UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C., 20549
                                   FORM 10-KSB
(Mark One)

 X   Annual report pursuant to Section 13 or 15(d) of the Securities  Exchange
     Act of 1934 for the  fiscal  year ended  December  31,  1999 or

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


Commission File No. 1-4385

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

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

     Check 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

     Check if there is no disclosure of delinquent  filers  pursuant to Item 405
of  Regulation  S-B is not  contained in this form,  and no  disclosure  will 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-KSB
or any amendment to this Form 10-KSB. (X)

State issuer's revenues for its most recent fiscal year:  $2,394,000

     The aggregate market value of the voting and non-voting  common equity held
by  non-affiliates  of the  Registrant  (1,240,918  common  shares)  computed by
reference  to the price at March 17,  2000  ($.875 per share) was  approximately
$1,085,803.  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 17,  2000 was
5,094,340.

               Documents Incorporated by Reference - Not Applicable

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


<PAGE>2

                                     PART I

ITEM 1.  DESCRIPTION OF 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 grain).  See
Note 13 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 at The  Fairways  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 grain over a two-month period
(approximately  September  15 to November  15) and stores,  for a fee, the dried
grain until it is removed by the owner. The Company stores grain principally for
one customer under a contract which expires in May 2002. This contract  accounts
for  approximately  50% of the storage  capacity and 98% of the storage revenue.
During the year ended  December 31, 1999, the Company did not have any contracts
for drying grain but is seeking such  contracts in 2000.  If the Company were to
lose its storage customer,  fail to obtain drying contracts or the crop yield is
low,  it would  have a material  adverse  effect on the  Company's  agricultural
segment.

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 24, 2000, 34 lots remain unsold.

         In connection with its development of The Fairways, SHF was required to
construct certain  improvements that benefited not only The Fairways,  but other
properties  that lay outside of the  boundaries of The Fairways  (the  Benefited
Properties).  The net cost of the  improvements to the Benefited  Properties was
$1,140,900  and SHF expects to be  reimbursed  for these costs if the  Benefited
Properties are developed.  SHF's right to reimbursement will expire in September
2015. The Company is unable to predict what amount,  if any, will be received as

<PAGE>3


reimbursement.  The rights to  reimbursement  are personal to SHF and do not run
with The Fairway's property unless assigned by SHF.

          Until 1999, all of the unsold lots in The Fairways were  encumbered by
a deed of trust in favor of Beal Bank which  required a $40,000  payment for the
release of each  encumbered lot. In November 1999, the note was paid in full and
the lien of the deed of trust was released.

         In October 1996, the Company and Murieta Investors,  LLC, (MI) signed a
Purchase and Option  Agreement  which  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 (a "Success Payment").

         The  agreement  also  provided  for MI to have an option to  acquire 36
additional lots at various prices. If two consecutive  options are not exercised
then the remaining  options are terminated.  MI did not exercise the December 1,
1998 option and the June 1, 1999 option.  During June 1999, the Company notified
MI that the remaining options were terminated.

SAM HAMBURG FARM

         MRI owns  approximately  150 acres of agricultural  property called Sam
Hamburg Farm (Hamburg  Farm) in Merced County,  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 one tenant at an annual  aggregate  rental of
approximately  $24,000. The current lease commences January 2000 for a period of
two years.

         The Company has been advised that the 40 acres  contains  approximately
5,000 cubic yards of contaminated  earth. The Company,  through its chemical and
toxic  clean-up   consultant,   has  been  working  with  the  California  State
Environmental  Protection  Agency, in seeking alternate means to the disposal in
toxic dump sites of the chemical and toxic-laden soil.

         Because of 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 the cost will be up to $170,000. The Company is unable to predict when
the ongoing  testing  will be  completed or what the outcome of these tests will
be.  Accordingly,  the  estimates  could  materially  change as the  testing and
remediation work continues.


AGRICULTURAL SEGMENT:

GRAIN STORAGE AND DRYING FACILITIES

         Since 1990, 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 Adam's Grain Company.
The Storage Facility can store approximately 34,000 tons of grain.

<PAGE>4


         In 1997, the Company  entered into a financing  lease agreement for its
drying facility which is adjacent to the Storage Facility. The lease is for five
years  commencing  March 1998, the monthly rental is $25,122 and the Company can
buy  the  drying  facility  for  $1 at  the  end  of the  lease.  The  lease  is
collateralized  by the drying  facility,  a deed of trust on certain  parcels of
property  including the parcel on which the Storage  Facility is located and the
guarantees  of MRI and the  Company.  Before the  Guarantors  are liable for any
deficiency,  the leasing  company must first proceed against the drying facility
and the additional collateral.

OTHER ACTIVITIES:

CERTAIN LOANS

         From time to time the Company has entered into certain transactions and
has  made  loans  to  various  Anderson  Entities,  Anderson  Related  Entities,
Directors  and  Executives  of the Company  and other  unrelated  third
parties.  All loans to related  parties  were  approved by the  Company's  Audit
Committee.  See Item 3. Legal Proceedings and Item 12. Certain Relationships and
Related Transactions.

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 period of 2 years.

AGRICULTURAL SEGMENT:

         With respect to the Company's grain drying and storage operations,  the
Company  competes  with other  grain  drying and storage  companies  in Northern
California.  The grain drying operation is seasonal and runs from  approximately
September  15 to November  15. The storage  facility,  depending on the types of
grain being  stored,  operates on a year  around  basis.  The drying and storage

<PAGE>5


operations  are  impacted  by the  number  of acres  grown,  the yield per acre,
weather conditions and government programs. Because the Company stores grain for
principally  one  customer,  the loss of that  customer  could  have a  material
adverse effect on the grain 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 grain  drying and storage  operation  is
marketed to  principally  one customer but the Company is  attempting  to obtain
additional customers.

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 grain drying and storage facilities.

EMPLOYEES

         At March 24, 2000,  the Company had 4 employees.  None of the Company's
employees are covered by collective bargaining agreements.  The Company believes
its employee relations to be satisfactory.

ITEM 2.  DESCRIPTION OF PROPERTY

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 of which 34 remain unsold as
of March 24,  2000.  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 $99,000,  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.

Sam Hamburg Farm

         Sam Hamburg Farm consists of approximately  150 acres remaining from an
original 4,600 acres of agricultural  land. The remaining land is located in the
most southwesterly corner of Merced 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 110 acres to one tenant,

<PAGE>6


who grows annual crops.  The terms of the leases are usually two crop years 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
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),  a director of the Company,  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,  1997,  see "Item 3. Legal
Proceedings - Federal Deposit Insurance Corporation, et al. v. John B. Anderson,
et al."

         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  asserts,  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 then 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  General
Financial Services, Inc. (GFS) since June 1999 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.

         In June 1999,  the FDIC sold a portion of its loan,  together  with the
underlying security and a part of the judgement against Anderson Parties to GFS.
Included in the sale was the pledged FDIC shares.

         GFS   attempted  to  exercise  its  rights  under  the   judgement  and
demanded  that the Company  transfer  ownership  of the FDIC  Pledged  Shares to
itself but Mr. Anderson objected, claiming that there was no change in ownership
of the  shares.  The  Company  in turn  filed on July 6, 1999,  a  Complaint  in
Interpleader in Superior Court of California. The jurisdiction of the action was
removed and  transferred  on September  20, 1999 to the United  States  District

<PAGE>7


Court for the  District  of Nevada as DUNES  HOTELS AND  CASINOS  INC. v. J.B.A.
INVESTMENTS, INC. et al. Case No. CV-S-99-1470-PMP (RJJ).

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

         Since 1998, the BGC Pledged Shares have been under the  jurisdiction of
the US  Bankruptcy  Court in Las Vegas,  NV,  since BGC filed a  petition  under
Chapter  7. On  February  22,  2000,  the  Company  was  granted  its  motion in
Bankruptcy Court to allow it to foreclose on the BGC Pledged Shares. On March 3,
2000,  the Company  foreclosed on the BGC Pledged  Shares and placed them in the
treasury.  GFS is now able to vote 75.6% of the outstanding  stock (GFS Shares).
See "Item 14. Subsequent Events, Notes To Consolidated Financial Statements."

         Because GFS is able to exercise  voting  rights with respect to the GFS
Shares, GFS could exercise substantial influence with respect to the election of
the entire  Board of  Directors  of the  Company and all  matters  submitted  to
stockholders.  Therefore,  GFS 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 it is determined that GFS owns the
FDIC Pledged  Shares,  it would then own 75.6% of the Company and GFS would have
ownership,  rather than only  significantly  control the  election of the entire
Board  of  Directors  of  the  Company  and  all  other  matters   submitted  to
stockholders.

         If there has been an  ownership  change for  purposes of Section 382 of
the  Internal  Revenue  Code of 1986,  as amended  (the  Code),  then there is a
limitation  on the  amount of income  that can be offset by NOL  carryovers.  In
general,  an  ownership  change  occurs  when  a  major  shareholder  of a  loss
corporation  increases their ownership by more than 50 percentage points,  which
is tested over a  three-year  period.  Regardless  of what  action,  if any, GFS
should  determine to take with respect to the Company,  if the District Court of
Nevada finds in favor of GFS with respect to the transfer of the pledged shares,
an ownership change of more than 50 percentage  points will have occurred at the
date the shares were actually acquired by GFS. At December 31, 1999, the Company
has a net operating loss carry forward (NOL) of approximately  $53,246,000.  The
Board of Directors  believes this NOL represents a valuable asset to the Company
which may or may not be utilized in future  years.  When GFS purchased a portion
of the FDIC loan in June 1999, there could be a deemed change in ownership under
the Code if it is  determined  that this action is  inconsistent  with a typical
lending transaction. It is possible that the Internal Revenue Service could take
the position that the events within a 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.  In various  court  pleadings,  GFS has asserted that it owns the FDIC
Pledged Shares.  Mr. Anderson  disagrees with this assertion and the decision in
the interpleader action will determine ownership.

         On January 28, 2000, the Company  entered into a non-binding  letter of
intent  with USI Corp  whereby  the  Company  would  acquire not less than 3,000
shares of Series B  Preferred  Stock of the  Company  valued at $275 per  share,

<PAGE>8

based upon the liquidation value and accrued but unpaid dividends on such Series
B Preferred  Stock, in exchange for shares of the Company's  Common Stock valued
at $.70 per share.  The entering into the transaction was subject to a number of
conditions,  including entering into a definitive stock purchase  agreement,  an
independent third party appraiser confirming the value of the Series B Preferred
Stock and Common Stock and the overall  transaction,  and  determination  by the
United States District Court, District of Nevada (No.  CV-5-99-1470-PMP  (RJJ)),
that the proposed stock purchase  agreement was not subject to the Court's order
of January 6, 2000.  Although  the Company and USI had entered  into  subsequent
discussions  regarding the acquisition of additional Common Stock, no definitive
agreement has been entered into.

         On March 23, 2000, GFS and GFS  Acquisition  served the Company with an
emergency  motion for temporary  restraining  order and amendment of preliminary
injunction in the United States  District Court for the District of Nevada (Case
No.  CV-S-99-1470-PMP-(RJJ))  seeking the Company from (1) issuing new shares of
common or preferred stock; (2) continuing or completing a purported  transaction
with USI; (3) doing  anything  that will hinder or effect GFS'  majority  voting
control of the Company;  and (4) changing the status quo concerning ownership of
the Company as of January 6, 2000, except as to transactions previously approved
by GFS. The  litigation  relates to a purported  transaction  with USI Corp. The
hearing for the emergency  motion has been scheduled for March 28, 2000, and the
Company has not yet responded to the motion.


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.

                                     PART II

ITEM 5.  MARKET FOR 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.  The Company's symbol for its common
stock is "DUNE". 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 quoted on the
OTC Bulletin Board.  The reported bid quotations  reflect  inter-dealer  prices,
without  retail  markup,  markdown  or  commissions,  and  may  not  necessarily
represent actual transactions.

             1999                                 HIGH                      LOW
         -----------                              ----                      ---
         1st Quarter                              .25                       .19
         2nd Quarter                              .83                       .21
         3rd Quarter                              .89                       .50
         4th Quarter                              .78                       .68

<PAGE>9


             1998                                 HIGH                      LOW
         -----------                              ----                      ---
         1st Quarter                              .44                       .25
         2nd Quarter                              .37                       .28
         3rd Quarter                              .32                       .15
         4th Quarter                              .19                       .14

         At December 31, 1999, the Company's  transfer agent reported that there
were  approximately  1,805 holders of record of the Company's  common stock, and
approximately  757 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 $1,317,000 as of December 31, 1999. The
Company  has no  present  intention  to pay  dividends  on either  its common or
preferred shares in the near future.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATION

         The Consolidated Financial Statements and Notes thereto are an integral
part of this report,  including this Item 6, 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,  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,  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.  As of March 24, 2000, all systems are
functioning properly.


<PAGE>10


OVERVIEW

REAL ESTATE

FAIRWAYS

In October 1996, the Company and Murieta Investors,  LLC, (MI) signed a Purchase
and Option  Agreement  which  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 (a  "Success  Payment).  During  1999,  the four  residential
dwellings  were sold by MI and the  Company  received  Success  Payments  in the
amount of $174,980. Construction has not started on the two remaining lots.

The agreement also provided for MI to have options to acquire 36 additional lots
at various  prices.  The options are  exercisable  starting  December 1, 1998 (6
lots) and every six months thereafter (4 lots each). If two consecutive  options
are not exercised then the remaining options are terminated. MI did not exercise
the December 1, 1998 option and the June 1, 1999 option.  During June 1999,  the
Company notified MI that the remaining options were terminated.

AGRICULTURAL

The Company operates a grain drying and storage facility. The drying facility is
financed by a 5 year lease  which  commenced  in March  1998.  At the end of the
lease, the Company will obtain title to the drying facility.

OPERATING RESULTS

Net loss  for the year  ended  December  31,  1999  decreased  by  approximately
$1,136,000 when compared with the year ended December 31,1998. This was due to a
number of factors including:

     (1)  A increase in profit from the sale of real estate primarily due to the
          sale of the 2.16 acres of industrial property in Las Vegas, Nevada.

     (2)  A decrease in bad debt expense.

     (3)  A decrease in interest expense.

1999 vs. 1998

Real estate

         The major increase in real estate  revenues and profits in 1999 was due
to the sale of the 2.16 acres of  industrial  property in Las Vegas,  Nevada for
$846,800 and the sale of the Solano Option for  $533,000.  Sales at The Fairways
were 6 lots in 1999 compared to 6 lots in 1998 and continue to be slow.

Agricultural

         Grain  drying and storage  losses in 1999  increased  by  approximately
$80,000 when compared with 1998. For the year ended December 31, 1999 drying and
storage  revenue was  $168,000  compared to  $370,000  for the prior year.  This

<PAGE>11


decrease  is  primarily  due to a  decrease  in drying  and  storage  revenue of
$200,000. The 1999 revenue decrease consisted of $75,000 less drying revenue and
$120,000 less rice overage revenue compared to 1998. It was anticipated that the
facility would dry rice during the 1999 season, however, due to the lower yields
of rice  acreage  grown,  there was no rice  available  to dry. The rice overage
revenue in 1998 resulted from the sale of rice overage from the 1997 crop.

General

         Selling,   administrative  and  general  expenses  in  total  decreased
approximately  $78,000. The major contributors to the decrease were salaried and
related costs of $122,000 due to the decrease in personnel;  office  expenses of
$7,000;  Director Fees of $8,000; and officers and directors liability insurance
of $16,000.  These  decreases  were offset by increases in legal fees of $85,000
primarily  related  to  litigation  concerning  the  Interpleader  and other GFS
related matters.

         Interest income decreased  because of principal  collections on various
notes  receivable.  Interest  expense  decreased  because of principal  payments
through the sale of the lots at The Fairways  made to Beal Bank,  which was paid
in full in November 1999.

LIQUIDITY AND CAPITAL RESOURCES

         During the year ended December 31, 1999,  cash,  cash  equivalents  and
marketable securities decreased by $347,000 from $3,948,000 at December 31, 1998
to $3,601,000 at December 31, 1999. The most significant sources of cash in 1999
were  cash of  $655,000  provided  by  operations,  the  collection  of loans of
$109,000 made to others,  the proceeds of $500,000 from  disposition  of assets.
The most  significant  uses of cash in 1999,  consisted  of payments of $320,000
made to former minority  interest,  payments of $1,060,000 on long-term debt and
payments of $49,000 on short-term debt.

         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 grain 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 will
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 grain drying and storage facilities, anticipated lot sales at
The  Fairways,  collection  of  notes  receivable  resulting  from  sales at The
Fairways.  Based on known commitments,  the Company believes that the sources of
cash described and the cash available at December 31, 1999,  will be adequate to
fund known liquidity  requirements in 2000.  However, if the sources of required
liquidity and the cash  available at December 31, 1999 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.

<PAGE>12


ITEM 7.  FINANCIAL STATEMENTS

         The  Consolidated  Financial  Statements of  Dunes  Hotels  and Casinos
Inc. are located at pages F-1 to F-20 attached to the end of this annual report.


ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

         None



<PAGE>13

                                    PART III

ITEM  9.  DIRECTORS,   EXECUTIVE  OFFICERS,   PROMOTERS,  AND  CONTROL  PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The  By-laws  of the  Company  provide  that the  number  of  directors
constituting  the entire  board  shall be seven.  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.

         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, 57, 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. On
June 4, 1998,  BGC filed a petition for relief under Chapter 7 of the Bankruptcy
Code in the United States  Bankruptcy  Court for the District of Nevada where it
is pending.

         Brent L. Bowen,  71, 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 was an  employee  of MRI from 1995 to 1998.  Mr.  Bowen has
experience in the hotel/casino,  farming, real estate, home-building, rice mill,
commodities and banking industries.

         Andrew  Marincovich,  78,  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 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,  69, 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

<PAGE>14

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,  56, 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, 69, 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,  53, 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 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, 1999.


<PAGE>15

ITEM 10.  EXECUTIVE COMPENSATION

         The following table sets forth the annual  compensation  paid to Edward
Pasquale,  the Company's  President  since  December  1997.  No other  executive
officer of the Company  received  compensation  in excess of $100,000  for the 3
years ended December 31, 1999.


                           SUMMARY COMPENSATION TABLE
                               ANNUAL COMPENSATION

<TABLE>

<S>                          <C>          <C>              <C>              <C>                 <C>

      (a)                     (b)           (c)              (d)                  (e)                  (i)
                                                                             Other annual           All other
Name and prin-                                                               compensation          compensation
cipal position                Year        Salary($)         Bonus($)                ($)              ($) (1)
------------------            ----        ---------         --------         ----------------    ---------------


Edward Pasquale,              1999           --                --                   --               $62,568
President

Edward Pasquale,
President                     1998           --                --                   --               $36,862

Edward Pasquale,
President                     1997           --                --                   --               $ 2,250 (2)

</TABLE>

(1)  All other compensation to Edward Pasquale consists of the following:

                                        Dec
                                        1997        1998          1999
                                       ------     --------      -------

       Directors fees                  $1,250     $15,000       $15,000
       Audit Committee fees             1,000      12,000        12,000
       Consulting fees                      -       9,862        35,568
                                       ------     -------       -------
                                       $2,250     $36,862       $62,568
                                       ======     =======       =======

(2)  Mr. Pasquale was elected as President in December 1997.  Amount  represents
     one-twelfth of the all other compensation paid in 1997.


Compensation of Directors

         The  Company  pays each  director  an  annual  fee of  $15,000  payable
monthly.  Directors  fees due to Mr.  Anderson  are  retained by the Company and
applied against amounts due 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 up to $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 fee 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  fee of $300 for each  meeting
attended.  For  services  rendered as Audit  Committee  members and  consultants

<PAGE>16


during the fiscal year 1999, Messrs.  Marincovich,  Pearson,  O'Leary, Bowen and
Pasquale were paid $15,750, $12,900, $16,050, $12,600, and $47,568 respectively.

         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.


ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The table shown below contains certain information as of March 17, 2000
with  respect to (1) any person  (including  any "group" as that term is used in
Section  13(d)(3)  of the  Exchange  Act),  who is  known to the  Company  to be
beneficial  owner  (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 (2) each director and executive officer and (3) 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  security
laws) by all directors, and executive officers of the Company as a group.

<TABLE>
<S>                                       <C>                                        <C>

Name and Address of                         Amount and Nature of                       Percent of Common
Beneficial Owner (1)                        Beneficial Ownership (1)                   Stock Outstanding
---------------------------------          -------------------------                   -----------------

John B. Anderson(2)                               3,000,000                                   58.9%
P.O. Box 1410
Davis, CA  95617

GFS Acquisition Company, Inc.(2)                  3,853,422                                   75.6%
8441 E. 32nd Street N
Wichita, KS  67226

Brent L. Bowen(3)                                     2,000                                      *
15361 Pear Valley Lane
Auburn, CA  95603

Andrew P. Marincovich(3)                                200                                      *
28924 S. Western Ave., Ste 206
Rancho Palos Verdes, CA  90275

All Directors and Officers
as a Group (7 Persons)                            3,002,200                                   58.9%

</TABLE>


*    Less than one percent

<PAGE>17


(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).  These  shares of
     common stock are subject to litigation. See Item 3. Legal Proceedings.

     Of the Anderson Shares, approximately 3,000,000 shares are pledged in favor
     of GFS as successor to the FDIC. In its Schedule 13D dated January 13, 2000
     GFS reports that it possesses "Shared Voting Power" and "Shared Dispositive
     Power" with respect to 3,853,422 shares of the Company's common stock which
     includes the Anderson Shares.

     The Anderson  Shares are the subject of litigation  between  Anderson,  the
     FDIC and GFS pending in the United States  District  Court for the District
     of Nevada.  The  Anderson  Shares are also the subject of the  interpleader
     action filed by the Company and now pending in the United  States  District
     Court for the  District  of  Nevada.  See Item 3. Legal  Proceedings  for a
     detailed discussion of the pending litigation.

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

The following  table sets forth, as of March 17, 2000, the number and percentage
of shares of the  Company's  Series B  preferred  stock  which are  beneficially
owned, directly or indirectly,  by each shareholder who owns more than 5% of the
outstanding  shares. No director or officer has any beneficial  ownership in the
Series B preferred stock. Unless otherwise indicated, the person listed has sole
voting and investment power over the preferred stock beneficially owned.

Name and Address of       Amount and Nature of            Percent of Series B
Beneficial Owner           Beneficial Ownership            Stock Outstanding
---------------------     ---------------------           -------------------

USI Corp                         1,811                              18.84%
1040 Lawrence Court
Wichita, KS  67206

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On March 17, 2000,  Anderson and  Anderson  Entities beneficially own
approximately 58.9% 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  (DCA).  In June 1999 GFS  acquired a
portion of the DCA including all of the collateral from the FDIC.


<PAGE>18

                                     PART IV

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K


The following documents are filed as part of this report

a.  Financial Statements

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

 PAGE
------

F-1  Independent Auditors' Report

F-2  Balance Sheet as December 31, 1999

F-4  Statements of Operations, two years ended December 31, 1999

F-6  Statements of shareholders' equity, two years ended December 31, 1999

F-7  Statements of cash flows, two years ended December 31, 1999

F-9  Notes to Consolidated  Financial  Statements,  two years ended December 31,
     1999


b.       Exhibits.


1.00      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.

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

3.00      Revised  By-laws of Dunes Hotels and Casinos Inc.  dated February 3,
          2000.

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.

<PAGE>19


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.

10.05     Promissory  Note dated  November 2, 1992, in the  principal  amount of
          $2,650,000 made by Baby Grand Corp. and 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.
          1-43855) for the year ended December 31, 1992, Part IV, Item 14(a)(3),
          Exhibit 10.05.  Second  Settlement  and  Forbearance  Agreement  dated
          February  5,  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.  Current Report on
          Form 8-K (file no.  1-4385)  dated  February 9, 1995,  Item 7, Exhibit
          Nos. 10.01 and 10.02.

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.

10.40     Purchase and Option  Agreement  by and between SHF  Acquisition
          Corporation  and Murieta  Investors,  LLC, dated October 7, 1996. This
          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.Amendment  to Purchase  and Option  Agreement by and between SHF
          Acquisition  Corporation  and Murieta  Investors,  LLC is incorporated
          herein by reference to Dunes Hotels and Casinos Inc.  Annual Report on
          Form 10-KSB  (file no.  1-4385) for the year ended  December 31, 1998,
          Part IV, Item 13 (b), Exhibit 10.51.

10.41     Master  Equipment  Lease  dated  April 3,  1997,  between  ICON
          Financial Corp. and SHF Acquisition Corporation 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.

<PAGE>20


10.52     Agreement to purchase  certain real property  located in Solano
          County,  California (the Option Property) between Los Rios Farms, Inc.
          and  M&R   Investment   Company,   Inc.  Dated  December  8,  1998  is
          incorporated  herein by  reference  to Dunes  Hotels and Casinos  Inc.
          Annual  Report on Form  10-KSB  (file no. 1- 4385) for the year  ended
          December  31,  1998,  Part  IV,  Item 13  (b),  Exhibit  10.52.

10.53     Agreement  to  provide  storage  and  drying  between Adams Grain Co.
          and SHF Acquisition Corporationis  dated May 7, 1999.

10.54     Form of Indemnity Agreement with Directors

21.01     Subsidiaries of Registrant.

27.01     Financial Data Schedule

(b)       Reports on Form 8-K

          None

<PAGE>21

                                   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  /s/ EDWARD PASQUALE                           By  /s/ MARVIN  P. JOHNSON
        ---------------                                   ------------------
        Edward Pasquale                                   Marvin P. Johnson
        President                                         Principal Financial
       (Principal Executive                               and Accounting Officer
        Officer)

Dated  March 24, 2000

       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
--------------------------        -----------              ---------------

/s/ EDWARD PASQUALE                President                March 24, 2000
    ----------------
    Edward Pasquale

John B. Anderson                   Director

/s/ BRENT L. BOWEN
    ----------------
    Brent L. Bowen                 Director                 March 24, 2000

/s/ ANDREW P. MARINCOVICH
    ----------------------
    Andrew P. Marincovich          Director                 March 24, 2000

/s/ DONALD J. O'LEARY
    -------------------
    Donald J. O'Leary              Director                 March 24, 2000

/s/ EDWARD PASQUALE
    ------------------
    Edward Pasquale                Director                 March 24, 2000

/s/ WAYNE O. PEARSON
    -------------------
    Wayne O. Pearson               Director                 March 24, 2000

/s/ ERIK J. TALLSTROM
    ------------------
    Erik J. Tallstrom              Director                 March 24, 2000

<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 sheet of Dunes Hotels and
Casinos  Inc.  and  Subsidiaries  as of  December  31,  1999,  and  the  related
consolidated  statements of operations,  shareholders' equity and cash flows for
each of the two years in the period ended  December 31,  1999.  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 audits 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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of Dunes
Hotels and Casinos  Inc.  and  Subsidiaries  as of December  31,  1999,  and the
consolidated  results  of their  operations  and cash  flows for each of the two
years in the period ended  December  31,  1999,  in  conformity  with  generally
accepted accounting principles.

In connection with the matters discussed in Notes 11(a) and 14, there has been a
change in voting control of the Company's  stock. The effect of such a change on
the Company's future  operations or other activities  cannot be assessed at this
time.


/s/ Piercy, Bowler, Taylor & Kern

Las Vegas, Nevada

January 28, 2000, except for Note 14 as to which the date is March 23, 2000.

<PAGE>F-2

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 1999
                             (Dollars in thousands)

                                     ASSETS

<TABLE>
<S>                                                                                   <C>

Cash and cash equivalents                                                       $        3,323

Marketable securities                                                                      278

Receivables
      Trade                                                                                  3
      Related party, less allowance                                                         37
      Real estate sales                                                                    363

Inventory of real estate held for sale                                                   3,460

Prepaid expenses                                                                           111

Property and equipment, less accumulated depreciation
      and amortization of $730                                                           3,118


Other assets                                                                                 3
                                                                                ---------------

                                                                                $       10,696
                                                                                ===============
</TABLE>

<PAGE>F-3
                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEET (CONTINUED)

                                DECEMBER 31, 1999
                             (Dollars in thousands)

                       LIABILITIES AND SHAREHOLDERS EQUITY


<TABLE>
<S>                                                                                        <C>


Accounts payable                                                                            $           52

Accrued expenses                                                                                       171

Income taxes                                                                                           307

Long-term debt and capital lease obligations                                                           815

Accrued preferred stock dividends in arrears                                                         1,317
                                                                                             --------------
                                                                                                     2,662
                                                                                             --------------

Shareholders' equity

      Preferred stock - authorized 10,750,000 shares ($.50 par);
          issued 10,512 shares Series B $7.50 cumulative preferred
          stock, outstanding 9,610 shares, aggregate liquidation
          value $2,517, including dividends in arrears                                                   5
      Common stock - authorized 25,000,000 shares ($.50 par);
          issued 7,799,780 shares, outstanding 6,375,096                                             3,900
          shares
      Capital in excess of par                                                                      25,881
      Deficit                                                                                      (19,752)
                                                                                             --------------
                                                                                                    10,034

      Treasury stock, at cost; Preferred - Series B, 902 shares


          Common 1,424,684 shares                                                                   (2,000)
                                                                                             --------------


                                                                                                      8,034
                                                                                             --------------

                                                                                             $       10,696
                                                                                             ==============

</TABLE>


<PAGE>F-4

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                    (Dollars in thousands, except per share)

<TABLE>
<S>                                                      <C>                    <C>

                                                                 1999                 1998
                                                           ----------------     -----------------
Revenues
  Sales of real estate                                     $         2,108      $            571
  Rental income, agricultural properties                                51                    57
  Drying and storage revenues                                          168                   370
  Miscellaneous income (expense), net                                   67                    35
                                                           ----------------     -----------------
                                                                     2,394                 1,033
                                                           ----------------     -----------------

Cost and expenses
  Cost of real estate sold                                           1,120                   552
  Cost and expenses of rental income                                     4                     4
  Cost of drying and storage revenues                                  292                   413
  Selling, administrative and general
    Corporate                                                          685                   763
    Real estate operations                                             225                   193
  Bad debts                                                                                  151
  Depreciation                                                         132                   129
  Provision for loss on real estate investment                                               100
                                                           ----------------     -----------------
                                                                     2,458                 2,305
                                                           ----------------     -----------------

Loss before other credits (charges) and income taxes                   (64)               (1,272)
                                                           ----------------     -----------------

Other credits (charges):
  Interest and dividend income                                         248                   260
  Interest expense                                                    (178)                 (184)
  Loss on marketable securities, net                                   (90)                  (20)
                                                           ----------------     -----------------
                                                                       (20)                   56
                                                           ----------------     -----------------

</TABLE>

<PAGE>F-5

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                    (Dollars in thousands, except per share)


<TABLE>
<S>                                                           <C>               <C>

                                                                   1999              1998
                                                              --------------    --------------

Loss before income taxes                                                (84)           (1,216)

Income taxes                                                              7                11
                                                              --------------    --------------


Net loss                                                     $          (91)   $       (1,227)
                                                              ==============    ==============


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


Loss per common share                                        $        (0.01)   $        (0.19)
                                                              ==============    ==============



</TABLE>


                 See notes to consolidated financial statements





<PAGE>F-6


                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

                             (Dollars in thousands)

<TABLE>
<S>                         <C>       <C>     <C>        <C>       <C>     <C>         <C>    <C>    <C>      <C>          <C>


                            Preferred stock       Common stock                           Preferred         Common
                              issued (1)             issued        Capital             treasury stock   treasury stock    Total
                           ------------------  ------------------    in                -------------- ----------------    share-
                                        Par                 Par     excess                                               holders'
                            Shares     value     Shares    value    of par   Deficit   Shares  Cost    Shares     Cost    equity
                           --------   -------   ---------  ------  --------  --------- ------- ----- ---------  ------- ----------
Balance, January 1, 1998    10,512      $5      7,799,780  $3,900   $25,881  ($18,290)   902   ($70) 1,424,684  ($1,930)  $9,496

Accrued dividends,
 preferred stock                                                                  (72)                                       (72)
Net loss                                                                       (1,227)                                    (1,227)

                           --------   -------   ---------  ------  --------  --------- ------- ----- ---------  ------- ----------

Balance, December 31, 1998  10,512       5      7,799,780   3,900    25,881   (19,589)   902    (70) 1,424,684   (1,930)   8,197

Accrued dividends,
 preferred stock                                                                  (72)                                       (72)
Net loss                                                                          (91)                                       (91)
                           --------   -------   ---------  ------  --------  --------- ------- ----- ---------  ------- ----------

Balance, December 31, 1999  10,512      $5      7,799,780  $3,900   $25,881  ($19,752)   902   ($70) 1,424,684  ($1,930)  $8,034
                           ========  ========  ==========  ======= ========= ========= ======= ===== =========  ======= ==========


</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, 1999 AND 1998
                             (Dollars in thousands)
<TABLE>
<S>                                                                                  <C>                   <C>


                                                                                           1999                  1998
                                                                                       --------------        ------------
Cash flows from operating activities:
   Net loss                                                                            $          (91)       $    (1,227)
 Adjustments to reconcile net loss to net cash
 provided by (used in)operating activities:
   Depreciation                                                                                   132                129
   Loss on marketable securities                                                                   90                 20
   Provision for losses on receivables                                                                                76
   (Gain) loss on disposition of assets                                                            11                 (8)
   Provision for loss on real estate investment                                                                      100
   (Increase) decrease in operating assets:
       Trade receivables                                                                            6                 (6)
       Inventory, real estate held for sale                                                       490                409
       Prepaid expenses                                                                             4                  7
       Other                                                                                                         121
    Increase (decrease) in operating liabilities:
       Accounts payable                                                                            27                  3
       Accrued expenses                                                                           (14)               (24)
       Deferred credits and other                                                                                   (178)
       Former minority interest                                                                  (320)
                                                                                        --------------        ------------
  Net cash provided by (used in) operating activities                                             335               (578)
                                                                                        --------------        ------------

Cash flows from investing activities:
   Investment in marketable securities                                                                              (250)
   Proceeds from sale of marketable securities                                                    460                 75
   Real estate loans                                                                              (70)              (145)
   Payments received on receivables                                                               109                224
   Proceeds from disposition of assets                                                            500                 13
   Purchase of property and equipment                                                             (22)              (110)
                                                                                        --------------        ------------
  Net cash provided by (used in) investing activities                                             977               (193)
                                                                                        --------------        ------------

</TABLE>

<PAGE>F-8

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                     YEARS ENDED DECEMBER 31, 1999 AND 1998
                             (Dollars in thousands)


<TABLE>
<S>                                                                     <C>                      <C>

                                                                                1999                      1998
                                                                         -------------------       -------------------
Cash flows from financing activities:
   Proceeds from short-term debt                                         $                         $               90
   Payments on short-term debt                                                          (49)                     (101)
   Payments on long-term debt                                                        (1,060)                     (397)
                                                                         -------------------       -------------------
  Net cash used in financing activities                                              (1,109)                     (408)
                                                                         -------------------       -------------------

Increase (decrease) in cash and cash equivalents                                        203                    (1,179)

Cash and cash equivalents, beginning of year                                          3,120                     4,299
                                                                         -------------------       -------------------

Cash and cash equivalents, end of year                                   $            3,323        $            3,120
                                                                         ===================       ===================


Supplemental  disclosures  of cash flow  information:
   Cash paid during the year for:
    Income taxes                                                         $                7                        11
                                                                         ===================       ===================
    Interest                                                             $              189        $              204
                                                                         ===================       ===================

Supplemental schedules of non-cash investing and
 financing activities:
   Dividends accrued but unpaid                                          $               72        $               72
                                                                         ===================       ===================


</TABLE>

                 See notes to consolidated financial statements


<PAGE>F-9

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


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 (grain 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.  Accordingly,  the  Company's  operations  in this
     segment  could  be  affected  by  material   adverse  changes  in  economic
     conditions in the area.

     The agricultural  segment dries and stores harvested grain over a two-month
     period  (approximately  September 15 to November 15) and stores, for a fee,
     the dried grain until it is removed by the owner.  The Company stores grain
     principally  for one customer  under a contract  which expires in May 2002.
     This contract  accounts for  approximately  50% of the storage capacity and
     98% of the storage  revenue.  The Company does not have any  contracts  for
     drying grain but is seeking such  contracts in 2000. If the Company were to
     lose its storage  customer,  fail to obtain drying contracts or crop yields
     are  low,  it  would  have a  material  adverse  affect  on  the  Company's
     agricultural segment.

     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.

     Loss per share:

     Loss percommon share has been computed  using the weighted  average  number
     of shares  outstanding  during the year:  6,375,096  and  6,375,096 for the
     years  ended  December  31,  1999  and  1998,  respectively.  Dividends  on
     nonconvertible preferred stock - Series B have been deducted from income or
     added to the loss applicable to common shares. (See Note 14).

<PAGE>F-10

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998

     Cash equivalents:

     The Company considers all highly liquid cash investments  purchased with an
     original maturity of three months or less to be cash equivalents.

     Marketable securities:

     The Company's  investments  in marketable  securities  are accounted for as
     trading securities.  Accordingly,  gains or losses related to the Company's
     investments in marketable  securities,  which have not been  material,  are
     included in operations.

     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.

     Inventory of real estate held for development and sale:

     Realestate 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, because the real estate is, in
     substance, inventory.

     Use of estimates:

     Timely  preparation  of financial  statements in accordance  with generally
     accepted accounting principles requires management estimates, some of which
     may require revision in future periods. (See Note 11(b) & (c)).

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, 1999.


<PAGE>F-11

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


     Notes receivable: These notes are collateralized by the real property sold.
     Management  believes  the  fair  value  of  real  estate  notes  receivable
     approximates their carrying value 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.

     In the event these notes were not collected, and the Company were unable to
     recover or sell the collateral  property the maximum losses sustained would
     be equal to the aggregate value of the notes.

     Long-term debt and capital lease obligation:  The fair value of the capital
     lease  obligation  is based on  current  rates at which the  Company  could
     borrow funds.

     The fair  values of the  Company's  significant  financial  instruments  at
     December 31, 1999 approximate their carrying amounts.

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 through
          ownership  of Cedar  Development  Co.,  was the sole  shareholder  and
          President  of Baby Grand Corp.  (BGC) and they  assert  that  entities
          owned or  controlled by him (Anderson  Entities)  owned  approximately
          67.2% of the Company's  common stock as of January 29, 2000.  See Note
          11(a) regarding  litigation  between  Anderson and the Federal Deposit
          Insurance  Corporation  (the  FDIC) and Note 14  regarding  subsequent
          events. Each entity related or controlled by Anderson will hereinafter
          be  identified  as  an  Anderson  Entity.  As  discussed,   Anderson's
          ownership in the Anderson Entities is currently subject to Litigation.
          In June 1999 the FDIC sold a portion  of its loan,  together  with the
          underlying  security  and a part  of the  judgement  against  Anderson
          Parties to General Financial Services, Inc. (GFS).

     (1)  In November 1997, the Company  entered into a Loan Purchase  Agreement
          with  Anderson,  as  Trustee  of the  John J.  Anderson  Family  Trust
          (Trust).  The Loan Purchase  Agreement provided for the sale of a note
          issued by BGC (BGC Note)  payable to MRI for  $320,000 and the Company
          reported a gain of approximately  $162,500 in 1997. On March 31, 1998,
          the Nevada District Court ordered that the Loan Purchase  Agreement be
          rescinded and all parties return any of the assets  transferred.  As a
          result, the Company recorded a loss of approximately $162,500 in 1998.


<PAGE>F-12

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


4.   Inventory  of real  estate  held  for  development  and  sale  (Dollars  in
     thousands):

         The Fairways (a)                      $    3,354
         Sam Hamburg Farm (b)                         146
         Other                                         40
                                               ----------
                                               $    3,460
                                               ==========

     (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.  The  land  is  encumbered  by  bonds  in the
          approximate  amount of $99,000.  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 January 29, 2000, 38 lots remain unsold.

          In connection with its  development of The Fairways,  SHF was required
          to  construct  certain   improvements  that  benefited  not  only  The
          Fairways,  but other  properties that lay outside of the boundaries of
          The  Fairways  (the  Benefited  Properties).   The  net  cost  of  the
          improvements to the Benefited  Properties was $1,140,900.  SHF expects
          to be  reimbursed  for these  costs as the  Benefited  Properties  are
          developed.  SHF's right to reimbursement will expire in September 2015
          and the  Company is unable to predict  what  amount,  if any,  will be
          received as reimbursement. The rights to reimbursement are personal to
          SHF and do not run with The Fairway's property unless assigned by SHF.

          In 1996,  the Company sold 6 lots to Murieta  Investors,  LLC (MI) for
          $40,000  per lot.  In  addition  the  Company is entitled to a success
          payment  based on the gross  sales price of the  residential  dwelling
          (Success Payment). To date MI has constructed 4 dwelling units and has
          not started any construction on the remaining 2 lots. During 1999, all
          4 dwellings were sold and the Company received net Success Payments in
          the amount of $174,980.

     (b)  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 11 (b) for a detailed  discussion  concerning  the removal of
          the toxic waste.  The  remaining 110 acres are leased to one tenant at
          an annual aggregate rental of approximately $24,000.


<PAGE>F-13


                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


5.   Property  and  equipment  and  accumulated  depreciation  and  amortization
     (Dollars in  thousands):

 Land and land  improvements                  $    159
 Building  and improvements                      3,591
 Machinery and equipment                            98
                                              ---------
                                                 3,848
 Less accumulated depreciation
  and amortization                                (730)
                                              ---------

                                              $  3,118
                                              =========

6.   Long-term notes receivable (Dollars in thousands):

 Related Party
  BGC, including interest                     $  1,936
  Less allowance                                 1,899
                                              ---------
                                                    37
 Real estate
  Various real estate notes, collateralized
  by deeds of trust with interest ranging
  from 8% to 10%                                   363
                                              ---------
                                              $    400
                                              =========

7.   Real estate investment:

          The  Company  had 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  provided that the Company
          would purchase the 1,690 acres at a price of  $3,000,000.  The Company
          would  receive a credit of  $1,000,000  against  the  Option  Purchase
          Price. The option expires on May 1, 2003.

          In March  1999,  the Company  sold its rights  under the option to the
          grantor of the option for $500,000 in cash and a $33,333 note.


8.   Long-term debt and capital lease obligations:

  Long-term  debt and capital  lease  obligations  at December 31, 1999,
  consists of the following (Dollars in thousands):

 Capital lease obligation (a)                 $    802
 Other (b)                                          13
                                              ---------
                                              $    815
                                              =========

<PAGE>F-14

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


 Maturities of long-term debt are as follows:

                                          (Dollars in thousands)
                                         -----------------------
                                                    Capital
                     Long term debt            Lease Obligation         Total
                     --------------            -----------------       ------
         2000            $ 3                         $223               $226
         2001              3                          250                253
         2002              3                          279                282
         2003              4                           50                 54
                     --------------            -----------------       ------
                         $13                         $802               $815
                     ==============            =================       ======




     (a)  The Company has a financing  lease  agreement for its drying  facility
          for five years commencing March 1998 with a monthly rental of $25,121.
          The  Company  can buy  the  drying  facility  for $1 at the end of the
          lease. The lease is collateralized  by the drying facility,  a deed of
          trust on certain  parcels of property,  including  the parcel on which
          the  storage  facility is located  and the  guarantees  of MRI and the
          Company.  Before the  guarantors  are liable for any  deficiency,  the
          leasing company must first proceed against the drying facility and the
          additional collateral.

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

9.   Preferred Stock:

          The Company is authorized to issue 10,750,000 share 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,  1999,  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  as of
          December 31, 1999, in the amount of approximately $1,317,000.

10.  Due to former minority interest:

          The due to former minority interest consists of a 50% co-owner's share
          of the  accumulated  profits from the  operations  of the White Ranch,
          which was sold in 1997. In December  1999,  the minority  interest was
          paid.


<PAGE>F-15

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


11.  Contingencies:

     (a)  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  asserts,  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 General  Financial
          Services, Inc. (GFS) since June 1999 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.

          In June 1999,  the FDIC sold a portion of its loan,  together with the
          underlying  security  and a part  of the  judgement  against  Anderson
          parties to GFS. Included in the sale was the pledged FDIC shares.

          GFS  attempted to exercise its rights under the judgement and demanded
          that the Company  transfer  ownership  of the FDIC  Pledged  Shares to
          itself but Mr. Anderson objected, claiming that there was no change in
          ownership of the shares.  The Company in turn filed on July 6, 1999, a
          Complaint  in  Interpleader  in  Superior  Court  of  California.  The
          jurisdiction  of the action was removed and  transferred  on September
          20,  1999,  to the United  Stated  District  Court for the District of
          Nevada.

          At December  31,  1999,  the Company  has a net  operating  loss carry
          forward  (NOL) of  approximately  $53,246,000.  The Board of Directors
          believes  that this NOL  represents  a valuable  asset to the  Company
          which may or may not be utilized in future years.

          See Note 14 for a discussion of subsequent developments with regard to
          these matters.

     (b)  SHF was advised in 1991 of the possible  contamination  of 40 acres at
          Sam Hamburg  Farm of  approximately  5,000  cubic  yards of soil.  The
          Company, through its chemical and toxic clean-up consultant,  has been
          working with the California State Environmental  Protection Agency, in
          seeking  alternate  means  to the  disposal  in  toxic  dump  sites of
          chemical and toxics-laden soil.

          Because of 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 the cost will be up to $170,000. The Company
          is unable to predict when the ongoing testing will be complete or what
          the outcome of these tests will be.  Accordingly,  the estimates could
          materially change as the testing and remediation work continues.

<PAGE>F-16


                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


     (c)  The Company had received an  assessment  from the State of  California
          Franchise  Tax Board  (FTB)  wherein  the FTB  stated  that one of the
          Company's  subsidiaries owed California franchise tax of approximately
          $316,000,  plus  approximately  $350,000  in  penalties  and  interest
          resulting from the  foreclosure  sale of certain real property owne by
          the  subsidiary.  The Company  appealed this matter to the  California
          State Board of Equalization  (SBE) which ruled in favor of the Company
          and in October 1999 the FTB withdrew it's assessment.

          The Company has been  notified  that the FTB is examining its 1995 tax
          return.   The  FTB  is   questioning   the   Company's   reporting  of
          approximately  $7,700,000  of  income  as being  exempt  from the 9.3%
          California tax. The Company disagrees with the FTB and plans to oppose
          any  assessment  of  additional  taxes  or  interest.   Therefore,  no
          provision for additional taxes or interest has been made.

12.  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, 1999 (Dollars in thousands):

<TABLE>
   <S>                                                                            <C>

     Marketable securities valuation allowance                                         $       26
     Real estate allowances                                                                   480
     Loss carryforwards                                                                    18,078
     Other                                                                                      2
                                                                                        ----------
              Gross deferred tax assets                                                    18,586
              Deferred tax asset valuation allowance                                      (18,586)
                                                                                        ----------
              Net deferred tax assets                                                   $       0
                                                                                        ==========


      A reconciliation  of the  changes in deferred  tax assets  valuation
      allowance is as follows:
      (Dollars in thousands);

         Valuation allowance for unrealized loss on marketable
           securities                                                                   $      28
         Current year loss carryforwards                                                      220
         Valuation allowance for other investments                                           (170)
                                                                                         ---------                 -
         Change in deferred tax asset valuation allowance                                      78
         Deferred tax assets valuation allowance, beginning of year                        18,508
                                                                                        ----------
         Deferred tax assets valuation allowance, end of year                           $  18,586
                                                                                        ==========

</TABLE>


<PAGE>F-17

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


A reconciliation of the federal statutory tax rate to the effective tax rate for
1999 and 1998, is as follows:

                                             Percentage of pre-tax income
                                                 1999              1998
                                             ----------         ---------

Federal statutory rate                         (34.00%)         (34.00%)
Debt discharges and other                                        (1.08%)
Non-deductible items:
     Valuation adjustments                      33.94%           34.65%
     Other                                        .06%             .43%
                                             ----------         ---------
                                                 0.00%            0.00%
                                             ==========         =========



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                                 803
                         2008                               2,408
                         2009                                 595
                         2010                               3,298
                         2011                               1,791
                         2012                               2,767
                         2018                               1,241
                         2019                                 589

          As more  fully  described  in Note  3(a),  11(a)  and 14, 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 materially reduce the
          amount of income  that could be offset by net  operating  losses  each
          year;  and if there is no  continuity  of business  after an ownership
          change,  the net operating  losses could be eliminated.  Net operating
          losses,  to the  extent  not used in any given  taxable  year,  may be
          carried forward and added to the limitation of subsequent years.



<PAGE>F-18

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


13.  Segment information:

          As discussed in Note 1, 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 grain).

          Following is a summary of segment information for 1999 and 1998:

<TABLE>
       <S>                                                       <C>            <C>

                                                                     1999          1998
                                                                   --------     ----------
         Net revenues from unaffiliated customers:
              Real estate:
                      Sale of real estate                          $   728      $     571
                      Land rent                                         51             57
              Grain drying and storage revenue                         168            370
                                                                    --------     ----------
                                                                   $   947      $     998
                                                                    ========     ==========

         Income (loss) from operations:


              Real estate                                          $    14       $   (122)
              Grain drying and storage                                (250)          (165)
                                                                    --------     ----------
                                                                       236            287
              Corporate operating income                               105         (1,020)
              Other income (expense)                                    47             91
              Income taxes                                              (7)           (11)

         Net loss, as reported in the
         accompanying consolidated statements of operations           ($91)       ($1,227)
                                                                    ========     ==========


                                                                      1999
                                                                   --------
         Identifiable assets
              Real estate                                          $ 3,921
              Grain drying and storage                               3,159
              General corporate assets                               3,616
                                                                   --------
         Total assets, as reported in the accompanying
          consolidated balance sheet                             $  10,696
                                                                  =========
</TABLE>

<PAGE>F-19

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


14.  Subsequent events:

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

     Since 1998, the BGC Pledged Shares have been under the  jurisdiction of the
     US  Bankruptcy  Court in Las Vegas,  NV,  since BGC filed a petition  under
     Chapter 7. On  February  22,  2000,  the  Company was granted its motion in
     Bankruptcy  Court to allow it to  foreclose on the BGC Pledged  Shares.  On
     March 3, 2000, the Company  foreclosed on the BGC Pledged Shares and placed
     them in the  treasury.  GFS is now able to vote  75.6%  of the  outstanding
     stock (GFS Shares).

     Because  GFS is able to  exercise  voting  rights  with  respect to the GFS
     Shares,  GFS could  exercise  substantial  influence  with  respect  to the
     election of the entire  Board of  Directors  of the Company and all matters
     submitted to stockholders.  Therefore, GFS is able to significantly control
     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 it
     is  determined  that GFS owns the FDIC  Pledged  Shares,  it would then own
     75.6% of the  Company  and GFS  would  have  ownership,  rather  than  only
     significantly control, the election of the entire Board of Directors of the
     Company and all other matters submitted to stockholders.

     If there has been an  ownership  change for  purposes of Section 382 of the
     Internal  Revenue  Code of 1986,  as amended  (the  Code),  then there is a
     limitation on the amount of income that can be offset by NOL carryovers. In
     general,  an ownership change occurs when a majority  shareholder of a loss
     corporation  increases their  ownership by more than 50 percentage  points,
     which is tested over a three-year  period.  Regardless  of what action,  if
     any,  GFS should  determine  to take with  respect to the  Company,  if the
     District Court of Nevada finds in favor of GFS with respect to the transfer
     of the  pledged  shares,  an  ownership  change of more than 50  percentage
     points will have occurred at the date the shares were actually  acquired by
     GFS.  When GFS  purchased  a portion of the FDIC loan in June  1999,  there
     could be deemed a change of  ownership  under the Code if it is  determined
     that this action is inconsistent with a typical lending transaction.  It is
     possible that the Internal Revenue Service could take the position that the
     events within a 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  already
     occurred.  In various  court  pleadings,  GFS has asserted that it owns the

<PAGE>F-20

                 DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     YEARS ENDED DECEMBER 31, 1999 AND 1998


     FDIC Pledged  Shares.  Mr.  Anderson  disagrees with this assertion and the
     decision in the interpleader action will determine ownership.

     On January 28,  2000,  the Company  entered  into a  non-binding  letter of
     intent  with USI  whereby  the  Company  would  acquire not less than 3,000
     shares of Series B Preferred Stock of the Company valued at $275 per share,
     based upon the liquidation  value and accrued but unpaid  dividends on such
     Series B Preferred  Stock,  in exchange for shares of the Company's  Common
     Stock  valued at $.70 per share.  The  entering  into the  transaction  was
     subject to a number of  conditions,  including  entering  into a definitive
     stock purchase agreement,  an independent third party appraiser  confirming
     the value of the Series B Preferred  Stock and Common Stock and the overall
     transaction,  and  determination  by  the  United  States  District  Court,
     District of Nevada (No.  CV-5-99-1470-PMP  (RJJ)),  that the proposed stock
     purchase agreement was not subject to the Court's order of January 6, 2000.
     Although  the  Company  and USI had  entered  into  subsequent  discussions
     regarding  the  acquisition  of  additional  Common  Stock,  no  definitive
     agreement has been entered into.

     On March 23,  2000,  GFS and GFS  Acquisition  served the  Company  with an
     emergency  motion  for  temporary   restraining   order  and  amendment  of
     preliminary injunction in the United States District Court for the District
     of Nevada  (Case No.  CV-S-99-1470-PMP-(RJJ)  seeking the Company  from (1)
     issuing  new  shares  of common  or  preferred  stock;  (2)  continuing  or
     completing a purported  transaction  with USI; (3) doing anything that will
     hinder or effect  GFS'  majority  voting  control of the  Company;  and (4)
     changing the status quo  concerning  ownership of the Company as of January
     6,  2000,  except  as to  transactions  previously  approved  by  GFS.  The
     litigation  relates to a purported  transaction  with USI Corp. The hearing
     for the emergency  motion has been  scheduled  for March 28, 2000,  and the
     Company has not yet responded to the motion.

<PAGE>i
                                  EXHIBIT INDEX

<TABLE>
<S>     <C>                                                                       <C>

Exhibit                                                                           Page
No.                                 Description                                    No.
------  -----------------------------------------------------------------------  ------
 3.01   Revised By-Laws of Dunes Hotels and Casinos Inc.

10.53   Agreement to provide storage and drying between Adams Grains Co. and SHF
        Acquisition Corp.

10.54   Form of Indemnity Agreement with Directors

10.55   Letter of Intent

21.01   Subsidiaries of Registrant

27.01   Financial Data Schedule

</TABLE>