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

(Mark One)
   X   Quarterly report pursuant to Section 13 or 15(d) of the Securities
------- Exchange Act of 1934 for the quarterly period ended  September 30, 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:  4,473,943 shares of common
stock,  $.50 par value as of  November  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
           September 30, 2001 and December 31, 2000

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

           Condensed Consolidated Statements of Loss                    6
           for the nine months ended September 30, 2001
           and 2000

           Condensed Consolidated Statements of Cash Flows              7
           for the nine months ended September 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                15
           ---------------------------------------------

Part II.   Other Information

           Item 1. Legal Proceedings                                    22
           -------------------------
           Item 2. Changes in Securities                                22
           -------------------------------
           Item 3. Defaults Upon Senior Securities                      22
           ---------------------------------------
           Item 4. Submission of Matters to a Vote of Security Holders  22
           -----------------------------------------------------------
           Item 5. Other Information                                    22
           -------------------------
           Item 6. Exhibits and Reports on Form 8-K                     22
           ----------------------------------------

           Signatures                                         23





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

                                 ASSETS

                                                   September    December
                                                   30, 2001     31, 2000
                                                   ----------  -----------
                                                   (Unaudited)
Cash and cash                                    $     2,992 $      4,241
equivalents

Marketable                                               436          422
securities

Receivables
    Trade                                                 22           37
    Real                                                 769          526
estate sales
    Other                                                487

Inventory of real estate held                            186        1,126
for sale

Prepaid                                                   70           56
expenses

Property and less accumulated
equipment, depreciation
    and amortization of $951 and $862 in               3,049        3,134
2001 and 2000

Other assets                                               2            4
                                                   ----------  -----------

                                                 $     8,013 $      9,546
                                                   ==========  ===========







        See notes to condensed consolidated financial statements




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

                  LIABILITIES AND SHAREHOLDERS' EQUITY

                                                   September    December
                                                   30, 2001     31, 2000
                                                   ----------  -----------
                                                   (Unaudited)
Accounts payable                                   $      94   $      143

Accrued expenses                                         500          478

Deferred income                                           57          159

Long-term debt and capital lease                         405          589
obligation

Accrued preferred stock dividends in                     844        1,389
arrears
                                                   ----------  -----------
                                                       1,900        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 5,620 and 9,610 shares at
        September 30, 2001 and December 31, 2000
        respectively, aggregate liquidation
        value $1,546, including dividends in arrears        5            5


    Common stock - authorized 25,000,000 shares
        ($.50 par); issued 7,799,780 shares,
        outstanding 4,473,943 and 5,094,340 shares
        at September 30, 2001 and December 31, 2000
        respectively                                   3,900        3,900


    Capital in excess of par                          25,881       25,881

    Deficit                                         (20,895)     (20,960)
                                                   ----------  -----------
                                                       8,891        8,826
    Treasury stock at cost;  Preferred - Series
        B, 4,892 shares Common 3,325,837 shares       (2,778)      (2,038)
                                                   ----------  -----------

        Total shareholders' equity                     6,113        6,788
                                                   ----------  -----------
                                                   $   8,013   $    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 SEPTEMBER 30, 2001 AND 2000
                    (Dollars in thousands, except per share)

                                    UNAUDITED

                                                    2001         2000
                                                  ----------   ---------
Revenues
    Sales of real estate                        $        55 $       729
    Rental income, agricultural properties               15          14
    Drying and storage revenues                          88          74
                                                  ----------   ---------
                                                        158         817
                                                  ----------   ---------
Cost and expenses
    Cost of real estate sold                                        763
    Cost and expenses of rental income                    1           1
    Cost of drying and storage revenues                  72         110
    Selling, administrative and general
        Corporate                                       193         225
        Real estate operations                            2          46
    Depreciation                                         33          33
                                                  ----------   ---------
                                                        301       1,178
                                                  ----------   ---------
Loss before other credits(charges)and
income taxes                                           (143)       (361)

Other credits (charges)
    Interest and dividend income                         39          56
    Interest expense                                    (13)        (19)
    Gain on marketable securities, net                   22          28
                                                  ----------   ---------
                                                         48          65
                                                  ----------   ---------
Loss before income taxes                                (95)       (296)

Income taxes                                              2
                                                  ----------   ---------
Net loss                                        $      (93) $     (296)
                                                  ==========   =========

Weighted average number of shares outstanding     4,489,351    5,966,973

Basic and diluted loss per common share         $    (0.02) $    (0.05)
                                                  ==========   =========

       See notes to condensed consolidated financial statements


                                       5
<PAGE>
                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF LOSS
                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                    (Dollars in thousands, except per share)

                                    UNAUDITED

                                                    2001       2000
                                                  ---------   --------
Revenues
    Sales of real estate                        $    1,004 $    1,807
    Rental income, agricultural properties              43         43
    Drying and storage revenues                        250        110
                                                  ---------   --------
                                                     1,297      1,960
                                                  ---------   --------
Cost and expenses
    Cost of real estate sold                           983      1,928
    Cost and expenses of rental income                   3          3
    Cost of drying and storage revenues                208        249
    Selling, administrative and general
        Corporate                                      644        692
        Real estate operations                          29        131
    Depreciation                                       100         98
                                                  ---------   --------
                                                     1,967      3,101
                                                  ---------   --------

Loss before other credits (charges) and
income taxes                                          (670)    (1,141)

Other credits (charges)
    Interest and dividend income                       114        159
    Interest expense                                   (42)       (62)
    Other income                                         3          3
    Gain on marketable securities, net                 117         59
                                                  ---------   --------
                                                       192        159
                                                  ---------   --------

Loss before income taxes                             (478)      (982)

Income taxes                                             2          5
                                                  ---------   --------

Net loss                                        $    (480) $    (987)
                                                  =========   ========

Weighted average number of shares outstanding    4,660,935   5,966,973

Basic and diluted loss per common share         $   (0.11) $   (0.17)
                                                  =========   ========

      See notes to condensed consolidated financial statements

                                       6
<PAGE>
                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                  NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
                             (Dollars in thousands)

                                    UNAUDITED


                                                    2001       2000
                                                  ---------   --------
Cash flows from operating activities
    Net cash provided by operating activities   $    169    $    762
                                                  ---------   --------

Cash flows from investing activities:
    Investment in distressed asset notes             (480)
    Investment in marketable securities              (14)    (3,127)
                                                  ---------   --------

    Net cash used in investing activities            (494)    (3,127)
                                                  ---------   --------

Cash flows from financing activities
    Payments on long-term debt                       (184)      (165)
    Purchase of treasury stock                       (740)
                                                  ---------   --------

    Net cash used in financing activities            (924)      (165)
                                                  ---------   --------

Decrease in cash and cash equivalents              (1,249)    (2,530)

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

Cash and cash equivalents, end of period       $    2,992   $    793
                                                  =========   ========


                                       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  September  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 nine months ended  September 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.

      Effective with the third quarter of 2001, we have changed the organization
      of our business segments.  Prior to the third quarter of 2001, we reported
      the rental  revenue from the Sam Hamburg  Farm under our Farming  segment.
      Beginning with the third quarter,  we are including the rental income from
      the Sam Hamburg Farm under our Real Estate  segment.  In addition,  we are
      reporting a new business segment,  Distressed  Assets,  which reflects our
      intention to pursue the acquisition and work-out of distressed real estate
      related assets. For more information on our reportable  business segments,
      see Note 6 below.

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:

      Injunctive Action regarding Tender Offer

      On April 3, 2000, J.B.A.  Investments,  Inc.  ("JBA"),  General Financial
      Services,   Inc.  ("GFS")  and  GFS  Acquisition   Company,   Inc.  ("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.


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

      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
      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  3,000 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.

      Derivative Shareholder Litigation

      On  October  5,  2001,  GFS  and  GFS   Acquisition   (collectively,   the
      "Plaintiffs"),  derivatively  on behalf of the Company  and  individually,
      filed a lawsuit in the Superior  Court of the State of California  for the
      County of Sacramento (Case No. CIV.  S-01-1878 DFL PAN) against certain of
      the Company's former  officers,  directors,  attorneys,  and their spouses
      (collectively,  the  "Defendants").  The  action  seeks to remedy  alleged
      breaches of fiduciary duty, waste of corporate assets,  unjust enrichment,
      lack of candor,  and fraud by the Company's  former senior  executives and
      directors.  The lawsuit  alleges that during a substantial  portion of the
      Company's  existence,  the  Defendants  abused their control and fiduciary
      positions improperly to obtain for themselves and other officers, managers
      and employees millions of dollars in benefits,  while greatly damaging the
      Company and its  shareholders.  At this time, the ultimate outcome of this
      litigation  is  unknown;   however,   the  Company  anticipates  that  the
      Defendants will vigorously defend  themselves.  Even if the Plaintiffs are
      successful in obtaining a judgment  against the Defendants,  it is unknown
      whether any such judgment would be ultimately  collectible.  However,  the
      Company is aware that the former  directors  and  officers  of the Company
      have  the  benefit  of  a  $3,000,000  directors  and  officers  liability
      insurance  policy  that may be  available  to help pay any such  judgment.
      Although the Company is a defendant in the


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

      litigation,  it would be entitled to recover any  judgment  awarded  with
      respect to the derivative claims alleged by the Plaintiffs.

4.    Contingencies:

      (a) At September  30,  2001,  the Company has a net  operating  loss carry
        forward  (NOL) of  approximately  $53,248,200.  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.

        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  applicable  period.  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
      $843,824 as of September 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


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

      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 September  30,  2001,  the Company  abandoned  2,699 shares of
      Series B preferred stock and 170,258 shares of common stock.  These shares
      are currently being held as treasury shares.

      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 $545,027.  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
      September 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.

      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 September 30, 2001, the Company had
      acquired  an  additional  22,576  shares  of  common  stock as a result of
      shareholders  who  had  submitted   incomplete  or  defective  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,  170,258  common  shares  pursuant  to the  abandoned
      property laws of the states.  On September 30, 2001,  there were 4,473,943
      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:

                                    Nine Months Ended    Nine Months Ended
                                    September 30, 2001   September 30, 2000

      Loss from operations                $(480)              $(  987)
      Less:  preferred dividends          (  32)              (    54)
                                          ------              --------
      Loss to common stockholders
          used in basic EPS               $(512)              $(1,041)
                                           =====               =======

      Weighted average number
        of common shares used
        in basic and diluted EPS          4,660,935           5,966,973
                                          =========           =========



                               Three Months Ended   Three Months Ended
                               September 30, 2001   September 30, 2000

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

    Loss from Operations             $( 93)          $(296)
      Less:  preferred dividends      ( 11)           ( 18)
                                      ------         -----
      Loss to common stockholders
          used in basic EPS          $(104)          $(314)
                                      ======         =====


      Weighted average number
        of common shares used
        in basic and diluted EPS    4,489,351       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.


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

                          Reportable Segments (in thousands)

                  Grain Drying               Distressed
                   and Storage Real Estate     Assets         Total
                  ------------ -----------   ----------       -----

                         Nine Months Ended September 30, 2001

External revenue         $250      $1,047                   $1,297
                                               $  --
Depreciation              100          --         --           100
(Loss)/income             (58)                    --           (26)
                                      32
Assets                  3,073        962         480         4,515

                         Nine Months Ended September 30, 2000

External revenue         $110     $1,850                    $1,960
                                                $  --
Depreciation               98           --         --           98
(Loss)                   (237)       (212)         --         (449)
Assets                  3,175       1,652          --        4,827

                        Three Months Ended September 30, 2001

External revenue        $ 88         $ 70                     $158
                                                $  --
Depreciation              33            --         --           33
(Loss)/income            (17)          67          --           50
Assets                 3,073          962        480         4,515

                        Three Months Ended September 30, 2000

External revenue          $74        $743                     $817
                                                $  --
Depreciation               33           --         --           33
(Loss)                    (69)        (67)         --         (136)
Assets                  3,175       1,652          --        4,827



                                       13
<PAGE>
                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                    UNAUDITED

                   Nine        Nine     Three         Three
                  Months      Months    Months       Months
                   Ended       Ended      Ended       Ended
                Sept. 30,    Sept. 30,  Sept. 30,   Sept. 30,
                  2001         2000        2001       2000

Revenues
Total for
  reportable
  Segments          $1,297      $1,960       $158        $817
                -----------------------------------------------
Total               $1,297      $1,960       $158        $817
                ===============================================

Loss
Total for
  reportable
  Segments           $ (26)      $(449)                 $(136)
                                           $ 50
Corporate expenses    (644)       (692)      (193)       (225)
Interest income/
  Expense & other      192         159         48          65
                -----------------------------------------------
Loss before
  income
  Taxes              $(478)      $(982)     $ (95)      $(296)
                ===============================================

Assets
Total for
  reportable
  Segments          $4,515      $4,827     $4,515      $4,827
Cash,
  securities &
  Prepaids           3,498       4,719      3,498       4,719
                -----------------------------------------------
Total               $8,013      $9,546     $8,013      $9,546
                ===============================================


7. Common Stock Tender Offer

      On October 9, 2001,  the Company  commenced a tender  offer for all of its
common  stock at a purchase  price of $1.05 per share.  The tender offer for the
common stock will expire on November 30, 2001, unless extended.

                                       14
<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 September 30, 2001, all of
the lots have been  sold.  The only  remaining  activity  is the  collection  of
interest and principal  payments on notes resulting from past sales. The Company
currently holds approximately $769,000 of notes receivable,  which all mature by
calendar year 2003.

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 grain drying and storage  facility.  The grain drying and
storage facility has two warehouses (the east warehouse and the west warehouse).
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, which is a carry-over of rice that was dried during
                                       15
<PAGE>
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 was due 50%
upon  completion of filling the warehouse,  with the remaining 50% due within 30
days after the warehouse is emptied.  The Company  received the first payment of
approximately $70,000 during the month of September 2001.

The Northern  California rice market is currently  experiencing an excess supply
of rice. Many of the farmers in the area have taken their land out of production
and are leasing  their water rights to  down-stream  users.  In  addition,  rice
growers  in the  area  are  experiencing  increasing  competition  from  foreign
sources.  Due to the current market  conditions for rice in Northern  California
and the seasonal  nature of the grain drying and storage  facility,  the Company
was  unable to obtain any rice  drying or rice  storage  contracts  for the east
warehouse  this fall.  At this time,  management is unable to determine how long
the market for rice in Northern California will remain depressed.

The Company is actively  seeking  contracts for the storage of grains other than
rice (such as corn).  However,  contracts  for the storage of corn are generally
less profitable than those for the storage of rice due to the fact that (1) more
rice can be  stored  in the same  amount of  space,  (2) the  storage  price per
hunderweight  of grain is higher  for rice than corn and (3)  contracts  for the
storage of rice usually  include  related  charges for the drying of the rice. A
prolonged  depression in the market for rice in Northern California could have a
material adverse effect on the Company's grain drying and storage segment.

The Company  contacted a local grain  broker,  Levine Grain Co.,  Inc. to store
corn in the east  warehouse.  As of November  1, 2001,  the east  warehouse  is
full with  259,800  cwt. of corn being  stored on behalf of various  growers in
the area and the expected storage revenue is approximately $90,000.

DISTRESSED ASSETS

Beginning  with the third  quarter of 2001,  the Company has  established a new
business  segment:   Distressed  Assets.  The  Company's  president,  Steve  K.
Miller,  has over  thirteen  years  experience  investing  in similar  types of
assets through General Financial  Services,  Inc., a wholly-owned  corporation.
General Financial Services is the majority shareholder of the Company.

The Company currently intends to acquire  distressed real estate for the purpose
of developing or rehabilitating and then selling or operating the property.  The
Company is focusing on property that could be developed or converted into single
family or multi-family residences,  but may also consider developing commercial.
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.

In  addition,  the Company  will seek to acquire  other  distressed  assets that
management  believes can be resolved or worked-out at a profit.  The Company has
invested in two distressed non-


                                       16
<PAGE>
performing promissory notes owed by debtors in bankruptcy. The notes are secured
by  accounts   receivables,   second   mortgages   and  shares  in  two  limited
partnerships.  The notes were  purchased for $480,000,  which is a discount from
their  outstanding  principal,  interest and payable  expenses of  approximately
$650,000. To date, the Company has not realized any income from this investment.

There is  substantial  risk  with  this  type of  business  and  there can be no
assurance  that the Company will recover the principal of its investment or make
a profit after additional incurred expenses.

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.

On October 9, 2001,  the Company  commenced a second tender offer for the common
stock,  that may 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 second  tender  offer for the common
stock may not be successful in achieving such result. The Company intends to pay
for any shares acquired in the tender offer with its cash and cash equivalents.

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 Exchange
Act and related rules would no longer be applicable to the Company.  The Company
expects  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

                                       17
<PAGE>
under Section 12 of the Exchange Act. The board of directors anticipates that
if those provisions are no longer applicable to the Company it may 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 September 30, 2001 vs. the three months ended September
30, 2000.

Real Estate

Revenue from the sale of real estate lots for the three  months ended  September
30, 2001,  decreased by $674,000 over the same period ended  September 30, 2000.
During the three months ended September 30, 2001, a "Success Payment" of $55,000
was made on one lot that had previously  been sold compared with eight lots sold
during  the three  months  ended  September  30,  2000,  with  gross  revenue of
$729,000. The Company currently holds approximately $769,000 of notes receivable
in connection with prior lot sales.  Interest  income from the notes  receivable
associated  with the lot sales for the three  months  ended  September  30, 2001
increased by approximately  $10,600 compared to the three months ended September
30, 2000 due to an increase in the  principal  balance of the notes  receivables
due to the sale of additional  lots.  "The  Fairways"  project is now completed.
There  were also  decreases  in cost of sales of  $763,000,  and a  decrease  in
related selling expenses of $44,000 due to the completion of the project.

Net rental  income  from  agricultural  properties  for the three  months  ended
September 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 income from the grain drying and storage facility for the three months ended
September 30, 2001,  increased by  approximately  $14,000 when compared with the
three months ended  September 30, 2000. The increase 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 during 2000, as one of
the warehouses remained empty. During the three month period ended September 30,
2000, there was storage revenue in the amount of approximately  $74,000 compared
to revenue of  approximately  $88,000 for the three months ended  September  30,
2001. The increased  storage  revenue during the period ended September 30, 2001
resulted  from the stored  paddy rice dried  during the fall 2000 season and the
corn that was placed in storage during the third quarter of 2001.

Distressed Assets

The Company has invested in two distressed  non-performing promissory notes owed
by debtors in bankruptcy. The notes are secured by accounts receivables,  second
mortgages and shares in two limited  partnerships.  The notes were purchased for
$480,000,  which is a discount from their  outstanding  principal,  interest and
payable  expenses  of  approximately  $650,000.  To date,  the  Company  has not
realized any income from this investment.

                                       18
<PAGE>
General

When  compared  with the  three  months  ended  September  30,  2000,  corporate
operating  expenses  decreased  by  approximately  $32,000 for the period  ended
September 30, 2001. Major items contributing to the decrease were administrative
and general expenses consisting of officers and directors  insurance  ($18,000),
officers travel expense ($13,000),  and directors expenses ($8,100).  Offsetting
this  decrease  were  increases  in expenses  associated  with the tender  offer
($4,300) and legal fees ($2,800).

Interest expense  decreased $6,000 for the three months ended September 30, 2001
compared with the three month period ended  September 30, 2000, due to decreased
debt on the grain  drying  and  storage  facility.  For the three  months  ended
September  30, 2001  compared  with the three month period ended  September  30,
2000, gain on marketable  securities  decreased by $17,000 along with a decrease
in  interest  and  dividend  income of $6,000 due to the  movement of short term
assets from money market accounts to short term commercial paper.

Nine months ended September 30, 2001 vs. nine months ended September 30, 2000.

Real Estate

Revenues from the sale of real estate lots at "The Fairways" for the nine months
ended  September  30,  2001,  decreased  by $803,000  compared to the nine month
period  ended  September  30,  2000.  There  were 13 lots sold in the first nine
months of 2001, with gross revenues of $1,004,000,  compared with gross revenues
of $1,807,000 for the first nine months of 2000,  which consisted of the sale of
21 lots. All lots in this  development are sold as of September 30, 2001.  Along
with the  decrease  in  revenue,  the cost of real  estate  sold and the related
expenses  decreased by  $1,047,000  due to the  decreased  sales  activity.  The
Company currently holds approximately $769,000 of notes receivable in connection
with prior lot sales.  Interest income from the notes receivable associated with
the lot  sales  for the nine  months  ended  September  30,  2001  increased  by
approximately  $36,000  compared to the nine months ended September 30, 2000 due
to an increase in the principal balance of the notes receivables due to the sale
of additional lots.

Net rental  income from the  property  at Sam  Hamburg  Farm for the nine months
ended September 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 $140,000
in the nine months ended September 30, 2001, compared with the nine months ended
September 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  and the facility  remained
empty  during most of 2000.  In addition,  contributing  to the increase was the
storage income from approximately  350,000 cwt. of inventory carry-over of paddy
rice placed into

                                       19
<PAGE>
storage  during the spring of 2000 in addition  to storage  income from the corn
harvest which started in September 2001.

Distressed Assets

The Company has invested in two distressed  non-performing promissory notes owed
by debtors in bankruptcy. The notes are secured by accounts receivables,  second
mortgages and shares in two limited  partnerships.  The notes were purchased for
$480,000,  which is a discount from their  outstanding  principal,  interest and
payable  expenses  of  approximately  $650,000.  To date,  the  Company  has not
realized any income from this investment.

General

Compared  with the nine months ended  September  30, 2000,  corporate  operating
expenses decreased by $48,000 in the nine month period ended September 30, 2001.
The decrease is made up of officers and directors liability insurance ($47,000),
accounting fees ($47,000),  legal fees ($35,000),  directors  expenses ($15,000)
director fees ($8,000),  general insurance  expense  ($5,000),  and rent expense
($4.000).  This decrease is offset by increases in expenses  associated with the
tender offer ($113,000).

Interest expense  decreased $20,000 for the nine months ended September 30, 2001
compared with the nine month period ended  September 30, 2000,  due to decreased
debt on the  grain  drying  and  storage  facility.  For the nine  months  ended
September 30, 2001 compared with the nine month period ended September 30, 2000,
gain on  marketable  securities  increased  by  $58,000  partially  offset  by a
decrease in interest and dividend income of $45,000 due to the movement of short
term assets from money market accounts to short term commercial paper.

LIQUIDITY AND CAPITAL RESOURCES

During the nine months ended  September 30, 2001,  cash,  cash  equivalents  and
marketable  securities  decreased by $1,235,000  from $4,663,000 at December 31,
2000, to $3,428,000 at September  30, 2001.  The most  significant  uses of cash
during the nine months  ended  September  30, 2001  consisted of the purchase of
shares of stock in the  Company's  tender  offer,  payments to states for shares
abandoned under state abandoned property laws and the payment on long-term debt.

The  Company  completed  its  tender  offer for  shares of the  common  stock on
February  15,  2001 and for Series B  preferred  stock on March 16,  2001.  As a
result of the tender offers,  the Company paid $488,869 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,  as of the  period  ended
September 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  $251,228,  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
$545,027.

                                       20
<PAGE>
On October 9, 2001,  the Company  commenced a tender offer for all of its common
stock at a purchase  price of $1.05 per share.  The tender  offer for the common
stock will expire on November 30, 2001, unless extended.

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;  to fund the costs of the second  tender offer and to pay for
any shares acquired in the tender offer; 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 and cash equivalents  available at September 30, 2001.
Based on known  commitments,  the  Company  believes  that the  sources  of cash
described and the cash available at September 30, 2001, will be adequate to fund
known liquidity requirements.

In  addition,  the  Company  currently  intends  to acquire  undeveloped  and/or
distressed real estate for the purpose of developing or rehabilitating  and then
selling or  operating  the  property.  The Company is focusing on property  that
could be developed or converted into single family or  multi-family  residences,
but may also consider  developing  commercial  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.


                                       21
<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 September 30, 2001.

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 September 5, 2001 between SHF  Acquisition,  a
           wholly-owned subsidiary of the Dunes Hotels & Casinos Inc. and Levine
           Grain Co., Inc.

(b)   Reports on Form 8-K

           None

                                       22
<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: November  14, 2001                         By: /s/ Steve K. Miller
                                                 Steve K. Miller, President



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



                                       23