.

                        QUARTERLY REPORT ON FORM 10-QSB

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999



OVERVIEW

REAL ESTATE

FAIRWAYS

In December 1996 the Company sold 6 lots to Murieta Investors,  LLC (MI) for the
greater of $40,000 per lot or 20% of the gross  sales  price of the  residential
dwelling (Success Payment).  To date MI has constructed 4 dwelling units and has
not started any  construction  on the  remaining 2 lots.  One  dwelling was sold
during the first quarter of 1999 and the Company  received a Success  Payment in
the amount of $43,600.  Two sales occurred  during the third quarter of 1999 and
the Company received success payments of $94,200.

The  Company  plans to initiate a sales  program  with  independent  builders to
complete The  Fairways.  The program will be similar to the MI program and it is
expected that several builders will participate.

In addition,  beginning in May of 1999, advertising expenditures were increased.
An advertising campaign featuring TV and newspaper advertising was begun with an
initial  expenditure of approximately  $20,000. It is anticipated that this will
generate additional sales.

AGRICULTURAL

The Company operates a grain drying and storage facility. The drying facility is
financed by a 5-year  lease,  which  commenced in March 1998.  At the end of the
lease the Company will obtain title to the drying  facility.  The Company leases
half of its storage facility to one customer under a contract for grain storage,
which  expires in May 2002.  If the Company were to lose this  customer it would
have a material adverse effect on the Company's agricultural segment.

The  Company  did not dry or store rice  during  the last two crop  years  which
normally  commences  in  September.  Without the  drying,  there will be no rice
storage  revenue,  which in 1997 was  approximately  $520,000.  The  Company has
reorganized the management of its drying and storage facility and is seeking new
customers to store other grain(s) at this time.

OTHER

The  California  State Board of  Equalization  appeal  hearing to determine  the
amount  of  Franchise  Tax,  if any,  that may be due as a result of the sale of
certain  real  property  in San Diego,  California  was held in July  1999.  The
Company was notified in October 1999 that the  Franchise Tax Board has withdrawn
the assessment.

<PAGE>13

                          DUNES HOTES AND CASINOS INC.

                        QUARTERLY REPORT ON FORM 10-QSB

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999


The Company has been notified that the FTB is examining its 1995 tax return. The
FTB is questioning the Company's reporting of approximately $7,700,000 of income
as being exempt from the 9.3% California tax. The Company disagrees with the FTB
and plans to oppose any assessment of additional taxes or interest.

The Company has no present  intentions  to pay dividends on either its common or
preferred stock.

OPERATING RESULTS

Three months ended  September 30, 1999 vs. the three months ended  September 30,
1998.

Real Estate

The increase in revenues from the sale of real estate for the three months ended
September  30, 1999 when  compared to the three months ended  September 30, 1998
resulted  from  three  lots being sold in 1999 while two lots were sold in 1998.
Also  contributing to the increase in revenues were the "Success  Payments" from
Murieta  Investors,  LLC. Sales at The Fairways continue to be slow. Real estate
revenue also  increased due to the sale of 2.16 acres of industrial  property in
Las Vegas, Nevada in the amount of $836,000.

Net rental  income  from  agricultural  properties  for the three  months  ended
September  30,  1999  parallel  the  revenue  for the same  period in 1998.  The
1999-year  is the second year of a two-year  lease for  property  located at Sam
Hamburg Farm.

Agricultural

Revenue  from the grain  drying and storage  facility for the three months ended
September  30, 1999  decreased  from the three months ended  September 30, 1998.
During the three  months ended  September  1999 the Company  received  wheat for
storage only and did not dry any grain resulting in a decrease in revenue.

General

When compared with the three months ended September 30, 1998  administrative and
general  expenses  increased by  approximately  $5,000.  Increases in legal fees
($23,000),  directors  consulting  fees and  expenses  ($7,800)  were  offset by
decreases in  officers/office  salaries  ($21,000),  office expense ($1,000) and
officer/directors liability insurance premiums ($4,000).

Selling expenses associated with real estate operations  increased by $8,000 for
the three months ended  September  30, 1999 compared with the three months ended
September 30, 1998.

<PAGE>14

                          DUNES HOTES AND CASINOS INC.

                        QUARTERLY REPORT ON FORM 10-QSB

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999


Advertising  expenditures  increased  ($30,000) and other expenses  increases of
($2,000) were offset by decreases in association  dues, taxes and utilitys costs
due to fewer lots held for resale in 1999 than in 1998.

Advertising costs increased as result of increased newspaper and TV advertising.
Other expense was  attributable to geotechnical  consulting  services on various
lots within the Fairways development.

Nine months ended September 30, 1999 vs. nine months ended September 30, 1998

Real Estate

Revenues  from the sale of real estate for the nine months ended  September  30,
1999 increased  $1,603,000 compared to the nine months ended September 30, 1998.
The  sale of the  Solano  Option  in  March  1999  ($533,333)  and the  "Success
Payments," from Murieta  Investors,  LLC  ($140,000),  the sale of 2.16 acres of
industrial  property  in Las  Vegas  ($836,000)  and lot  sales at The  Fairways
account for the increase.

Agriculture

Storage revenue at the grain drying and storage facility increased by $33,000 in
the nine months ended  September  30, 1999  compared  with the nine months ended
September 30, 1998. The 1999 increase is a result from the bulk of the 1998 crop
shipped out during this period.

General

Compared  with the nine months  ended  September  30, 1998  corporate  operating
expenses  decreased by $83,000 in the nine months ended  September 30, 1999. The
decrease is made up of salaries  officer/office and related benefits ($118,000),
officers/directors  liability insurance ($15,000),  and office expense ($8,000).
This decrease was offset by an increase in legal fees ($41,000), and an increase
in directors consulting fees and expenses ($25,000).

The cost of real estate operations  increased in the nine months ended September
30, 1999  compared  with the nine months  ended  September  30,  1998.  The most
significant  increase was  advertising  ($45,000).  A reduction in the number of
lots held for resale  decreased the cost of  association  dues,  utilities,  and
related expenditures ($29,000).

<PAGE>15

                          DUNES HOTES AND CASINOS INC.

                        QUARTERLY REPORT ON FORM 10-QSB

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999


LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended  September 30, 1999,  cash,  cash  equivalents  and
marketable  securities  increased by $712,000  from  $3,948,000  at December 31,
1998, to $4,660,000 at September 30, 1999. The most significant  sources of cash
during  the  nine  months  ended   September  30,  1999,  were  from  operations
($643,000);  payments on long-term and short-term debt ($399,000) and a decrease
in investments of $587,000.

The Company  believes that its primary  requirements for liquidity in the coming
fiscal year will be to fund ongoing  expenses at The  Fairways,  which  include,
among other things,  association  dues, water and sewer fees and property taxes;
to fund the  required  payments on the note to Beal Bank;  to fund the  required
payments  due on the grain dryer  financing;  to fund costs that may be incurred
relating to the toxic clean-up at Sam Hamburg Farm; to fund any tax payment that
might be due to the  California  Franchise  Tax Board;  and to fund  general and
administrative  expenses.  In  addition,  the  Company  may be  required to fund
certain costs relating to a possible stockholder meeting.

The Company  believes that sources of required  liquidity will be cash generated
from anticipated lot sales at The Fairways,  collection of notes receivable, and
the cash  available  at  September  30, 1999.  Based on known  commitments,  the
Company  believes that the sources of cash  described and the cash  available at
September 30, 1999 will be adequate to fund known liquidity requirements.

<PAGE>16

                          DUNES HOTES AND CASINOS INC.

                        QUARTERLY REPORT ON FORM 10-QSB

                    FOR THE PERIOD ENDED SEPTEMBER 30, 1999


                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

        None,  except for the  discussion  contained  in  footnote 3 in Notes to
Consolidated Condensed Financial Statements.

ITEM 2.  Changes in Securities

        Not applicable

ITEM 3.  Default Upon Senior Securities

        Dividends  in  arrears.  See Note 5 of Notes to  Consolidated  Condensed
Financial Statements for the quarter ended September 30, 1999.

ITEM 4.  Submission of Matters to a Vote of Security Holders

        Not applicable

ITEM 5.  Other Information

        None

ITEM 6.  Exhibits and Reports on Form 8-K

(a)     Exhibits

27.01   Financial Data Schedule

(b)     Reports on Form 8-K

               None


<PAGE>17

                                   SIGNATURES

        PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT  HAS DULY  CAUSE  THIS  REPORT  TO BE  SIGNED  ON ITS  BEHALF  BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.


                                   DUNES HOTELS AND CASINOS INC.
                                             Registrant



Date:November 10, 1999             By:  /s/ Edward Pasquale
                                        Edward Pasquale, President



                                   By:  /s/ Marvin P. Johnson
                                        Marvin P. Johnson
                                        Principal Financial and Accounting
                                        Officer