UNITED STATES
                 SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C.,  20549

                              FORM 10-K
(Mark One)
  X  Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 [No Fee Required] for the fiscal year ended DECEMBER 31, 1997
     or
     Transition  report  pursuant  to Section 13 or 15(d) of the Securities
     Exchange Act of 1934 [No Fee Required]  for  the  transition  period from
      to                          .
Commission File No. 1-4385

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

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

4600 NORTHGATE BOULEVARD, SUITE 130, SACRAMENTO, CALIFORNIA           95834
(Address  of principal executive offices)                           (Zip Code)

Registrant's telephone number, including area code (916) 929 2295

Securities Registered Pursuant to Section 12(b) of the Act:
                                                    Name of each exchange
     Title of each class                              on which registered
           NONE                                               NONE

Securities Registered Pursuant to Section 12(g) of the Act:
                                                 SERIES B, $7.50 CUMULATIVE
  COMMON STOCK, $.50 PAR VALUE                PREFERRED STOCK, $.50 PAR VALUE
      (Title of class)                             (Title of class)

     Indicate  by  check mark whether the registrant (1) has filed all reports
required to be filed  by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding  12  months  (or  for  such  shorter period that the
registrant  was required to file such reports), and (2) has  been  subject  to
such filing requirements for the past 90 days.
                         YES  X      NO
     Indicate  by  check  mark  if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form 10-K or  any
amendment to this Form 10-K.  (X)

     The aggregate market value of the voting  stock held by non-affiliates of
the Registrant (2,094,340 common shares) computed by reference to the price at
March  11,  1998 ($.28125 per share) was approximately  $589,033.   No  market
value is assigned  to  the  Series B preferred stock.  See "Item 5. Market for
Registrant's Common Equity and Related Matters".

The number of shares of common  stock  outstanding  as  of  March 11, 1998 was
6,375,096.
         Documents Incorporated by Reference Not Applicable

This document consists of    pages with exhibits,    pages without exhibits.

<PAGE>2

ITEM 1. BUSINESS

     Dunes Hotels and Casinos Inc. was incorporated in New York  in  1956.  In
this  report  the term "the Company" refers to Dunes Hotels and Casinos  Inc.,
individually, or  with  its  wholly-owned subsidiaries, Continental California
Corporation (Continental), M &  R Corporation (MRC) and MRC's subsidiary M & R
Investment  Company,  Inc.  (MRI)  and   MRI's  subsidiaries  SHF  Acquisition
Corporation (SHF) and Southlake Acquisition Corporation (Southlake).

     The Company, through its subsidiaries, operates in two principal business
segments:  real estate (development and sale of residential lots and rental of
agricultural land), and agriculture (drying and storing rice).  See Note 15 of
Notes  to  Consolidated  Financial  Statements  for  information  relating  to
industry segments and class of services.

     The  Company's  real  estate  segment   develops   and   sells  completed
residential  lots  primarily  to  builders of custom homes and to the  general
public located in and around the greater Sacramento, California area.

     The agricultural segment dries  harvested  rice  over  a two month period
(approximately September 15 to November 15) and stores, for a  fee,  the dried
rice  (or  other grains) until it is removed by the owner.  The Company  dries
and stores rice  principally  for  one  customer,  Farmers  Rice  Co-operative
(Farmers).   Farmers  accounts  for  approximately 98% of the rice drying  and
storage revenue.  If the Company were  to lose Farmers as a customer, it would
have  a  material  adverse effect on the Company's  agricultural  segment.  In
September 1997, the  Company  completed  construction  of  a  new  rice drying
facility  adjacent  to  its  rice  storage facility.  See "Item 1. Business  -
Agricultural Segment - Grain Storage and Drying Facilities."

RESOLUTION OF SASA DISPUTE

     On October 24, 1995, the Company,  along  with  Continental, MRI and SHF,
entered  into  a  Settlement,  Release  and Loan Modification  Agreement  (the
Settlement  Agreement) with the Resolution  Trust  Corporation  (the  RTC)  in
connection  with   the  Company's  obligation,  alleged  to  be  approximately
$21,107,796, to San  Antonio  Savings  Association (the SASA Obligation) which
became effective on December 6,  1995.   As  a  result  of the settlement, the
Company recorded a one-time extraordinary gain of $8,346,000.  Pursuant to the
terms of the Settlement Agreement and as full payment of  the SASA Obligation,
(i)  Continental  transferred  four  parcels of non-contiguous  real  property
located northwest of San Diego, California,  owned by Continental,  to the RTC
in consideration of a $1,500,000 credit against  the SASA Obligation, (ii) the
Company paid $290,000 to the RTC, and (iii) the Company  delivered  a  secured
promissory  note  to the RTC (the RTC Settlement Note) in the principal amount
of $2,710,000.  The RTC Settlement Note bears interest at an annual rate of 1%
over the prime rate,  adjustable  semi-annually;  provided,  however, that the
interest rate shall not be less than 8% or more than 12% per annum.   The  RTC
Settlement  Note requires monthly payments of interest until December 6, 2000,
at which time  the  entire  unpaid principal amount and all accrued and unpaid
interest is due.  The RTC Settlement  Note  is  collateralized  by   a deed of
trust   on  50  unsold  residential  lots  at  The Fairways in Rancho Murieta,
California  and a collateral assignment  of purchase  money  promissory  notes
in  the  aggregate  principal amount of $227,160 secured by 2 residential lots
previously sold at The  Fairways.   The  SASA Obligation has been purchased by
Beal Bank.

<PAGE>3

REAL ESTATE SEGMENT:

THE FAIRWAYS

     The  Company,  through  SHF, developed approximately  50  acres  of  real
property as a residential planned  unit development known as "The Fairways" in
Rancho Murieta, California.  Rancho  Murieta  is  a  3,500 acre master planned
unit  development located approximately 25 miles from Sacramento,  California.
Rancho  Murieta  consists  primarily  of  single  family  homes,  town houses,
commercial  property  and  two  18-hole  championship  golf courses, including
country club facilities.  The Fairways, located within the  boundaries  of one
of  the  golf courses at Rancho Murieta, was subdivided into 110 single family
estate lots.  As of March 11, 1998, 49 lots remain unsold.

     In connection  with  its development of The Fairways, SHF was required to
construct several water, sewer and drainage facilities (the Improvements) that
are oversized to serve lands  outside  the  boundaries  of  The  Fairways (the
Benefited  Properties).   SHF  and Rancho Murieta Community Services  District
(the District) have entered into  an  agreement  (the Reimbursement Agreement)
wherein  SHF  and  the  District  have  agreed  that the  total  cost  of  the
Improvements was $1,597,425 and that of this amount,  $276,088 is allocable to
The Fairways and $1,321,337 is allocable to the Benefited Properties.  SHF and
the District also agreed that future construction of certain  other facilities
will   benefit   both   The   Fairways  and  the  Benefited  Properties.   The
Reimbursement Agreement provides that the amount that will be allocable to The
Fairways will be approximately  $176,500  and will be deducted from the amount
due SHF resulting in a net amount due to SHF of approximately $1,140,900.  The
funds will be reimbursed to SHF out of proceeds  of  any  subsequent community
facilities  district  or  by  direct payment by subsequent developers  of  the
Benefited Properties.  SHF's right  to  reimbursement  under the Reimbursement
Agreement  will expire in twenty years from September 1995.   The  Company  is
unable  to  predict   what   amount,  if  any,  will  be  received  under  the
Reimbursement Agreement.  The  rights to reimbursement under the Reimbursement
Agreement are personal to SHF and  do not run with The Fairway property unless
assigned by SHF.

     As part of the development of The  Fairways,  SHF  entered  into  a Parks
Development  Agreement  dated  February  20,  1991  (the Parks Agreement) with
Rancho  Murieta  Association  (RMA).    In  August 1994, SHF  entered  into  a
Settlement Agreement Regarding Payment of Park  Fees  (the  Park  Fee  Payment
Agreement).   The Park Fee Payment Agreement acknowledged that the total  park
fees owing to RMA  were  $173,238.  On  December 29, 1997, SHF paid all of the
remaining park fees that were due to RMA.

     As part of the Settlement Agreement described above with the  RTC, all of
the unsold lots in The Fairways are encumbered  by a deed of trust in favor of
the RTC.  The deed of trust requires a $40,000 payment for the release of each
encumbered lot. See "Resolution of SASA Dispute" above.

     On October 7, 1996, the Company signed a letter  agreeing  to  modify the
Purchase  and  Option  Agreement  (the New Agreement) between the Company  and
Murieta  Investors,  LLC,  (MI) formerly  West  Coast  Properties,  LLC.   The
Purchase and Option Agreement is described in detail in the Company's Form 10-
K for the year ended December  31,  1995.  See Item 1. "Business - Real Estate
and Related Activities - The Fairways."   The  New  Agreement provides that MI
will purchase from the Company 6 lots at The Fairways  at $40,000 per lot plus
payment of the park fees applicable to the lots purchased.   In  addition, the
Company  may receive contingent consideration equal to 20% of the gross  sales

<PAGE>4

price of each  residential  dwelling sold less $40,000 (the Success Payments).
Eight months after the purchase  of the initial 6 lots, MI will be entitled to
purchase a second group of 6 lots.   An  additional  group  of  6  lots may be
purchased  every  4 months thereafter until 40 lots have been purchased.   The
initial payment for  the second 6 lots purchased will be $40,000, plus payment
of the applicable park  fees  and  the  Success  Payments.  Beginning with the
purchase of the third group of 6 lots, the initial  payment  will  be $45,000,
plus  payment of the park fees applicable to the lots purchased.  The  Success
Payments will be 20% of the gross sales price of each residential dwelling lot
sold less  $45,000.   If  MI  sells any lot without constructing a residential
dwelling thereon, the Company will  receive  20%  of  the  sale  price without
offset  of  the  initial  payment.   The  sale  of the first 6 lots closed  on
December 20, 1996.  Because of certain difficulties  regarding MI's ability to
obtain plans and permits relating to the first 6 lots  purchased,  MI  did not
purchase any lots in 1997.

WHITE RANCH

     On  July  15, 1997, the Company closed the sale of the White Ranch.   Net
proceeds from the  sale  were  approximately $5,965,000 of which approximately
$2,982,500 was paid to the Company.   The balance of the proceeds were paid to
the other 50% owner of the White Ranch.

SAM HAMBURG FARM

     MRI  owns approximately 150 acres of  agricultural  property  called  Sam
Hamburg Farm  (Hamburg Farm) in Fresno and Merced Counties, California.  MRI's
150 acres are operated  by  SHF.   Of  the  150  acres,  40  acres contain the
airstrip  and  the  shop areas which are the focus of continuing  attempts  at
chemical clean-up.  The  remaining  110 acres are leased to various tenants at
an annual aggregate rental of approximately $20,000.

     In connection with a potential 1991  sale  of  a portion of Hamburg Farm,
SHF was advised of possible contamination on the site.  The Company retained a
specialist to inspect the sites, take samples, analyze  the samples and report
to the Company.  The specialist indicated that there were  two  major sites of
chemical  spillage,  a  storage facility for diesel fuels and an old  airstrip
which  had  been  used  for the  loading  and  fueling  of  aircraft  applying
agricultural  chemicals to  the  surrounding  farm  lands.   The  Company  has
substantially completed the clean-up relating to the diesel storage tanks at a
cost of approximately $100,000.  The Company has disposed of a large amount of
the contaminated  earth  at  an approved site for the storage of toxic wastes.
However, approximately 5,000 cubic  yards  of contaminated earth  still remain
to  be  disposed of.  The Company, through its  chemical  and  toxic  clean-up
consultant,   has   been  working  with  the  California  State  Environmental
Protection Agency, in  seeking  alternate  means to the disposal in toxic dump
sites of chemical and toxics-laden soil.  The  State  has  participated in the
funding of several projects by a number of chemical treatment firms in efforts
to try other detoxification methods on the soil.

     Because of the ongoing testing, the State has not imposed a disposal date
upon  the Company.  Cost of disposal is estimated at $100 per  cubic  yard  or
approximately $500,000. However, if on-site remediation can be achieved, it is
estimated  that the cost will be between $90,000 and $115,000.  The Company is
unable to predict  when  the  ongoing  testing  will  be completed or what the
outcome of these tests will be.  As of December 31, 1997, the Company has paid
approximately $500,000, including the $100,000 expended for the diesel storage
tanks and has accrued an estimated $174,000 relating to  the  balance  of  the
clean up.  That estimate could change as the remediation work takes place.

<PAGE>5

RESIDENTIAL  LOTS, NORTH LAS VEGAS

     The  Company  owned  57 partially developed residential lots in North Las
Vegas,  Nevada. On July 3, 1997,  the  Company  closed  the  sale  of  the  57
residential  lots.   Net  proceeds  to the Company were approximately $645,600
which  included  a  reimbursement of  approximately  $72,600  for  water  fees
previously paid.  Out  of  the  net  proceeds,  the Company paid approximately
$318,000 to Beal Bank, the purchaser of the SASA Obligation.

SOLANO COUNTY OPTION

     The  Company  has  an  option  (the  Solano  County  Option)  to  acquire
approximately 1,690 acres of farm land located in Solano  County,  California.
The  Company  acquired  the  Solano  County  Option  as  part  of a settlement
agreement  between  Baby  Grand  Corp. (BGC), an Anderson Entity, a  financial
institution and MRI.  The purchase  price  of  the  Solano  County  Option was
$1,043,902.   The  Solano County Option provides that the Company can purchase
the 1,690 acres at a  price  of  $3,000,000  (the Option Purchase Price).  The
Company will receive a credit of $1,000,000 against the Option Purchase Price.
The option expires on May 1, 2003.  Upon certain conditions and the consent of
the first lienholder on BGC's Maxim Hotel and  Casino  and  the  Nevada Gaming
Control Board, MRI can require BGC to repurchase the Solano County Option (The
Repurchase  Agreement).   The Repurchase Agreement expires on the earlier  of:
(i) May 1, 2002 or (ii) 1 year prior to the date the Option Agreement expires.
However, due to the recent  events  between  BGC, Mr. Anderson and the Federal
Deposit Insurance Corporation, the Company  does  not believe that BGC will be
in a position to honor the repurchase agreement.  The Company can only recover
the value of the option (i) by exercising the option  and selling the property
or (ii) selling the option.  However, if the fair value  of  the real property
should drop below the Option Purchase Price, the Company would  not be able to
recover all of its investment in the Solano County Option.  The owner  of  the
property  under  option  has  informed  the  Company that it is current on all
payments due under the first mortgage lien. During the quarter ended September
30,1997, the Company wrote down its investments in the Solano County Option by
$400,000 because management believes that the  Option  Purchase  Price  is  in
excess of the estimated fair value of the property believed to be $2,600,000.

AGRICULTURAL SEGMENT:

GRAIN STORAGE AND RICE DRYING FACILITIES

     SHF  owns a grain storage facility (The Storage Facility) located in Yolo
County, California.   The Storage Facility generally stores, for a fee, grains
owned principally by Farmers  Rice  Co-operative.   The  Storage  Facility can
store approximately 34,000 tons of grain.

     On  May  29, 1997, SHF signed a contract (the Contract) in the amount  of
$1,651,800  for  the  construction of the Drying Facility adjacent to the rice
storage facility in Yolo  County,  California.   The  Contract did not include
certain  costs such as permits, landscaping, paving, utility  lines,  interest
costs, etc.   These additional costs were estimated to be between $200,000 and
$250,000.   In  connection   with   the   financing  of  the  Drying  Facility
construction, SHF entered into the following  agreements  with  ICON Cash Flow
Partners,  L.P.,  Series E (ICON, LP) and ICON Financial Corp. (ICON):  (1)  A

<PAGE>6

promissory note (the Note) dated April 3, 1997, between ICON,LP and SHF in the
principal amount of  $1,150,000,  with  interest at the rate of 12% per annum.
Interest is payable on the first day of the  month following the first advance
and on the first day of the month thereafter.   Upon  completion of the Drying
Facility, advances made under the Note will be rolled into the equipment lease
financing as of the Base Lease Commencement Date (the last  day  of  the month
following  the  date the Drying Facility is declared complete by both SHF  and
ICON, LP),  (2) A  Master  Equipment  Lease  (the  Lease) dated April 3, 1997,
between ICON and SHF.  Beginning with the Base Lease  Commencement  Date, ICON
will lease to SHF the Drying Facility for a period of five years.  At  the end
of the five year period, SHF will have the right to purchase not less than all
of the Drying Facility for $1.00.  The monthly rental under the Lease will  be
approximately  2.202%  of  the  funded  Drying  Facility cost (estimated to be
approximately  $25,000  per  month)  and will begin on  March  30,  1998.   In
addition to being collateralized by the  Drying  Facility,  SHF  has  provided
additional  collateral  in  the form of a Deed of Trust on certain parcels  of
property, including the parcel on which the storage facility is located.  Both
the Note and the Lease are guaranteed by MRI and the Company (collectively the
Guarantors).  Before the Guarantors  are  liable  for  any deficiency, ICON or
ICON,  LP must first proceed against the Drying Facility  and  the  additional
collateral.  Both  the  Lease and the Note contain certain events of defaults,
one  of which relates to any  material  adverse  change  in  the  business  or
financial  condition  of  SHF  and  the  Guarantors (defined as a reduction of
Tangible Net Worth of 20% or more) and another  relates to the loss of Farmers
as a customer.  These events of defaults only apply during the period the Note
remains unpaid.  The Drying Facility  commenced operations  on  September  15,
1997.

OTHER ACTIVITIES:

CERTAIN LOANS

     From  time  to  time  the  Company  has  made  loans  to various Anderson
Entities, Anderson Related Entities, Directors and Executive  Officers  of the
Company and other unrelated third parties.  All loans to related parties  were
approved  by the Company's Audit Committee.  The most significant of these are
as follows:

BABY GRAND CORP.

     On November  26, 1997, the Company entered into a Loan Purchase Agreement
(the Note Sale Agreement)  with  John  B.  Anderson, as Trustee of the John J.
Anderson Family Trust.  The Note Sale Agreement  provided  for  the  sale of a
note  (the BGC Note) issued by Baby Grand Corp. payable to MRI.  The BGC  Note
is described  in detail in the Company's Form 10-K for the year ended December
31, 1996.  See  Item  1.  "Business  - Other Activities - Certain Loans - Baby
Grand  Corp."   The Note Sale Agreement  and  events  subsequent  thereto  are
described in detail  in Item 3. "Legal Proceedings - Federal Deposit Insurance
Corporation, et. al. v. John B. Anderson et. al.

GOLDEN STATE TRUST

     In 1997, management  determined that the remaining balance of $150,000 on
the $250,000  loan to Golden  State  Trust,  an  Anderson  related entity, was
uncollectible and therefore wrote the note off against the related reserve.

<PAGE>7

Other Transactions

     In  August  1997,  the Company entered into a verbal  agreement  with  an
Anderson related entity to  lease  the West Sacramento Drying Facility for the
purpose of drying short-grain rice during the 1997 rice drying season.  Rental
for the West Sacramento Drying Facility  was  $20,000  plus  50%  of  the rice
drying  and  storage profit after deduction of the $20,000 rent payment.   The
rent payment was  made  by transferring to the Anderson related entity a piece
of equipment, valued at $20,000,  that  was  previously  used in the Steadfast
Cattle operation.

DIRECTORS

     On  October  1,  1997,  the Company loaned James H. Dale,  the  Company's
Secretary/Treasurer and President  of  MRI,  $85,000.   The  loan is for three
years  with  interest  at  9%  with  interest  payable monthly.  The  loan  is
collateralized  by  a  deed  of  trust  on  real property  and  a  conditional
assignment of Mr. Dale's director's fees.

COMPETITION

REAL ESTATE SEGMENT:

     The   real  estate  investment  and  development   business   is   highly
competitive.   The Company competes for real estate investments with investors
of  all  types,  including   domestic   and  foreign  corporations,  financial
institutions, other real estate investment  companies and individuals, many of
which have substantially greater resources than the Company.  In addition, the
Company's  properties are subject to local competitors  from  the  surrounding
areas.  The  Company does not consider its real estate business to be seasonal
in nature.

     With respect  to  the  residential real estate, the Company competes with
numerous other developers and residential properties in the greater Sacramento
area  of  California,  ranging from  regional  and  national  firms  to  local
companies,  many  of which  have  substantially  greater  resources  than  the
Company.  In the greater  Sacramento  area,  the  Company's  residential  lots
compete  on  the  basis of, among other things, location, price and quality of
amenities, such as  the  golf  course  and  country  club facilities at Rancho
Murieta.

     With  respect  to the Company's  agricultural real  estate,  the  Company
competes for tenants  with  other regional or local agricultural properties in
the  area of California where  the  Company's  property is located.    Leasing
property to prospective tenants is generally determined on the basis of, among
other things, lease rates and quality of top soil.   The  Company's  leases of
agricultural  property  are  generally for a short-term period of one year  or
less.

AGRICULTURAL SEGMENT:

     With respect to the Company's  rice  drying  and  storage operations, the
Company  competes  with  other rice drying and storage companies  in  Northern
California.  The rice drying operation is seasonal and runs from approximately

<PAGE>8

September 15 to November 15.   The storage facility, depending on the types of
grain being stored, operates on  a  year  around  basis.   The rice drying and
storage  operations  are  impacted by the number of acres of rice  grown,  the
yield  per acre, weather conditions  and  government  programs.   Because  the
Company  dries  and stores rice for principally one customer, the loss of that
customer could have  a  material adverse effect on the rice drying and storage
operation.

SALES AND MARKETING

     The Company employs  a  sales  consultant for the sale of its residential
lots at the Fairways, although sales  by  independent  real estate brokers are
also  encouraged.   The residential lots are marketed primarily  by  means  of
media advertising, customer  referrals  and  realtor contacts.  Selling prices
are  set  based on the local market conditions and  competitive  factors.  The
agricultural  properties are marketed to farmers in the surrounding area where
the agricultural  property  is located.  The rice drying and storage operation
is marketed to principally one customer.

REGULATION

     The Company must comply  with  various  federal,  state and local zoning,
building, pollution, environmental, health, and advertising  ordinances, rules
and regulations, including regulations relating to specific building materials
to  be used, building design, minimum elevations of properties  and  emissions
from the rice drying and storage facilities.

EMPLOYEES

     At  March  11,  1998, the Company had 8 employees.  None of the Company's
employees  are covered  by  collective  bargaining  agreements.   The  Company
believes its employee relations to be satisfactory.

ITEM 2.  PROPERTIES

REAL ESTATE SEGMENT:

THE FAIRWAYS

     The Fairways  is  comprised  of  approximately 50 acres of land which has
been developed into 110 single family estate  lots.   It  is located in Rancho
Murieta, California, adjacent to Highway 16, approximately  25 miles southeast
of Sacramento.  The land is encumbered by bonds in the approximate  amount  of
$600,000,  which  is the pro rata share of a bonded indebtedness incurred that
enabled the Rancho  Murieta  Community  Services District to acquire the water
and  sewer  facilities  that  serve the community  of  Rancho  Murieta,  which
includes the Fairways.   The bonded indebtedness will be assumed, pro rata, by
the individual lot buyers.   As part of the settlement of the SASA Obligation,
the Company signed a note in favor of the RTC in the original principal amount
of $2,710,000.  The note is collateralized  by,  among other things, a deed of
trust  on  the  lots at The Fairways.  The deed of trust  requires  a  $40,000
payment for the release of each of the encumbered lots.  See "Item 1. Business
-- Real Estate  Segment -- The Fairways."

<PAGE>9

RESIDENTIAL LOTS -- NORTH LAS VEGAS

     The residential  lots  in North Las Vegas were sold on July 3, 1997.  See
"Item 1. Business - Real Estate Segment - Residential Lots North Las Vegas.

WHITE RANCH

     The White Ranch was sold  on July 15, 1997.  See "Item 1. Business - Real
Estate Segment - White Ranch.

SAM HAMBURG FARM

     Sam Hamburg Farm consists of  approximately  150  acres remaining from an
original 4,600 acres of agricultural land.  The land is  located  in  the most
southwesterly  corner  of Merced County, California and the most northwesterly
corner  of  Fresno  County,   California,  approximately  two  miles  east  of
Interstate Highway 5.  It is approximately  ten miles south of the city of Los
Banos, California.  The Company leases the remaining  land to various tenants,
whose current crops include cotton, small grains, and certain types of melons.
The terms of the leases are usually one crop year on a  cash  rent basis.  See
"Item 1.  Business - Real Estate Segment - Sam Hamburg Farm".

AGRICULTURAL SEGMENT:

GRAIN STORAGE AND DRYING FACILITY

     The Storage and Drying Facilities are located in Yolo County, California,
approximately  15 miles west of the city of Sacramento.  The Storage  Facility
can store approximately  34,000  tons  of  grain.  The Drying Facility can dry
approximately  165,000  pounds  of  grain  in  a 24 hour period.   The  Drying
Facility  dries enough grain to fill approximately  one-half  of  the  Storage
Facility.   See "Item 1. Business -- Agricultural Segment -- Grain Storage and
Rice Drying Facilities."

EXECUTIVE OFFICES:

     The Company's  executive  office  is  located  in  an  office building in
Sacramento, California.  The executive offices are 1,353 square  feet  and are
leased  under  terms of a lease agreement expiring June 30, 2001.  The Company
believes that the executive office is suitable for its needs.

ITEM 3.  LEGAL PROCEEDINGS

     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),  instituted  on  July 14, 1995.  John  B.  Anderson  (Anderson),  Edith
Anderson (Anderson's wife), Cedar Development Co. (Cedar), J.A Inc (JA) J.B.A.
Investments Inc, (JBA and,  collectively  with  Anderson, his wife, Cedar, and
JA, the Anderson Parties) are involved in litigation (the Anderson Litigation)
with the Federal Deposit Insurance Corporation (the  FDIC).   This  matter  is
more  fully  described  in the Company's Form 10-K for the year ended December
31,  1996,  see  "Item  3.  Legal  Proceedings  -  Federal  Deposit  Insurance
Corporation, et al. v. John B.  Anderson,  et  al.";  Form 8-K, "Item 5. Other
Events," dated February 4, 1997; Form 8-K, "Item 5. Other Events," dated March
26, 1997; Form 8-K, "Item 5. Other Events," dated July  8, 1997; and Form 8-K,
"Item  1.Changes  In  Control Of Registrant and Item 5. Other  Events,"  dated

<PAGE>10

December 16, 1997.  Until  December  11,  1997, Anderson was the President and
Chairman of the Board of the Company and Chairman  of  the  Board  of  various
subsidiaries  of the Company.  Prior to the events described herein, Anderson,
through his ownership  of Cedar, the parent of Baby Grand Corp. (BGC) and JBA,
owned approximately 4,280,756  shares  or  67.2%  of the Company's outstanding
common stock (the Common Stock).  Of those shares (i)  3,000,000  shares  (the
FDIC  Pledged  Shares) have been pledged as collateral in favor of entities of
which the FDIC is  a  successor  and/or assign, and (ii) 1,280,756 shares (the
BGC Pledged Shares) had been pledged as collateral in favor of a subsidiary of
the Company.  The BGC Pledged Shares  have been ordered to be turned over to a
special liquidating master (the Special Master) appointed by the United States
District Court, District of Nevada (the  Nevada  District  Court)  to sell the
assets  that  serve  as  collateral  for  the  obligation  due the FDIC by the
Anderson Parties.

     In July 1997, the FDIC won a motion in the Anderson Litigation before the
Nevada  District  Court to enforce its security interest in the  FDIC  Pledged
Shares.  On December  12, 1997, the FDIC filed in the Nevada District Court an
emergency motion to acknowledge  the  FDIC's right to act by unanimous written
consent and to authorize the FDIC to so  act  with  respect to Cedar, BGC, JBA
and JA.  On December 16, 1997, with the consent of all parties to the Anderson
Litigation, the Nevada District Court issued an order  declaring that the FDIC
has the right to act by written consent with respect to  Cedar,  BGC,  JBA and
JA.   Because of the Nevada District Court's order, the FDIC has the power  to
exercise  voting  rights  with  respect  to  the  FDIC  Pledged  Shares, which
represent 47.1% of the outstanding Common Stock.  Because the FDIC  is able to
exercise  voting  rights with respect to the FDIC Pledged Shares, the FDIC  is
able to exercise substantial  influence  with  respect  to the election of the
entire  Board  of  Directors  of  the  Company  and all matters  submitted  to
stockholders.  The FDIC is able to significantly  influence  the direction and
future  operations  of  the  Company,  including  decisions  regarding  future
financing  (which  could  involve the issuance of additional Common  Stock  or
other securities) and decisions  regarding  the  day-to-day  operations of the
Company's  real  estate  and agricultural operations.  If the Nevada  District
Court ultimately determines  that  the  FDIC  has authority to exercise voting
rights with respect to the BGC Pledged Shares,  then  the  FDIC would have the
power to vote 67.2% of the outstanding Common Stock of the Company.   In  such
event,  the  FDIC  would  be  able  to control, rather than only significantly
influence, the election of the entire  Board  of  Directors of the Company and
all other matters submitted to stockholders.

     In  a letter dated January 15, 1998, to the Company,  the  FDIC  demanded
that the Company  hold a special meeting of the stockholders of the Company by
January 30, 1998,   at  which  meeting  the  FDIC  advised the Company that it
intends to vote or cause BGC and JBA to vote the FDIC  and  BGC Pledged Shares
to  remove  the  existing  board of directors of the Company and  to  elect  a
designee or designees of the  FDIC to constitute the new board of directors of
the Company.  The FDIC further stated that no corporate action should be taken
by the Company which is inconsistent  in  any  manner  with  the rights of the
FDIC.

     In  response to the FDIC's demand of January 15, 1998, the  directors  of
the  Company  on  January  27,  1998,  held  a  board  meeting  and  met  with
representatives  of  the FDIC.  The Company stated that in light of regulatory
requirements under state  and  federal securities laws, the Company was unable
to hold a special stockholders meeting  by  January  30,  1998.   The  Company
indicated  that  it  is  willing  to  discuss  the procedures and effects of a
stockholder meeting with the FDIC, but pending further  information  from  the
FDIC,  the  Company   was deferring the formal setting of the meeting date and
record date for voting  purposes.   The  FDIC  has  not  yet  responded to the
Company.

<PAGE>11

     Further,  the FDIC has successfully obtained the approval of  the  Nevada
District Court to  authorize  the  liquidation  of  the  assets  that serve as
collateral for the obligation owing to the FDIC by the Anderson Parties.   The
FDIC's proposed plan for disposition of the collateral is more fully described
in  the  Company's  10-Q   for  the  quarter ended June 30, 1997, see "Item 2.
Managements Discussion and Analysis of  Financial  Condition  and  Results  of
Operations". On March 12, 1998, the Nevada District Court approved the sale of
the  FDIC's  security  interest in that portion of the  collateral relating to
the stock of BGC and JA.   The  sale  of  the  security interest may allow the
purchasers to foreclose and assume ownership  of  the stock of BGC and JA.  At
the same time, the Nevada District Court approved the FDIC's request for a 120
day extension to liquidate the remaining collateral.

     Regardless of what action, if any, the FDIC should determine to take with
respect to the Company, if there is a change of more than 50% of the ownership
of the outstanding Common Stock (taking into account the action of the FDIC as
well  as certain other changes that have occurred over  the  prior  three-year
period),  there  will  be a change of ownership of the Company for purposes of
the Internal Revenue Code  of  1986,  as  amended (the Code).  At December 31,
1997, the Company had a net operating loss carryforward (NOL) of approximately
$50,900,000.   The Board of Directors believes  that  this  NOL  represents  a
valuable asset to  the  Company  which may or may not be used in future years.
It is unclear whether or not the events  described  herein  have resulted in a
change  of ownership  under the Code.  If the FDIC or a third-party  purchaser
obtains the  power  to  vote  the  BGC  Pledged Shares in addition to the FDIC
Pledged Shares, there would be a change in  ownership  under  the Code.  It is
possible  that  the Internal Revenue Service will take the position  that  the
events described  below  or  other  events within the three-year period, taken
together with the events described above, have already resulted in a change in
ownership under the Code.  If there is  a  change of ownership under the Code,
the  value  of  the  Company's NOL would be materially  adversely  reduced  or
eliminated.  There can  be  no  assurance  that a change of ownership will not
occur or has not already occurred.

     On November 26, 1997, the Company entered  into a Loan Purchase Agreement
(the Note Sale Agreement) with Anderson, as Trustee  of  the  John J. Anderson
Family Trust (the Trust).  At such date, Anderson was President  and  Chairman
of  the  Board of the Company and through his ownership of Cedar was the  sole
shareholder  and  President  of BGC.  The Note Sale Agreement provided for the
sale of a note (the BGC Note)  issued  by BGC payable to MRI.  The BGC Note is
described in detail in the Company's Form 10-K for the year ended December 31,
1996.  See Item 1. "Business - Other Activities  -  Certain Loans - Baby Grand
Corp."   The BGC Note had a principal balance at the date  of  the  Note  Sale
Agreement of approximately $1,900,000 and was due on December 1, 1997.  It was
carried on  the Company's books at approximately $100,000, an amount which the
Company believed  to  be  its net realizable value.  The sale price of the BGC
Note was $320,000 plus a possible contingent bonus payment of $50,000.  Of the
$320,000, $200,000 was paid  to  the  Company  upon  signing  of the Note Sale
Agreement  at  which  time  the  Company  delivered to the Trust approximately
1,036,160 of the BGC Pledged Shares.  The remaining $120,000 is held in escrow
pending  delivery  to  the  Trust of the remaining  BGC  Pledged  Shares.   In
connection with the Note Sale  Agreement, MRI assigned to the Trust all of its
rights pursuant to that certain  Amended  and  Restated  Pledge Agreement (the
Pledge  Agreement)  dated  November  2,  1992,  made by BGC in favor  of  MRI.
Pursuant  to  the Pledge Agreement, BGC had granted  the  Company  a  security
interest in the BGC Pledged Shares as collateral for the BGC Note.

<PAGE>12

     The Note Sale  Agreement  was unanimously approved by the Audit Committee
of the Board of Directors and by  seven  (7)  of the Directors of the Company.
The Note Sale Agreement was approved because the  Board  of  Directors and the
Audit  Committee had been advised  that the imminent foreclosure  on  the  BGC
Pledged  Shares by MRI, which represent approximately 20.1% of the outstanding
Common Shares  of  the  Company, when coupled with the then likely exercise of
voting rights by the FDIC of the FDIC Pledged Shares, which represent 47.1% of
the outstanding Common Shares  of  the  Company,  would  result in a change in
ownership  under  the  Code.   Such   change of ownership would  result  in  a
significant reduction, or the complete  loss , of the NOL as described  above.
The Board of Directors and the Audit Committee  had  been  advised  that, only
through  Anderson  maintaining  control  over the BGC Pledged Shares  could  a
change of ownership under the code be avoided  and that the Trust was the only
entity controlled by Anderson that, at the  time  the Note Sale Agreement  was
approved,  was free from claims of the FDIC that might  adversely  effect  the
ownership of  the BGC Pledged shares.  The Note Sale Agreement was approved in
part to avoid the  loss  of  the  NOL.   Anderson  did  not participate in the
Board's  deliberation  or  vote  with  respect  to  the  Note Sale  Agreement.
Anderson provided written representation to the Board that (i) he was aware of
his  fiduciary  obligation  to  the  Company, and (ii) he was unaware  of  any
transaction pending or in prospect which  would  enhance  the value of the BGC
Note above the sale price to the Trust.

     On December 2, 1997, subsequent to completing the Note Sale Agreement, it
came  to  the Company's attention that BGC had transferred to  the  Trust,  in
satisfaction  of the BGC Note, assets having an estimated value, determined by
BGC, ranging from  $1,192,443 to $1,612,632.  The assets transferred consisted
of the BGC Pledged Shares,  the net equity in a residence occupied by Anderson
in Yolo County, California, and $580,000 in cash.

     By letter to Anderson, as  Trustee  of the Trust, dated December 8, 1997,
the Company demanded that Anderson confirm to the Company that the transfer of
the assets from BGC to the Trust did in fact  occur.  In addition, the Company
demanded that all assets received by the Trust  from BGC, less the amount paid
to MRI for the purchase of the BGC Note, be turned  over  to MRI.  The Company
further  advised Anderson that the Company reserves all rights  and  remedies,
including   possible   claims  for  compensatory  and  punitive  damages,  the
imposition of a constructive trust, and rescission.

     On December 15, 1997,  Larry  L.  Bertsch,  the Special Master previously
appointed  by the Nevada District Court, filed with  the  court  an  emergency
motion seeking  (1)  to set aside the alleged fraudulent tranfers of assets by
the Company to the Trust and by BGC to the Trust; (2) to freeze assets held by
the Trust; and (3) to  schedule  an order to show cause why Anderson, James H.
Dale (the Company's Secretary/Treasurer,  Director  and the President of MRI),
Kent Neville Calfee (counsel to Anderson who drafted  the  Note Sale Agreement
documents),  and  Calfee  & Young (Calfee's law firm) should not  be  held  in
contempt by the Nevada District Court.

     On December 16, 1997, the Nevada District Court ordered that Anderson, as
Trustee of the Trust, return to BGC the $580,000 in cash.  The Nevada District
Court further ordered that  the Anderson  residence in Yolo County, California
remain in the Trust until further  order of the Nevada District Court and that
the BGC Pledged Shares be turned over  to  the  custody  of the Special Master
until further order of the Nevada District Court.  The Nevada  District  Court
gave  the  parties  until  January 9, 1998, to submit responses to the Special
Master's Motion.  The Company  submitted  a  response on that date challenging
the  allegation  in  the  Special  Master's  Motion   that   MRI  fraudulently
transferred between $872,443 and $1,292,632 to the Trust.  The  response  also

<PAGE>13

opposed  unwinding  the  Note Sale Agreement and any order that would deny the
Trust ownership of the BGC Pledged Shares.

     On January 27, 1998,  the Special Master submitted to the Nevada District
Court his reply to  the response  of  the  Company,  asking  that  the  Nevada
District Court unwind the Note Sale Agreement, at least to the extent that MRI
is  made  whole  for  its  lost  profit, representing $580,000 in cash and the
interest in the Anderson residence  in  Yolo  County,  California and that the
Nevada  District  Court  find Anderson and his attorneys Calfee  &  Young,  in
contempt and to impose appropriate  sanctions.   In  this  reply,  the Special
Master did not ask the Nevada District Court to find Mr. Dale in contempt.

     On January 27, 1998, the FDIC submitted to the Nevada District  Court its
Reply  Memorandum  Of  Points  and  Authorities  of FDIC in Support of Special
Master  Larry  L.  Bertsch's  Motion  to  Set Aside Fraudulent  Transfer,  For
Contempt and For Monetary Sanctions Jointly  and  Severally  Against  John  B.
Anderson,  James  H. Dale, Kent Neville Calfee and Calfee & Young.  This Reply
Memorandum asked the  Nevada  District  Court  to  set  aside  the  Note  Sale
Agreement  in  the  manner that the Nevada District Court deems most equitable
and that the Nevada District  Court  should  sanction  Anderson, the Trust and
Calfee  and  Calfee & Young.  In its reply, the FDIC did not  ask  the  Nevada
District Court to sanction Mr. Dale.

     On February  3, 1998, the Nevada District Court ordered that a hearing be
held on Friday, March 27, 1998, regarding the Motion of the Special Master (1)
to Set Aside Fraudulent  Transfer  of Assets; and (2) to Freeze Assets held by
Transferee John J. Anderson Family Trust.   The  Nevada District Court further
ordered that no hearing shall be set regarding contempt  charges and sanctions
until after the March 27, 1998 hearing.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

     No  matter  was submitted during the fourth quarter of  the  fiscal  year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.   No  matter has been submitted to a vote of security
holders since December 19, 1984.   See  "Item  10.  -  Directors and Executive
Officers of the Registrant."

<PAGE>14

                               PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The principal United States market in which the Company's common stock is
traded is the over-the-counter market.  There is no established public trading
market  for  the  Company's Series B preferred stock.  Neither  the  Company's
common stock nor the  Company's  preferred  stock  is listed for trading on an
exchange.

     The following table sets forth for the periods indicated the range of the
high and low bid quotations for the Company's common  stock as reported by the
National Quotation Bureau.  The reported bid quotations  reflect  inter-dealer
prices,   without   retail  markup,  markdown  or  commissions,  and  may  not
necessarily represent actual transactions.

     1998                          HIGH                LOW
     1st Quarter
     (through March 11, 1998)      3/8                 9/32

     1997                          HIGH                LOW
     1st Quarter                   3/16                5/32
     2nd Quarter                   1/4                 5/32
     3rd Quarter                   11/32               1/4
     4th Quarter                   1/2                 1/4

     1996                          HIGH                LOW
     1st Quarter                   3/16                3/16
     2nd Quarter                   11/32               3/32
     3rd Quarter                   1/4                 1/8
     4th Quarter                   3/16                1/8

     At December 31,  1997,  the  Company's transfer agent reported that there
were approximately 1,826 holders of  record of the Company's common stock, and
approximately  753  holders  of  record  of   the  Company's  Series  B  $7.50
cumulative,  voting and non-convertible Preferred  Stock  with  a  liquidating
value of $125 per share.

     Dividends  on  the  Company's  common  stock have not been paid since the
second quarter of 1979.  Dividends on the Company's  Series  B preferred stock
have not been paid since the first quarter of 1982.  The Company is in arrears
on such dividends in the amount of approximately $1,173,000 as of December 31,
1997.   The  Company has no present intention to pay dividends on  either  its
common or preferred  shares.   See  "Item  7  -  Management's  Discussion  and
Analysis of Financial Condition and Results of Operations".

<PAGE>15

ITEM 6.  SELECTED FINANCIAL DATA

     The  following  table  summarizes certain selected financial data for the
periods indicated.  The data  for  the years ended December 31, 1995, 1996 and
1997 should be read in conjunction with the more detailed audited Consolidated
Financial Statements and Notes thereto  appearing  elsewhere herein, including
the Independent Auditors' Report and with Management's Discussion and Analysis
of Financial Condition and Results of Operations.

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                         SELECTED FINANCIAL DATA
               (NOT COVERED BY INDEPENDENT AUDITORS' REPORTS)

                                              Year ended December 31,
                                 1993      1994      1995      1996     1997
                                 (Dollars in thousands, except per share data)
Continuing operations:
  Net sales and miscellaneous
   income                      $ 1,387   $ 3,242   $ 3,130   $ 2,982  $  8,398

Loss  from
  continuing operations       ($ 1,678) ($ 1,195) ($ 2,075) ($ 1,789) ($   875)

Extraordinary item, net of
  tax                                              $ 8,346

Loss per common share
  before extraordinary item   ($   .25) ($   .20) ($   .33) ($   .29) ($   .14)

Extraordinary item per common
  share                                            $  1.30

Earnings (loss) per common
  share                       ($   .25) ($   .20)  $   .97  ($   .29) ($   .14)

As of the end of period:
  Total assets                 $21,262   $19,962   $19,527   $17,126   $14,037

  Long-term debt and capital
   lease obligations           $    25   $   146   $ 2,797   $ 1,955   $ 2,272

  Shareholders' equity         $ 7,545   $ 6,275   $12,304   $10,443   $ 9,496

  Book value per common share  $  1.16   $   .97   $  1.93   $  1.64   $  1.49


     Certain  items  in  the  table  of  selected  financial  data  have  been
reclassified to conform to the current classification.

<PAGE>16

ITEM  7.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS

     The Consolidated Financial Statements  and  Notes thereto are an integral
part  of this report, including this Item 7, and are  incorporated  herein  by
this reference and should be read in conjunction herewith.

     Certain information included herein contains statements that are forward-
looking,  such  as  anticipated  liquidity  requirements for the coming fiscal
year, anticipated sources of liquidity for the  coming fiscal year, the impact
of  anticipated  asset sales, proposed facilities construction  and  potential
changes in control  of the Company.  Such forward-looking information involves
important  risks  and  uncertainties   that  could  significantly  affect  the
Company's  financial  condition  and  future   results   of  operations,  and,
accordingly,  such  future financial condition and results of  operations  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,  actual  construction  costs  and construction contingencies in
connection  with  construction  of  any  new facilities,  real  estate  market
conditions and general economic conditions,  the  abilities  of  certain third
parties  to obtain financing and otherwise perform under real estate  purchase
agreements,  and  the  outcome  of  certain  litigation  and other risks.  The
Company  cautions  readers  not to place undue reliance on any  such  forward-
looking statements, and, such statements speak only as of the date made.

YEAR 2000 ISSUE

     The Company has addressed the possible exposures related to the impact on
its  computer  systems  of  the Year  2000.   Key  financial  information  and
operational systems have been  assessed  and  steps have been taken to address
systems modifications timely.  The financial impact  of  making  the  required
systems  changes  is not expected to be material to the Company's consolidated
financial position, results of operations or cash flows.

OVERVIEW

     On  October  24,   1995,   the   Company,  along  with  its  subsidiaries
Continental, MRI, and SHF, entered into a Settlement Agreement with the RTC in
connection  with  the  SASA  Obligation.   The   Settlement  Agreement  became
effective December 6, 1995.

     Pursuant to the terms of the Settlement Agreement  and as full payment of
the SASA Obligation, (i) Continental transferred the San Diego Property to the
RTC in consideration of a $1,500,000 credit against the SASA  Obligation, (ii)
the  Company  paid  $290,000  to  the  RTC, and (iii) the Company delivered  a
secured promissory note to the RTC (the  RTC Settlement Note) in the principal
amount of $2,710,000.  The RTC Settlement  Note  bears  interest  at an annual
rate  of 1% over the prime rate as published in the Wall Street Journal.   The
interest  rate is adjusted semi-annually; provided, however, that the interest
rate shall  not  be less than 8% or more than 12% per annum.  The Company will
make monthly payments  of  interest  until December 6, 2000, at which time the
entire principal amount and all accrued interest is due.

     The RTC Settlement Note is collateralized  by  a   Deed  of  Trust  on 50
unsold  residential  lots  at The Fairways in Rancho Murieta, California,  and
the Collateral Assignment of  purchase money promissory notes in the aggregate

<PAGE>17

principal amount of $227,160 secured  by 2 residential lots previously sold at
The Fairways.  The  Deed of Trust requires  a  $40,000 payment for the release
of  each  of the encumbered lots.  The RTC will apply  such  payments  to  the
outstanding  principal  due on the RTC Settlement Note.  Principal collections
received  by the Company on  the  purchase  money  promissory  notes  will  be
remitted to  the  RTC  for application to the outstanding principal due on the
RTC Settlement Note.

     As a result of settling  the  SASA  Obligation,  the  Company recorded an
extraordinary  gain of $8,346,000 in the year ended December  31,  1995.   The
gain consisted of  a profit of approximately $1,100,000 on the transfer of the
San Diego property to the RTC and a reduction of indebtedness of approximately
$7,246,000 net of related legal fees and other costs.

     On July 3, 1997,  the  Company closed the sale of the 57 residential lots
located  in  North  Las Vegas, Nevada.   Net  proceeds  to  the  Company  were
approximately $645,600  which  included  a  reimbursement of $72,600 for water
fees previously paid.  Out of the net proceeds  the Company paid approximately
$318,000 to Beal Bank, the purchaser of the SASA Obligation.

     On October 7, 1996, the Company signed a letter  agreeing  to  modify the
Purchase  and  Option  Agreement  (the New Agreement) between the Company  and
Murieta  Investors,  LLC  (MI), formerly  West  Coast  Properties,  LLC.   The
Purchase and Option Agreement  between  West  Coast  Properties,  LLC  and the
Company  is  described in detail in the Company's Form 10-K for the year ended
December 31, 1995.  See Item 1. "Business - Real Estate and Related Activities
- The Fairways".  The  New  Agreement  provides that MI will purchase from the
Company 6 lots at The Fairways at $40,000  per  lot  plus  payment of the Park
Fees applicable to the lots purchased.  In addition, the Company  may  receive
contingent  consideration  equal  to  20%  of  the  gross  sales price of each
residential dwelling sold less $40,000 (the Success Payments).   Eight  months
after  the  purchase of the initial 6 lots, MI will be entitled to purchase  a
second group  of 6 lots.  An additional group of 6 lots may be purchased every
4 months thereafter until a total of 40 lots have been purchased.  The initial
payment for the  second  6 lots purchased will be $40,000, plus payment of the
applicable Park Fees and the  Success  Payments.   The initial payment for all
subsequent lots purchased will be $45,000, plus payment of the applicable Park
Fees and the Success Payments.  Beginning with the purchase of the third group
of 6 lots, the Success Payments will be 20% of the gross  sales  price of each
residential  dwelling  sold  less  $45,000.   If  MI  sells  any  lots without
constructing a residential dwelling thereon, the Company will receive  20%  of
the  sales  price without offset of the initial price of $40,000.  The sale of
the first 6 lots closed on December 20, 1996.  Because of certain difficulties
regarding MI's  ability  to  obtain  plans and permits relating to the first 6
lots purchased, MI did not purchase any lots in 1997.

     On May 29, 1997, SHF signed a contract  (the  Contract)  in the amount of
$1,651,800  for the construction of the Drying Facility adjacent  to  the rice
storage  facility  in  Yolo  County, California.  The Contract did not include
certain costs such as permits,  landscaping,  paving,  utility lines, interest
costs, etc.  These additional costs were estimated to be  between $200,000 and
$250,000.    In   connection   with  the  financing  of  the  Drying  Facility
construction, SHF entered into the  following  agreements  with ICON Cash Flow
Partners,  L.P., Series E (ICON, LP) and ICON Financial Corp.  (ICON):  (1)  A
promissory note (the Note) dated April 3, 1997, between ICON,LP and SHF in the
principal amount  of  $1,150,000,  with interest at the rate of 12% per annum.
Interest is payable on the first day  of the month following the first advance
and on the first day of the month thereafter.   Upon  completion of the Drying
Facility, advances made under the Note will be rolled into the equipment lease
financing as of the Base Lease Commencement Date (the last  day  of  the month

<PAGE>18

following  the  date the Drying Facility is declared complete by both SHF  and
ICON, LP),  (2) A  Master  Equipment  Lease  (the  Lease) dated April 3, 1997,
between ICON and SHF.  Beginning with the Base Lease  Commencement  Date, ICON
will lease to SHF the Drying Facility for a period of five years.  At  the end
of the five year period, SHF will have the right to purchase not less than all
of the Drying Facility for $1.00.  The monthly rental under the Lease will  be
approximately  2.202%  of  the  funded  Drying  Facility cost (estimated to be
$25,000 per month) and will begin on March 30, 1998.   In  addition  to  being
collateralized  by the Drying Facility, SHF has provided additional collateral
in the form of a  Deed  of Trust on certain parcels of property, including the
parcel on which the storage  facility is located.  Both the Note and the Lease
are guaranteed by MRI and the  Company  (collectively the Guarantors).  Before
the Guarantors are liable for any deficiency,  ICON  or  ICON,  LP  must first
proceed  against  the Drying Facility and the additional collateral. Both  the
Lease and the Note contain certain events of defaults, one of which relates to
any material adverse  change in the business or financial condition of SHF and
the guarantors (defined  as  a reduction of Tangible Net Worth of 20% or more)
and another relates to the loss  of  Farmers  as  a customer.  These events of
defaults  only apply during the period the Note remains  unpaid.   The  Drying
Facility was completed and commenced operations on September 15, 1997.

     On July  15,  1997,  the Company closed the sale of the White Ranch.  Net
proceeds to the Company were  approximately  $5,965,000 of which approximately
$2,982,500 was paid to the Company.   The balance of the proceeds were paid to
the other 50% owner of the White Ranch.

     Until December 11, 1997, Anderson was the  President  and Chairman of the
Board of the Company and Chairman of the Board of various subsidiaries  of the
Company.  Anderson, through his ownership of Cedar, the parent of BGC and JBA,
owns   approximately  4,280,756 shares or 67.2% of the Company's common stock.
Of those shares (i) 3,000,000  shares  (the  FDIC  Pledged  Shares)  have been
pledged  as  collateral  in favor of entities of which the FDIC is a successor
and/or assign, and (ii) 1,280,756  shares  (the  BGC  Pledged Shares) had been
pledged as collateral in favor of a subsidiary of the Company.   Refer to Item
3. Legal Proceedings - Federal Deposit Insurance Corporation et al. v. John B.
Anderson et al. Re: (i) the rights of the FDIC to vote the FDIC Pledged Shares
and  the  possible  right of the FDIC to vote the BGC Pledged Shares;  (ii)  a
possible change in control  of the Company and (iii) a demand made by the FDIC
to have the Company hold a shareholder meeting.

     On November 26, 1997, the  Company entered into a Loan Purchase Agreement
(the Note Sale Agreement) with Anderson,  as  Trustee  of the John J. Anderson
Family Trust.  The Note Sale Agreement provided for the  sale  of the BGC Note
issued by BGC payable to MRI.  This matter is described in detail  in  Item 3.
Legal  Proceedings  - Federal Deposit Insurance Corporation et al. v. John  B.
Anderson et al.

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

OPERATING RESULTS

     Net loss for the year ended December 31, 1997 decreased  by approximately
$914,000 when compared with the year ended December 31,1996.  This  was due to
a number of factors including: (i) an increase in profit from the sale of real
estate  primarily  due  to the sale of the White Ranch and the sale of the  57

<PAGE>19

residential lots in North  Las  Vegas,  Nevada  and (ii) an increase in profit
from the rice drying and storage operation.  This  increase  was  due  to  the
increased  efficiency  of  the new rice dryer as compared to the operations of
the West Sacramento rice dryer and, (iii) a decrease in bad debt expense which
resulted in fewer bad debts  incurred  in 1997 and the recovery of certain bad
debts written off in prior years.

1997 VS. 1996

REAL ESTATE

     The major increase in real estate revenues and profits in 1997 was due to
the sale of the White Ranch and the 57 residential  lots  in  North Las Vegas,
Nevada.   Although  the  Sacramento  real  estate market is showing  a  modest
increase, sales at The Fairways continue to be slow.

     Net rental income from agricultural properties  decreased  in  1997  when
compared with 1996 due primarily to the sale of the White Ranch.

AGRICULTURAL

     Rice  drying  and  storage  profits  in  1997  increased by approximately
$268,000  when compared with 1996.  The increase was due  to  cost  reductions
attributable  to  the  operations  of  the new rice dryer, which included such
items  as:  (i)  a  reduction in salaries of  approximately  $27,000,  (ii)  a
reduction in repairs  and  maintenance  of  approximately $18,000, and (iii) a
reduction in custom services of approximately  $35,000.   In addition, because
the Company now owns its own rice dryer rental payments for  the  use  of  the
West  Sacramento  dryer decreased by approximately $85,000.  Also in 1996, the
Company made a one  time  payment  to  cancel  the  original lease on the West
Sacramento dryer.

GENERAL

     Selling, administrative and general expenses in  total  remained constant
when comparing 1997 with 1996.  However, there were some significant increases
and decreases during 1997 such as: (i) an increase in legal fees which relates
to  the  ongoing  litigation  between  John B. Anderson and the FDIC,  (ii)  a
decrease in office and related expenses of approximately $65,000 which was due
primarily to relocating the Company's offices  to  Sacramento,  California and
(iii)  a  decrease  of  approximately  $18,000  in  the cost of directors  and
officers liability insurance.

     Interest income decreased  because of principal  collections  on  various
notes  receivable.   Interest  expense decreased because of principal payments
made to Beal Bank, the purchaser  of  the  SASA  Obligation.   The decrease in
interest expense was partially offset by interest expense  applicable  to  the
Drying Facility financing.

<PAGE>20

1996 VS. 1995

REAL ESTATE

     During 1996 the Company reduced the carrying value of The Fairway lots by
$290,000.   The  write  down  of  the carrying value was necessitated when the
Company reduced the listed sales prices  of The Fairways lots in an attempt to
increase the number of lot sales.  The sale  of the 6 lots to MI were recorded
at  the  initial price of $40,000 per lot.  In accordance  with  Statement  of
Accounting  Financial  Standards  (SFAS)  No. 66 "Accounting for Sales of Real
Estate,"  no recognition was given to any Success  Payments  the  Company  may
receive in the future.  The Company has recorded all costs associated with the
lots which  resulted  in  a  loss  on  the sale of the 6 lots of approximately
$240,000.

     Net rental income from agricultural properties increased by approximately
$400,000 when compared with 1995.  The increase  was  due  to  increased acres
being rented for the 1996 crop year.

AGRICULTURAL

     Rice drying and storage gross profit decreased by approximately  $204,000
when  compared  with  1995.  The decrease was due primarily to increased costs
associated with the operation  of  the  Drying  Facility,  and  the payment of
$75,000  relating  to  the  Drying Facility lease.  The cost of operating  the
Drying Facility increased because  the  Company  had  to  rent  generators  to
provide the power necessary to run the Drying Facility.  This was necessitated
by  vandalism  relating  to  the  electrical  wiring  in  the drying facility.
Because  of the vandalism, the Company was required, under the  terms  of  the
drying facility  lease,  to  return  the  premises  to  the lessor in the same
condition  it  was  in  at the inception of the lease.  The Company  paid  the
lessor $75,000 and in return,  the  lessor  agreed to accept the return of the
premises in an "as is" condition.

GENERAL

     During  1996, the Company recorded bad debts  of  approximately  $482,000
relating to loans  made to entities owned or related to the Company's Chairman
of the Board and President.   Of  the $482,000, $150,000 related to a $250,000
loan  made to Golden State Trust in  connection  with  a  proposed  settlement
between  John  B. Anderson and the Anderson Parties and the FDIC. (See Item 1.
"Business - Other  Activities  -  Certain  Loans  - Golden State Trust.").  In
addition, the Company reduced the carrying value of  the  BGC Note by $338,000
to  an amount the Company considers to be collectible by the  due  date.  (See
Item 1. "Business - Other Activities - Certain Loans - Baby Grand Corp.").

     On  October  10,  1996,  the  last remaining home constructed by PRJV was
sold, thereby effectively terminating  PRJV.  (See  Item  1.  "Business - Real
Estate  Segment  - AJD Joint Venture.").  The Company does not anticipate  any
future losses relating to PRJV.

     As of December 31, 1996, all operations of Steadfast ceased.

     When compared  with  1995,  corporate selling, general and administrative
expenses decreased due primarily to  a reduction in legal fees.  When compared
with 1995, real estate selling, administrative  and general expenses decreased
due primarily to the sale of lots at The Fairways  which caused a reduction in

<PAGE>21

association dues, water and sewer fees, and property  taxes.   The decrease in
interest and dividend income, when compared with 1995, was due to  a  decrease
in  notes  receivables.   When  compared with 1995, interest expense increased
because  of  the December 1995 settlement  of  the  SASA  Obligation  and  the
commencement of interest payments.

     As a result  of  the  foregoing,  the  net loss, before the extraordinary
item,  for  the  year  ended  December 31, 1996, decreased  by  $286,000  when
compared with the net loss before  the  extraordinary  item for the year ended
December 31, 1995.

LIQUIDITY AND CAPITAL RESOURCES

     During  the  year  ended  December 31, 1997, cash, cash  equivalents  and
marketable securities increased  by $3,162,000 from $1,810,000 at December 31,
1996 to $4,972,000 at December 31, 1997.  The most significant sources of cash
in 1997 were cash provided by operations ($6,978,000), the collection of loans
made to others, including related parties, ($760,000),and proceeds from short-
term and long-term  debt ($1,260,000).   The  most significant uses of cash in
1997, consisted of payments made to minority interest  ($2,981,000),  payments
for  capital expenditures ($1,826,000), payments on long-term debt ($833,000),
payments  on  short  term  debt  ($119,000),  loans  made to others, including
related parties ($189,000) and cash paid for other investments.

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

     The  Company  believes  that sources of required liquidity will  be  cash
generated from the rice drying  and  storage facilities, anticipated lot sales
at The Fairways, collection of notes receivable  resulting  from  sales at The
Fairways,Success  Payments  related  to the venture with MI.   Based on  known
commitments, the Company believes that  the  sources of cash described and the
cash available at December 31, 1997,  will be adequate to fund known liquidity
requirements.   However, if the sources of required  liquidity  and  the  cash
available at December 31, 1997 prove to be insufficient to cover the Company's
primary liquidity  requirements,  it  will  be  necessary  to sell some of the
Company's non-income producing assets.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The  Consolidated Financial Statements and supplementary  data  of  Dunes
Hotels and  Casinos  Inc.  are located at pages F-1 to F-31 and are listed and
included under Item 14, Exhibits, Financial Statement Schedules and Reports on
Form 8-K of Part IV hereof and are incorporated herein by reference.

<PAGE>22

                              PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  By-laws  of  the  Company  provide  that  the  number  of  directors
constituting the entire board  shall be twelve.  Directors are elected at each
annual meeting of shareholders to  hold  office  until the next annual meeting
and until a successor has been elected and qualified.   The  Company  has  not
held  an annual meeting of stockholders since December 19, 1984.  However, see
"Item 3.  Legal  Proceedings - Federal Deposit Insurance Corporation et al. v.
John B. Anderson et  al."  regarding  a possible stockholders meeting.  Of the
nine  directors  elected  at  the  December   19,   1984   annual  meeting  of
shareholders,  three  have  resigned,  and only two of such vacancies  thereby
created have been filled.  As a result,  the  number  of  directors  currently
serving is eight.

     Pursuant  to  a  Securities  and Exchange Commission consent decree,  the
Company has been required to have an Audit Committee of the Board of Directors
(Audit  Committee)  since  1978,  a majority  of  which  must  be  independent
directors.

     Identified  herein  are  all directors  and  executive  officers  of  the
Company.  The information set forth  as to each Director and Executive Officer
has been furnished by such person.

     John B. Anderson, 55, is and has  been  since May 1984, a director of the
Company and until December 11, 1997, served as  the  Company's chairman of the
board  and  president.  On March 10, 1992, BGC (an Anderson  Entity)  filed  a
voluntary petition  for  relief under Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court  for  the  District of Nevada.  On November 10,
1992, the United States Bankruptcy Court confirmed  and approved BGC's plan of
reorganization which became effective December 1, 1992.  On December 20, 1994,
the Chapter 11 case was closed.  On April 6, 1992, Maxim  Development  Co. (an
Anderson Entity) filed a voluntary petition for relief under Chapter 11 of the
Bankruptcy Code in the United States Bankruptcy Court for the Eastern District
of California, which bankruptcy was subsequently dismissed on March 12, 1993.

     Brent L. Bowen, 69, is and has been a director, officer and member of the
audit  committee of the Company; and a director and officer of certain of  the
Company's  subsidiaries  since  December  1984.   Mr.  Bowen  was  employed by
Anderson  Farms  (an  Anderson  Entity)  from  1981 to 1995 as a business  and
financial analyst. Mr. Bowen became an employee  of MRI in 1995. Mr. Bowen has
experience  in  the  hotel/casino, farming, real estate,  home-building,  rice
mill, commodities and  banking industries.  Mr. Bowen retired from the Company
in 1998.

     James H. Dale, 66,  is and has been since January 1988, a director of the
Company.  Mr. Dale was elected  Treasurer of the Company in 1990 and Secretary
of the Company on December 11, 1997.  From September 1986 to October 1991, Mr.
Dale was employed by Anderson Farms  (an  Anderson  Entity) as Chief Financial
Officer.  Prior to 1986, he was a partner in Grant Thornton,  Certified Public
Accountants.  Mr. Dale became an employee of MRI in October 1991  when  he was
elected president of MRI and its subsidiaries.

     Andrew Marincovich, 76, is and has been since August 1978, a director and
member of the Audit Committee of the Company.  He is, and has been since  July
1983,  Chairman of the Audit Committee.  He is President and Executive Officer

<PAGE>23

of Marincovich  &  Company, a certified public accounting firm in Rancho Palos
Verdes, California.  He is a Certified Public Accountant, licensed to practice
in California.

     Donald J. O'Leary,  67,  was  elected to the Company's Board of Directors
and appointed to the Company's Audit  Committee  on May 19, 1994.  Mr. O'Leary
is an attorney and is a member of the California,  Virginia  and  District  of
Columbia  Bars.   He is currently in private practice in California.  Prior to
entering private practice,  Mr.  O'Leary  was  a  trial  attorney for the U.S.
Department  of  Justice  and  resident counsel for several large  real  estate
companies.

     Edward Pasquale, 54, is and  has  been  a  director  and  officer  of the
Company since December 1984; and was a director and officer of certain of  the
Company's  subsidiaries  from  December 1984 until September 1988.  On January
27, 1998, he was elected president  and a director of certain of the Company's
subsidiaries.  On December 11, 1997, Mr. Pasquale was elected president of the
Company.  Mr. Pasquale has been a  member  of  the  Company's  audit committee
since  May  19,  1994.  He  is  presently, and has been since September  1983,
self-employed as a financial consultant,  with  emphasis in litigation support
services,  bankruptcy  proceedings,  and corporate reorganization.   He  is  a
Certified Public Accountant, licensed  to practice in the States of California
and Nevada.

     Wayne O. Pearson, 67, is and has been  since  August 1978, a director and
member of the Audit Committee of the Company.  From March 1975 to May 1993, he
was a marketing analyst for R&R Advertising Agency,  Las  Vegas,  Nevada;  and
since  January  1970,  sole  proprietor, Wayne Pearson  Consulting, Las Vegas,
Nevada, a business and public opinion research company.

     Erik J. Tallstrom, 50, is  and  has  been a director of the Company since
December  1984.  Prior to 1985, he was self-employed  as  a  certified  public
accountant, and was a financial consultant to Anderson.  From November 1985 to
December, 1996   he  was   a  business  partner  with Anderson in several real
estate developments, including Rancho Murieta in California.   Currently,  Mr.
Tallstrom  acts as a consultant to various real estate companies and is a part
owner of a tile manufacturing company.

       There  is  no  family  relationship  between any directors or executive
officers  of  the  Company.  No director holds a  directorship  in  any  other
company with a class  of  securities  registered pursuant to Section 12 of the
Exchange Act or subject to the requirements  of  Section  15(d) of such Act or
any  company registered as an investment company under the Investment  Company
Act of 1940, as amended.

     COMPLIANCE  WITH  SECTION 16(A) OF THE EXCHANGE ACT.  Based solely upon a
review of the Commission's  Forms  3  and 4 received by the Company during the
last fiscal year and upon written representations solicited by the Company, no
Officer, Director, beneficial owner of  more  than  10%  of  any  class of the
Company's equity securities or any other person subject to Section  16  of the
Exchange Act failed to file on a timely basis as disclosed in the above forms,
reports  required  by  Section 16(a) of the Exchange Act during the year ended
December 31, 1997.

<PAGE>24

ITEM 11.  EXECUTIVE COMPENSATION

     The following table  sets  forth  the annual compensation paid to John B.
Anderson, who until December 11,1997, was  the Company's Chairman of the Board
and President, and to James H. Dale, the only executive officer of the Company
who received compensation in excess of $100,000  for  the  year ended December
31, 1997.
                          SUMMARY COMPENSATION TABLE
                              ANNUAL COMPENSATION
        (a)           (b)      (c)        (d)         (e)             (i)
                                                  Other annual    All other
Name and prin-                                    compensation    compensation
CIPAL POSITION       YEAR   SALARY($)   BONUS($)      ($)             ($)

John B. Anderson,    1997      --         --          --          $60,400 (1)
Chairman of the      1996      --         --          --          $74,998 (1)
Board and President  1995      --         --          --          $64,278 (1)

James H. Dale,       1997   $110,000  $ 3,500         --          $15,000 (2)
Secretary/Treasurer  1996   $110,000  $ 2,500         --          $15,000 (2)
                     1995   $102,400  $20,000         --          $15,000 (2)

     (1)  All other compensation to John B. Anderson consists of the following
          for the years indicated:

          1997   Annual Directors fees            $   15,000
                 Payments of certain expenses
                 on behalf of Mr. Anderson            45,400
                                                  ----------
                                                  $    60,400


          1996   Annual Directors fees            $    15,000
                 Payments of certain expenses
                 on behalf of Mr. Anderson             59,998
                                                  -----------
                                                  $    74,998

          1995   Annual Directors fees            $    15,000
                 Payments of certain expenses
                 on behalf of Mr. Anderson             49,278
                                                  -----------
                                                  $    64,278

     (2)  All  other  compensation to James H. Dale, the Company's  Secretary/
          Treasurer, consists  of  annual  directors  fees  in  the  amount of
          $15,000.

COMPENSATION OF DIRECTORS

     The  Company  pays  each  director  an  annual fee of $15,000 which until
December 31, 1996, was paid quarterly.  At the January 1997 Board of Directors
meeting, the Directors voted to pay directors  fees  monthly.   Directors fees
due Mr. Anderson are retained by the Company and applied against  amounts  due

<PAGE>25

the Company from entities owned or controlled by Mr. Anderson.  The assignment
of  Mr.  Anderson's  directors fees will remain in effect until changed by the
Board of Directors. In  addition  to  their  regular  directors fees and audit
committee fees, board members and audit committee members   are  paid $150 per
hour  for special projects considered to be outside the scope of their  duties
as board  and  audit  committee  members.   In addition, they receive a travel
allowance of $300 for each meeting attended.

     Messrs. Marincovich, Pearson, Bowen, Pasquale and O'Leary are all members
of   the   Company's  Audit  Committee.   Audit  Committee   members   receive
compensation  of  $1,000  per  month  plus a travel allowance of $300 for each
meeting  attended.   For services rendered  as  Audit  Committee  members  and
consultants  during  the  fiscal  year  1997,  Messrs.  Marincovich,  Pearson,
Pasquale, O'Leary and  Bowen were paid $14,400, $12,900, $15,000, $14,100, and
$12,000, respectively.   Beginning  January  1,  1997, the Company adopted the
policy  of  deferring $250 of each monthly directors  fee  and  $200  of  each
monthly audit  committee  fee.   In  July  1997, the Company paid all deferred
directors and audit committee fees and resumed  paying the directors and audit
committee fees in full on a monthly basis.

     The  Company does not have a plan, pursuant to  which  cash  or  non-cash
compensation  is paid or distributed, or is proposed to be paid or distributed
in the future.  The Company does not have any pension or other benefit plans.

<PAGE>26

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The table  shown  below  (1) contains certain information with respect to
any person (including any "group"  as that term is used in Section 13(d)(3) of
the Exchange Act), who are known to  the  Company  to be beneficial owners (as
that  term  is defined in rules and regulations of the  Commission  under  the
federal securities  laws)  of  more than 5% of the Company's common stock.  No
person is known to the Company to  be  the beneficial owner of more than 5% of
the Company's Series B preferred stock.

Name and Address of         Amount and Nature of            Percent of Common
BENEFICIAL OWNER          BENEFICIAL OWNERSHIP (1)          STOCK OUTSTANDING

John B. Anderson(2)             4,280,756                         67.2%
P.O. Box 1410
Davis, CA  95617

Federal Deposit Insurance       4,280,756                         67.2%
Corporation(2)
550-17th N.W.
Washington, D.C.

     The table shown below (1) contains  certain  information  with respect to
the  Company's  common  stock  beneficially owned (as that term is defined  in
rules and regulations of the Commission  under the federal securities laws) by
all directors, and directors and executive officers of the Company as a group.
No director or executive officer of the Company  is known to the Company to be
the beneficial owner of any of the Company's Series B preferred stock.

Name of Beneficial           Amount and Nature of          Percent of Common
Owner                        Beneficial Ownership(1)       STOCK OUTSTANDING

John B. Anderson(2)                4,280,756                     67.2%

Brent L. Bowen(3)                      2,000                         *

Andrew P. Marincovich(3)                 200                         *

All Directors and Officers
as a Group (3 Persons)             4,282,956                     67.2%

* Less than one percent

     (1)  In  furnishing this information, the Company  is  relying  upon  the
     contents of  statements  filed  with  the  Commission pursuant to Section
     13(d) and Section 13(g) of the Exchange Act.

     (2)  Anderson,  through  various entities owned  or  controlled  by  him,
     claims beneficial ownership  of,  and shared voting and shared investment
     power with respect to the reported  shares  (the  Anderson  Shares).  See
     Item 3. Legal Proceedings.

<PAGE>27

          Of  the Anderson Shares, approximately 3,000,000 shares are  pledged
     in favor of  the FDIC.  On February 17, 1993, the Company received a copy
     of Securities  and  Exchange  Commission  Schedule 13D dated February 12,
     1993  filed with the Commission on behalf of  EurekaBank  (Eureka).   The
     Eureka Schedule 13D reports that Eureka possesses "sole voting power" and
     "sole  dispositive  power"  with  respect  to  3,000,000  shares  of  the
     Company's common stock.  The Eureka Schedule 13D also reports that Eureka
     may be deemed  to  have acquired beneficial ownership of 4,367,643 shares
     of the Company's common  stock  which  amounts  to  68.5%  of  the  class
     represented by said shares.  In July 1993, Eureka representatives advised
     the Nevada Gaming Control Board that the FDIC had assumed management  and
     supervision  of  efforts  to  collect  Mr.  Anderson's obligation under a
     debtor-creditor agreement dated November 30, 1988, by and between John B.
     Anderson, Edith Anderson and Eureka Federal Savings and Loan Association.
     On July 14, 1995, the FDIC filed an action in the United States  District
     Court for the District of Nevada against Anderson,  Edith  Anderson, CDC,
     J.A. Inc. and J.B.A. Investments, Inc.  The Company is not a party to the
     action. See "Item.3 - Legal Proceedings" for a detailed discussion of the
     Anderson  Parties  obligation  to  the  FDIC  and the litigation relating
     thereto.

          Of the Anderson Shares,  1,280,756  shares  are  pledged in favor of
     the Company to secure indebtedness to the Company.  The  balance  of  the
     Anderson Shares are pledged in favor of other creditors of Anderson.

          The  transfer  agent's  records maintained for the Company show that
     Anderson or entities owned or  controlled  by  him  own 4,260,912 shares.
     The  difference between what the transfer agent's records  show  and  the
     information  provided  to the Company by Anderson is 19,844  shares.  The
     difference consists of (i)  106,731  shares  purchased  by  BGC  and (ii)
     86,887  shares  owned  by CBC given in payment of legal fees owed by  Mr.
     Anderson.  None of these  transactions  have been changed on the transfer
     agent's records.

     (3)  Messrs. Marincovich and Bowen claim  beneficial  ownership  of,  and
     sole  investment  and  sole  voting  powers  with respect to the reported
     shares.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Anderson  and Anderson Entities own approximately  67.2% of the Company's
common stock.  Refer to the Company's report on Form 8-K  dated  February  12,
1993 regarding Securities and Exchange Commission Schedule 13D filed on behalf
of  Eureka  wherein  Eureka  claims "sole voting" and "sole dispositive power"
with respect to 3,000,000 shares  of the Company's common stock and beneficial
ownership of 4,367,643 shares of the  Company's  common  stock.  In July 1993,
the  FDIC  succeeded  to the position of Eureka with respect  to  the  Debtor-
Creditor Agreement.

     On November 26, 1997,  the Company entered into a Loan Purchase Agreement
(the Note Sale Agreement) with  John  B.  Anderson, as Trustee for the John J.
Anderson Family Trust.  The Note Sale Agreement  provided  for  the  sale of a
note  (the BGC Note) issued by Baby Grand Corp. payable to MRI.  The BGC  Note
is described  in detail in the Company's Form 10-K for the year ended December
31, 1996.  See  Item1.  "Business  -  Other  Activities - Certain Loans - Baby
Grand  Corp."  The  Note  Sale  Agreement and events  subsequent  thereto  are
described in detail in Item 3. "Legal  Proceedings - Federal Deposit Insurance
Corporation et al. v. John B. Anderson et al."

<PAGE>28

     On June 12, 1996, the Company loaned  Golden  State  Trust,  an  Anderson
Entity, $250,000.  The  balance of the Golden State Trust loan, $150,000,  was
written off against the 1996 reserve in 1997.

     On  October  1,  1997,  the  Company  loaned James H. Dale, the Company's
Secretary/Treasurer and President of MRI, $85,000.   The  loan  is  for  three
years  with  interest at 9% payable monthly.  The loan is collateralized by  a
deed of trust  on  real  property  and  a conditional assignment of Mr. Dale's
directors fees.

<PAGE>29

                               PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as part of this report.

     1. Financial Statements.
                                                                PAGE

        Independent Auditors' Report                             F-1

        Dunes Hotels and Casinos Inc. and Subsidiaries
        Consolidated Financial Statements:

        Balance sheets as of December 31, 1997 and 1996          F-2

        Statements of income (loss), three years ended
        December 31, 1997, 1996 and 1995                         F-4

        Statements of shareholders' equity, three years
        ended December 31, 1997, 1996 and 1995                   F-6

        Statements of cash flows, three years ended
        December 31, 1997, 1996 and 1995                         F-7

        Notes to Consolidated Financial Statements, three
        years ended December 31, 1997, 1996 and 1995             F-9

     2. Financial Statement Schedules:

        Schedule II                                              S-1

        Schedule III                                             S-4

        Schedule IV                                              S-5

     3. Exhibits.

        3.01  Restated  Certificate  of  Incorporation  of  Dunes  Hotels  and
              Casinos Inc. dated June 17,  1982,  is  incorporated  herein  by
              reference to Dunes Hotels and Casinos Inc. Annual Report on Form
              10-K  (file  no.  1-4385)  for the year ended December 31, 1994,
              Part IV, Item 14(a)(3), Exhibit 3.01.

        3.02  Certificate   of   Amendment   of    Restated   Certificate   of
              Incorporation of Dunes Hotels and Casinos  Inc.  dated  December
              19,  1984,  is  incorporated herein by reference to Dunes Hotels
              and Casinos Inc.  Annual  Report  on Form 10-K (file no. 1-4385)

<PAGE>30

              for the year ended December 31, 1994,  Part  IV,  Item 14(a)(3),
              Exhibit 3.02.

        3.03  Revised By-laws of Dunes Hotels and Casinos Inc. dated  December
              1984,  is  incorporated herein by reference to Dunes Hotels  and
              Casinos Inc.  Annual  Report  on Form 10-K (file no. 1-4385) for
              the  year  ended  December 31, 1994,  Part  IV,  Item  14(a)(3),
              Exhibit 3.03.

        4.01  Specimen Certificate  for  the  Common Stock of Dunes Hotels and
              Casinos  Inc.,  is incorporated herein  by  reference  to  Dunes
              Hotels and Casinos  Inc. Annual Report on Form 10-K (file no. 1-
              4385)  for the year ended  December  31,  1994,  Part  IV,  Item
              14(a)(3), Exhibit 4.01.

        4.02  Specimen Certificate for the Preferred Stock of Dunes Hotels and
              Casinos  Inc.,  is  incorporated  herein  by  reference to Dunes
              Hotels and Casinos Inc. Annual Report on Form 10-K  (file no. 1-
              4385)  for  the  year  ended  December  31, 1994, Part IV,  Item
              14(a)(3), Exhibit 4.02.

        10.04 Settlement Agreement dated June 28, 1988,  by  and  between  San
              Antonio  Savings  Association and Dunes Hotels and Casinos Inc.;
              First Amendment to  Settlement Agreement dated December 5, 1989,
              by and between San Antonio  Savings  Association, F.A. (assignee
              of San Antonio Savings Association) and Dunes Hotels and Casinos
              Inc., is incorporated herein by reference  to  Dunes  Hotels and
              Casinos  Inc.  Annual Report on Form 10-K (file no. 1-4385)  for
              the  year ended December  31,  1994,  Part  IV,  Item  14(a)(3),
              Exhibit   10.04.    Settlement  Release  and  Loan  Modification
              Agreement dated October  24,  1995,  by and among the Resolution
              Trust  Corporation, Dunes Hotels and Casinos  Inc.,  Continental
              California  Corporation,  M & R Investment Company, Inc. and SHF
              Acquisition Corporation, is  incorporated herein by reference to
              Dunes Hotels and Casinos Inc.  Quarterly Report on Form 10-Q for
              the nine months ended September 30, 1995, Item 6, Exhibit 10.01.
              Order  Granting  Joint  Motion to Dismiss  Bankruptcy  Case  and
              Adversary Proceeding, dismissing  bankruptcy case of Continental
              California Corporation, is incorporated  herein  by reference to
              Dunes Hotels and Casinos Inc. Current Report on Form  8-K  dated
              November 22, 1995, Item 7(c), Exhibit 99.01.

        10.05 Stipulation and Order for Dismissal with Prejudice filed in  the
              United States Bankruptcy Court, District of Nevada, Case No. BK-
              S-92-20989  (RCJ)  executed  by  The  Valley  National  Bank  of
              Arizona, EurekaBank, M&R Investment Company, Inc. and Baby Grand
              Corp.; Compromise Agreement dated November 9, 1992, by and among
              Maxim  Development,  The  Valley  National  Bank  of Arizona and
              Redwood  Bank;  Settlement  Agreement  and Mutual Release  dated
              November 2, 1992, by and among EurekaBank,  The  Valley National
              Bank  of  Arizona, M&R Investment Company, Inc. and  Baby  Grand
              Corp.; Addendum to Settlement Agreement and Mutual Release dated
              November 2,  1992,  by and among EurekaBank, The Valley National
              Bank of Arizona, M&R  Investment  Company,  Inc., and Baby Grand
              Corp.; Stipulation for Dismissal of Appeal with  Prejudice filed
              in  the  United States District Court, District of Nevada,  Case

<PAGE>31

              No. CV-S-92-675-LVG (RCH) dated November 2, 1992 and executed by
              The Valley  National  Bank  of  Arizona,  Baby  Grand Corp., M&R
              Investment  Company, Inc. and the official Unsecured  Creditors'
              Committee; Promissory  Note  dated  November  2,  1992,  in  the
              principal  amount of $2,650,000  made by Baby Grand Corp. to M&R
              Investment Company,  Inc.; Amended and Restated Pledge Agreement
              dated November 2, 1992,  by and between Baby Grand Corp. and M&R
              Investment Company, Inc.;  and  Release of Assignment of Leases,
              Rents and Revenues dated November  2,  1992,  by  M&R Investment
              Company,  Inc.,  are incorporated herein by reference  to  Dunes
              Hotels and Casinos  Inc. Annual Report on Form 10-K (file no. 1-
              4385) for the  year ended  December  31,  1992,  Part  IV,  Item
              14(a)(3),  Exhibit  10.05.   Second  Settlement  and Forbearance
              Agreement dated February 9, 1995, by and among Baby Grand Corp.,
              M & R Investment Company, Inc. and Bank One, Arizona,  NA.;  and
              Purchase  Agreement  (including Option Agreement) dated February
              9, 1995, by and between  Baby  Grand  Corp. and M & R Investment
              Company, Inc., are incorporated herein  by  reference  to  Dunes
              Hotels and Casinos Inc. Current Report on Form 8-K (file no.  1-
              4385)  dated  February  9,  1995, Item 7, Exhibit Nos. 10.01 and
              10.02.

        10.06 Straight Note dated August 28,  1990, in the principal amount of
              $486,000  made  by  Rancho  Murieta  Properties,   Inc.  to  SHF
              Acquisition  Corporation;  and Deed of Trust with Assignment  of
              Rents (Short Form) dated August  28, 1990, by and between Rancho
              Murieta Properties, Inc., First American Title Insurance Company
              and  SHF  Acquisition  Corporation, securing  $486,000  Straight
              Note,  are incorporated  herein by reference to Dunes Hotels and
              Casinos Inc. Annual Report  on  Form  10-K (file no. 1-4385) for
              the  year  ended  December  31, 1990, Part  IV,  Item  14(a)(3),
              Exhibit 10.07.  Second Extension  Agreement  dated September 30,
              1993,  by  and  between SHF Acquisition Corporation  and  Rancho
              Murieta Properties,  Inc.;  Pre-workout  Letter  Agreement dated
              November 9, 1993, by and between SHF Acquisition Corporation and
              Rancho   Murieta  Properties,  Inc.;  Assignment  of  Membership
              Proceeds dated  September 30, 1993, by and among SHF Acquisition
              Corporation,  Rancho   Murieta   Properties,  Inc.  and  M  &  R
              Investment Company, Inc.; and UCC-1  Financing  Statement  dated
              November  29,  1993, by Rancho Murieta Properties, Inc. in favor
              of SHF Acquisition  Corporation  and  M  & R Investment Company,
              Inc., are incorporated herein by reference  to  Dunes Hotels and
              Casinos  Inc. Annual Report on Form 10-K (file no.  1-4385)  for
              the year ended  December  31,  1993,  Part  IV,  Item  14(a)(3),
              Exhibit 10.10.

        10.10 Letter  Agreement  dated  July  21, 1991, by and among Calfee  &
              Young  (on  behalf of M & R Investment  Company,  Inc.),  Rancho
              Murieta Properties, Inc. and CBC Builders, Inc.; Promissory Note
              in the principal  amount  of  $955,500  made  by  Rancho Murieta
              Properties,  Inc.  and  CBC  Builders,  Inc.  to  M&R Investment
              Company, Inc.; Deed of Trust with Assignment of Rents dated July
              22,  1991,  by  CBC  Builders,  Inc.  in favor of M&R Investment
              Company,  Inc.;  Deed  of  Trust  dated July  22,  1991  by  CBC
              Builders,  Inc.  in  favor  of  M&R  Investment  Company,  Inc.;
              Collateral  Assignment of Partnership Interest  dated  July  22,

<PAGE>32

              1991, by Erik  J.  Tallstrom in favor of M&R Investment Company,
              Inc.; Assignment of  Director's Fees dated July 22, 1991, by and
              between CBC Builders,  Inc.  and  M&R  Investment Company, Inc.;
              Memorandum of Option to Purchase dated July  22,  1991,  by  and
              between CBC Builders, Inc. and M&R Investment Company, Inc.; and
              Personal Guaranty dated July 22, 1991, by Erik J. Tallstrom, are
              incorporated  by  reference  to  Dunes  Hotels  and Casinos Inc.
              Annual Report on Form 10-K (file no 1-4385) for the  year  ended
              December  31,  1991,  Part  IV,  Item  14(a)(3),  Exhibit 10.12.
              Extension Agreement dated September 30, 1993, by and among M & R
              Investment  Company, Inc., Rancho Murieta Properties,  Inc.  and
              CBC Builders,  Inc.; Pre-workout Letter Agreement dated November
              9, 1993, by and  among  M  &  R Investment Company, Inc., Rancho
              Murieta Properties, Inc. and CBC  Builders,  Inc.;  Extension of
              Option  Agreement  dated September 30, 1993, by and between  M&R
              Investment Company, Inc. and CBC Builders, Inc, are incorporated
              herein by reference  to  Dunes  Hotels  and  Casinos Inc. Annual
              Report  on  Form  10-K  (file  no.  1-4385) for the  year  ended
              December 31, 1993, Part IV, Item 14(a)(3), Exhibit 10.10.

        10.14 Corporation Deed of Trust with Assignment  of  Rents dated March
              23,  1993,  by  and among Andrew P. Marincovich and  Matilda  C.
              Marincovich, First  American  Title  Insurance  Company  and M&R
              Investment  Company,  Inc.; Promissory Note dated July 22, 1992,
              in the principal amount of $500,000 made by El Dorado Vineyards,
              Inc. to M&R Investment Company, Inc.; Business Loan Agreement by
              and among M&R Investment  Company,  Inc.,  El  Dorado Vineyards,
              Inc. and Andrew P. Marincovich; Security Agreement  by El Dorado
              Vineyards,  Inc.  in  favor  of   M&R Investment Company,  Inc.;
              Personal Guaranty dated April 7, 1993,  by Andrew P. Marincovich
              in  favor  of  M&R  Investment Company, Inc.,  are  incorporated
              herein by reference to  Dunes  Hotels  and  Casinos  Inc. Annual
              Report  on  Form  10-K  (file  no.  1-4385)  for  the year ended
              December  31,  1992,  Part  IV,  Item  14(a)(3), Exhibit  10.14.
              Promissory Note in the principal amount  of $500,000, made by El
              Dorado   Vineyards,  Inc.  to  M&R  Investment  Company,   Inc.;
              Promissory  Note  in  the  principal amount of $8,800 made by El
              Dorado  Vineyards,  Inc.  to  M&R   Investment   Company,  Inc.;
              Promissory Note in the principal amount of $3,945.21  made by El
              Dorado   Vineyards,   Inc.  to  M&R  Investment  Company,  Inc.;
              Promissory Note in the principal amount of $39,591.29 made by El
              Dorado Vineyards, Inc. to M&R Investment Company, Inc.; Business
              Loan Agreement by and among  M&R  Investment  Company,  Inc., El
              Dorado  Vineyards,  Inc.  and  Andrew  P.  Marincovich; Personal
              Guaranty by Andrew P. Marincovich  in favor  of  M&R  Investment
              Company,  Inc.;  and  Security Agreement by El Dorado Vineyards,
              Inc. in favor of M&R Investment  Company, Inc., are incorporated
              herein  by reference to Dunes Hotels  and  Casinos  Inc.  Annual
              Report on  Form  10-K  (file  no.  1-4385)  for  the  year ended
              December 31, 1993, Part IV, Item 14(a)(3), Exhibit 10.14.   Loan
              Modification  Agreement  dated  July  15,  1994, by and among El
              Dorado Vineyards, Inc., Andrew P. Marincovich and M&R Investment
              Company, Inc.; Durable Special Power of Attorney  dated July 21,
              1994  by Andrew P. Marincovich; Promissory Note dated  July  15,
              1994, in  the  principal  amount  of  $500,000 made by El Dorado
              Vineyards, Inc. to M&R Investment Company, Inc.; Promissory Note
              dated July 15, 1994, in the principal amount  of $39,591.32 made

<PAGE>33

              by  El Dorado Vineyards, Inc. to M&R Investment  Company,  Inc.;
              Promissory  Note dated July 15, 1994, in the principal amount of
              $3,945.21 made  by  El  Dorado Vineyards, Inc. to M&R Investment
              Company, Inc.; Promissory  Note  dated  July  15,  1994,  in the
              principal  amount  of $8,800.00 by El Dorado Vineyards, Inc.  to
              M&R Investment Company,  Inc.;  Promissory  Note  dated July 15,
              1994,  in the principal amount of $12,184.86 made by  El  Dorado
              Vineyards,  Inc. to M&R Investment Company, Inc.; and Promissory
              Note dated July 19, 1994, in the principal amount of $153,428.94
              by El Dorado  Vineyards,  Inc.  to M&R Investment Company, Inc.,
              are incorporated herein by reference to Dunes Hotels and Casinos
              Inc. Quarterly Report on Form 10-Q (file no. 1-4385) for the six
              months  ended  June  30,  1994, Item  6,  Exhibit  10.01.   Note
              Modification Agreement (with Exhibits A through F) dated January
              5,  1995,  by and among El Dorado  Vineyards,  Inc.,  Andrew  P.
              Marincovich  and  M&R  Investment Company, Inc., is incorporated
              herein by reference to Dunes  Hotels  and  Casinos  Inc.  Annual
              Report  on  Form  10-K  (file  no.  1-4385)  for  the year ended
              December 31, 1994, Part IV, Item 14(a)(3), Exhibit 10.14.

        10.16 Parks  Development  Agreement  dated February 20, 1991,  by  and
              among  the  Rancho  Murieta  Association,   the  Rancho  Murieta
              Community Services District,  Rancho Murieta  Properties,  Inc.,
              CBC   Builders,   Inc.   and  SHF  Acquisition  Corporation,  is
              incorporated herein by reference  to  Dunes  Hotels  and Casinos
              Inc. Annual Report on Form 10-K (file no. 1-4385) for  the  year
              ended  December 31, 1993, Part IV, Item 14(a)(3), Exhibit 10.16.
              Settlement  Agreement Regarding Payment of Park Fees (not dated)
              by  and  among   Rancho  Murieta  Association,  SHF  Acquisition
              Corporation, CBC Builders, Inc., Rancho Murieta Properties, Inc.
              and Rancho Murieta  Community  Services  District  of Sacramento
              County, is incorporated herein by reference to Dunes  Hotels and
              Casinos  Inc.  Annual Report on Form 10-K (file no. 1-4385)  for
              the  year ended December  31,  1994,  Part  IV,  Item  14(a)(3),
              Exhibit 10.16.

        10.17 Inter-Creditor  Agreement dated September 30, 1993, by and among
              SHF Acquisition Corporation,  M & R Investment Company, Inc. and
              Calfee & Young, is incorporated  herein  by  reference  to Dunes
              Hotels and Casinos Inc. Annual Report on Form 10-K (file  no. 1-
              4385)  for  the  year  ended  December  31,  1993, Part IV, Item
              14(a)(3), Exhibit 10.17.

        10.18 Commercial  Premises Lease dated July 1, 1993,  by  and  between
              California Dehydrating  Company and SHF Acquisition Corporation,
              is incorporated herein by  reference to Dunes Hotels and Casinos
              Inc. Annual Report on Form 10-K  (file  no. 1-4385) for the year
              ended December 31, 1993, Part IV, Item 14(a)(3), Exhibit 10.18.

        10.19 Renewal   Promissory   Note   secured   by  Security   Agreement
              Modification Agreement dated June 1989, by  and  between  Eureka
              Federal  Savings  and  Loan  Association  and  Andco Development
              Group, Inc.; Security Agreement-Pledge dated June  1989,  by and
              between  Rancho  Murieta  Properties,  Inc.  and  Eureka Federal
              Savings  and  Loan  Association;  Agreement to Modify Promissory
              Note dated June 1989, by and among  Eureka  Federal  Savings and

<PAGE>34

              Loan Association, Andco Development Group, Inc., Andco  Land and
              Development  Company,  Inc.   and  CBC Builders, Inc.; Extension
              Agreement dated February 1, 1990, by  and  among  Eureka Federal
              Savings  and  Loan Association, Andco Development  Group,  Inc.,
              Andco  Land  and   Development  Company,  Inc.,  Rancho  Murieta
              Properties,  Inc., Erik  J.  Tallstrom  and  John  B.  Anderson;
              Guaranty dated  October 1, 1987, by John B. Anderson in favor of
              Eureka Federal Savings  and  Loan  Association;  Guaranty  dated
              October 1, 1987, by Erik J. Tallstrom in favor of Eureka Federal
              Savings and Loan Association; Guaranty dated October 1, 1987, by
              Rancho  Murieta  Properties,  Inc.  in  favor  of Eureka Federal
              Savings and Loan Association; Amendment No. 1 to  Guaranty dated
              June  1989,  by and between John B. Anderson and Eureka  Federal
              Savings and Loan  Association; Amendment No. 1 to Guaranty dated
              June 1989, by and between  Erik  J. Tallstrom and Eureka Federal
              Savings and Loan Association; Amendment  No. 1 to Guaranty dated
              June 1989, by and between Rancho Murieta Properties,  Inc.   and
              Eureka Federal Savings and Loan Association; Corporation Deed of
              Trust  with  Assignment of Rents dated June 1989, by and between
              Rancho Murieta  Properties,  Inc. and Eureka Federal Savings and
              Loan Association; Agreement for  Purchase and Sale of Promissory
              Note dated November 24, 1993, by and  between Realecon, Inc. and
              M&R  Investment  Company, Inc.; Assignment  of  Promissory  Note
              dated November 24,  1993, by and  between Realecon, Inc. and M&R
              Investment Company, Inc.; Assignment and Assumption Agreement of
              Security  Agreement and  Guaranties  dated  November  24,  1993,
              between Realecon, Inc. and M&R Investment Company, Inc.; Secured
              Promissory Note dated November 24, 1993, in the principal amount
              of $125,000  by  M&R Investment Company, Inc. to Realecon, Inc.;
              Assignment of Deed  of  Trust  with  Request  for Special Notice
              dated  November  24,  1993,  by Realecon, Inc. in favor  of  M&R
              Investment Company, Inc.; and  Corporation  Deed  of  Trust with
              Assignment  of Rents dated November 24, 1993, by SHF Acquisition
              Corporation in  favor  of Realecon, Inc, are incorporated herein
              by reference to Dunes Hotels  and  Casinos Inc. Annual Report on
              Form  10-K (file no. 1-4385) for the  year  ended  December  31,
              1993, Part IV, Item 14(a)(3), Exhibit 10.19.

        10.20 Pine Ridge  Joint  Venture  Agreement  dated  June  1993, by and
              between  AJD and M & R Investment Company, Inc., is incorporated
              herein by  reference  to  Dunes  Hotels  and Casinos Inc. Annual
              Report  on  Form  10-K  (file  no. 1-4385) for  the  year  ended
              December 31, 1993, Part IV, Item  14(a)(3), Exhibit 10.20.  Pine
              Ridge  Joint  Venture -- Joint Venture  Meeting--  November  10,
              1994,  discussing   additional   capital  requirements  for  the
              continuing operations of Pine Ridge  Joint  Venture  and  equity
              increases  to  M&R Investment Company, Inc. related thereto,  is
              incorporated herein  by  reference  to  Dunes Hotels and Casinos
              Inc. Annual Report on Form 10-K (file no.  1-4385)  for the year
              ended December 31, 1994, Part IV, Item 14(a)(3), Exhibit 10.20.

        10.21 Letter dated March 28, 1994 from M&R Investment Company, Inc. to
              Michael Shipsey and Tri-Star International Development regarding
              purchase   of   a   25%   interest   of  Tri-Star  International
              Development's   50%  interest  in Arroyo  Grande  Joint  Venture
              Agreement of distributable cash;  and Letter dated July 29, 1994
              from Dennis L. Kennedy of Lionel Sawyer  &  Collins  to Tri-Star

<PAGE>35

              International  Development  regarding  termination  of  Tri-Star
              International Development's interest in the Arroyo Grande  Joint
              Venture,  are  incorporated  herein by reference to Dunes Hotels
              and Casinos Inc. Annual Report  on  Form  10-K (file no. 1-4385)
              for the year ended December 31, 1994, Part  IV,  Item  14(a)(3),
              Exhibit 10.21.

        10.22 Agreement  dated  January  1,  1996,  by  and between California
              Dehydrating  Company,  Inc.  and  SHF  Acquisition   Corporation
              regarding use of the California Dehydrating name and a  Covenant
              Not  to  Compete  is  incorporated  herein by reference to Dunes
              Hotels and Casinos Inc. Annual Report  on Form 10-K (file no. 1-
              4385)  for  the  year  ended December 31, 1995,  Part  IV,  Item
              14(a)(3), Exhibit 10.22.

        10.23 Commercial Premises Lease  dated  March  1, 1995, by and between
              Pheasant Investment Corporation and SHF Acquisition  Corporation
              regarding  the  lease  of  the  rice  drying  facility  in  West
              Sacramento,  California  is  incorporated herein by reference to
              Dunes Hotels and Casinos Inc.  Annual  Report on Form 10-K (file
              no. 1-4385) for the year ended December  31, 1995, Part IV, Item
              14(a)(3), Exhibit 10.23.

        10.24 Reimbursement Agreement dated September 20, 1995, by and between
              Rancho Murieta Community Services District  and  SHF Acquisition
              Corporation  regarding the amount of the reimbursement  due  SHF
              for excess work done at The Fairways at Rancho Murieta that will
              benefit other properties within the boundaries of Rancho Murieta
              is incorporated  herein by reference to Dunes Hotels and Casinos
              Inc. Annual Report  on  Form 10-K (file no. 1-4385) for the year
              ended December 31, 1995, Part IV, Item 14(a)(3), Exhibit 10.24.

        10.25 Assignment of promissory  note  in the original principal amount
              of $57,000 made by James P. Parks  and Dale A. Parks in favor of
              SHF Acquisition Corporation; Promissory  Note dated February 13,
              1995, made by James P. Parks and Dale A. Parks  in  favor of SHF
              Corporation;  Deed  of  Trust  dated February 13, 1995, made  by
              James  P.  Parks and Dale A. Parks  is  incorporated  herein  by
              reference to Dunes Hotels and Casinos Inc. Annual Report on Form
              10-K (file no.  1-4385)  for  the  year ended December 31, 1995,
              Part IV, Item 14(a)(3), Exhibit 10.25.

        10.26 Assignment of promissory note in the  original  principal amount
              of  $70,000  made by Chandler T. Martin and Debra L.  Martin  in
              favor  of SHF Acquisition  Corporation;  Promissory  Note  dated
              March 2, 1992, made by Chandler T. Martin and Debra L. Martin in
              favor of  SHF  Acquisition  Corporation;  Letter  dated April 6,
              1994, extending the due date of the note to March 10, 1998; Deed
              of  Trust  dated  March 2, 1992, made by Chandler T. Martin  and
              Debra L. Martin is  incorporated  herein  by  reference to Dunes
              Hotels and Casinos Inc. Annual Report on Form 10-K  (file no. 1-
              4385)  for  the  year  ended  December  31, 1995, Part IV,  Item
              14(a)(3), Exhibit 10.26.

        10.27 Assignment of promissory note in the original  principal  amount
              of  $164,160 made by Consolidated Kapital, Inc. in favor of  SHF
              Acquisition Corporation; Promissory Note dated January 24, 1992,
              made  by  Consolidated  Kapital, Inc in favor of SHF Acquisition

<PAGE>36

              Corporation; Deed of Trust  dated  January  24,  1992,  made  by
              Consolidated  Kapital,  Inc. is incorporated herein by reference
              to Dunes Hotels and Casinos  Inc.  Annual  Report  on  Form 10-K
              (file no. 1-4385) for the year ended December 31, 1995, Part IV,
              Item 14(a)(3), Exhibit 10.27.

        10.28 Assignment  of promissory note in the original principal  amount
              of $85,360 made  by William A. Brown in favor of SHF Acquisition
              Corporation; Promissory  Note  dated  April  6,  1995,  made  by
              William  A.  Brown in favor of SHF Acquisition Corporation; Deed
              of Trust dated  April  6,  1995,  made  by  William  A. Brown is
              incorporated  herein  by  reference  to Dunes Hotels and Casinos
              Inc. Annual Report on Form 10-K (file  no.  1-4385) for the year
              ended December 31, 1995, Part IV, Item 14(a)(3), Exhibit 10.28.

        10.29 Assignment of promissory note in the original  principal  amount
              of $76,000 made by John P. Xepoleas and Monterey A. Xepoleas  in
              favor  of  SHF  Acquisition  Corporation;  Promissory Note dated
              March  10,  1995,  made  by  John  P. Xepoleas and  Monterey  A.
              Xepoleas in favor of SHF Acquisition  Corporation; Deed of Trust
              dated March 10, 1995, made by John P. Xepoleas  and  Monterey A.
              Xepoleas is incorporated herein by reference to Dunes Hotels and
              Casinos  Inc.  Annual Report on Form 10-K (file no. 1-4385)  for
              the  year ended December  31,  1995,  Part  IV,  Item  14(a)(3),
              Exhibit 10.29.

        10.30 Assignment  of  promissory note in the original principal amount
              of $193,800 made by T. E. Duerr and P. A. Duerr, Trustees of the
              Duerr Family Revocable Trust dated October 14, 1987, in favor of
              SHF Acquisition Corporation;  Promissory  Note  dated  July  22,
              1992,  made by T.E. Duerr and P. A. Duerr, Trustees of the Duerr
              Family Revocable  Trust in favor of SHF Acquisition Corporation;
              Deed of Trust dated  July 22, 1992, made by T.E. Duerr and P. A.
              Duerr,  Trustees  of  the   Duerr   Family  Revocable  Trust  is
              incorporated  herein by reference to Dunes  Hotels  and  Casinos
              Inc. Annual Report  on  Form 10-K (file no. 1-4385) for the year
              ended December 31, 1995, Part IV, Item 14(a)(3), Exhibit 10.30.

        10.31 Assignment of promissory  note  in the original principal amount
              of $79,000 made by Raymond L. James  and  Cheryle James in favor
              of SHF Acquisition Corporation; Promissory  Note  dated December
              7, 1994, made by Raymond L. James and Cheryle James  in favor of
              SHF  Acquisition  Corporation;  Deed of Trust dated December  7,
              1994, made by Raymond L. James and Cheryle James is incorporated
              herein  by reference to Dunes Hotels  and  Casinos  Inc.  Annual
              Report on  Form  10-K  (file  no.  1-4385)  for  the  year ended
              December 31, 1995, Part IV, Item 14(a)(3), Exhibit 10.31.

        10.32 Installment  Note dated January 17, 1996, made by Mukhtar  Ahmad
              and Nazra P. Ahmad  in  favor of Willows Ranch Group, consisting
              of SHF Acquisition Corporation  and 500 First Street wherein SHF
              Acquisition Corporation has a 91.90%  interest  is  incorporated
              herein  by  reference  to  Dunes Hotels and Casinos Inc.  Annual
              Report  on  Form  10-K (file no.  1-4385)  for  the  year  ended
              December 31, 1995, Part IV, Item 14(a)(3), Exhibit 10.32.

<PAGE>37

        10.33 Purchase and Option  Agreement  by  and  between SHF Acquisition
              Corporation and West Coast Properties, LLC,  undated,  regarding
              the  sale of 20 lots and an option to purchase an additional  20
              lots at  The Fairways is incorporated herein by Dunes Hotels and
              Casinos Inc. Quarterly Report on Form 10-Q for the quarter ended
              March 31, 1996, Part II, Item 6, Exhibit 10.01.

        10.34 Letter dated  July  12,  1996  from  Murieta Investors regarding
              Amended Purchase Agreement is incorporated  herein  by reference
              to Dunes Hotels and Casinos Inc. Quarterly Report on  Form  10-Q
              for  the  quarter  ended June 30, 1996, Part II, Item 6, Exhibit
              10.01

        10.35 Promissory note dated  June  12,1996, between Golden State Trust
              and M & R Investment Company,  Inc.;   Assignment  of  Rights to
              Payments, Consent to Assignment between Baby Grand Corp. and M &
              R  Investment  Company,  Inc.;   Loan  Agreement  and Assignment
              between M & R Investment Company Inc. and Golden State  Trust is
              incorporated  herein  by  reference  to Dunes Hotels and Casinos
              Inc. Quarterly Report on Form 10-Q for  the  quarter  ended June
              30,1996, Part II, Item 6, Exhibit 10.02.

        10.36 Real  Estate Option Agreement dated September 27, 1996,  wherein
              M&R  Investment  Company,  Inc.  granted  an  Option  to  MARCOR
              PARTNERSHIP,  a   general  partnership, an Option to acquire M&R
              Investment Company, Inc's 66.667%  interest  in  2.16  acres  of
              industrial  property in Las Vegas, Nevada;  Memorandum Of Option
              for the purpose  of  recordation is incorporated by reference to
              Dunes Hotels and Casinos  Inc.  Annual Report on Form 10-K (file
              no 1-4385) for the year ended December  31,  1996, Part IV, Item
              14 (a) (3), Exhibit 10.36.

        10.37 Purchase Agreement dated February 27, 1997 by  and  between Dana
              C.  Hair  ("Buyer")  and  Southlake  Acquisition Corporation,  a
              Nevada Corporation, and Jim Joseph, as  Trustee  of  The  Joseph
              Revocable  Trust, each as to an undivided  1/2  interest wherein
              Buyer agrees  to  buy  the  property, more commonly known as The
              White Ranch for $6,000,000;   Exhibit "A" to purchase agreement,
              Legal description of the property;   Exhibit  "B",  there are no
              items in Exhibit B;  Exhibit "C", there are no items  in Exhibit
              "C";   Exhibit  "D",  (i)  Copy  of  a  Field Tenant Lease dated
              January 5, 1997, between Southlake Acquisition  Corporation  and
              Phoenix  Farming Company (ii) Copy of a Field Tenant Lease dated
              January 5,  1997,  between Southlake Acquisition Corporation and
              Four  B's  Farms (iii)  Copy  of  an  Agricultural  Lease  dated
              September 8,  1992,  and  its  amendment dated November 29, 1995
              between  Southlake  Acquisition  Corporation  and  J.G.  Boswell
              Company  (iv) Copy of a letter dated  February  14,  1997,  from
              Brent Bowen,  Vice  President, Southlake Acquisition Corporation
              to J. W. Boswell, President,  J.G. Boswell Company (v) Copy of a
              Field Tenant Lease dated February  20,  1997,  between Southlake
              Acquisition Corporation and W.William Blanken dba  HWB   Farms.;
              Exhibit  "E",  there  are no items in Exhibit "E";  Exhibit "F",
              (i)  Copy  of  the  Angiola   Water   District   Restated  Water
              Distribution  Agreement  (ii)  Copy  of a Fax Transmittal  dated
              February 12, 1997, from Kevin Johansen,  Angiola Water District,
              to  Brent  Bowen, Southlake Acquisition Corporation,  describing

<PAGE>38

              portions of  "the  Property"  lying within the boundaries of the
              Tulare Lake Basin Water Storage  District  and  the  Tulare Lake
              Drainage  District,  (iii)  Copy  of the Short Term State  Water
              Contract between Tulare Lake Basin  Water  Storage  District and
              Southlake  Acquisition  Corp.  for  the  period January 1,  1997
              through December 31, 1998, (iv)  Copy of the Ninth Amended Rules
              and Regulations Governing the Transmission  of  Water  Under the
              Water   Supply   Contract   Between  the  State  of  California,
              Department of Water Resources  and  the  Tulare Lake Basin Water
              Storage District;  Exhibit "G", there are  no  items  in Exhibit
              "G"  is  incorporated  by  reference to Dunes Hotels and Casinos
              Inc. Annual Report on Form 10-K  (file  no. 1-4385) for the year
              ended  December  31,  1996, Part IV, Item 14  (a)  (3),  Exhibit
              10.37.

        10.38 Agreement For The Purchase  and  Sale  of  Real  Property  dated
              February 21,1997, wherein SHF Acquisition Corporation agrees  to
              sell to Celebrate, LLC, and/or assignee, a parcel of vacant land
              consisting  of approximately .82 acres described as a portion of
              the W2, SW4,  Se4NW4  of Section 33, Township 195 and Range 61E,
              M.D.M.  The Property is  further described as Arroyo Grande Unit
              3 consisting of 4 lots is  incorporated  by  reference  to Dunes
              Hotels and Casinos Inc. Annual Report on Form 10-K (file  no. 1-
              4385) for the year ended December 31, 1996, Part IV, Item 14 (a)
              (3), Exhibit 10.38.

        10.39 Agreement  For  The  Purchase  and  Sale  of Real Property dated
              February 21,1997, wherein SHF Acquisition Corporation  agrees to
              sell to Celebrate, LLC, and/or assignee, a parcel of vacant land
              consisting  of  approximately  11  gross  acres  described as  a
              portion  of the SW4, NW4 of Section 33, Township 195  and  Range
              61E, M.D.M.   The property is further described as Arroyo Grande
              Unit 2A and 2B  consisting  of 53 lots is incorporated herein by
              reference to Dunes Hotels and Casinos Inc. Annual Report on Form
              10-K (file no. 1-4385) for the  year  ended  December  31, 1996,
              Part IV, Item 14 (a) (3), Exhibit 10.39.

        10.40 Purchase  and  Option  Agreement  by and between SHF Acquisition
              Corporation and Murieta Investors,  LLC,  dated October 7, 1996,
              wherein SHF Acquisition Corporation sold 6  lots at The Fairways
              to  Murieta  Investors,  LLC, and granted an option  to  Murieta
              Investors, LLC, to acquire  34  additional  lots at The Fairways
              under terms and conditions described in the Purchase  and Option
              Agreement  is  incorporated herein by reference to Dunes  Hotels
              and Casinos Inc.  Annual  Report  on Form 10-K (file no. 1-4385)
              for the year ended December 31, 1996,  Part IV, Item 14 (a) (3),
              Exhibit 10.40.

        10.41 Construction  Contract  dated  March  24,  1997,   between   SHF
              Acquisition  Corporation  and  Tolson  Construction  Co. for the
              construction  of  a  new  rice  dryer is incorporated herein  by
              reference to Dunes Hotels and Casinos  Inc.  Quarterly Report on
              Form 10-Q for the quarter ended June 30, 1997,  Part II, Item 6,
              Exhibit 10.01

        10.42 Master  Equipment  Lease  dated  April  3,  1997,  between  ICON
              Financial Corp. and SHF Acquisition Corporation; Promissory Note
              dated  April  3,  1997,  in  the  principal amount of $1,150,000
              between ICON Cash Flow Partners, L.P.,  Series  E;  Guaranty  by

<PAGE>39

              Dunes  Hotels and Casinos Inc. to ICON Financial Corp. dated May
              19, 1997;   Guaranty  by  M&R  Investment  Company, Inc. to ICON
              Financial Corp. dated May 19, 1997; Short Form Deed of Trust and
              Assignment  of  Rents  dated  May  21, 1997, by SHF  Acquisition
              Corporation in favor of ICON Cash Flow  Partners, L.P., Series E
              is incorporated herein by reference to Dunes  Hotels and Casinos
              Inc.  Quarterly Report on Form 10-Q for the quarter  ended  June
              30, 1997, Part II, Item 6, Exhibit 10.02.

        10.43 Letter  dated  March  18,  1997,  to  Baby  Grand  Corp., 160 E.
              Flamingo  Road, Las Vegas, Nevada 89109, Re: Pledged  Shares  Of
              Dunes  Hotels   and  Casinos  Inc.  is  incorporated  herein  by
              reference to Dunes  Hotels  and  Casinos  Inc. Current Report on
              Form 8-K, dated March 26, 1997, Item 5. Other Events.

        10.44 Letter  dated  March 18, 1997, to J.B.A. Investments,  Inc.  c/o
              John B. Anderson,  Anderson Farms, Mace Blvd., Road 32 A, Davis,
              California 95616, Re: Pledged Shares of Dunes Hotels and Casinos
              Inc. is incorporated  herein  by  reference  to Dunes Hotels and
              Casinos Inc. Current Report on Form 8-K, dated  March  26, 1997,
              Item 5. Other Events.

        10.45 Letter  dated  March  28,  1997,  to  Federal  Deposit Insurance
              Corporation from Baby Grand Corp., Re: Pledged Shares  of  Dunes
              Hotels  and Casinos Inc. is incorporated herein by reference  to
              Dunes Hotels  and Casinos Inc. Current Report on Form 8-K, dated
              March 26, 1997, Item 5. Other Events.

        10.46 Letter  dated March  28,  1997,  to  Federal  Deposit  Insurance
              Corporation  from  Cedar  Development Co., Re: Pledged Shares of
              Baby Grand Corp. is incorporated  herein  by  reference to Dunes
              Hotels and Casinos Inc. Current Report on Form  8-K, dated March
              26, 1997, Item 5. Other Events.

        10.47 Letter  dated  March  28,  1997,  to  Federal  Deposit Insurance
              Corporation from John B. Anderson, Re: Pledged Shares  of  Cedar
              Development  Co.  is  incorporated  herein by reference to Dunes
              Hotels and Casinos Inc. Current Report  on Form 8-K, dated March
              26, 1997, Item 5. Other Events.

        10.48 Letter  dated  March  28,  1997,  to  Federal Deposit  Insurance
              Corporation from J.B.A. Investments Inc.  Re:  Pledged Shares of
              Dunes  Hotels  and  Casinos  Inc.  is  incorporated  herein   by
              reference  to  Dunes  Hotels  and Casinos Inc. Current Report on
              Form 8-K, dated March 26, 1997, Item 5. Other Events.

        10.49 Loan Purchase Agreement dated November  19,  1997,  between  M&R
              Investment Company, Inc. and John B. Anderson, as Trustee of the
              John   J.  Anderson  Family  Trust  is  incorporated  herein  by
              reference  to  Dunes  Hotels  and Casinos Inc. Current Report on
              Form 8-K, dated December 16, 1997, Item 5. Other Events.

        21.01 Subsidiaries of Registrant.

        27.01 Financial Data Schedule

<PAGE>40

     (b) Reports on Form 8-K

        8K.01 March 26, 1997.  This report on  Form 8-K, Item 5, reported that
              the Company had received copies of  letters  to Baby Grand Corp.
              (BGC)  and  J.B.A.  Investments,  Inc.  (JBA) from  the  Federal
              Deposit  Insurance Corporation (FDIC) wherein  the  FDIC  stated
              that all rights  of  BGC and JBA pertaining to the Pledged Dunes
              Shares were now vested in the FDIC..

        8K.02 July 8, 1997.  This report on Form 8-K, Item 5, reported that on
              June 3, 1997, the FDIC filed a motion for a declaration that the
              FDIC has the right to  exercise the voting rights to the Pledged
              Dunes Shares and requiring  stockholders  meetings  be  held for
              Dunes  and certain other entities and that on July 8, 1997,  the
              Nevada District Court granted the FDIC's motion.

        8K.03 August 15, 1997.  This report on Form 8-K, Item 5, reported that
              on August 9, 1997, the court appointed Special Master, acting as
              an agent  of  the  FDIC,  published  in a major newspaper in Las
              Vegas,  Nevada, a notice of a court supervised  sale  of  common
              stock and other assets, including certain shares of common stock
              of the Company.

        8K.04 December  16,  1997.   This report on Form 8-K, Item 1, reported
              that the Federal Deposit  Insurance  Corporation (the FDIC) in a
              letter  dated January 15, 1998, had demanded  that  the  Company
              hold a special meeting of stockholders of the Company by January
              30, 1998, at which meeting the FDIC intends to vote the FDIC and
              Baby Grand  Corp. Pledged Shares to remove the existing board of
              directors of the Company and to elect a designee or designees of
              the FDIC to constitute the new board of directors of the Company
              and under Item  5,  reported  the sale, and events subsequent to
              the sale, of the Baby Grand Note  to the John J. Anderson Family
              Trust.

<PAGE>41

                             SIGNATURES

     Pursuant to the requirements of Section 13 or  15(d)  of  the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be  signed
on its behalf by the undersigned, thereunto duly authorized.

DUNES HOTELS AND CASINOS INC.       DUNES HOTELS AND CASINOS INC.


By    EDWARD PASQUALE                By    JAMES H. DALE
   Edward Pasquale                      James H. Dale
   President                            Secretary/Treasurer (Principal
   (Principal Executive Officer)        Accounting and Financial Officer)

Dated     MARCH 25, 1998

   Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
report has been signed  below  by  the  following  persons  on  behalf  of the
registrant and in the capacities and on the date indicated.

SIGNATURE                           TITLE                          DATE



John B. Anderson                  Director


BRENT L. BOWEN
Brent L. Bowen                    Director                    MARCH 25, 1998

JAMES H. DALE
James H. Dale                     Director                    MARCH 25, 1998

ANDREW P. MARINCOVICH
Andrew P. Marincovich             Director                    MARCH 25, 1998


Donald J. O'Leary                 Director

EDWARD PASQUALE
Edward Pasquale                   President                   MARCH 25, 1998

WAYNE O. PEARSON
Wayne O. Pearson                  Director                    MARCH 25, 1998

ERIK J. TALLSTROM
Erik J. Tallstrom                 Director                    MARCH 25, 1998

<PAGE>F-1

                      INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
Dunes Hotels and Casinos Inc.
Sacramento, California

     We  have  audited  the  accompanying  consolidated balance sheets of Dunes
Hotels and Casinos Inc. and Subsidiaries as  of December 31, 1997 and 1996, and
the related consolidated statements of income  (loss), shareholders' equity and
cash flows for each of the three years in the period  ended  December 31, 1997.
These financial statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

     We  conducted  our  audits  in accordance with generally accepted auditing
standards.  Those standards require  that  we  plan  and  perform  the audit to
obtain reasonable assurance about whether the financial statements are  free of
material  misstatement.  An audit includes examining, on a test basis, evidence
supporting  the  amounts and disclosures in the financial statements.  An audit
also  includes  assessing   the  accounting  principles  used  and  significant
estimates made by management,  as  well  as  evaluating  the  overall financial
statement presentation.  We believe that our audit provides a reasonable  basis
for our opinion.

     In  our  opinion,  the consolidated financial statements referred to above
present fairly, in all material  respects,  the  financial  position  of  Dunes
Hotels and Casinos Inc. and Subsidiaries as of December 31, 1997 and 1996,  and
the  results  of  their  operations  and their cash flows for each of the three
years  in the period ended December 31,  1997,  in  conformity  with  generally
accepted accounting principles.

     As  discussed  in  Note  3a(1),  there is a substantial possibility that a
change of control of the Company may occur  in  the near future.  The effect of
such a change on the Company's future operations  or other activities cannot be
assessed at this time.

     The   Company   has  engaged  in  significant  business   activities   and
transactions  with related  parties,  including  real  estate  investments  and
lending, which have resulted in losses.

     In connection  with  our  audits  of  the financial statements referred to
above, we audited the financial statement schedules  listed  under Item 14(a)2.
In  our  opinion,  these financial statement schedules present fairly,  in  all
material respects, the  information stated therein, when considered in relation
to the financial statements taken as a whole.

PIERCY, BOWLER, TAYLOR & KERN

Las Vegas, Nevada

March 11, 1998, except for Note 12(b)
   as to which the date is March 12, 1998

<PAGE>F-2

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                        CONSOLIDATED  BALANCE SHEETS
                         DECEMBER 31, 1997 AND 1996

                                  ASSETS
                                                         1997         1996
                                                       (Dollars in thousands)
Cash and cash equivalents                              $  4,299     $  1,283
Marketable securities                                       673          527
Receivables
  Trade, less allowance, 1996, $141                           3          133
  Related party, less allowance, 1996, $2,049                            397
  Real estate sales, less allowance, 1997, $64              469          928
  Other, including officer,1997, $85                         92           47
Inventory of real estate held for sale                    4,359       10,919
Inventory, other                                                          38
Prepaid expenses                                            122          116
Property and equipment, less accumulated
  depreciation and amortization, 1997, $477;
  1996, $425                                              3,252        1,678
Investments                                                 644        1,049
Other assets                                                124           11
                                                       --------     --------
                                                       $ 14,037     $ 17,126

                                  (continued)

<PAGE>F-3

                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                                         1997         1996
                                                      (Dollars in thousands)
Accounts payable                                       $     24     $     98
Accrued expenses                                            207          246
Deferred credits and other                                  178           70
Income taxes                                                307          247
Short-term debt                                              60           69
Long-term debt and capital lease obligations              2,272        1,955
Accrued preferred stock dividends in arrears              1,173        1,101
                                                       --------     --------
     Total liabilities                                    4,221        3,786
                                                       --------     --------
Minority interest                                           320        2,897
                                                       --------     --------
Shareholders' equity
     Preferred stock - authorized 10,750,000 shares
     ($.50 par); issued issued 10,512 shares Series
     B $7.50 cumulative preferred stock, outstanding
     9,610 shares in 1997 and 1996, aggregate
     liquidation value $2,373 including dividends in
     arrears                                                  5            5

     Common stock - authorized 25,000,000 shares ($.50
     par); issued 7,799,780 shares, outstanding
     6,375,096 shares in 1997 and 1996                    3,900        3,900

     Capital in excess of par                            25,881       25,881

     Deficit                                            (18,290)     (17,343)
                                                       --------     --------
                                                         11,496       12,443
     Treasury stock at cost; Preferred - Series B, 902
     shares Common 1,424,684 shares in 1997 and 1996      2,000        2,000
                                                       --------     --------

     Total shareholders' equity                           9,496       10,443
                                                       --------     --------
                                                       $ 14,037     $ 17,126
                                                       ========     ========

<PAGE>F-4

                DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                 YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

                                                1997        1996        1995
                                      (Dollars in thousands, except per share)
Operating revenues:
  Sales of real estate                        $ 7,146     $ 1,128     $ 1,901
  Cost of real estate sold                      6,658       1,226       1,824
                                              -------     -------     -------
                                                  488         (98)         77
                                              -------     -------     -------
  Rental income - agricultural properties         529         948         485
  Cost and expense of rental income                97         449         386
                                              -------     -------     -------
                                                  432         499          99
                                              -------     -------     -------
  Rice drying and storage revenues                806         787         752
  Cost of rice drying and storage                 519         768         529
                                              -------     -------     -------
                                                  287          19         223
                                              -------     -------     -------
  Miscellaneous income (expense) - net            (83)        119          (8)
                                              -------     -------     -------
                                                1,124         539         391
                                              -------     -------     -------
Operating expenses:
  Selling, administrative and general
    Corporate                                   1,053       1,022       1,090
    Real estate operations                        218         245         388
  Bad debts (recoveries), net                     (94)        556         425
  Depreciation                                     83          99          69
  Losses on real estate investments               400         290         284
                                              -------     -------     -------
                                                1,660       2,212       2,256
                                              -------     -------     -------
Loss before other credits (charges), income
taxes, minority interest and extraordinary
item                                             (536)     (1,673)     (1,865)
                                              -------     -------     -------
Other credits (charges):
  Interest and dividend income                    323         360         595
  Interest expense                               (201)       (230)        (37)
  Partnership income (loss)                                  (135)       (781)
  Securities gains (losses), net                   (4)        (14)         26
                                              -------     -------     -------
                                                  118         (19)       (197)
                                              -------     -------     -------

                                 (continued)

<PAGE>F-5
                                                 1997       1996        1995
                                      (Dollars in thousands, except per share)

Loss before income taxes, minority interest
and extraordinary item                           (418)     (1,692)     (2,062)

Income taxes                                      (53)                    (13)
                                              -------     -------     -------

Loss before minority interest and
extraordinary item                               (471)     (1,692)     (2,075)

Minority interest in income of the White
Ranch                                            (404)        (97)
                                              -------     -------     -------

Loss before extraordinary item                   (875)     (1,789)     (2,075)
Extraordinary item, net of taxes of $80                                 8,346
                                              -------     -------     -------

Net income (loss)                             $  (875)    $(1,789)    $ 6,271
                                              =======     =======     =======

Income (loss) per common share:
  Loss before extraordinary item              $ (0.14)    $ (0.29)    $ (0.33)
  Extraordinary item                                                     1.30
                                              -------     -------     -------
  Net income (loss)                           $ (0.14)    $ (0.29)    $  0.97
                                              =======     =======     =======

               See notes to consolidated financial statements.

<PAGE>F-6
<TABLE>
<CAPTION>
                           DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF SHREHOLDERS' EQUITY
                            YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                                      (Dollars in thousands)
<S>                   <C>     <C>     <C>       <C>      <C>      <C>         <C>     <C>    <C>          <C>        <C>
                     PREFERRED STOCK     COMMON STOCK   CAPITAL                  PREFERRED            COMMON          TOTAL
                        ISSUED(1)           ISSUED         IN                 TREASURY STOCK      TREASURY STOCK      SHARE
                                                         EXCESS                                                      HOLDERS'
                      SHARES  AMOUNT   SHARES    AMOUNT  OF PAR   DEFICIT     SHARES  AMOUNT    SHARES      AMOUNT   EQUITY
Balance, January 1,
  1995                10,512      $5  7,799,780  $3,900  $25,881  $(21,681)   (902)   $(70)  (1,339,684)  $(1,760)     6,275

Accrued dividends,
  Preferred                                                            (72)                                              (72)
Purchase of
  treasury stock                                                                                (85,000)     (170)      (170)
Net income                                                           6,271                                             6,271
                      ------  ------  ---------  ------  -------  ---------   ----    -----    ----------  --------   ------

Balance, December 31,
  1995                10,512       5  7,799,780   3,900   25,881   (15,482)   (902)    (70)    (1,424,684)  (1,930)   12,304

Accrued dividends,
  Preferred                                                            (72)                                              (72)

                                                                                                                           0
Net Loss                                                            (1,789)                                           (1,789)
                      ------  ------  ---------  ------  -------  ---------   -----   -----    ----------  --------  -------

Balance, December 31,
  1996                10,512       5  7,799,780   3,900   25,881   (17,343)   (902)    (70)    (1,424,684) ( 1,930)   10,443

Accrued dividends,
  Preferred                                                            (72)                                              (72)

Net loss                                                              (875)                                             (875)
                      ------  ------  ---------  ------  -------  ---------   -----   -----    ----------  --------  -------

Balance, December 31,
  1997                10,512      $5  7,799,780  $3,900  $25,881  ($18,290)   (902)   ($70)    (1,424,684) ($1,930)  $ 9,496
                      ======  ======  =========  ======  =======  =========   =====   =====    =========== ========  =======
</TABLE>

(1) Series B, $7.50 dividend, voting and non-convertible (liquidation value
    $125 per share).

                            See notes to consolidated financial statements.

<PAGE>F-7

                     DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1997, 1996 and 1995

                                              1997         1996        1995
                                                  (Dollars in Thousands)
Cash flows from operating activities:
   Net income (loss)                        $  (875)     $(1,789)     $ 6,271
 Adjustments to reconcile net income
  (loss) to net cash provided by
  operating activities:
   Provision for losses on accounts and
    notes receivable, related parties
    and others                                  240          600          331
   Non-cash gain from settlement of
    liability                                                          (8,619)
   Depreciation                                  83           99           69
   Gain on disposition of assets                 58                        (2)
   Provision for losses on investments          400          171          346
   Partnership loss, net                                                  435
   Allocation of minority interest              404           97
   (Gain) loss on marketable securities           4           14          (26)
   Changes in operating assets and 
    liabilities
     Trade receivables                          130            6          235
     Inventory, real estate held for sale     6,560        1,431        1,248
     Inventory, other                            38           51          (89)
     Prepaid expenses                            (6)          26          107
     Other Assets                              (113)          41          (44)
     Accounts payables                          (74)          (2)         (74)
     Accrued expenses                           (39)         173           15
     Deferred credits and other                 108           47
     Income taxes                                60          (80)          80
                                            -------      -------      -------
Net cash provided by operating activities     6,978          885          283
                                            -------      -------      -------

Cash flows from investing activities:
   Payments made to minority interest        (2,981)
   Capital expenditures                      (1,826)         (23)        (146)
   Purchase of investments                                  (125)      (1,367)
   Purchase of marketable securities           (150)         (30)         (65)
   Proceeds from sale of marketable
    securities                                                            435
   Payments received on receivables             760          975        1,873
   Loans made to related parties                            (250)        (594)
   Loans made to others, including
    officer                                    (189)         (43)        (193)
   Proceeds from investments                      5          247
   Proceeds from disposition of
    property                                    111                        10
                                            -------      -------      -------
  Net cash provided by (used in)
   investing activities                      (4,270)         751          (47)
                                            -------      -------      -------

                                        (continued)
<PAGE>F-8
                                                1997        1996          1995
                                                    (Dollars in Thousands)

Cash flows from financing activities:
   Proceeds from short-term debt             $   110     $   123      $   133
   Payments on short-term debt                  (119)       (129)        (134)
   Proceeds from long-term debt                1,150
   Payments on long-term debt                   (833)       (842)        (444)
   Payments for treasury stock                                           (170)
                                             -------     -------      -------
  Net cash provided by (used in)
   financing activities                          308        (848)        (615)
                                             -------     -------      -------
Increase (decrease) in cash and
  cash equivalents                             3,016         788         (379)
Cash and cash equivalents,
  beginning of year                            1,283         495          874
                                             -------     -------      -------
Cash and cash equivalents,
   end of year                               $ 4,299     $ 1,283      $   495
                                             =======     =======      =======
Supplemental disclosures of cash flow
information:
   Cash paid during the year for:
    Interest                                 $   185     $   283      $    10
Supplemental schedules of non-cash
investing and financing activities:
   Total liability settled                   $           $            $ 8,985
   Less assets transferred                                               (366)
                                             -------     -------      -------
   Non-cash gain from extraordinary
    items -- settlement of liabilities       $           $            $ 8,619
                                             =======     =======      =======
   Real estate acquired through foreclosure  $           $    38      $
                                             =======     =======      =======
   Note receivable from sale of investments  $           $   224      $
                                             =======     =======      =======
   Property and equipment acquired through
    a capital lease                          $           $            $    73
                                             =======     =======      =======
   Dividends accrued but unpaid              $    72     $    72      $    72
                                             =======     =======      =======


                  See notes to consolidated financial statements.

<PAGE>F-9

                DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

   CONSOLIDATION:

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

   DESCRIPTION OF BUSINESS:

   The  Company  operates  in  two  principal  business  segments: Real  estate
     (development and sale of residential lots and rental of agricultural land)
     and agricultural (rice drying and storage).

   The Company's real estate segment sells completed residential lots primarily
     to builders of custom homes and to the general public  in  and  around the
     greater  Sacramento,  California  area.   The agricultural properties  are
     leased  to  farmers  in  the  area where the agricultural  properties  are
     located.

   The  agricultural  segment dries harvested  rice  over  a  two-month  period
     (approximately September   15  to  November 15) and stores, for a fee, the
     dried  rice (or other grains) until it  is  removed  by  the  owner.   The
     Company  dries  and stores rice principally for one customer, Farmers Rice
     Co-operative (Farmers).   Farmers  accounts  for  approximately 98% of the
     Company's rice drying and storage revenues.  If the  Company  were to lose
     Farmers  as  a  customer, it would have a material adverse effect  on  the
     Company's drying and storage operation.

    PROPERTY AND EQUIPMENT AND DEPRECIATION AND AMORTIZATION:

   Property and equipment  are  stated  at cost.  Depreciation and amortization
     are provided by the straight-line method  over  the estimated useful lives
     of the assets.

   Effective  January  1,  1996,  the  Company adopted Statement  of  Financial
     Accounting Standards (SFAS) No. 121  "Accounting  for  the  Impairment  of
     Long-Lived  Assets  and  for Long-Lived Assets to be Disposed of," without
     any material effect.

<PAGE>F-10

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
              YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

   INCOME (LOSS) PER SHARE:

    For the year ended December 31, 1997, the Company has adopted retroactively
     Statement of Financial Accounting  Standards  No. 128 "Earnings Per Share"
     (SFAS  No.  128)  which  established  a new accounting  standard  for  the
     computation  and  reporting  on  net  income   (loss)   per   share.   The
     implementation of SFAS No. 128 had no material effect on the Company's net
     income (loss) per share computations.

   Income (loss) per common share has been computed using the weighted  average
     number  of  shares outstanding during the year:  6,375,096, 6,375,096  and
     6,429,822  for   the  years  ended  December  31,  1997,  1996  and  1995,
     respectively.  Dividends on nonconvertible preferred stock - Series B have
     been deducted from  income  or  added  to  the  loss  applicable to common
     shares.  See Note 16.

   CASH AND CASH EQUIVALENTS:

   Cash  equivalents  are short-term (original maturity of 90  days  or  less),
     highly liquid investments  that  are  both  readily  convertible  to known
     amounts of cash and so near their maturity that they present insignificant
     risk of changes in value because of changes in interest rates.

   MARKETABLE SECURITIES:

   Effective in the year ended December 31, 1995, the Company adopted Statement
     of  Financial  Accounting Standards (SFAS) No. 115 "Accounting for Certain
     Investments in Debt  and Equity Securities".  The Company's investments in
     marketable securities  are   accounted  for  as trading securities.  There
     have been no material gains or losses related to the Company's investments
     in marketable securities.

   RECLASSIFICATIONS:

   Certain  amounts  in  the  Company's  prior  years  consolidated   financial
     statements  have  been  reclassified  to conform to the 1997 presentation.
     Such reclassification has no effect on the results of operations.

<PAGE>F-11

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

   ENVIRONMENTAL EXPENDITURES:

   Expenditures that relate to current operations  are  expensed or capitalized
     as appropriate.  Expenditures that relate to an existing  condition caused
     by  past  operations  and  which do not contribute to future revenues  are
     expensed.  Liabilities are recorded when remedial efforts are probable and
     the costs can be reasonably estimated.

   REAL ESTATE HELD FOR DEVELOPMENT AND SALE:

   Real estate held for development  and sale is stated at the lower of cost or
     net  realizable  value.  Costs include  primarily  acquisition  costs  and
     improvements costs.   Costs  are  allocated to individual properties using
     the method appropriate in the circumstances. For purposes of the statement
     of cash flows, sales and purchases of real estate held for development and
     sale are classified as operating activities.

   USE OF ESTIMATES:

   The timely preparation of financial statements  in conformity with generally
     accepted accounting principles requires management  to  make estimates and
     assumptions that affect certain reported amounts and disclosures.   Actual
     results  could  differ  from  those  estimates  some  of which may require
     revision in future periods.

   CAPITALIZED INTEREST:

    For the year ended December 31, 1997, the Company capitalized approximately
     $15,000 of interest in connection with the construction of the rice drying
     facility (the Drying Facility).  The capitalization rate that was used was
     12% which is the rate applicable to the debt related to  the  construction
     of the Drying Facility.

<PAGE>F-12

2. FAIR VALUE OF FINANCIAL INSTRUMENTS:

   The following methods and assumptions were used by the Company in estimating
     its fair value and disclosures for financial instruments.

   CASH,  CASH  EQUIVALENTS  AND  MARKETABLE  SECURITIES:  The  carrying amount
     approximates   fair   value  of  cash,  cash  equivalents  and  marketable
     securities. For marketable  securities, fair values are estimated based on
     quoted market prices as of December 31, 1997 and 1996.

   NOTES RECEIVABLE: The fair value  of  real estate notes receivable are based
     on  their  outstanding  balances  (net of  allowances),  their  respective
     interest rates and the estimated fair  value, based on comparable sales in
     the area, of the real property which serves  as  collateral for the notes.
     It was not possible to determine the fair value of  the  BGC  Note because
     the Company was unable to predict  whether Baby Grand Corp. would  be able
     to  pay its first lien note on its due date, which was the same date  that
     the  BGC   Note   came  due.   The  fair  value  of  the  note  receivable
     officer/director is base on its interest rate and the estimated fair value
     of the real property that serves as collateral for the note.

   SOLANO COUNTY OPTION: The fair value of the Solano County option is based on
     management's estimate  of the amount that could be realized if the Company
     were to exercise its option  and subsequently sell the property.  See Note
     7(a).

   LONG-TERM DEBT AND CAPITAL LEASE  OBLIGATION:  The  fair  value of long-term
     debt  related  to  the  SASA  Obligation  is  not  subject  to  reasonable
     estimation  because  the  debt  arose  principally  as  a  result  of  the
     settlement  of  a dispute.  The fair value of the capital lease obligation
     is based on current rates at which the Company could borrow funds.

   The carrying amounts  and fair values of the Company's financial instruments
     at December 31, 1996 and 1997 are as follows (in thousands):

                                                          DECEMBER 31, 1996
                                                          Carrying    Fair
                                                           AMOUNT     VALUE

Cash, cash equivalents and marketable securities           $1,810     $1,810
Notes receivable, real estate sales                           928        928
Note receivable, related party, BGC Note                      397
Solano County option                                        1,044      1,044
Long-term debt and capital lease obligation                 1,955         57

<PAGE>F-13

2. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED):


                                                        DECEMBER 31, 1997
                                                        Carrying     Fair
                                                         AMOUNT     VALUE
Cash, cash equivalents and marketable securities         $4,972     $4,972
Notes receivable, real estate sales                         469        469
Note receivable, Officer/Director                            85         85
Solano County option                                        644        644
Long-term debt and capital lease obligation               2,272      1,150

3. RELATED PARTY TRANSACTIONS:

   a.  John B. Anderson (Anderson),  the  Company's controlling stockholder and
   former Chairman of the Board of Directors of the Company, and entities owned
   or controlled by him (Anderson  Entities)  own   approximately  67.2% of the
   Company's  common  stock  as  of  March 11, 1998.  See Note 12 (b) regarding
   litigation between Anderson and the  Federal  Deposit  Insurance Corporation
   (the FDIC) and a possible change in ownership of the Company.   Each  entity
   related  or  controlled  by  Anderson   will hereinafter be identified as an
   Anderson   Entity.

     (1)  On  November  26,  1997, the Company entered  into  a  Loan  Purchase
        Agreement (the Note  Sale  Agreement)  with Anderson, as Trustee of the
        John J. Anderson Family Trust (the Trust).   At such date, Anderson was
        President  and Chairman of the Board of the Company,  and  through  his
        ownership of  Cedar  Development  Co.,  was  the  sole  shareholder and
        President of Baby Grand Corp. (BGC).  The Note Sale Agreement  provided
        for  the  sale  of  a note (the BGC Note) issued by BGC payable to MRI.
        The BGC Note was in the  original  principal  amount of $2,650,000 with
        interest  at  9%  per  annum  and was collateralized  by  approximately
        1,280,756 shares of the Company's  outstanding  common  stock  (the BGC
        Pledged  Shares).   The BGC Note was due on December 1, 1997.  The  BGC
        Note had a principal  balance at the date of the Note Sale Agreement of
        approximately $1,900,000.   It  was  carried  on the Company's books at
        approximately $100,000, an amount which the Company  believed to be its
        net realizable value.  The sale price of the BGC Note was $320,000 plus
        a  possible  contingent  bonus  payment  of $50,000.  Of the  $320,000,
        $200,000  was  paid  to  the  Company upon signing  of  the  Note  Sale
        Agreement and the delivery to the  Trust  of approximately 1,036,160 of
        the  BGC  Pledged Shares.  The remaining $120,000  is  held  in  escrow
        pending delivery  to  the Trust of the remaining BGC Pledged Shares and
        is classified under other assets with an offset to deferred credits.

<PAGE>F-14

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

3. RELATED PARTY TRANSACTIONS (CONTINUED):

   a. (1) continued

        In connection with the  Note  Sale Agreement, MRI assigned to the Trust
        all of its rights pursuant to that  certain Amended and Restated Pledge
        Agreement dated November 2, 1992, made by BGC in favor of MRI.

        The Note Sale Agreement was unanimously approved by the Audit Committee
        of the Company's Board of Directors and  seven  of the Directors of the
        Company.   The Note Sale Agreement was approved because  the  Board  of
        Directors and  the  Audit Committee had been advised  that the imminent
        foreclosure of the BGC Pledged Shares by MRI, which represents 20.1% of
        the outstanding Common  Shares  of  the  Company, when coupled with the
        then likely exercise of voting rights by the  FDIC  of 3,000,000 shares
        of  the  Common  Stock  of  the  Company pledged to the FDIC  by  other
        Anderson Entities, which represents  47.1%  of  the  outstanding Common
        Stock  of  the  Company,  would  result   in a change of ownership  for
        purposes  of the Internal Revenue Code of 1986,  as  amended.   Such  a
        change  would  result  in a significant reduction, or the complete loss
        of the Company's net operating  loss carryforward, which as of December
        31, 1997, approximated $50,900,000  (the  NOL).  The Board of Directors
        and the Audit Committee had been advised  that,  only  through Anderson
        maintaining  control  over  the  BGC Pledged Shares could a  change  of
        ownership under the code be avoided  and  that  the  Trust was the only
        entity controlled by Anderson that, at the time the Note Sale Agreement
        was  approved,  was  free from claims of the FDIC that might  adversely
        effect  the  ownership of  the  BGC  Pledged  Shares.   The  Note  Sale
        Agreement was  approved in part to avoid the loss of the NOL.  Anderson
        did not participate in the Board's deliberation or vote with respect to
        the Note Sale Agreement.   Anderson  provided written representation to
        the  Board that (i) he was aware of his  fiduciary  obligation  to  the
        Company,  and  (ii)  he  was not aware of any transaction pending or in
        prospect which would enhance  the  value of the BGC Note above the sale
        price to the Trust.

        On December 2, 1997, subsequent to completing  the Note Sale Agreement,
        it  came  to the Company's attention that BGC had  transferred  to  the
        Trust, in satisfaction  of  the  BGC  Note,  assets having an estimated
        value,  determined  by  BGC, ranging from approximately  $1,192,443  to
        approximately $1,612,632.  The assets transferred  consisted of the BGC
        pledged shares, the net equity  in  a residence occupied by Anderson in
        Yolo County, California and $580,000 in cash.

        By letter to Anderson, as Trustee of the Trust, dated December 8, 1997,
        the Company demanded that Anderson confirm  to  the  Company  that  the
        transfer  of  the  assets  from BGC to the Trust did in fact occur.  In
        addition, the Company demanded  that  all  assets received by the Trust
        from BGC, less the amount paid to MRI for the purchase of the BGC Note,
        be turned over to MRI.  The Company further advised Anderson that the
        Company

<PAGE>F-15

RELATED PARTY TRANSACTION (CONTINUED):

   a. (1) continued

        reserves  all  rights  and  remedies,  including  possible  claims  for
        compensatory  and  punitive  damages,  the imposition of a constructive
        trust, and recission.

        On December 15, 1997, Larry L. Bertsch,  the special liquidating master
        (the Special Master) previously appointed by the United States District
        Court,  District of Nevada (the Nevada District  Court),  to  sell  the
        assets that  serve as collateral for the obligation due the FDIC by the
        Anderson Parties, filed with that court an emergency motion seeking (1)
        to set aside the allegedly fraudulent transfer of assets by the Company
        to the Trust and  by BGC to the Trust; (2) to freeze assets held by the
        Trust; and (3) to schedule  an  order to show cause why Anderson, James
        H. Dale (the Company's Secretary/Treasure,  Director  and the President
        of MRI), Kent Neville Calfee (counsel to Anderson who drafted  the Note
        Sale  Agreement  documents),  and  Calfee  &  Young (Calfee's law firm)
        should not be held in contempt by the Nevada District Court.

        On December 16, 1997, the Nevada District Court  ordered that Anderson,
        as  Trustee  of  the Trust, return to BGC the $580,000  in  cash.   The
        Nevada District Court  further  ordered  that the Anderson residence in
        Yolo County, California remain in the Trust  until further order of the
        Nevada District Court and that the BGC Pledged Shares be turned over to
        the custody of the Special Master until further  order  of  the  Nevada
        District  Court.   The  Nevada  District  Court  gave the parties until
        January  8, 1998, to submit responses to the Special  Master's  Motion.
        The  Company   submitted  a  response  on  that  date  challenging  the
        allegation  in  the  Special  Master's  Motion  that  MRI  fraudulently
        transferred between $872,443 and $1,292,632 to the Trust.  The response
        also opposes the  unwinding  of  the  Note Sale Agreement and any order
        that would deny the Trust ownership of the BGC Pledged Shares.

        On  January  27,  1998,  the Special Master  submitted  to  the  Nevada
        District Court his reply to  the  response  of the Company, asking that
        the Nevada District Court unwind the Note Sale  Agreement,  at least to
        the  extent  that  MRI  is made whole for its lost profit, representing
        $580,000 in cash and the  interest  in  the  Anderson residence in Yolo
        County, California, and that the Nevada District  Court  find  Anderson
        and his attorneys Calfee & Young, in contempt and to impose appropriate
        sanctions.   In  this  reply, the Special Master did not ask the Nevada
        District Court to find Mr. Dale in contempt.

        On January 27, 1998, the  FDIC  submitted  to the Nevada District Court
        its Reply Memorandum of Points and Authorities  of  FDIC  in Support of
        Special  Master  Larry  L.  Bertsch's  Motion  to  Set Aside Fraudulent
        Transfer, For Contempt and For Monetary Sanctions Jointly and Severally
        Against John B. Anderson, James H. Dale, Ken Neville

<PAGE>F-16

                DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

RELATED PARTY TRANSACTION (CONTINUED):
   a. (1) continued

        Calfee and  Calfee  &  Young.  This  Reply Memorandum asked the Nevada
        District Court to set aside the Note Sale  Agreement in the manner that
        the Nevada District Court deems most equitable  and  that  the  Nevada
        District Court should sanction Anderson,  the Trust,  Calfee and Calfee
        & Young.  In its reply, the FDIC did not ask the Nevada District Court
        to sanction Mr. Dale.

        On February  3,  1998, the Nevada District Court ordered that a hearing
        be held on Friday  March  27, 1998, regarding the Motion of the Special
        Master (1) to Set Aside Fraudulent   Transfer  of  Assets;  and  (2) to
        Freeze  Assets  Held  by Transferee John J. Anderson Family Trust.  The
        Nevada District Court further  ordered  that  no  hearing  shall be set
        regarding  contempt   charges  and sanctions until after the March  27,
        1998 hearing.

     (2)   For  the years ended December 31,  1997,  1996  and  1995,  $45,400,
        $59,998 and  $49,278,  respectively, was paid on behalf of Anderson for
        certain of Anderson's expenses,  in lieu of salary, which payments were
        considered compensation to Anderson  as  President  of  the Company and
        were approved by the Company's Audit Committee.

     (3)  In  connection  with  a  proposed settlement agreement in June  1996,
        between the FDIC and the Anderson  Parties, the Company loaned $250,000
        to the Golden State Trust, an Anderson Party.  The loan is evidenced by
        a note dated June 12, 1996, which bears interest at the rate of 12% per
        annum, payable monthly.  A principal  payment  of  $100,000 was paid on
        July  1,  1996.  In  1997,  the  Company  determined  that the  balance
        remaining on the Golden State Trust note was uncollectible and wrote it
        off against the related reserve.

     (4)  In  August  1997, the Company entered into a oral agreement  with  an
        Anderson related  entity  to  lease the West Sacramento Drying Facility
        for the purpose of drying short-grain  rice during the 1997 rice drying
        season.  Rental for the West Sacramento  Drying  Facility  was  $20,000
        plus 50% of the rice drying and storage profit after deduction for  the
        $20,000 rent payment.  The rent payment was made by transferring to the
        Anderson  related  entity a piece of equipment, valued at $20,000, that
        was previously used in the Steadfast Cattle operation.
        .
     (5) On October 1, 1997,  the  Company  loaned James H. Dale, the Company's
        Secretary/Treasurer and President of  MRI,  $85,000.   The  loan is for
        three years with interest at 9% per annum, payable monthly.   The  loan
        is collateralized by a deed of trust on real property and a conditional
        assignment of Mr. Dale's director's fees.

<PAGE>F-17

              DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

4. INVENTORY OF REAL ESTATE HELD FOR DEVELOPMENT AND SALE:

                                                         1997         1996
     The Fairways (a)                                  $ 4,173      $ 4,664
     White Ranch (b)                                                  5,600
     Residential lots, North Las Vegas (c)                              469
     Sam Hamburg Farm (d)                                  146          146
     Other                                                  40           40
                                                       -------      -------
                                                       $ 4,359      $10,919
                                                       =======      =======

   (a) The Company, through SHF, developed 50 acres of residential land located
     at  Rancho  Murieta,  California as a residential planned unit development
     known as "The Fairways".   Rancho  Murieta  is a 3,500 acre master planned
     unit   development  located  approximately  25  miles   from   Sacramento,
     California.   Rancho  Murieta  consists  primarily of single family homes,
     town  houses,  commercial  property  and  two  18-hole  championship  golf
     courses, including country club facilities.  The  Fairways, located within
     the boundaries of one of the golf courses located at  Rancho  Murieta, was
     subdivided into 110 single-family estate lots.  As of March 11,  1998,  49
     lots remain unsold.

     In  connection  with  its development of The Fairways, SHF was required to
     construct certain improvements  that benefitted not only The Fairways, but
     other properties that lay outside  of  the boundaries of The Fairways (the
     Benefited Properties).  The total cost of the improvements was $1,597,425,
     of which $276,088 is allocable to The Fairways and $1,321,337 is allocable
     to  the  Benefited  Properties.   SHF  entered   into  an  agreement  (the
     Reimbursement  Agreement)  with  the  Rancho  Murieta  Community  Services
     District  which  provides that SHF will be reimbursed the  amount  of  the
     costs allocable to  the Benefitted Properties, less approximately $176,500
     of future costs that  will  be  of  benefit  to  The  Fairways  for  a net
     reimbursement  to the Company of approximately $1,140,900.  The funds will
     be  reimbursed  to  SHF  out  of  proceeds  of  any  subsequent  community
     facilities district  or  by direct payment by subsequent developers of the
     Benefited Properties.  SHF's  right to reimbursement will expire in twenty
     years from September 1995.  The  Company is unable to predict what amount,
     if any, will be received under the Reimbursement Agreement.  The rights to
     reimbursement under the Reimbursement Agreement are personal to SHF and do
     not run with The Fairway's property unless assigned by SHF.

     As part of the development of The  Fairways, SHF entered into a Settlement
     Agreement Regarding Payment of Park  Fees (the Park Fee Payment Agreement)
     regarding park fees that are payable to  Rancho  Murieta Association (RMA)
     on each developed lot.  The Park Fee Agreement acknowledged that the total
     park  fees owing to RMA were $173,238.  SHF agreed  to  pay  $17,323  upon
     signing  the  Park  Fee  Agreement with the balance payable ratably as the
     remaining lots were sold.   In  the event all of the lots were not sold by
     December 31, 1997, then any remaining amount due must be paid in full.  On
     December 29, 1997, SHF paid all of  the  remaining park fees that were due
     to RMA.

<PAGE>F-18

            DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

INVENTORY OF REAL ESTATE HELD FOR DEVELOPMENT AND SALE (CONTINUED):
   (a) continued

     As part of the Settlement Agreement with the  Resolution Trust Corporation
     (the  RTC)  as Receiver for San Antonio Savings Association,  all  of  the
     unsold lots in  The Fairways are encumbered by a deed of trust in favor of
     the RTC.  The deed  of trust requires a $40,000 payment for the release of
     each of the encumbered lots. See Note 9 of Notes to Consolidated Financial
     Statements.

     On October 7, 1996, the  Company  signed  a  Purchase and Option Agreement
     with West Coast Properties, LLC (WCP) whereby WCP offered to purchase from
     the Company, 20 lots at The Fairways and obtain  an  option to purchase an
     additional  20  lots,  with  the  intent  of  constructing  single  family
     residences on the lots purchased.  On July 12, 1996, the Company  signed a
     letter  agreeing  to  modify  the  Purchase  and Option Agreement (the New
     Agreement) between the Company and Murieta Investors,  LLC  (MI), formerly
     WCP.  The New Agreement provides that MI will purchase from the  Company 6
     lots  at  The  Fairways  at  $40,000  per  lot  plus  payment of Park Fees
     applicable  to the lots purchased.  In addition, the Company  may  receive
     contingent consideration equal to 20% of the gross sales price of each
     residential dwelling  sold  less  $40,000  (the  Success Payments).  Eight
     months after the purchase of the initial 6 lots, MI  will  be  entitled to
     purchase a second group of 6 lots.  An additional group of 6 lots  may  be
     purchased  every  4  months  thereafter until a total of 40 lots have been
     purchased.  The initial payment  for  the  second 6 lots purchased will be
     $40,000,  plus  payment  of  the  applicable Park  Fees  and  the  Success
     Payments.  The initial payment for  all  subsequent lots purchased will be
     $45,000,  plus  payment  of  the  applicable Park  Fees  and  the  Success
     Payments.  Therefore, beginning with  the purchase of the third group of 6
     lots, the Success Payments will be 20%  of  the  gross sales price of each
     residential  lot  sold  less  $45,000.   If  MI  sells  any   lot  without
     constructing a residential dwelling thereon, the Company will receive  20%
     of  the sale price without offset of the initial payment.  The sale of the
     first  6  lots  which  closed  on  December 20, 1996, were recorded at the
     initial  price  of  $40,000  per lot.  In  accordance  with  Statement  of
     Accounting Financial Standards (SFAS) No. 66 "Accounting for Sales of Real
     Estate," no recognition was given  to any Success Payments the Company may
     receive in the future, but the Company  has  recorded all costs associated
     with the lots, resulting in a recorded loss on the sale of the six lots in
     1996.  Because of certain difficulties regarding  MI's  ability  to obtain
     plans  and  permits  relating  to  the  first 6 lots purchased, MI did not
     purchase any lots in 1997.

   (b) On July 15, 1997, the Company closed the  sale  of the White Ranch.  Net
     proceeds   from   the   sale  were  approximately  $5,965,000   of   which
     approximately $2,982,500  was  paid  to  the  Company.  The balance of the
     proceeds were paid to the other 50% owner of the White Ranch.

<PAGE>F-19

             DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
              YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

INVENTORY OF REAL ESTATE HELD FOR DEVELOPMENT AND SALE (CONTINUED):

   (c) On July 3, 1997, the Company closed the sale  of the 57 residential lots
     located  in North Las Vegas, Nevada.  Net proceeds  to  the  Company  were
     approximately  $645,600  which  included  a reimbursement of approximately
     $72,600 for water fees previously paid.  Out  of  the  net  proceeds,  the
     Company  paid  approximately  $318,000  to Beal Bank, the purchaser of the
     SASA Obligation.

   (d) Sam Hamburg Farm consists of approximately  150  acres  of  agricultural
     property. Of the 150 acres, 40 acres contain the air strip and  shop areas
     which are the focus of continuing attempts at chemical clean-up.  See Note
     12  (c)  for  a  detailed  discussion  concerning the removal of the toxic
     waste. The remaining 110 acres are leased  to various tenants at an annual
     aggregate rental of approximately $20,000.

5. PROPERTY AND EQUIPMENT AND ACCUMULATED DEPRECIATION AND AMORTIZATION:

                                                        1997     1996
                                                  (Dollars in thousands)

     Land and land improvements                          $   159    $   159
     Building and improvements                             3,484      1,679
     Machinery and equipment                                  86        265
                                                         -------    -------
                                                           3,729      2,103
     Less accumulated depreciation and amortization        ( 477)      (425)
                                                         -------    -------
                                                         $ 3,252    $ 1,678
                                                         =======    =======

   On  May  29, 1997, SHF signed a contract (the Contract)  in  the  amount  of
     $1,651,800  for the construction of a new rice drying facility (the Drying
     Facility)  adjacent  to  the  storage facility in Yolo County, California.
     The Contract did not include certain  costs  such as permits, landscaping,
     paving, utility lines, interest costs and others.   The  completed cost of
     the  Drying  Facility  was  $1,806,250.   The  Drying Facility   commenced
     operations on September 15, 1997.

<PAGE>F-20

             DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
              YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

6. LONG-TERM NOTES RECEIVABLE:
                                                              1997     1996
                                                        (Dollars in thousands)
   Related parties
     BGC, including interest (See Notes 3a(1) and (3)     $          $ 2,296
     Less allowance                                                   (1,899)
     Golden State Trust                                                  150
     Less allowance                                                     (150)

   Officer and Director                                        85
   Real estate
     Various real estate notes, collateralized by
       deeds of trust with interest ranging from
       8% to 10% (a)                                          469        928
                                                          -------    -------
                                                          $   554    $ 1,325
                                                          =======    =======

   (a) Approximately $227,160 of the various real estate   notes are subject to
     a collateral assignment in favor of the RTC.  See Note 9.


7. INVESTMENTS:
                                                          1997     1996
                                                     (Dollars in thousands)
   Investments at cost, net of valuation
   allowances, consist of:
     Solano County Option (a)                          $ 1,044     $ 1,044
     Less allowance                                       (400)
     Pine Ridge Joint Venture (b)                                      572
     Less reserve                                                     (572)

     Steadfast Cattle Company (d)                                       84
     Less reserve                                                      (84)
     Other                                                               5
                                                       -------     -------
                                                       $   644     $ 1,049
                                                       =======     =======

   (a)  The  Company  has  an  option  (the  Solano  County  Option) to acquire
     approximately  1,690  acres  of  farm  land  located  in  Solano   County,
     California.   The  Company acquired the Solano County Option as part of  a
     settlement  agreement   between  BGC,  an  Anderson  Entity,  a  financial
     institution and MRI.  The  purchase  price of the Solano County Option was
     $1,043,902.  The Solano County Option provides that the

<PAGE>F-21

7. INVESTMENTS (CONTINUED):
   (a) continued

     Company can purchase the 1,690 acres at  a price of $3,000,000 (the Option
     Purchase Price)  The Company will receive  a credit of $1,000,000  against
     the  Option Purchase Price.  The option expires  on  May  1,  2003.   Upon
     certain  conditions and the consent of the first lien holder on  the Maxim
     and the Nevada Gaming Control Board, MRI can require BGC to repurchase the
     Solano County Option (the Repurchase Agreement).  The Repurchase Agreement
     expires on  the  earlier  of:  (i) May 1, 2002 or (ii) 1 year prior to the
     date the option agreement expires.   However, due to recent events between
     BGC, Anderson and the FDIC, the Company  does not believe that BGC will be
     in  a  position  to honor the repurchase agreement.    The  owner  of  the
     property under option  has  informed the Company that it is current on all
     payments that are required on the first mortgage lien.  During the quarter
     ended September 30, 1997, the  Company  wrote  down  its investment in the
     Solano  County  Option  by $400,000 because management believes  that  the
     option purchase price may  be in excess of the estimated fair value of the
     property, believed to be $2,600,000.

   (b) In June 1993, MRI entered into a joint venture known as Pine Ridge Joint
     Venture (PRJV) with AJD, a Nevada  limited partnership, for the purpose of
     developing  approximately 92 single-family  residences  in  Clark  County,
     Nevada.  The  development  was  scheduled  to  be  completed in two phases
     consisting of 32 residences which were to be completed  in the first phase
     and  the balance to be completed in  the second phase.   See  Note  4  (c)
     regarding  the  disposition  of 57 of the PRJV lots.  On October 10, 1996,
     the  last  remaining  house  in Phase  I  was  sold,  thereby  effectively
     terminating PRJV.

   (c) In July 1995, the Company's Board of Directors authorized the Company to
     invest up to $200,000 for a 50%  interest  in  a  cattle feeding operation
     with  an unrelated third party.  The parties formed  a  Limited  Liability
     Company  named  Steadfast Cattle Company (Steadfast).  Steadfast's primary
     operation was feeding  cattle,  owned by others, on leased land located in
     Gonzales, California. As of December  31, 1996, all operations at the feed
     lot had ceased.

     In  connection  with its investment in Steadfast,  the  Company  purchased
     equipment  costing   approximately  $200,000  for  use  in  the  Steadfast
     operation.   As of December  31,  1997,  the  equipment  remaining  had  a
     carrying value of approximately $5,000.

8. RESOLUTION OF SASA DISPUTE:

   On October 24, 1995,  the  Company,  along  with  Continental,  MRI and SHF,
     entered  into  a Settlement, Release and Loan Modification Agreement  (the
     Settlement Agreement) with the RTC in connection with the SASA Obligation.
     The Settlement Agreement  became  effective December 6, 1995.  Pursuant to
     the Settlement Agreement and as full  payment  of the SASA Obligation, (i)
     Continental transferred the San Diego

<PAGE>F-22

8. RESOLUTION OF SASA DISPUTE (CONTINUED):

     Property to the RTC in consideration of $1,500,000 credit against the SASA
     Obligation,  (ii)  the Company paid $290,000 to the  RTC,  and  (iii)  the
     Company delivered a secured promissory note to the RTC (the RTC Settlement
     Note) in the amount  of  $2,710,000.   See  Note  9 and 14  for a detailed
     discussion of the terms of the RTC Settlement Note.

9. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS:

Long-term debt and capital lease obligations consists  of the following at
December 31:

                                                          1997       1996
                                                      (Dollars in thousands)

     RTC Settlement Note (a)                             $ 1,103    $ 1,784
     RMA                                                                 93
     Capital lease obligation (b)                          1,150         57
     Other (c)                                                19         21
                                                         -------    -------
                                                         $ 2,272    $ 1,955
                                                         =======    =======

Five year maturities of long-term debt are as follows:

                                                (Dollars in thousands)
                                 Long term         Capital
                                   Debt        Lease Obligation       Total
     1998                        $     2           $   134           $   136
     1999                              3               198               201
     2000                          1,106               221             1,327
     2001                              3               247               250
     2002                              3               276               279
     Thereafter                        5                74                79
                                 -------           -------           -------
                                 $ 1,122           $ 1,150           $ 2,272
                                 =======           =======           =======

   (a) The RTC Settlement Note is dated December 6, 1995, and  is  due December
     6, 2000. The note bears interest at the rate of 1% over the prime  rate as
     published  in the Wall Street Journal.  The rate is adjusted semi-annually
     (the  Interest   Adjustment   Date),  provided,  however,  that  under  no
     circumstances shall the rate be  less  than 8% or more than 12% per annum.
     Payment terms are interest only, payable  monthly.   Monthly  payments are
     adjusted  semi-annually  on  the  Interest  Adjustment  Date.   The entire
     remaining principal amount and all accrued and unpaid interest is  due and
     payable in full on December 6, 2000.  The RTC Settlement Note was sold  to
     Beal Bank in 1996.

     The note is collateralized by the following:

<PAGE>F-23

9. LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS (CONTINUED):
   (a) continued

        A  deed  of  trust  with an assignment of rents (Rancho Murieta Deed of
        Trust)  with  SHF.   The   Rancho   Murieta  Deed  of  Trust  encumbers
        approximately  50  finished residential  lots   at  December  31,  1996
        located at The Fairways.   SHF is entitled to the release of a lot upon
        the payment of $40,000 to Beal  Bank  for each lot released.  Beal Bank
        will apply such payments to the outstanding principal due on the note.

        A  collateral  assignment  of  purchase  money  promissory  notes  (The
        Promissory  Notes)  secured by deeds of trust  (Collateral  Assignment)
        with SHF as pledgor and  Beal  Bank   as  pledgee.   As of December 31,
        1997,  Notes with a face amount of $227,160 have been pledged  to  Beal
        Bank.  Principal  collections  on the Promissory Notes will be remitted
        to  Beal Bank for application to  the  outstanding principal due on the
        note.

   (b)  In connection with the financing of the  Drying  Facility construction,
        SHF entered into the following agreements with ICON Cash Flow Partners,
        L.P.,  Series  E  (ICON,  LP) and ICON Financial Corp.  (ICON):  (1)  A
        promissory note (the Note)  dated  April  3, 1997, between ICON, LP and
        SHF in the principal amount of $1,150,000, with interest at the rate of
        12%  per annum.  Interest is payable on the  first  day  of  the  month
        following  the  first  advance  and  on  the  first  day  of  the month
        thereafter.   Upon  completion of the  Drying Facility, advances   made
        under the Note will be  rolled into the equipment lease financing as of
        the Base Lease Commencement  Date  (the last day of the month following
        the date the Drying Facility is declared complete by both SHF and ICON,
        LP), (2) A Master Equipment Lease (the  Lease)  dated  April  3,  1997,
        between ICON and SHF.  Beginning with the Base Lease Commencement Date,
        ICON  will lease to SHF the Drying Facility for a period of five years.
        At the end of the five year period, SHF will have the right to purchase
        not less than all of the Drying Facility for $1.00.  The monthly rental
        under the  lease  will  be  approximately  2.202%  of the funded Drying
        Facility  cost.   The  monthly  lease  payments  will  be approximately
        $25,000  and  will  commence on March 30, 1998.  In addition  to  being
        collateralized by the  Drying  Facility,  SHF  has  provided additional
        collateral  in  the  form  of  a  Deed of Trust on certain  parcels  of
        property,  including  the  parcel  on which  the  storage  facility  is
        located.  Both the Note and the Lease  are  guaranteed  by  MRI and the
        Company (collectively the Gurantors).  Before the Guarantors are liable
        for  any  deficiency,  ICON or ICON, LP must first proceed against  the
        Drying Facility and the additional collateral.

   (c)  Other long-term debt consists  of  an  unsecured note payable in annual
        installments of $5,000 including interest.

<PAGE>F-24

10. SHAREHOLDERS' EQUITY:

     The Company is authorized to issue 10,750,000  shares  of  $0.50 par value
        Preferred  shares.   The  Company  gave  authority  to  its  Board   of
        Directors  to issue such Preferred shares in one or more series, and to
        fix the number of shares in each series, and all designations, relative
        rights preferences and limitations of the shares issued in each series.
        As of December  31,  1997, the Board of Directors has not exercised the
        authority granted, and
        no such Preferred shares  have been issued except for the 10,512 shares
        of Series B, $7.50 cumulative Preferred of which 902 shares are held as
        Treasury stock.

     Dividends on the Company's Series  B  Preferred  stock  have not been paid
        since  the  first quarter of 1982.  The Company is in arrears  on  such
        dividends in  the amount of approximately $1,173,000 as of December 31,
        1997.

11. MINORITY INTEREST:

     The minority interest  consists  of  the  other  50%  owner's share of the
        accumulated  profits  from  the operations of  the White  Ranch  as  of
        December 31,1997.

12. CONTINGENCIES:

     (a) As of December 31, 1997, there  were  no  material  legal  proceedings
        pending  against the Company.  However, see footnote 3(a) and  item  b.
        below  regarding legal proceedings, not involving the Company, that may
        have a material adverse effect on the Company.

     (b) Anderson,  Edith  Anderson  (Anderson's  wife),  Cedar Development Co.
        (Cedar), J.A. Inc., and J.B.A. Investments, Inc. (JBA  and collectively
        with  Anderson,  his wife, Cedar, and  J.A. Inc. the Anderson  Parties)
        are involved  in  litigation  (the  Anderson Litigation) with the FDIC.
        Until December 11, 1997, Anderson  was  the  President  and Chairman of
        the  Board  of  the  Company  and  Chairman  of  the  Board  of various
        subsidiaries  of  the  Company.   Prior to the events described herein,
        Anderson, through his ownership of  Cedar,  the  parent of BGC and JBA,
        owned   approximately   4,280,756  shares  or  67.2% of  the  Company's
        outstanding  common  stock  (the Common Stock).  Of  those  shares  (i)
        3,000,000  shares  (the  FDIC Pledged  Shares)  have  been  pledged  as
        collateral in favor of entities of which the FDIC is a successor and/or
        assign, and (ii) 1,280,756   shares  (the BGC Pledged Shares) have been
        pledged as collateral in favor of a subsidiary of the Company.  The BGC
        Pledged  Shares have been ordered to be  turned  over  to  the  Special
        Master as more fully described in note 3b.

        In July 1997,  the  FDIC won a motion in the Anderson Litigation before
        the Nevada District Court  to enforce its security interest in the FDIC
        Pledged Shares.  On December 12, 1997, the FDIC filed

<PAGE>F-25

12. CONTINGENCIES (CONTINUED):
     (b) continued

        in the Nevada District Court  an  emergency  motion  to acknowledge the
        FDIC's right to act by unanimous written consent and to  authorize  the
        FDIC to so act with respect to Cedar, BGC, JBA and JA.  On December 16,
        1997,  with  the consent of all parties to the Anderson Litigation, the
        Nevada District  Court  issued an order declaring that the FDIC has the
        right to act by written consent with respect to Cedar, BGC, JBA and JA.
        Because of the Nevada District Court's order, the FDIC has the power to
        exercise voting rights with  respect  to the FDIC Pledged Shares, which
        represent 47.1% of the outstanding common  stock.   Because the FDIC is
        able to exercise voting rights with respect to the FDIC Pledged Shares,
        the FDIC is able to exercise substantial influence with  respect to the
        election  of  the  entire  Board  of  Directors of the Company and  all
        matters submitted to stockholders.  The  FDIC  is able to significantly
        influence the direction and future operations of the Company, including
        decisions regarding future financings (which could involve the issuance
        of additional Common Stock or other securities) and decisions regarding
        the day-to-day operations of the Company's real estate and agricultural
        operations.   If the Nevada District Court ultimately  determines  that
        the FDIC has the  authority  to  exercise voting rights with respect to
        the BGC Pledged Shares, then the FDIC  would  have  the  power  to vote
        67.2%  of  the outstanding Common Stock of the Company.  In such event,
        the FDIC would  be  able  to  control,  rather  than only significantly
        influence, the election of the entire Board of Directors of the Company
        and all matters submitted to stockholders.

        In a letter dated January 15, 1998, to the Company,  the  FDIC demanded
        that  the  Company  hold a special meeting of the stockholders  of  the
        Company by January 30,  1998,   at  which  meeting the FDIC advised the
        Company that it intends to vote or cause BGC  and  JBA to vote the FDIC
        Pledged Shares and the BGC Pledged Shares to remove  the existing board
        of directors of the Company and to elect a designee or designees of the
        FDIC to constitute the new board of directors of the Company.  The FDIC
        further stated that no corporate action should be taken  by the Company
        which is inconsistent in any manner with the rights of the FDIC.

        In response to the FDIC's demand of January 15, 1998, the  directors of
        the  Company  on  January  27, 1998, held a board meeting and met  with
        representatives of the FDIC.   The  Company  stated  that  in  light of
        regulatory  requirements  under state and federal securities laws,  the
        Company was unable to hold a special shareholder meeting by January 30,
        1998.   The  Company indicated  that  it  is  willing  to  discuss  the
        procedures and  effects  of  a  stockholder  meeting with the FDIC, but
        pending more information from the FDIC the Company  was  deferring  the
        formal  setting  of a meeting date and record date for voting purposes.
        The FDIC has not yet responded to the Company.

<PAGE>F-26

               DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

12. CONTINGENCIES (CONTINUED):
     (b) continued

        Further, the FDIC  has successfully obtained the approval of the Nevada
        District Court to authorize  the  liquidation  of the various corporate
        entities included among the Anderson
        Parties.   On March 12, 1998, the Nevada District  Court  approved  the
        sale of the  FDIC's security interest in that portion of the collateral
        relating to the  stock  of  BGC  and  JA Inc.  The sale of the security
        interest may allow the purchasers to foreclose  and assume ownership of
        the  stock  of BGC and JA Inc.  At the same time, the  Nevada  District
        Court approved  the FDIC's request for a 120-day extension to liquidate
        the remaining collateral.   There  can  be  no  assurance that the FDIC
        would  not  take  similar action with respect to the  Company  and  its
        subsidiaries.

     (c) SHF was advised of  possible contamination on two sites at Sam Hamburg
        Farm, a storage facility for diesel fuels and an old airstrip which had
        been used for the loading and fueling of aircraft applying agricultural
        chemicals to the surrounding farm lands.  The Company has completed the
        cleanup relating to the diesel storage tanks at a cost of approximately
        $100,000.

        The Company has disposed of a large amount of the contaminated earth at
        an  approved  site  for  the   storage   of   toxic  wastes.   However,
        approximately 5,000 cubic yards of contaminated  earth  still remain to
        be disposed of.  The Company, through its chemical  and  toxic clean-up
        consultant,  has  been  working with the California State Environmental
        Protection Agency, in seeking  alternate means to the disposal in toxic
        dump  sites  of  chemical  and  toxics-laden   soil.    The  State  has
        participated in the funding of several projects by a number of chemical
        treatment firms in efforts to try other detoxification methods  on  the
        soil.

        Because  of  the  ongoing testing, the State has not imposed a disposal
        date upon the Company.  Cost of disposal is estimated at $100 per cubic
        yard or approximately  $500,000. However, if on-site remediation can be
        achieved, it is estimated  that  the  cost  will be between $90,000 and
        $115,000.  The Company is unable to predict when  the  ongoing  testing
        will  be  complete  or what the outcome of these tests will be.  As  of
        December  31,  1997,  the  Company  has  paid  approximately  $500,000,
        including the $100,000  expended  for  the  diesel  storage  tank,  and
        accrued  an  estimated $174,000 relating to the balance of the clean-up
        of  the  contaminated   earth.   That  estimate  could  change  as  the
        remediation work takes place.

       (d)The  Company  has received a notice  from  the  State  of  California
        Franchise Tax Board  (FTB)  wherein  the  FTB  alleges  that one of the
        Company's  subsidiaries  owes California franchise tax of approximately
        $316,000  plus  approximately   $250,000   in  penalties  and  interest
        resulting from the foreclosure sale of certain  real property, owned by
        the

<PAGE>F-27

              DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
             YEARS  ENDED DECEMBER 31, 1997, 1996 AND 1995

12. CONTINGENCIES (CONTINUED)
   (d) continued
     subsidiary, in San Diego, California. The Company has appealed this matter
     to  the California State Board of Equalization and is  currently  awaiting
     its decision.

13. TAXES:

     The Company  and  its  subsidiaries file a consolidated federal income tax
        return.
     Deferred  tax assets (liabilities)  are  comprised  of  the  following  at
        December 31:

                                                         1997           1996
                                                        (Dollars in thousands)
Loan reserves                                                 2     $    697
     Accounts receivable reserves                                         48
     Investment reserves                                    136
     Real estate reserves                                   480          480
     Loss carryforwards                                  17,307       15,337
     Other                                                   13            2
                                                       --------     --------
        Gross deferred tax assets                        17,938       16,564
        Deferred tax assets valuation allowance         (17,929)     (16,553)
                                                       --------     --------
                                                              9           11
                                                       --------     --------
     Marketable securities valuation allowance               (9)         (11)
                                                       --------     --------
        Gross deferred tax liabilities                       (9)         (11)
                                                       --------     --------
     Net deferred tax assets                           $      0     $      0
                                                       ========     ========

     A reconciliation of the changes in deferred tax assets valuation allowance
        for 1997 and 1996 is as follows:

                                                        1997        1996     
                                                     (Dollars in thousands)
     Book reserve of idle equipment                          11
     Book marketable securities unrealized
       (gain) loss                                            2            6
     Current year loss carryforwards                      1,970          635
     (Decrease) increase in loan reserves                  (695)         161
     (Decrease) increase in accounts receivable
        reserves                                            (48)          40
     Book reserve of investments loss                       136         (197)
     Book reserve of real estate loss                                     98
                                                       --------     --------
     Change in deferred tax asset valuation
       allowance                                          1,376          743
     Deferred tax assets valuation allowance,
       beginning of year                                 16,553       15,810
                                                       --------     --------
     Deferred tax assets valuation allowance,
       end of year                                     $ 17,929     $ 16,553
                                                       ========     ========

<PAGE>F-28

13. TAXES (CONTINUED):

     A  reconciliation  of the federal statutory tax rate to the effective  tax
        rate for 1997, 1996 and 1995, is as follows:

                                              Percentage of pre-tax income
                                             1997         1996         1995
     Federal statutory rate                (34.00%)     (34.00%)       34.00%
     Net operating loss applied                                       (18.38%)
     Debt discharges and other             (84.69%)     (15.52%)      (21.55%)
     Non-deductible items:
        Loss reserves                      104.74%       45.41%         0.03%
        Valuation adjustments               16.72%        8.75%         0.03%
        Other                               (2.77%)      (4.64%)        5.88%
                                           -------      -------      -------
                                             0.00%        0.00%         0.01%
                                           =======      =======      =======

     The  Company has the following net operating loss carryovers available for
        income tax reporting purposes:

            YEAR OF EXPIRATION       (Dollars in thousands)
                   2000                       2,386
                   2001                       9,890
                   2003                      20,156
                   2004                       1,889
                   2005                       1,891
                   2006                       3,542
                   2007                         809
                   2008                       2,411
                   2009                         595
                   2010                       3,299
                   2011                       1,343
                   2012                       2,692

     As more  fully  described  in  Note  3a  (1)  a change in ownership of the
        Company may have or could take place.  If such  a  change  in ownership
        were  to take place, it would have an effect as to when and as  to  the
        amount  of  net  operating  losses that the Company could use to offset
        future taxable income in any  given  year.   This annual limitation, to
        the extent not used in any given taxable year,  may  be carried forward
        and added to the limitation of subsequent years.

<PAGE>F-29

14. EXTRAORDINARY ITEM:

     At  December  31, 1995, the Company recorded as an extraordinary  item,  a
        gain in the amount of $8,346,000, net of tax of $80,000, resulting from
        the settlement  of  the  SASA  Obligation with the RTC.  The settlement
        resulted in the Company and the RTC entering into a Settlement, Release
        and  Loan  Modification  Agreement   (The  Agreement).   The  Agreement
        provided, among other things, that upon execution of The Agreement, the
        Company would pay to the RTC the sum of  $290,000,  transfer to the RTC
        the San Diego property at an agreed upon price of $1,500,000 and sign a
        promissory  note  in  favor  of  the  RTC  in the principal  amount  of
        $2,710,000.  The effect of the foregoing was  to  reduce  the amount of
        the SASA Obligation by $8,616,000.  In connection with the  settlement,
        the  Company  incurred  legal  fees  and other costs in the approximate
        amount of $190,000.

     A reconciliation of the extraordinary item  as  shown  in the Consolidated
        Statements of Income (Loss) with the supplemental schedules of non-cash
        investing  and  financing  activities  as  shown  in  the  Consolidated
        Statements  of  Cash  Flow for the year ended December 31, 1995  is  as
        follows:

        Non-cash gain from extraordinary items--
           Settlement of liabilities                          $8,619,000

        Less:  Cash paid for legal fees                         (190,000)
              Tax effects                                        (80,000)
              Cash paid for miscellaneous expenses                (3,000)
                                                              ----------
        Extraordinary item -- net of tax effect               $8,346,000
                                                              ==========

<PAGE>F-30

15. SEGMENT INFORMATION:

     The Company operates in two  principal  business  segments:   Real  estate
        investments  (development  and  sale  of residential lots and rental of
        agricultural land), and agricultural (drying and storing rice).

       The  Company's  real  estate  segment sells completed  residential  lots
        primarily to builders of custom homes and to the general public located
        in   and  around  the  greater  Sacramento,   California   area.    The
        agricultural  properties  are  leased  to farmers in the area where the
        agricultural properties are located.

     The agricultural segment dries harvested rice  over  a  two  month  period
        (approximately September 15 to November 15) and stores, for a fee,  the
        dried  rice  (or  other  grains) until it is removed by the owner.  The
        Company dries and stores rice  for  principally  one  customer, Farmers
        Rice Co-operative (Farmers).  Farmers accounts for approximately 98% of
        the  rice  drying  and storage revenues.  If the Company were  to  lose
        Farmers as a customer,  it  would have a material adverse effect on the
        drying and storage operation.

     Following is a summary of segmented information for 1997, 1996, and 1995:

                                                    1997      1996     1995
     Net revenues from unaffiliated customers:
        Real estate:
              Sale of real estate                $ 7,146   $ 1,128    $ 1,901
              Land rent                              529       948        485
        Rice drying and storage revenue              806       787        752
                                                 -------   -------    -------
                                                 $ 8,481   $ 2,683    $ 3,138
                                                 =======   =======    =======
     Income (loss) from operations:
        Real estate                              $   626   $  (254)   $  (482)
        Rice drying and storage                      211       (42)       162
                                                 -------   -------    -------
                                                     837      (296)      (320)
        Corporate operating expense               (1,290)   (1,496)    (1,537)
        Other income (expense)                        35       100       (205)
        Income taxes                                 (53)                 (13)
        Minority interest                           (404)      (97)
                                                 -------   -------    -------

     Loss before extraordinary item as
       reported in the accompanying
       consolidated statement of income
       (loss)                                   ($   875) ($ 1,789)  ($ 2,075)
                                                 =======   =======    =======

<PAGE>F-31

15. SEGMENT INFORMATION (CONTINUED):

                                                         1997       1996
     Identifiable assets
        Real estate                                   $  4,359    $ 10,919
        Rice drying and storage                          3,213       1,477
        General corporate assets                         6,465       4,730
                                                      --------    --------
     Total assets as reported in the accompanying
       consolidated balance sheets                    $ 14,037    $ 17,126
                                                      ========    ========

16. COMPUTATION OF PER SHARE EARNINGS (LOSS):

     Earnings  (loss) per share for the years ended December 31, 1997, 1996 and
        1995 were computed as follows:

                                                 1997      1996     1995

     Weighted average number of shares
     outstanding                            6,375,096   6,375,096   6,429,822
                                           ==========  ==========  ==========

     Loss  before extraordinary item       $           $           $   (2,075)
     Extraordinary item                                                 8,346
                                                                   ----------
     Net income (loss) for the year              (875)     (1,789)      6,271
     Dividends applicable to preferred
     shares                                       (72)        (72)        (72)
                                           ----------  ----------  ----------
     Net income (loss) used for
     computing net earnings (loss)
     per common share                      $     (947) $   (1,861) $    6,199
                                           ==========  ==========  ==========

     Net earnings (loss) per common
     share                                 $     (.14) $     (.29) $      .97
                                           ==========  ==========  ==========

<PAGE>S-1
<TABLE>
<CAPTION>
                                       DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                                                            December 31, 1997
<S>                                 <C>           <C>           <C>               <C>              <C>
                                                                                                                  SCHEDULE II
         COLUMN A                   COLUMN B              COLUMN C                COLUMN D         COLUMN E
                                                         Additions
                                                     (1)           (2)
                                    Balance at    Charges to    Charges to        Other changes    Balance
                                    beginning     Costs and     other accounts-   add (deduct)     at end of
       Classification               of period     expenses      describe          describe         period
                                                    (Dollars in thousands)
Allowance for doubtful accounts:
  Long-term notes receivable -
    Related Party                    $  2,049                                     ($  2,049)(1)
  Accounts receivable                     141                                          (141)(2)
  Real Estate Sales                               $     64                                         $    64
                                     --------     --------      --------           --------        -------
                                     $  2,190     $     64                        ($  2,190)       $    64
                                     ========     ========      ========           ========        =======
(1) Offset to related notes
    receivable
(2) Bad recovery

Allowance for doubtful accounts:
  Long-term notes receivable -
  related party                        1,566           483                                           2,049
  Accounts receivables                    23           118                                             141
                                    --------      --------      --------           --------        -------
                                    $  1,589      $    601      $      0           $      0        $ 2,190
                                    ========      ========      ========           ========        =======

Allowance for doubtful accounts:
  Accounts Receivable                             $     23                                         $    23
  Long-term notes receivable           1,174                    $     61(2)         (1,235)(1)           0
  Notes Receivable - Director       $    427           382            72              (881)(1)           0
  Long-term notes receivable -
  related party                        2,967                          41(2)         (1,442)(3)       1,566
                                    --------      --------      --------           --------        -------
                                    $  4,568      $    405      $    174           ($3,558)         $1,589
                                    ========      ========      ========           =======         =======

(1)  Write off against allowance
(2)  Interest income
(3)  Bad debt recovery
</TABLE>

<PAGE>S-4

<TABLE>
<CAPTION>
                                         DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                                     SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
                                                             December 31, 1997
<S>                    <C>        <C>      <C>   <C>          <C>         <C>      <C>    <C>           <C>     <C>      <C>

COLUMN A               COLUMN B             COLUMN C          COLUMN D            COLUMN E
                                                                                  Gross amount which carried
                                               Initial        Costs capitalized   Gross amount which carried
                                             Cost to Company     subsequent to    at close of period (Note 1)
                                                  Buildings      Acquisition              Buildings
                                                     and                  Carrying           and
Description               Encumbrances      Land Improvements Improvements Costs   Land   Improvements  Total
                                                              (Dollars in Thousands)
REAL ESTATE HELD FOR   Deed of
SALE                   Trust in
Approximately 110      favor of
residential lots       favor of
located in Rancho      Resolution
Murieta, California    Trust
(The Fairways)         Corporation
                       (2)         $1,062
                                          $3,880                  $6,837          $4,173               $4,173
Approximately 80
acres of unimproved
land located in
Auburn, California                            40                                      40                   40

Approximately 4,600
acres located in
Fresno and Merced
County, California                         1,866                            276      146                  146
                                    1,062  5,786                   6,837    276    4,359                4,359

REAL ESTATE INCLUDED
IN PROPERTY, PLANT
AND EQUIPMENT Rice
storage facility
located in Yolo
County, California                           159  1,678            1,791     15      159     3,484      3,643

                                   $1,062 $5,945 $1,678           $8,628 $  291   $4,518    $3,484     $8,002
</TABLE>


                         COLUMN F      COLUMN G      COLUMN H  COLUMN I
                                                               Life on which
                                                               depreciation in
                                                               latest income
                         Accumulated   Date of       Date      statement is
Description              depreciation  construction  acquired  computed

Real Estate Held For
Sale Approximately
110 Residential lots
located in Rancho
Murieta, California
(The Fairways)
                                                     01/31/90

Approximately 80
acres of unimproved
land located in
Auburn, California                                   03/08/94

Approximately 4,600
acrres located in
Fresno and Merced
County, California                                   03/23/88

Real Estate Included
in Property, Plant
and Equipment
Rice storage facility
located in Yolo                       1985 &         11/90 &     10-31
County, California         430        1997           9/97        years

                          $430

<TABLE>
<CAPTION>
                                December 31,                                               December 31,
<S>                           <C>   <C>   <C>   <C>                  <C>      <C>     <C>
                              1997  1996  1995                       1997     1996    1995
Accumulated Depreciation
Reconciliation:                                 Reconciliation:
Balance-beginning of period   $359  $301  $243  Balance-beginning
                                                of period            $12,756  $11,348 $12,920
Additions during period:                        Additions during
                                                period:
Provision for depreciation      71    58    58  Improvements                               17
                                                Other acquisitions     1,806    2,841     427
                                                                      14,562   14,189  13,364
Balance-end of period         $430  $359  $301  Deductions during
                                                period:
                                                Cost of sales          6,560    1,143   1,732
                                                Valuation allowance               290     284
                                                Balance-close of
                                                period               $ 8,002  $12,756 $11,348
</TABLE>

Note 1 - The cost basis for Federal Income Tax purposes is the same as for
financial reporting purposes.

Note 2 - Valuation allowances have been provided against the lots in Rancho
Murieta.  The purpose of valuation was to reduce the carrying value to
estimated market value.

<PAGE>S-5


<TABLE>
<CAPTION>
                                   DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
                                     SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
                                                       December 31, 1997
<S>                  <C>      <C>      <C>        <C>      <C>       <C>        <C>
COLUMN A             COLUMN B COLUMN C COLUMN D   COLUMN E COLUMN F  COLUMN G   COLUMN H
                                                                                Prnicipal
                                                                                Amount of
                                                                                Loans
                                                                     Carrying   Subject to
                              Final    Periodic            Face      Amount of  Delinquent
                     Interest Maturity Payment    Prior    Amount of Mortgages  Principal
Description          Rates    Date     Term       Liens    Mortgages (Note 3)   or Interest



Collateralized by
Sam Hamburg Farm
Property:
 Delgado             9.00%    02/22/00 Note 1     None     $ 50,099  $30,059    $         0
 ATB Packing         8.50%    02/08/00 Note 2     None      126,737   57,032              0
                                                  Subtotal  176,836   87,091              0
Collateralized by
property in
Houston, Texas
 Parvizian           9.00%    12/31/97 Note 5     None      125,000   20,000

Collateralized by
the Fairways
Property:
 Consolidated
  Kapital, Inc.      8.00%    01/25/97 Note 3 & 4 None      164,160  100,000        164,160
 Threatte Family
   Ltd. Partnership  8.25%    06/20/00 Note 3     None       60,100   60,100
 Threatte Family
   Ltd. Partnership  8.25%    06/20/00 Note 3     None       43,900   43,900              0
 James, Raymond L.
   & Cheryle        10.00%    12/14/97 Note 3     None       79,200   79,200              0
 Conners, James
   & Dorrie          8.50%    03/15/00 Note 3     None       63,000   63,000              0
                                                  Subtotal  410,360  346,200        164,160
                                                  TOTAL    $712,196 $453,291       $164,160

                                                           12/31/97
                               Balance at Beginning of     $910,331
                               Additions During Period:
                               New Mortgage Loans           104,000
                                                          1,014,331
                               Deduction During Period:
                               Reduction of Principal       561,040
                               Balance at End of Period  $  453,291
</TABLE>

Note 1 - Interest Payable Quarterly - Prnicipal payable in 5 equal annual
 installments.
Note 2 - Principal and interest payable quarterly until maturity.
Note 3 - Interest payable monthly until maturity.
Note 4 - Subject to a collateral assignment in favor of the Resolution Trust
 Corporation as Receiver for San Antonio Savings Association, F.A.
Note 5 - Interest payable quarterly until maturity.

<PAGE>E-1

                               EXHIBIT INDEX

EXHIBIT
NO.                      DESCRIPTION


21.1                     Subsidiaries of Registrant.

27.1                     Financial Data Schedule