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, 2001
____ 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)

46735 County Road 32B, P.O. Box 130, Davis, California 95617
--------------------------------------------------------------------------------
(Address of principal executive offices)

(530) 753-4890
--------------------------------------------------------------------------------
(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:  4,470,615 shares of common
stock, $.50 par value as of August 1, 2001.

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, 2001 and December 31, 2000

            Condensed Consolidated Statements of Loss                    5
            for the three months ended June 30, 2001
            and 2000

            Condensed Consolidated Statements of Loss                    6
            for the six months ended June 30, 2001
            and 2000

            Condensed Consolidated Statements of Cash Flows              7
            for the six months ended June 30, 2001
            and 2000

            Notes to Condensed Consolidated Financial                    8
            Statements

            Item  2. Management's Discussion and Analysis of
            ------------------------------------------------
            Financial Condition and Results of Operations                14
            ---------------------------------------------

Part II.    Other Information

            Item 1. Legal Proceedings                                    19
            ------------------------------------

            Item 2. Changes in Securities                                19
            -----------------------------

            Item 3. Defaults Upon Senior Securities                      19
            ---------------------------------------

            Item 4. Submission of Matters to a Vote of Security Holders  19
            -----------------------------------------------------------
            Item 5. Other Information                                    19
            -------------------------

            Item 6. Exhibits and Reports on Form 8-K                     19
            ----------------------------------------

            Signatures                                                   20








                                        2
<PAGE>
                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2001 AND DECEMBER 31, 2000
                             (Dollars in thousands)

                                     ASSETS

                                                 June         December
                                               30, 2001       31, 2000
                                              ------------  -------------
                                              (Unaudited)
Cash and cash equivalents                   $       3,705 $        4,241

Marketable securities                                 450            422

Receivables
    Trade                                                             37
    Real estate sales                                 769            526

Inventory of real estate held for sale                187          1,126

Prepaid expenses                                       28             56

Property and equipment,  less accumulated
    depreciation and amortization of $917
    and $862 in 2001 and 2000                       3,082          3,134

Other assets                                           27              4
                                              ------------  -------------

                                            $       8,248 $        9,546
                                              ============  =============









            See notes to condensed consolidated financial statements

                                       3
<PAGE>
                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
                       JUNE 30, 2001 AND DECEMBER 31, 2000
                             (Dollars in thousands)

                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                      June         December
                                                    30, 2001       31, 2000
                                                   ------------  -------------
                                                   (Unaudited)
Accounts payable                                 $         154  $         143

Accrued expenses                                           477            478

Deferred income                                             68            159

Long-term debt and capital lease obligation                468            589

Accrued preferred stock dividends in arrears               875          1,389
                                                   ------------  -------------

                                                         2,042          2,758
                                                   ------------  -------------
Shareholders' equity
    Preferred stock - authorized 10,750,000
        shares ($.50 par); issued 10,512
        shares Series B $7.50 cumulative
        preferred stock, outstanding 5,898
        shares and 9,610 shares at June 30,
        2001 and December 31, 2000, respectively,
        aggregate liquidation value $1,612,
        including dividends in arrears                       5              5

    Common stock - authorized 25,000,000 shares
        ($.50 par); issued 7,799,780 shares,
        outstanding 4,496,444 shares and 5,094,340
        shares at June 30, 2001 and December 31,
        2000, respectively                               3,900          3,900

    Capital in excess of par                            25,881         25,881

    Deficit                                            (20,833)       (20,960)
                                                   ------------  -------------
                                                         8,953          8,826
    Treasury stock at cost;  Preferred -
        Series B, 4,614 shares
        Common 3,303,336 shares                         (2,747)        (2,038)
                                                   ------------  -------------

        Total shareholders' equity                       6,206          6,788
                                                   ------------  -------------

                                                 $       8,248  $       9,546
                                                   ============  =============


            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, 2001 AND 2000
                    (Dollars in thousands, except per share)

                                    UNAUDITED

                                                      2001            2000
                                                 ---------------  --------------
Revenues
    Sales of real estate                        $           224  $          683
    Rental income, agricultural properties                   13              15
    Drying and storage revenues                              81              22
                                                 ---------------  --------------
                                                            318             720
                                                 ---------------  --------------
Cost and expenses
    Cost of real estate sold                                228             705
    Cost and expenses of rental income                        1               1
    Cost of drying and storage revenues                      53              71
    Selling, administrative and general
        Corporate                                           246             106
        Real estate operations                                5              43
    Depreciation                                             33              33
                                                 ---------------  --------------
                                                            566             959
                                                 ---------------  --------------

Loss before other credits (charges) and income
    taxes                                                  (248)           (239)

Other credits (charges)
    Interest and dividend income                             38              57
    Interest expense                                        (14)            (21)
    Other income                                              3
    Gain / (loss) on marketable securities, net              30               9
                                                 ---------------  --------------
                                                             57              45
                                                 ---------------  --------------

Loss before income taxes                                   (191)           (194)

Income taxes                                                 (4)             (5)
                                                 ---------------  --------------

Net loss                                        $          (195) $         (199)
                                                 ===============  ==============

Weighted average number of shares outstanding         4,612,495       5,966,973

Basic and diluted loss per common share         $         (0.05) $        (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, 2001 AND 2000
                    (Dollars in thousands, except per share)

                                    UNAUDITED

                                                      2001            2000
                                                 ---------------  --------------
Revenues
    Sales of real estate                        $           949  $        1,078
    Rental income, agricultural properties                   27              29
    Drying and storage revenues                             162              35
                                                 ---------------  --------------
                                                          1,138           1,142
                                                 ---------------  --------------
Cost and expenses
    Cost of real estate sold                                983           1,164
    Cost and expenses of rental income                        2               2
    Cost of drying and storage revenues                     135             139
    Selling, administrative and general
        Corporate                                           451             467
        Real estate operations                               27              85
    Depreciation                                             67              65
                                                 ---------------  --------------
                                                          1,665           1,922
                                                 ---------------  --------------

Loss before other credits (charges) and income
    taxes                                                  (527)           (780)

Other credits (charges)
    Interest and dividend income                             75             104
    Interest expense                                        (30)            (43)
    Other income                                              3               3
    Gain / (loss) on marketable securities, net              96              30
                                                 ---------------  --------------
                                                            144              94
                                                 ---------------  --------------

Loss before income taxes                                   (383)           (686)

Income taxes                                                 (4)             (5)
                                                 ---------------  --------------

Net loss                                        $          (387) $         (691)
                                                 ===============  ==============

Weighted average number of shares outstanding         4,612,495       5,966,973

Basic and diluted loss per common share         $         (0.09) $        (0.12)
                                                 ===============  ==============


            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, 2001 AND 2000
                             (Dollars in thousands)

                                    UNAUDITED


                                                     2001            2000
                                                ---------------  --------------
Cash flows from operating activities:
    Net cash provided by operating activities  $           322  $          487
                                                ---------------  --------------

Cash flows from investing activities:
    Investment in marketable securities                    (28)           (131)
                                                ---------------  --------------

                                                           (28)           (131)
                                                ---------------  --------------

Cash flows from financing activities
    Payments on long-term debt                            (121)            (71)
    Purchase of treasury stock                            (709)
                                                ---------------  --------------

                                                          (830)            (71)
                                                ---------------  --------------

Increase in cash and cash equivalents                     (536)            285

Cash and cash equivalents, beginning of period           4,241           3,323
                                                ---------------  --------------

Cash and cash equivalents, end of period       $         3,705  $        3,608
                                                ===============  ==============















            See notes to condensed consolidated financial statements

                                       7
<PAGE>

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
              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, 2000, was derived
     from the audited financial  statements  included in the Company's 2000 Form
     10-KSB. The June 30, 2001 information reflects all adjustments  (consisting
     solely of normal  recurring  adjustments)  which  are,  in the  opinion  of
     management,  necessary for a fair  presentation of the financial  position,
     results of operations and cash flows of the Company.

     The results of operations  for the six months ended June 30, 2001,  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 2000 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 South Lake  Acquisition  Corporation  (South  Lake),
     after elimination of all material inter-company balances and transactions.

3.   Legal proceedings:

     FDIC Litigation/Change of Control
     ---------------------------------

     On January  19,  2001,  General  Financial  Services,  Inc.  completed  the
     foreclosure of 3,000,000  shares of the Company's  common stock pursuant to
     the  order  of  the  court  in the  proceeding  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. The Company has no further  involvement  in these legal  proceedings.
     For additional  information regarding these legal proceedings,  see Note 10
     to the financial  statements  included in the Company's Form 10-KSB for the
     fiscal year ended December 31, 2000.

     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,ss.ss.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.,


                                       8
<PAGE>
                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED

     et al. Case No. 00127 WEB (D. Kan.  2000).  The plaintiffs  allege that the
     USI Group conducted a tender offer for the Company's non-convertible 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 Series B preferred  stock.  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  stockholders  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  stock
     purchases by the USI Group and damages.  On August 3, 2000, the Company was
     joined as a plaintiff.

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

     On March 9, 2001, the USI Group filed an answer and several  counter-claims
     against the plaintiffs,  including the Company.  USI subsequently  withdrew
     its  answer  and   counter-claims  and  filed  an  amended  answer  denying
     plaintiffs' claims without the previously stated counter-claims against the
     plaintiffs and the Company.

     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 stock.

4.   Contingencies:

     (a)  At June 30, 2001,  the Company has a net operating  loss carry forward
          (NOL) of approximately  $53,298,000.  The Board of Directors  believes
          that this NOL is subject to severe  limits under the Internal  Revenue
          Code  and as a  result,  the  Board  of  Directors  believes  there is
          substantial  doubt as to whether the NOL has any value to the Company.
          If there has been an  ownership  change for purposes of Section 382 of
          the Internal  Revenue Code of 1986, as amended (the Code),  then there
          is a  limitation  on the  amount of  income  that can be offset by NOL
          carryovers.  In  general,  an  ownership  change  occurs  when a major
          shareholder of a loss  corporation  increases  their ownership by more
          than 50%, which is tested over a three-year  period.  Depending on the
          interpretation  of the IRS,  an  effective  change in control may have
          occurred as early as January 4, 2000,  upon the order  vesting  voting
          control with GFS.

     (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 consultants,  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 toxics-laden soil.

                                       9
<PAGE>
                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED

          Because  of the  ongoing  testing,  the  State of  California  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, of which $472,000 has been accrued.  However, if
          on-site  remediation  can be achieved,  it is estimated  that the cost
          will be no more than  $170,000.  The Company is unable to predict when
          the  ongoing  testing  will be  complete  or what the outcome of these
          tests will be.  Accordingly,  it is reasonably  possible the estimates
          will change materially in the near term as the testing and remediation
          work continues.

5.   Loss per common share:

     Loss per common share has been computed  using the weighted  average number
     of shares outstanding  during the quarter:  4,612,495 and 5,966,973 for the
     quarters  ended  June 30,  2001 and 2000,  respectively.  Dividends  on the
     Series B  preferred  stock have been  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
     $874,505 as of June 30, 2001.

     During June 2001, the Company completed  abandoned  property reports to the
     various  states as required by state law.  This resulted from the Company's
     efforts to locate the affected  Series B preferred and common  stockholders
     in connection with its tender offer  completed  during the first quarter of
     2001. In general, state law requires the Company to abandon shares of stock
     or their value when  shareholders  are  deceased,  without  adequate  asset
     transfer  arrangements,  or change their mailing address without  informing
     the Company or without the Company  being able to locate  them.  The states
     accepted  cash in lieu of the  abandoned  securities.  The amounts paid per
     share were the same as those paid in the Company's  tender offer ($1.00 per
     share of common  stock  share and  $30.00  per share of Series B  preferred
     stock).  By June 30, 2001, the Company  abandoned  2,637 shares of Series B
     preferred  stock and  170,333  shares of common  stock.  These  shares  are
     currently being held as treasury shares. As of August 13, 2001, the Company
     had abandoned an additional 62 shares of Series B preferred stock and 3,253
     shares  of  common  stock.  These  additional  abandoned  shares  are still
     included in the total number of outstanding  shares  outstanding as of June
     30, 2001, and in the per share data for the three and six months ended June
     30, 2001.

     As a result of the  purchase  of Series B  preferred  shares in the  tender
     offer and the  abandonment  of Series B preferred  stock,  the  accumulated
     dividends on the Series B preferred  stock were decreased by $536,400.  The
     Company has no present  intention to pay  dividends on either its common or
     preferred shares.

     On January 1, 2000,  there were  6,375,096  common shares  outstanding.  On
     March 3, 2000, the Company  foreclosed on the 1,280,756  common shares that
     had been pledged as collateral in favor of a subsidiary of the Company.  On
     June 30, 2000, there were 5,094,340 common shares outstanding.  See Note 10
     to the Company's  financial  statements included in the Form 10-KSB for the
     year ended December 31, 2000.

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

     On January 1, 2001,  there were  5,094,340  common shares  outstanding.  On
     February 15, 2001, the Company  acquired  427,563 common shares pursuant to
     its tender  offer for common  stock.  By June 30,  2001,  the  Company  had
     acquired  an  additional  17,534  shares  of  common  stock as a result  of
     shareholders who had submitted  incomplete or defect letters of transmittal
     in connection with the tender offer having cured such defects. As discussed
     above,  on June 1, 2001, the Company  effectively  abandoned to the various
     states,  173,586 common shares  pursuant to the abandoned  property laws of
     the  states.   On  June  30,  2001,  there  were  4,496,444  common  shares
     outstanding.

     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, 2001          June 30, 2000
                                    --------------          -------------
      Loss from operations            $(387)                     $(691)
      Less:  preferred dividends       ( 22)                      ( 36)
                                      ------                     ------
      Loss to common stockholders
          used in basic EPS           $(409)                     $(727)
                                      ======                     ======

      Weighted average number
        of common shares used
        in basic and diluted EPS    4,612,495                  5,966,973
                                    =========                  =========



                                    Three Months Ended      Three Months Ended
                                    June 30, 2001           June 30, 2000
                                    -------------           -------------

      Loss from Operations            $(195)                    $(199)
      Less:  preferred dividends       ( 11)                     ( 18)
                                      ------                    ------
      Loss to common stockholders
        used in basic EPS             $(206)                    $(217)
                                      ======                    ======


      Weighted average number
        of common shares used
        in basic and diluted EPS    4,612,495                 5,966,973
                                    =========                 =========

6.   Segment Information:

     The Company's  operations are  classified  into three  principal  reporting
     segments  that provide  different  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.


                                       11

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

                            Reportable Segments (in thousands)

                      Grain Drying
                       And Storage    Real Estate   Farming        Total
                       -----------    -----------   -------        -----
                               Six Months Ended June 30, 2001

External revenue             $162          $949     $ 27          $1,138
Depreciation                   67                                     67
(Loss)/income                 (40)          (61)      25             (76)
Assets                      3,083           809      146           4,038

                               Six Months Ended June 30, 2000

External revenue              $35        $1,078     $ 29          $1,142
Depreciation                   65                                     65
(Loss)/income                (169)         (171)      27            (313)
Assets                      3,858         2,592      146           5,796

                              Three Months Ended June 30, 2001

External revenue              $81          $224     $ 13            $318
Depreciation                   33                                     33
(Loss)/income                  (5)           (9)      12              (2)
Assets                      3,083           809      146           4,038


                              Three Months Ended June 30, 2000

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



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


                    Six Months      Six Months    Three Months  Three Months
                      Ended            Ended         Ended         Ended
                     June 30,2001  June 30, 2000  June 30,2001  June 30, 2000

Revenues
Total for reportable
    Segments            $1,138        $1,142         $318          $720
                   ------------------------------------------------------
Total                   $1,138        $1,142         $318          $720
                   ======================================================

Loss
Total for reportable
    Segments             $ (76)        $(313)        $ (2)        $(133)
Corporate expenses        (451)         (467)        (246)         (106)
Interest income/
    expense & other        144            94           57            45
                   ------------------------------------------------------
Loss before income
    Taxes                $(383)        $(686)       $(191)        $(194)
                   ======================================================

Assets
Total for reportable
    Segments            $4,038        $5,796       $4,038        $5,796
Cash, securities &
    Prepaids             4,210         4,068        4,210         4,068
                   ------------------------------------------------------
Total                   $8,248        $9,864       $8,248        $9,864
                   ======================================================





                                       13
<PAGE>

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 and  anticipated  sources of liquidity  for the coming  fiscal year.
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

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,  California.  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 June 30, 2001, all of the
lots have been sold.

FARMING

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.  The year 2001 is the last year of the two-year lease. It is not known at
this time if the  Company  will lease the  property  to the same  tenant for the
coming year.

GRAIN DRYING AND STORAGE

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 have the option to buy the drying facility for $1.

As of  August  5,  2001,  the  Company  entered  into a  contract  with  Pacific
International  Rice Mills, Inc. (PIRMI) to store  approximately  350,000 cwt. of
dry paddy rice in the west warehouse.  This agreement  covers the rice currently
in storage,

                                       14
<PAGE>

which is a  carry-over  of rice that was dried  during the 2000  drying  season.
Payment for the storage  charges on the paddy rice currently in storage was made
during the 2000 drying  season with the storage  period  ending August 30, 2001.
The new contract period will be from September 1, 2001 to August 31, 2002. Under
the new contract, payment for storage will be 50% upon completion of filling the
warehouse and 50% within 30 days after the warehouse is emptied.  As the rice is
currently  in  storage,  the  Company  expects to receive  the first  payment of
approximately $70,000 during the month of September 2001.

Currently the Company does not have any signed  agreements to store or dry paddy
rice for the east warehouse during the 2001 season.  Due to the large carry-over
of  inventory  throughout  the  industry  and the low market  price,  due to the
increased  inventory,  it cannot be determined at this time if there will be any
paddy rice  available  for drying.  The Company is working  with PIRMI and other
rice  producers in the area to obtain  contracts to dry and store paddy rice for
the 2001 season.  The Company is also  exploring  other  possibilities,  such as
storing other grain, such as corn, in the east warehouse.

If the  Company  were to lose its drying  and  storage  customers  or if it were
unable to obtain any storage  contracts for the east warehouse,  it would have a
material adverse effect on the Company's grain drying and storage segment.

OTHER

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

Due to the success of the Company's tender offer for its common stock and Series
B preferred  stock  which  closed in March 2001 and the  elimination  of certain
shareholders  due to the  application  of state  abandoned  property  laws,  the
Company anticipates that as of January 1, 2002, it will be able to terminate its
registration  of the  Series  B  preferred  stock  under  Section  12(g)  of the
Securities  Exchange Act of 1934 (the "Exchange Act") and suspend its obligation
to file  periodic  reports  with the SEC with  respect to the Series B preferred
stock.

The board of  directors  of the  Company  is also  currently  exploring  various
options, including a second tender offer for the common stock, that might result
in the Company  being able to  terminate  its  registration  of the common stock
under  Section  12(g) of the  Exchange  Act and suspend its  obligation  to file
periodic  reports with the SEC with respect to the common stock as of January 1,
2002. However,  the board of directors has not yet made a decision to pursue any
such action and such action,  if taken,  may not be successful in achieving such
result.

In the event that the  Company is able to suspend  its filing  obligations  with
respect to both the Series B preferred  stock and the common stock,  the Company
will then no longer be considered  publicly traded and shareholders  will not be
able to trade their shares of common stock on the  over-the-counter  market. The
Company  anticipates that there will be minimal affect on the trading market for
the Series B preferred  stock as there in no present market or exchange for such
shares. In addition, the obligation of certain significant  shareholders to file
reports under Section 13 of the Exchange Act and the related rules,  the insider
short-swing  trading  rules  contained in Section 16 of the Exchange Act and the
related  rules,  the proxy  solicitation  rules  contained  in Section 14 of the
Exchange Act and the related  rules and certain of the rules  regulating  tender
offers for shares of the Company's stock contained in Section 14 of the

                                       15
<PAGE>

Exchange Act and related rules would no longer be applicable to the Company. The
Company expects some savings from discontinuing audited financial statements and
legal expenses in preparing periodic reports to the SEC.

The Company is also currently subject to the provisions of the New York Business
Corporation  Law which  restrict  certain  transactions  between the Company and
General  Financial  Services,  Inc.,  GFS  Acquisition  Company,  Inc. and Steve
Miller.  Those  provisions would no longer apply to the Company if it terminates
the  registration of its common stock and Series B preferred stock under Section
12 of the  Exchange  Act.  The  board  of  directors  anticipates  that if those
provisions are no longer  applicable to the Company it would authorize a reverse
stock split that would have the effect of cashing out and eliminating all of the
remaining  minority common  stockholders.  At that time, only General  Financial
Services,  Inc.  and GFS  Acquisition  Company,  Inc.  would  remain  as  common
stockholders.

OPERATING RESULTS

Three months ended June 30, 2001 vs. the three months ended June 30, 2000.

Real Estate

Revenue  from the sale of real estate lots for the three  months  ended June 30,
2001, decreased by $456,300 over the same period ended June 30, 2000. There were
three lots sold through June 30, 2001,  with gross revenue of $226,600  compared
with eight lots sold during the three  months  ended June 30,  2000,  with gross
revenue of $682,900.  The three lot sales during the three months ended June 30,
2001 were the  final  lots to be sold and this  project  is now  completed.  The
decrease in revenue was offset by a $477,000 decrease in the cost of real estate
sold and a $38,000  decrease  in related  expenses  due to the  decreased  sales
activity.

Farming

Net rental income from  agricultural  properties for the three months ended June
30, 2001,  remained  constant  compared to the same period in 2000.  This is the
second year of a two-year lease at Sam Hamburg Farm.

Grain Drying and Storage

The loss from the grain  drying and storage  facility for the three months ended
June 30, 2001,  decreased by approximately  $74,000 when compared with the three
months ended June 30, 2000.  The loss  decrease was  primarily  the result of an
increase in 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, 2000,  there were
grain  shipments  generating  revenue  in the  amount of  approximately  $32,000
compared to revenue of approximately $88,000 for the three months ended June 30,
2001.  The  increased  storage  revenue  during the period  ended June 30,  2001
resulted from the paddy rice dried during the fall 2000 season.


                                       16
<PAGE>


General

When  compared  with the three months ended June 30, 2000,  corporate  operating
expenses increased by approximately $140,000 for the period ended June 30, 2001.
Major  items  contributing  to the  increase  were  administrative  and  general
expenses consisting of legal fees ($89,000), officers salary ($25,000), expenses
relating  to  the  tender  offer  ($32,000),   and  accounting  fees  ($15,000).
Offsetting  this  increase were  decreases in officers and  directors  insurance
($15,000)  and rent  expense  resulting  from  the  office  move in  March  2001
($6,000).

Interest  expense  decreased  $7,000 for the three  months  ended June 30,  2001
compared with the three month period ended June 30, 2000,  due to decreased debt
on the grain  drying and storage  facility.  For the three months ended June 30,
2001  compared  with  the  three  month  period  ended  June 30,  2000,  gain on
marketable  securities  increased by $21,000  partially  offset by a decrease in
interest and dividend income of $19,000 due to the movement of short term assets
from money market accounts to short term commercial paper.

Six months ended June 30, 2001 vs. six months ended June 30, 2000.

Real Estate

Revenues from the sale of real estate lots at "The  Fairways" for the six months
ended June 30,  2001,  decreased  by $129,000  compared to the six month  period
ended  June 30,  2000.  There were 12 lots sold in the first six months of 2001,
with gross  revenues of $949,000  compared with gross revenues of $1,078,000 for
the first six months of 2000,  which  consisted of the sale of 13 lots. All lots
in this  development  are sold as of June 30, 2001.  The decrease in revenue was
offset by a  $181,000  decrease  in the cost of real  estate  sold and a $58,000
decrease in related expenses due to the decreased sales activity.

Farming

Net rental income from the property at Sam Hamburg Farm for the six months ended
June 30, 2001,  remained  constant  compared to the same period in 2000. This is
the second year of a two-year lease.

Grain Drying and Storage

Storage revenue at the grain drying and storage  facility  increased by $127,000
in the six months ended June 30, 2001,  compared  with the six months ended June
30, 2000. The 2001 increase resulted from the operation of the rice dryer during
the 2000 fall harvest season and the resultant storage income. During 1999 there
was no rice drying at the facility.  In addition,  contributing to the increase,
was the storage income from approximately  350,000 cwt. of inventory  carry-over
of paddy rice placed into storage during the spring of 2000.

General

Compared with the six months ended June 30, 2000,  corporate  operating expenses
decreased by $16,000 in the six month  period ended June 30, 2001.  The decrease
is made  up of  accounting  fees  ($45,000),  legal  fees  ($38,000),  directors
consulting fees ($30,000),  officers/directors

                                       17
<PAGE>

liability  insurance  ($29,000) and director fees and expenses  ($15,000).  This
decrease is offset by  increases  in expenses  associated  with the tender offer
($77,000), officers salaries ($50,000) and officers travel ($14,000).

Interest  expense  decreased  $13,000  for the six months  ended  June 30,  2001
compared with the six month period ended June 30, 2000, due to decreased debt on
the grain  drying and storage  facility.  For the six months ended June 30, 2001
compared  with the six month  period  ended June 30,  2000,  gain on  marketable
securities  increased by $36,000  partially offset by a decrease in interest and
dividend  income of $29,000 due to the  movement of short term assets from money
market accounts to short term commercial paper.

LIQUIDITY AND CAPITAL RESOURCES

During the six months ended June 30, 2001, cash, cash equivalents and marketable
securities  decreased by $508,000  from  $4,663,000  at December  31,  2000,  to
$4,155,000 at June 30, 2001.  The most  significant  uses of cash during the six
months  ended June 30, 2001  consisted of the purchase of shares of stock in the
Company's tender offer and the payment on long-term debt.

On March 16,  2001,  the Company  completed  its tender  offer for shares of the
common stock and Series B preferred  stock. As a result of the tender offer, the
Company  paid  $459,813 to the former  holders of the common  stock and Series B
preferred  stock,  which  amount  was  paid  from  the  Company's  cash and cash
equivalents.  In addition,  during the period  ended June 30, 2001,  the Company
abandoned to the various states  pursuant to the state  abandoned  property laws
common stock and Series B preferred  stock in the amount of $249,443,  which was
also paid from the Company's cash and cash equivalents.

As a result of the tender offer and the abandonment of Series B preferred stock,
the Company's  accrued  dividends on the Series B preferred  stock  decreased by
$536,400.

The Company  believes that its primary  requirements  for  liquidity  during the
remainder of 2001 will be to fund the  required  payments due on the grain dryer
financing,  to fund equipment purchases and or modifications at the grain drying
facility;  to fund costs that may be incurred  relating to the toxic clean-up at
Sam Hamburg Farm; and to fund general and administrative expenses.

The  Company  anticipates  that  sources  of  required  liquidity  will  be cash
generated  from the grain  drying and storage  facilities,  collection  of notes
receivable, and the cash available at June 30, 2001. Based on known commitments,
the Company  believes that the sources of cash  described and the cash available
at June 30, 2001, will be adequate to fund known liquidity requirements.

In addition,  the Company currently  intends to acquire  undeveloped real estate
for the purpose of  developing  and then  selling the  property.  The Company is
focusing on property that could be developed into single family residences,  but
may also consider  developing  commercial and/or  multi-family  properties.  The
Company does not have any current  commitments  to acquire any such property and
there can be no assurance that the Company will be able to acquire such property
on terms that are  favorable to the Company.  The Company would seek to fund the
purchase  of such  property  through  a  combination  of debt and the use of the
Company's short term liquid assets.


                                       18


<PAGE>
                           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  June 5, 2001 and  signed  August 5, 2001
              between SHF  Acquisition,  a wholly-owned  subsidiary of the Dunes
              Hotels & Casinos Inc. and Pacific International Rice Mills

(b)   Reports on Form 8-K

              None

                                       19
<PAGE>

                                   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  14, 2001                          By:   /s/ Steve K. Miller
      ----------------                             ---------------------------
                                                Steve K. Miller, President



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




                                       20
<PAGE>