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 June 30, 2000
                                                -------------
____ 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:  5,094,340 shares of common
stock, $.50 par value as of August 1, 2000.

Transitional Small Business Disclosure Format (check one): Yes        No   X
                                                                ----      ----
                                      -1-
<PAGE>


                          DUNES HOTELS AND CASINOS INC.


                                      INDEX
                                      -----
                                                                            Page
Part 1. Financial Information                                               ----

            Item 1. Financial Statements
            ----------------------------
            Condensed Consolidated Balance Sheets                              3
            June 30, 2000 and December 31, 1999

            Condensed Consolidated Statements of Loss                          5
            for the three months ended June 30, 2000
            and 1999

            Condensed Consolidated Statements of Loss                          6
            for the six months ended June 30, 2000
            and 1999

            Condensed Consolidated Statements of Cash Flows                    7
            for the six months ended June 30, 2000
            and 1999

            Notes to Condensed Consolidated Financial                          8
            Statements

            Item  2. Management's Discussion and Analysis of
            ------------------------------------------------
            Financial Condition and Results of Operations                     16
            ---------------------------------------------

Part II.    Other Information

            Item 1. Legal Proceedings                                         21
            -------------------------
            Item 2. Changes in Securities                                     21
            ------------------------------------
            Item 3. Defaults Upon Senior Securities                           21
            ---------------------------------------
            Item 4. Submission of Matters to a Vote of Security Holders       21
            -----------------------------------------------------------
            Item 5. Other Information                                         21
            -------------------------
            Item 6. Exhibits and Reports on Form 8-K                          21
            ----------------------------------------

            Signatures                                                        22


                                      - 2 -
<PAGE>

             DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                  CONDENSED CONSOLIDATED BALANCE SHEETS

                   JUNE 30, 2000 AND DECEMBER 31, 1999
                         (Dollars in thousands)


                                 ASSETS

                                                       June         December
                                                     30, 2000       31, 1999
                                                   -----------      --------
                                                   (Unaudited)


Cash and cash equivalents                          $     3,608    $    3,323

Marketable securities                                      409           278

Receivables
    Trade                                                    1             3
    Related party, less allowance of $1,899 in 1999                       37
    Real estate sales                                      301           363

Inventory of real estate held for sale                   2,437         3,460

Prepaid expenses                                            51           111

Property and equipment, less accumulated depreciation
    and amortization of $796 and $631 in 2000 and 1999   3,054         3,118

Other assets                                                 3             3
                                                   -----------    ----------
                                                   $     9,864    $   10,696
                                                   ===========    ==========


               See Notes to Condensed Consolidated Financial Statements


                                      -3-

<PAGE>


             DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

            CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

                   JUNE 30, 2000 AND DECEMBER 31, 1999

                         (Dollars in thousands)

                  LIABILITIES AND SHAREHOLDERS' EQUITY


                                                      June           December
                                                    30, 2000         31, 1999
                                                   -----------     -----------
                                                   (Unaudited)

Accounts payable                                   $       4       $      52

Accrued expenses                                         188             171

Income taxes                                             307             307

Long-term debt and capital lease obligation              744             815

Accrued preferred stock dividends in arrears           1,353           1,317
                                                   -----------    -----------
                                                       2,596           2,662
                                                   ------------   -----------
Shareholders' equity
    Preferred stock - authorized 10,750,000
        shares ($.50 par); issued 10,512 shares
        Series B $7.50 cumulative preferred
        stock, aggregate liquidation value $2,553
        at June 30, 2000, including dividends
        in arrears                                         5               5

    Common stock - authorized 25,000,000 shares
        ($.50 par); issued 7,799,780 shares            3,900           3,900

    Capital in excess of par                          25,881          25,881

    Deficit                                          (20,480)        (19,752)
                                                   -----------    -----------
                                                       9,306          10,034

    Treasury stock at cost;  Preferred - Series B,
        902 shares Common 2,705,440 shares and
        1,424,484 shares in 2000 and 1999             (2,038)         (2,000)
                                                   -----------    -----------
        Total shareholders' equity                     7,268           8,034

                                                   -----------    -----------
                                                   $   9,864      $   10,696
                                                   ===========    ===========

            See Notes to Condensed Consolidated Financial Statements


                                      -4-

<PAGE>


                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS

                    THREE MONTHS ENDED JUNE 30, 2000 AND 1999

                    (Dollars in thousands, except per share)

                                    UNAUDITED

                                                        2000          1999
                                                  ------------  ------------
Revenues
    Sales of real estate                          $       683   $       105
    Rental income, agricultural properties                 15            14
    Drying and storage revenues                            22            46
                                                  ------------  ------------
                                                          720           165
                                                  ------------  ------------
Cost and expenses
    Cost of real estate sold                              705            85
    Cost and expenses of rental income                      1             1
    Cost of drying and storage revenues                    71            70
    Selling, administrative and general
        Corporate                                         106           159
        Real estate operations                             43            64
    Depreciation                                           33            33
                                                  ------------  ------------
                                                          959           412
                                                  ------------  ------------

Loss before other credits (charges) and income taxes     (239)         (247)

Other credits (charges)
    Interest and dividend income                           57            62
    Interest expense                                      (21)          (46)
    Other income                                                          3
    Gain / (loss) on marketable securities, net             9           (12)
                                                  ------------  ------------
                                                           45             7
                                                  ------------  ------------

Loss before income taxes                                 (194)         (240)

Income taxes                                               (5)           (7)
                                                  ------------  ------------

Net loss                                          $      (199)  $      (247)
                                                  ============  ============

Weighted average number of shares outstanding       5,966,973     6,375,096

Basic and diluted loss per common share           $     (0.04)  $     (0.04)
                                                  ============  ============





            See Notes to Condensed Consolidated Financial Statements

                                     -5-


<PAGE>


                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                    (Dollars in thousands, except per share)

                                    UNAUDITED

                                                        2000          1999
                                                  ------------  ------------
Revenues
    Sales of real estate                          $     1,078   $       778
    Rental income, agricultural properties                 29            26
    Drying and storage revenues                            35            93
                                                  ------------  ------------
                                                        1,142           897
                                                  ------------  ------------
Cost and expenses
    Cost of real estate sold                            1,164           716
    Cost and expenses of rental income                      2             2
    Cost of drying and storage revenues                   139           150
    Selling, administrative and general
        Corporate                                         467           343
        Real estate operations                             85           108
    Depreciation                                           65            66
                                                  ------------  ------------
                                                        1,922         1,385
                                                  ------------  ------------

Loss before other credits (charges) and income taxes     (780)         (488)

Other credits (charges)
    Interest and dividend income                          104           114
    Interest expense                                      (43)          (89)
    Other income                                            3             7
    Gain / (loss) on marketable securities, net            30           (15)
                                                  ------------  ------------
                                                           94            17
                                                  ------------  ------------

Loss before income taxes                                 (686)         (471)

Income taxes                                               (5)          (10)
                                                  ------------  ------------

Net loss                                          $      (691)  $      (481)
                                                  ============  ============

Weighted average number of shares outstanding       5,966,973     6,375,096

Basic and diluted loss per common share           $     (0.12)  $     (0.08)
                                                  ============  ============





            See Notes to Condensed Consolidated Financial Statements



                                       -6-

<PAGE>


                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                             (Dollars in thousands)

                                    UNAUDITED


                                                      2000          1999
                                                  ------------  ------------
Cash flows from operating activities:
    Net cash provided by (used in) operating
     activities                                   $       487   $      (256)
                                                  ------------  ------------

Cash flows from investing activities:
    Proceeds from disposition of investment                             544
    Investment in marketable securities                  (131)           15
                                                  ------------  ------------

                                                         (131)          559
                                                  ------------  ------------

Cash flows from financing activities
    Payments on long-term debt                            (71)         (180)
    Payments on short-term debt                                         (49)
                                                  ------------  ------------

                                                          (71)         (229)
                                                  ------------  ------------

Increase in cash and cash equivalents                     285            74

Cash and cash equivalents, beginning of period          3,323         3,120
                                                  ------------  ------------

Cash and cash equivalents, end of period          $     3,608   $     3,194
                                                  ============  ============







            See Notes to Condensed Consolidated Financial Statements

                                     -7-

<PAGE>
                          DUNES HOTELS AND CASINOS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED

1.    BASIS OF PRESENTATION:

     The  condensed   consolidated  financial  information  included  herein  is
     unaudited,  except that the balance sheet at December 31, 1999, was derived
     from the audited financial  statements  included in the Company's 1999 Form
     10-KSB,  however,  such  information  reflects all adjustments  (consisting
     solely of normal  recurring  adjustments)  which  are,  in the  opinion  of
     management, necessary for a fair presentation of the of financial position,
     results of operations and cash flow of the Company."

      The results of operations  for the six months ended June 30, 2000, are not
      necessarily  indicative  of the results to be expected  for the full year.
      Further, Certain information and note disclosures normally included in the
      Company's  annual  financial   statements   prepared  in  accordance  with
      generally accepted  accounting  principles have been condensed or omitted.
      These  condensed  consolidated  financial  statements  should  be  read in
      conjunction with the consolidated  financial  statements and notes thereto
      included in the  Company's  Form 10-KSB  annual report for 1999 filed with
      the Securities and Exchange Commission.

2.    CONSOLIDATION:

      The accompanying consolidated 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:

      FDIC LITIGATION/CHANGE OF CONTROL

     John B. Anderson (Anderson),  the former Chairman of the Board of Directors
     of the Company,  through ownership of Cedar Development Co. ("Cedar"),  was
     the  controlling  shareholder  and President of Baby Grand Corp.  (BGC) and
     J.B.A.  Investments,  Inc.  (Anderson  Entities),  which collectively owned
     approximately  4,280,756  shares or 67.2% of the Company's common stock. Of
     those shares (i) 3,000,000 shares (the FDIC Pledged Shares) were pledged as
     collateral  to  secure  certain  obligations  owing to the  FDIC,  and (ii)
     1,280,756  shares (the BGC Pledged  Shares) were pledged as  collateral  in
     favor of a subsidiary of the Company.

                                      - 8 -

<PAGE>
                          DUNES HOTELS AND CASINOS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED


3.   CONTROL OF REGISTRANT: (CONTINUED)

     The  Federal  Deposit  Insurance  Corporation  ("FDIC")  brought  an action
     captioned,  Federal  Deposit  Insurance  Corporation,  et al.  v.  John  B.
     Anderson et al., United States District Court, District of Nevada, Case No.
     CV-S-95-00679-PMP  (LRL),  on  July  14,  1995.  Anderson,  Edith  Anderson
     (Anderson's  wife),  Cedar,  J.A Inc. (JA),  J.B.A.  Investments Inc, (JBA)
     (collectively, the Anderson Parties) are defendants in this litigation (the
     Anderson Litigation).  This matter is more fully described in the Company's
     Form  10-K for the  year  ended  December  31,  1997,  see  "Item 3.  Legal
     Proceedings  - Federal  Deposit  Insurance  Corporation,  et al. v. John B.
     Anderson, et al."

     Prior to the  events  described  herein,  Anderson  asserted,  through  his
     ownership of Cedar,  the parent of Baby Grand Corp.  (BGC) and JBA, that he
     owned  approximately  4,280,756  shares  or  67.2%  of the  then  Company's
     outstanding  common stock (the Common Stock). Of those shares (i) 3,000,000
     shares (the FDIC Pledged Shares) were pledged as collateral in favor of the
     FDIC,  and (ii) 1,280,756  shares (the BGC Pledged  Shares) were pledged as
     collateral  in favor of a subsidiary  of the Company.  The FDIC reduced its
     claims to a Consent Judgment dated September 12, 1995 (the "Judgement").

     In June 1999, the FDIC sold a portion of its  Judgement,  together with the
     underlying  security  owned by the  Anderson  Parties to General  Financial
     Services,  Inc.  (GFS).  Included in the sale were the FDIC Pledged Shares.
     GFS  attempted  to exercise  its rights  under the  Judgement  and transfer
     ownership of the FDIC Pledged  Shares to it but the Company  intervened  on
     behalf of  Anderson,  and seized the  Pledged  Shares.  The Company in turn
     filed on July 6, 1999, a Complaint  in  Interpleader  in Superior  Court of
     California  (the   "California   Action").   The  action  was  removed  and
     transferred on September 20, 1999, to the United States  District Court for
     the District of Nevada (the "Nevada  Action").  GFS and its  subsidiary GFS
     Acquisition  Company,  Inc.  filed a  counter-claim  alleging  among  other
     things,  damages  from the  previous  Company  management  for  filing  the
     California  Action,  seizing the FDIC Pledged Shares,  interfering with the
     lawful   transfer  of  the  FDIC  Pledged  Shares  and  refusing  to  grant
     shareholder   demands  for  an  immediate   shareholder  meeting  to  elect
     directors.  A more detailed  discussion is described in the Company's  Form
     10-KSB for the fiscal year ended December 31, 1999.


                                     - 9 -
<PAGE>

                          DUNES HOTELS AND CASINOS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED


3.    CONTROL OF REGISTRANT: (CONTINUED)

      On January 5, 2000,  the U.S.  District  Court in Nevada  ordered that the
      Company hold a shareholders' meeting on or before April 14, 2000, and that
      GFS was  entitled  to vote the FDIC  Pledged  Shares at that  meeting.  In
      addition to its interest in the FDIC Pledged Shares, GFS has reported that
      through its  subsidiary  GFS  Acquisition  Company,  Inc., it owns 853,422
      shares of the  Company's  common stock  acquired in the open market during
      1999  and  January  2000,  or  approximately  a total  of 60% of the  then
      outstanding stock.

      Since 1998, the BGC Pledged Shares have been under the jurisdiction of the
      U.S.  Bankruptcy  Court in Las Vegas,  Nevada,  where BGC filed a petition
      under  Chapter  7 of the  Bankruptcy  Code.  On  February  22,  2000,  the
      Company's  motion in Bankruptcy  Court for relief from the automatic  stay
      was granted to allow it to foreclose on the BGC Pledged  Shares.  On March
      3, 2000, the Company  foreclosed on the BGC Pledged Shares and placed them
      in the  treasury.  Placing the BGC Pledged  Shares into  treasury  had the
      effect of increasing  GFS's voting  percentage to 75.6% of the outstanding
      stock (GFS Shares).

      On Friday,  April 14,  2000,  an Annual  Meeting  (the  "Meeting")  of the
      Shareholders of the Company was held at 10:00 a.m. in Sacramento,  CA. The
      purpose of the Meeting was the  election of the Board of  Directors of the
      Company.  Upon completion of the ballot  counting,  it was determined that
      the nominees of GFS and its subsidiary GFS  Acquisition,  Inc.  received a
      plurality of the votes and were duly elected.  See the  Company's  Current
      Report on Form 8-K dated April 14, 2000 and filed with the  Securities and
      Exchange Commission on May 3, 2000.

      Immediately  following the annual Meeting, the board of directors met and,
      in accordance with the provisions of the Company's  bylaws,  elected three
      additional  directors  to  fill  the  three  vacancies  on  the  board  of
      directors.  For more  information  regarding the names,  ages and business
      experience for at least the past five years of the new directors,  see the
      Company's  Current  Report on Form 8-K dated April 14, 2000 and filed with
      the Securities and Exchange Commission on May 3, 2000.


                                     - 10 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED


3.   CONTROL OF REGISTRANT: (CONTINUED)

     Pursuant to a Consent and Undertaking  entered into with the Securities and
     Exchange  Commission on October 13, 1977, the SEC asserts that the board of
     directors must have at least three directors satisfactory to the Commission
     (the "Independent Directors"). The Company has sought confirmation from the
     staff of the  Commission  that  they do not  object  to  Messrs.  Herfurth,
     Steckart and Viets being designated the Independent  Directors for purposes
     of the Consent and Undertaking. The staff has not responded to date. If the
     staff were to object to any of the above  individuals  being  designated an
     Independent  Director,  then the board of directors  will,  without further
     shareholder  approval elect another  director,  submit that director to the
     staff to replace any director that was objected to by the staff.

     The new board of directors elected Mr. Miller president of the Company. Mr.
     Cary Peaden was elected  secretary-treasurer  of the  Company.  Mr.  Marvin
     Johnson has been retained as the chief accounting officer of the Company.

     On July 18, 2000,  the Company and GFS filed in the United States  District
     Court in Nevada a joint  motion to dismiss  the  Nevada  Action and the GFS
     counterclaim.  When  granted, the order to dismiss  will turn the FDIC
     Pledged  shares over to GFS for  foreclosure.  GFS is  proceeding  with the
     foreclosure  in the  Nevada  Action.  There can be no  assurance  as to the
     outcome of the foreclosure or at what time the foreclosure will be.

     INJUNCTIVE ACTION REGARDING TENDER OFFER

     On April 3, 2000, JBA, GFS and GFS Acquisition  filed an action against the
     USI Corp., Barney Kreutzer and Thomas Honton (collectively the "USI Group")
     in the U.S. District Court for the District of Kansas alleging, among other
     things,  violations of the Williams Act, Sections 13(d), 14(d) and 14(e) of
     the  Securities  Exchange  Act of 1934,  15 U.S.C.  78a et seq.  ("Williams
     Act"). The case is captioned J.B.A. Investments,  Inc., et al. v. USI Corp,
     et al., Case No 00127 WEB (D. Kan.  2000).  The plaintiffs  allege that the
     USI Group  conducted a tender  offer for the  Company's  Series B Preferred
     Stock in violation of the Williams  Act.  Upon  information  believed to be
     reliable,  USI Group was able to purchase  approximately 3000 shares of the
     Company's non-convertible preferred stock, Series B ("Series B Preferred").
     The  plaintiffs  further  allege  that USI Group  failed to file any of the
     necessary  reports required under the Williams Act, failed to make material
     disclosures  to the former Series B Preferred  shareholders  and engaged in
     fraudulent  practices in  conjunction  with the alleged  tender offer.  The
     plaintiffs seek a preliminary and permanent injunction  prohibiting the USI
     Group from completing the tender offer, recission of the Series B Preferred
     purchases by the USI Group and damages.


                                     - 11 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED


3.    CONTROL OF REGISTRANT: (CONTINUED)

      The USI Group and the  plaintiffs  have  consented to an order halting any
      further  purchases  of Series B Preferred  by the USI Group,  allowing the
      Company to instruct its transfer agent to stop the transfer of such shares
      to USI Group and precluding the USI Group from  transferring  or otherwise
      disposing the acquired Series B Preferred.

      The USI Group has filed a motion to dismiss the  plaintiff's  action.  The
      plaintiffs have responded and the matter is under advisement by the court.
      On August 3, 2000,  the court  entered an agreed order joining the Company
      as third party plaintiff in the action.

      While  management  believes  in the merits of the action  against  the USI
      Group,  there can be no  assurance  as to the  outcome  of the  action and
      ultimate ownership of the contested Series B Preferred.

4.    CONTINGENCIES:

     (a) As of June 30, 2000, there were no material legal  proceedings  pending
         against the  Company.  Subsequent  to June 30,  2000,  see Note 3 above
         regarding legal  proceedings that may have a material adverse affect on
         the Company.

     (b) SHF was  advised in 1991 of possible  contamination  of 40 acres at Sam
         Hamburg Farm of  approximately  5,000 cubic yards of soil. 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.

         Because of the  ongoing  testing,  the State has not imposed a disposal
         date upon the Company. The Company has disposed of 1,000 cubic yards of
         soil to date.  Cost of disposal of the  remaining  soil is estimated at
         $125 to $200 per cubic  yard or  approximately  $500,000  to  $800,000.
         However, if on-site  remediation can be achieved,  it is estimated that
         the cost should be no more than $170,000  which has been  accrued.  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 has been notified that the  California  Franchise Tax Board
         (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  income tax. The Company disagrees with
         the FTB and plans to  oppose  any  assessment  of  additional  taxes or
         interest.  Therefore, no provision for additional taxes or interest has
         been made.

     (d) The Company  estimates  the carrying  value of the lots at The Fairways
         real estate  development  approximate  their  fair market  value.  It's
         reasonably  possible  the amounts  ultimately   realized  could  differ
         materially in the near term from the amounts  recorded in the financial
         statements.


                                     - 12 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED


5.   LOSS PER COMMON SHARE:

     Loss per common share has been computed by dividing the net loss,  plus the
     accrued dividends  applicable to the Series B Preferred,  for the three and
     six months ended June 30, 2000, and 1999, by the weighted  number of shares
     outstanding (5,966,973) as of June 30, 2000, and (6,375,096) as of June 30,
     1999.  Dividends on Series B Preferred are added to the loss  applicable to
     common shares.  Dividends on the Company's Series B Preferred have not been
     paid  since the first  quarter of 1982.  The  Company is in arrears on such
     dividends in the amount of  approximately  $1,353,000  as of June 30, 2000.
     The Company has no present  intention to pay dividends on either its common
     or preferred shares.

     The  following  data show the amounts used in computing  loss per share and
     the effect on loss and the  weighted  average  number of shares of dilutive
     potential common stock.

                                     Six Months Ended        Six Months Ended
                                     June 30, 2000           June 30, 1999
                                     -------------           -------------
        Loss from operations              $(691)                $(481)
        Less:  preferred dividends         ( 36)                (  36)
                                          ------                ------
        Loss to common stockholders
            used in basic EPS             $(727)                $(517)
                                          ======                ======

        Weighted average number
          of common shares used
          in basic and diluted EPS        5,966,973             6,375,096
                                          =========             =========



                                     Three Months Ended      Three Months Ended
                                     June 30, 2000           June 30, 1999
                                     -------------           -------------

      Loss from Operations                $(199)                $(247)
      Less:  preferred dividends           ( 18)                 ( 18)
                                          ------                ------
      Loss to common stockholders
          used in basic EPS               $(217)                $(265)
                                          ======                ======


      Weighted average number
        of common shares used
        in basic and diluted EPS          5,966,973             6,375,096
                                          =========             =========





                                     - 13 -
<PAGE>

                          DUNES HOTELS AND CASINOS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED

6.    SEGMENT INFORMATION:

      The Company's  operations are classified  into three  principal  reporting
      segments that provide different products or services.  Separate management
      of each  segment is  required  because  each  business  unit is subject to
      different marketing,  production, and technology strategies. The following
      table  shows  external  revenues,  depreciation,  loss and  assets for the
      reportable segments.

                                   Reportable Segments (in thousands)

                      Grain Drying
                       And Storage    Real Estate      Farming           Total

                                   Six Months Ended June 30, 2000

External revenue              $35         $1,078          $29           $1,142
Depreciation                   65                                           65
Loss                         (169)          (171)          27             (313)
Assets                      3,058          2,592          146            5,796

                                   Six Months Ended June 30, 1999

External revenue              $93           $778          $26             $897
Depreciation                   66                                           66
Loss                         (123)           (46)          24             (145)
Assets                      3,199          4,110          146            7,455

                                  Three Months Ended June 30, 2000

External revenue              $22           $683          $15             $720
Depreciation                   33                                           33
Loss                          (82)           (65)          14             (133)
Assets                      3,058          2,592          146            5,796

                                  Three Months Ended June 30, 1999

External revenue              $46           $105          $14             $165
Depreciation                   33                                           33
Loss                          (57)           (44)          13              (88)
Assets                      3,199          4,110          146            7,455


                                     - 14 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED


<TABLE>
<CAPTION>

                         Six Months      Six Months    Three Months     Three Months
                           Ended            Ended           Ended           Ended
                       June 30, 2000    June 30, 1999   June 30, 2000   June 30, 1999

<S>                            <C>               <C>             <C>             <C>
Revenues
Total for reportable
    segments                   $1,142            $897            $720            $165
                      -----------------------------------------------------------------
Total                          $1,142            $897            $720            $165
                      =================================================================

Loss
Total for reportable
    segments                    $(313)          $(145)          $(133)           $(88)
Corporate expenses               (467)           (343)           (106)           (159)
Interest income/
    expense & other                94              17              45               7
                      -----------------------------------------------------------------
Loss before income
    taxes                       $(686)          $(471)          $(194)          $(240)
                      =================================================================

Assets
Total for reportable
    segments                   $5,796          $7,455          $5,796          $7,455
Cash, securities &
    prepaids                    4,068           4,060           4,068           4,060
                      -----------------------------------------------------------------
Total                          $9,864         $11,515          $9,864         $11,515
                      =================================================================
</TABLE>






                                     - 15 -
<PAGE>

                          DUNES HOTELS AND CASINOS INC.


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.

OVERVIEW

REAL ESTATE

FAIRWAYS
The  Fairways  consist of the  remaining  portion of  approximately  50 acres of
developed  residential land in Rancho Murieta,  Sacramento  County,  California.
Rancho Murieta is a 3,500 acre master planned unit development community located
approximately 25 miles from Sacramento.  The development  consists  primarily of
single  family  homes,  town  houses,   commercial   property  and  two  18-hole
championship golf courses and country club facilities.  The 50 acres are located
within the  boundaries of one of the golf courses.  The property was  subdivided
into 110 single-family estate lots. As of August 14, 2000, 14 lots remain and 10
lots are in escrow pending closing.  Although  dependent on a myriad of factors,
Management  anticipates  that  most of the  lots  will be sold by the end of the
current  year.  The Company does not expect to realize a gain on the sale of the
remaining lots as the existing cost basis  approximates  net sale  proceeds.  To
facilitate sales on certain lots, the Company expects to build a privacy wall at
an estimated cost of approximately  $60,000. The Company intends to add the cost
of the wall back into the listing price of the lots.

In January 2000, the Company's subsidiary purchased thirty social memberships at
the Rancho Murieta Country Club, which were convertible to golfing  memberships.
Due to  changes in the  Country  Club's  bylaws  effective  August 7, 2000,  the
Company's  subsidiary was forced to convert the remaining 19 social  memberships
into golfing memberships.  This change will increase the future carrying cost on
the remaining lots by approximately $5,000 per month.  Management is considering
its options with respect to recouping this additional expense.

                                     - 16 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.

SAM HAMBURG FARM
Sam Hamburg Farm consists of approximately  150 acres remaining from an original
4,600 acres of  agricultural  land.  The Company leases 110 acres to one tenant,
who grows various  crops.  The term of the lease is for two years on a cash rent
basis.

AGRICULTURAL
The Company operates a rice 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 stored wheat principally for one customer,  Adams Grain Co.("Adams")
under a contract  which  expires May 2002 ("Adams  Contract").  However,  in May
2000, the Company  negotiated an end to the Adams Contract.  The terms of ending
the storage agreement,  effective May 18, 2000 require the Company to only store
rice at its  storage  facility  and if the  Company  stores any grain other than
rice,  Adams,  retains a first right of refusal to store  commodities  under the
Adams Contract.  These  conditions will remain in effect until May 31, 2002 (the
original expiration date of the Adams Contract).

Subsequently,   the  Company  has  entered  into  an   agreement   with  Pacific
International  Rice Mills, Inc. (PIRMI) to store  approximately  350,000 cwt. of
dry paddy rice for the period commencing  September 1, 2000, to August 31, 2001,
in the east warehouse.  The gross revenue is approximately  $140,000. As of July
26, 2000, the filling of the east warehouse was completed.

In addition,  another  agreement has been signed with PIRMI to dry and store wet
paddy rice from the 2000 crop.  The agreement  provides for a minimum of 400,000
cwt. of wet paddy rice to be delivered.  Gross drying revenue will be determined
by the moisture  content of the wet paddy rice delivered and the storage revenue
will be  calculated  per dry cwt.  Due to  these  unknown  factors,  anticipated
revenues cannot be determined at this time.

In the next three months, the Company expects to spend approximately  $50,000 to
$100,000 to purchase and install  equipment and field related  structures at the
drying facility.  This equipment which allows the Company to clean the wet paddy
rice prior to drying and the elevator modifications is projected to increase the
Company's  storage  capacity and flow rates. In July 2000, an $8,000 deposit was
made to Pneumatic Conveying & Mfg. to begin the fabrication of the structure and
purchase of equipment.

If the  Company  were to lose its drying and storage  customer,  it would have a
material adverse effect on the Company's agricultural segment.

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


                                     - 17 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.


OPERATING RESULTS

   THREE MONTHS ENDED JUNE 30, 2000 VS. THE THREE MONTHS ENDED JUNE 30, 1999.

REAL ESTATE

Revenue  from the sale of real estate lots for the three  months  ended June 30,
2000, increased by $578,000 over the same period ended June 30, 1999. There were
eight lots sold through June 30, 2000,  with gross revenue of $683,000  compared
with one lot sold  through  June 30, 1999,  gross  revenue of $105,000.  The lot
sales  increase can be  attributed to a turn around in the real estate market in
the  Sacramento,  California  area.  However,  due  to the  length  of  time  in
inventory,  the cost of sales of the lots in  inventory  has  reduced the profit
margins considerably.

Net rental income from  agricultural  properties for the three months ended June
30,  2000,  increased  slightly  over the revenue  the same period in 1999.  The
annual rent in calendar year 1999 was $19,950,  compared to $24,000 for calendar
year 2000 which  accounted  for the slight  increase  during this period.  A new
two-year lease at Sam Hamburg Farm was signed in January 2000. This is the first
year of a two-year lease.

AGRICULTURAL

The loss from the grain  drying and storage  facility for the three months ended
June 30, 2000,  increased by approximately  $25,000 when compared with the three
months ended June 30, 1999.  The loss  increase  was  primarily  the result of a
severe  reduction  in drying and storage  revenue.  During the fall 1999 season,
there was virtually no drying revenue,  which also reduced the storage  revenue,
as one of the  warehouses  remained  empty.  During the three month period ended
June 30, 1999,  there were grain shipments  generating  revenue in the amount of
approximately $46,000 compared to revenue of approximately $22,000 for the three
months ended June 30, 2000. As the fixed costs were constant  during this period
in 2000 and  1999,  the  difference  in  revenue  was  responsible  for the loss
increase.  The Company's new management  team has entered into two new contracts
which are expected to keep the east side of its flat houses full and,  depending
on the harvest of rice this fall, to fill the west side of the  facility.  These
two new contracts are anticipated  (depending on harvest conditions and results)
to generate  both drying  revenues and storage fees.  See "Item  2--Management's
Discussion    and   Analysis   of   Financial    Condition    and   Results   of
Operations--Overview--Agricultural"

General
-------
When  compared  with the three months ended June 30, 1999,  corporate  operating
expenses decreased by approximately  $53,000 for the period ended June 30, 2000.
This decrease  consisted of reductions in  administrative  and general expenses,
primarily legal fees ($29,000),  director fees ($6,000) and director  consulting
fees ($21,000), offset by an increase in registrar/transfer agent fees ($3,000).
The  increase in  registrar/transfer  agent fees  resulted  from the cost of the
shareholder meeting held on April 14, 2000.

Selling  expenses  associated  with  the real  estate  operations  decreased  by
approximately  $21,000 for the three months ended June 30, 2000,  compared  with
the three months ended June 30, 1999. Decreases in advertising  ($14,000),  real
property taxes ($4,000), and other expense ($10,000)

                                     - 18 -

<PAGE>
                          DUNES HOTELS AND CASINOS INC.


made up the majority of the decrease.  The decrease was offset by an increase in
country club dues ($4,000),  and miscellaneous  expense  ($3,000).  Country club
dues increased during this period as the Company purchased 30 social memberships
to aid in the sales of the remaining lots.

The decrease in other expense of $10,000  resulted from a one-time charge during
this period in 1999,  for  geo-technical  consulting  services  on various  lots
within "The Fairways" project.

        SIX MONTHS ENDED JUNE 30, 2000 VS. SIX MONTHS ENDED JUNE 30, 1999

REAL ESTATE

Revenues  from the sale of real estate for the six months  ended June 30,  2000,
increased  by $300,000  compared to the six month  period  ended June 30,  1999.
There were 13 lots at "The Fairways" sold in the first six months of the year as
of June 30, 2000, with gross revenues of $1,078,000 compared with gross revenues
of  $778,000  for the first  six  month  period of the year as of June 30, 1999,
which consisted of the sale of three lots at "The Fairways" for $245,000 and the
sale of Solano  Option for $533,000.  A more  detailed  discussion of the Solano
Option  sale is  described  in the  Company's  Form  10-KSB  for the year  ended
December 31, 1999.  The lot sales increase can be attributed to a turn around in
the real estate market in the Sacramento,  California area. However,  due to the
length  of time in  inventory,  the cost of sales of the lots in  inventory  has
reduced the profit margins considerably.

AGRICULTURAL

Storage revenue at the grain drying and storage facility decreased by $58,000 in
the six months ended June 30, 2000,  compared with the six months ended June 30,
1999.  The 2000 decrease  resulted from a lack of drying revenue during the 1999
fall harvest season.  The only storage revenue  generated  during the six month
period ended June 30, 2000 was from the out-bound  shipment of wheat in storage.
The west  warehouse at the storage  facility  remained empty during this period.
See "Item  2--Management's  Discussion  and Analysis of Financial  Condition and
Results of  Operations--Operating  Results-Three  months ended June 30, 2000 vs.
the three months ended June 30, 1999-Agriculture."

GENERAL

Compared with the six months ended June 30, 1999,  corporate  operating expenses
increased  by $124,000 in the six months  ended June 30,  2000.  The increase is
made up of office  salaries and benefits  ($4,000),  accounting  fees ($21,000),
legal  fees  ($106,000),   registrar/transfer  agent  fees  ($5,000),  directors
expenses  ($3,000)  and office  expense  ($3,000).  This  increase  is offset by
decreases in directors fees ($6,000) and directors consulting fees ($12,000).

Accounting,  registrar/transfer  agent fees and office  expense  increased  as a
result of the shareholder's meeting held on April 14, 2000. Legal fees increased
due to the proxy  preparation  for the  annual  shareholder  meeting  and due to
litigation relating to GFS Acquisition Corp.

The cost of real estate operations  decreased by $23,000 in the six months ended
June 30,  2000,  compared  with the six  months  ended June 30,  1999.  The most
significant decreases were

                                     - 19 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.


advertising expenditures ($14,000),  geo-technical consulting services ($9,000),
real property taxes ($7,000) and legal fees ($2,000). The decrease was offset by
an increase in sales trailer  expense  ($2,000) and Rancho Murieta  Country Club
dues ($7,000).

The  increase  in country  club dues  resulted  from the  purchase  of 30 social
memberships as a method to boost sales.

LIQUIDITY AND CAPITAL RESOURCES

During the six months ended June 30, 2000, cash, cash equivalents and marketable
securities  increased by $416,000  from  $3,601,000  at December  31,  1999,  to
$4,017,000 at June 30, 2000. The increase in cash was due primarily to lot sales
at "The  Fairways".  The most  significant  uses of cash during the three months
ended June 30, 2000, consisted of payment of long-term debt ($71,000).

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
and the building of the privacy wall;  to fund the required  payments due on the
grain  dryer  improvements  and  financing;  to fund costs that may be  incurred
relating to the toxic clean-up at Sam Hamburg Farm; to fund any tax payment that
may be due if the  California  Franchise Tax Board  disagrees with the Company's
exemptions (see Note 4 to the Condensed Consolidated Financial Statements);  and
to fund general and administrative expenses.

The Company  believes that sources of required  liquidity will be cash generated
from the rice  drying  and  storage  facilities,  anticipated  lot  sales at The
Fairways,  collection of notes  receivable,  and the cash  available at June 30,
2000. Based on known commitments,  the Company believes that the sources of cash
described  and the cash  available  at June 30,  2000,  will be adequate to fund
known liquidity requirements.


                                     - 20 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.

                           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 Condensed Consolidated
Financial Statements for the quarter ended June 30, 2000.

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

      None

ITEM 5.  Other Information
--------------------------

      None

ITEM 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

(a)   Exhibits

      10.1     Letter  Agreement  dated May 31,  2000 and  signed  May 31,  2000
               between SHF Acquisition,  a wholly-owned  subsidiary of the Dunes
               Hotels & Casinos Inc. and Pacific International Rice Mills

      10.2     Letter  Agreement  dated April 26, 2000 and signed April 26, 2000
               between SHF Acquisition,  a wholly-owned  subsidiary of the Dunes
               Hotels & Casinos Inc. and Pacific International Rice Mills

      27.01    Financial Data Schedule

(b)  Reports on Form 8-K

     Current Report on Form 8-K dated April 14, 2000 regarding Item 1, regarding
     a change of control  pursuant to the election of new directors  proposed by
     GFS and GFS Acquisition, Inc.


                                     - 21 -
<PAGE>
                          DUNES HOTELS AND CASINOS INC.


                                   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: August  15, 2000                          By: /s/ Steve K. Miller
                                                   -----------------------------
                                                   Steve K. Miller, President



                                                By: /s/ Marvin P. Johnson
                                                    ----------------------------
                                                    Marvin P. Johnson
                                                    Chief Accounting Officer