SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20589


FORM 10-QSB

(Mark One)

  X               Quarterly report pursuant to section 13 or 15(d) of the 
-----             Securities Exchange Act of 1934 for the quarterly period
                  ended June 29, 1997; 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 Number 0-24828


                         GRAND HAVANA ENTERPRISES, INC.
                   FORMERLY KNOWN AS UNITED RESTAURANTS, INC.

             (Exact Name of Registrant as Specified in its Charter)

          Delaware                                         95-4428370
-------------------------------                        -------------------
(State or Other Jurisdiction of                         (I.R.S. Employer
Incorporation or Organization)                         Identification No.)

             1990 Westwood Boulevard, Los Angeles, California 90025
            --------------------------------------------------------
                    (Address of Principle Executive Offices)
                                   (Zip Code)

                                 (310) 475-5600
              -----------------------------------------------------
              (Registrant's Telephone Number, Including Area Code)


Check  whether  the  Issuer  (1) filed all  reports to be filed by Section 13 or
15(d)  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 at least the past 90 days.

                               YES  X   NO
                                   ---    ----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date.

         Class                                Outstanding at August 1, 1997
-------------------------                    -------------------------------
Common Stock, par value                              8,469,933 shares
$.01 per share

Transitional Small Business Disclosure Format (check one):

                               YES        NO   X   
                                   -----     ------




                                       1
<PAGE>





PART I -- FINANCIAL INFORMATION
ITEM 1.    Financial Statements
<TABLE>
<CAPTION>
GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
<S>                                                   <C>                <C>
                                                  
                                                June 29,        September 30,
                                                 1997               1996
                                         ------------------    -----------------
ASSETS
CURRENT ASSETS
 Cash and cash equivalents                     $   227,529       $ 1,010,062
 Accounts receivable, less allowance for
  doubtful accounts of $54,036 and
  $15,500 (June 29, 1997 and
  September 30, 1996)                              469,967           125,402
 Short Term note receivable                         59,719                 -
 Equipment contract receivable                           -           330,000
 Inventories                                       735,736           210,054
 Prepaid expenses and other assets                   7,268           145,187
 Net assets discontinued business, held for sale   359,924                 -
                                              -------------     -------------
  TOTAL CURRENT ASSETS                           1,860,143         1,820,705

PROPERTY AND EQUIPMENT, NET                      5,353,656         2,124,346

OTHER ASSETS
 Pre-opening costs                                       -           132,723
 Due from related parties                                -            69,419
 Deferred financing cost                            92,025            80,000
 Deposits and other                                452,679           131,389
                                              ------------      ------------
  TOTAL OTHER ASSETS                               544,704           413,531
                                              ------------      ------------
                                               $ 7,758,503       $ 4,358,582
                                              ============      ============

</TABLE>


See accompanying Notes to Consolidated Condensed Financial Statements




                                       2
<PAGE>
<TABLE>
<CAPTION>

GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
<S>                                                    <C>                  <C>
                                                  June 29,        September 30,
                                                    1997               1996
                                           -----------------   -----------------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Accounts payable                            $    1,236,049        $    561,819
 Accrued liabilities                                103,620             125,219
 Deferred rent                                      584,967                -
 Deferred revenue                                    71,085                -
 Due to affiliates                                1,112,542             172,571
                                           -----------------   -----------------
  TOTAL CURRENT LIABILITIES                       3,108,263             859,609

COMMITMENTS AND CONTINGENCIES                            -                 -

                                           -----------------   -----------------
  TOTAL LIABILITIES                               3,108,263             859,609

STOCKHOLDERS' EQUITY Preferred Stock, $.01 par value:
  Authorized - 3,000,000 shares
  Issued and outstanding - none                          -                 -
 Common Stock, $.01 par value:
  Authorized - 22,000,000 shares
  Issued and outstanding  - 8,469,933 and
  6,362,500 shares                                   84,699              63,625
 Additional paid-in capital                      10,269,518           7,850,042
 Accumulated deficit                             (5,703,977)         (4,414,694)
                                           -----------------   -----------------
  TOTAL STOCKHOLDERS' EQUITY                      4,650,240           3,498,973
                                           -----------------   -----------------
                                              $   7,758,503        $  4,358,582   
                                           =================   =================
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements




                                       3
<PAGE>
<TABLE>
<CAPTION>
GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<S>                                       <C>         <C>        <C>         <C> 
                                   For the Three Months   For the Nine Months
                                   --------------------   -------------------
                                   June 29,    June 30,   June 29,   June 30,
                                     1997        1996       1997      1996
                                   --------   ---------   --------   --------
REVENUES
 Food and beverage sales         $  739,211 $1,034,781   $2,055,359 $3,119,389
 Membership fees                    464,175    135,450      824,642    496,992
 Licensing                          600,000          -      600,000    200,000
 Merchandise sales                  117,716     74,489      253,513    266,108
 Other                               23,156     41,700       43,224     68,295
                                 ----------   ---------   ---------  ---------
                                  1,944,258  1,286,420    3,776,738  4,150,784
                                 ----------   ---------   ---------  ---------
COST AND EXPENSES:
 Food and beverage                  297,381    304,682      745,135    911,359
 Merchandise                         82,375     57,334      159,381    197,109
 Direct labor and benefits          625,907    455,876    1,405,845  1,798,316
 Occupancy and other                391,328    350,713      777,803    828,309
 Pre-opening expense                166,550          -      241,550     41,006
 General and administrative         334,791    193,390      792,509    580,171
 Depreciation and amortization      103,323     30,784      206,161    170,727
                                 ----------   ---------   ---------  ---------                                  
                                  2,001,655  1,392,779    4,328,384  4,526,996
                                 ----------   ---------   ---------  ---------
LOSS BEFORE OTHER
   INCOME (EXPENSE)                 (57,396)  (106,360)    (551,646)  (376,213)
                                 ----------   ---------   ---------  ---------

OTHER INCOME (EXPENSES)
 Interest income                      5,082     25,776       11,382     88,851
 Interest expense                  (107,309)    (6,689)    (143,867)   (18,964)
 Other income (net)                  72,909     45,708       76,964     95,142
                                 ----------   ---------   ---------  ---------
                                    (29,318)    64,796      (55,521)   165,030
                                 ----------   ---------   ---------  ---------
LOSS FROM CONTINUING
     OPERATIONS                  $  (86,714)  $(41,564)   $(607,167) $(211,183)
                                 ----------   ---------   ---------  ---------
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements




                                       4
<PAGE>


<TABLE>
<CAPTION>
GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (cont.)
(unaudited)
<S>                                       <C>          <C>       <C>         <C>
                                  For the Three Months   For the Nine Months
                                 ---------------------  ---------------------
                                   June 29,    June 30,   June 29,   June 30,
                                     1997        1996       1997      1996
                                 ----------  ---------  ----------  ---------
LOSS FROM CONTINUING OPERATIONS    (86,714)    (41,564)   (607,167)  (211,183)
                                 ----------  ---------  ----------  ---------

DISCONTINUED OPERATIONS
 (Loss) from operations                 -     (232,544)    (94,809)  (352,691)
 Gain (loss) on disposal           286,942           -    (587,306)         -
                                 ----------  ---------  ----------  ---------
INCOME (LOSS) FROM DISCONTINUED
 OPERATIONS                        286,942    (232,544)   (682,115)  (352,691)
                                 ----------  ---------  ----------  ---------
NET INCOME (LOSS)                $ 200,228  $ (274,108)$(1,289,282) $(563,874)
                                 ==========  =========   ==========  =========

WEIGHTED AVERAGE NUMBER
  OF COMMON SHARES
  OUTSTANDING                    8,356,461   6,262,500   7,791,131  6,262,500
                                 ==========  =========   ========== ==========                                     
NET LOSS PER COMMON SHARE           $ 0.02      $(0.04)     $(0.17)   $(0.09)
                                 ==========  =========   ========== ==========

</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements




                                       5
<PAGE>
<TABLE>
<CAPTION>
GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited) 

<S>                                                       <C>                <C>
                                                      For the Nine Months
                                             -----------------------------------
                                                  June 29,             June 30,
                                                   1997                  1996
                                             -----------------     -------------
CASH FLOWS FROM OPERATING ACTIVITIES
 Net income (loss)                               $ (1,289,282)     $   (563,874)
 Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation and amortization                       206,161           291,713
 Changes in assets/liabilities
  Receivables                                         (74,284)           14,507
  Inventories                                        (525,682)          (26,531)
  Prepaid expenses                                    137,919           (17,480)
  Deposits and other                                 (131,173)           32,290
  Payables                                            652,630          (253,988)
  Assets held for sale                               (359,924)                -
  Deferred Rent                                       584,967                 -
  Deferred Income                                      71,085          (200,000)
                                                  ------------      ------------
  NET CASH - OPERATING                               (727,583)         (723,363)

CASH FLOW FROM INVESTING ACTIVITIES
 Purchases of Capital assets                       (3,435,471)          (94,236)
                                                 -------------      ------------
  NET CASH - INVESTING                             (3,435,471)          (94,236)

CASH FLOW FROM FINANCING ACTIVITIES
  Proceeds from sale of stock                       2,440,550                 -
  Due to affiliates                                 1,112,542                 -
  Repayment of Notes payable                         (172,571)         (106,401)
                                                 -------------      ------------
  NET CASH - FINANCING                              3,380,521          (106,401)

NET DECREASE IN CASH AND CASH EQUIVALENT             (782,533)         (924,000)
CASH AND CASH EQUIVALENTS, BEGINNING
 OF PERIOD                                          1,010,062         2,281,973
                                                 -------------      ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD          $   227,529      $  1,357,973
                                                 =============      ============
</TABLE>

See accompanying Notes to Consolidated Condensed Financial Statements


                                       6
<PAGE>




         GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1.        The results of interim periods are not necessarily  indicative
               of results to be  expected  for the year.  In the  opinion of the
               Company,  the  accompanying   consolidated  financial  statements
               reflect all adjustments (which are normal recurring  adjustments)
               necessary for a fair  presentation of the results for the interim
               period  and the  comparable  period  presented.  These  condensed
               financial  statements do not purport to be full presentations and
               do not include all  requirements  in  accordance  with  generally
               accepted  accounting  principles,  but  include  all  information
               required by the instructions to Form 10-QSB.

               The information  included in this quarterly report on Form 10-QSB
               should  be  read  in  conjunction  with  the  audited   financial
               statements  as of  September  30,  1996,  filed  as  part  of the
               Company's annual report on Form 10-KSB.

Note 2.        Disposition of business segment in December 1996. The Board of
               Directors   approved  a  plan  of  dissolution   for  the  Love's
               restaurant chain. The Company originally estimated  approximately
               $900,000  of  disposal  and wind down  costs.  During the quarter
               ended June 29, 1997, Management changed its estimate on the costs
               of  disposal  and   wind-down   based  on   agreements   to  sell
               substantially all assets of Love's  Enterprises,  Inc, except for
               the international  rights of Love's trademark,  which the Company
               intends  to  retain.  Pursuant  to the  change in  estimate,  the
               Company recorded a gain of  approximately  $287,000 to revise the
               reserve  required to wind-down and dispose of Love's  Enterprises
               and its assets.

Note 3.        In  February  1997,  the  Company  entered  into a  financing
               agreement  with  United  Leisure  Corporation  ("ULC"),  a public
               company and an affiliate  of the  Company,  whereby ULC agreed to
               provide  advances  to the  Company  from  time to time,  during a
               period  of  six  months,  of up to  $1,250,000.  Interest  on any
               amounts  advanced bears interest at the rate of 8% per annum. The
               full  principal  amount  and  accrued  interest  on  any  amounts
               advanced is payable on September 30, 1997. In  consideration  for
               making the loan,  the Company  issued 75,000 shares of its common
               stock to ULC. If the loan is not paid by the maturity  date,  the
               Company has agreed to issue an  additional  25,000  shares of its
               common stock to ULC. As of June 29, 1997 the Company had borrowed
               an  aggregate of $775,000  under this  financing  agreement.  The
               Chairman of the Board,  President and Chief Executive  Officer of
               the  Company  is the  Chairman  of the Board and Chief  Executive
               Officer of ULC. The Chief Financial Officer of the Company is the
               Chief Financial officer of ULC.

Note 4.        In May 1997,  the Company  entered into a financing  agreement
               with United Film Distributors,  Inc. ("UFD"), an affiliate of the
               Company,  whereby  UFD agreed to provide  advances to the Company
               from  time  to  time.  Interest  on any  amounts  advanced  bears
               interest  at the  rate of  prime  plus  3% per  annum.  The  full
               principal  amount and accrued interest on any amounts advanced is
               payable on demand.  As of June 29, 1997 the Company had  borrowed
               an  aggregate of $337,542  under this  financing  agreement.  The
               Chairman of the Board,  President and Chief Executive  Officer of
               the  Company  is the  Chairman  of the Board and Chief  Executive
               Officer of UFD.





                                       7
<PAGE>
<TABLE>
<CAPTION>
Note 5.        The Company's inventory at June 29, 1997 consisted of the
               following:
               <S>                                                           <C>

               Liqour products                                       $   137,977
               Food and other beverages                                   25,892
               Tobacco products                                          267,567
               Merchandise                                               304,300
                                                                   -------------
                                                                     $   735,736
                                                                   =============
</TABLE>

Note 6         In the  quarter  ended  June 29,  1997 the  Company  sold,  in
               private  placements  of its  securities,  an aggregate of 432,500
               shares of its common stock, and warrants to purchase an aggregate
               of 80,000 shares of its common stock,  for aggregate  proceeds to
               the  Company  of  approximately  $649,500.  See part II,  Item 2.
               "Changes in Securities."




                                       8
<PAGE>
Item 2.           Management's Discussion and Analysis
                  of Financial Condition and Results of Operations

                  This Quarterly Report on Form 10-QSB contains  forward-looking
statements. A forward-looking statement may contain words such as "will continue
to be," "will be," "continue to," "expect to,"  "anticipates  that," "to be," or
"can impact." Management cautions that forward-looking statements are subject to
risks and uncertainties  that could cause the Company's actual results to differ
materially from the those projected in forward-looking statements.

                  Grand  Havana  Enterprises,  Inc.,  formerly  known as  United
Restaurants Inc., and its subsidiaries (collectively,  the "Company") is engaged
primarily in the business of the ownership, operation and development of private
membership restaurants and cigar clubs and of retail cigar stores. The Company's
private membership  restaurant and cigar clubs are known as "Grand Havana Rooms"
("GHR"), and the Company's retail cigar stores,  specializing in premium cigars,
humidors,  cigar accessories and merchandise are known as "Grand Havana House of
Cigars"  ("GHHC").  The Beverly Hills GHR opened in June 1995, the Washington DC
GHR and GHHC  opened in March  1997,  the New York GHR  opened in May 1997.  Two
additional  GHHC's are  scheduled  to open in late 1997,  one in Beverly  Hills,
adjacent to the Company's On Canon  restaurant and one in Las Vegas in the lobby
of Bally's  Hotel and Casino.  In  addition,  the Company  has an  agreement  to
operate a Cigar kiosk in the Las Vegas Hilton.  The Company  intends to actively
pursue the  operation  of its  existing  Grand  Havana  Room  locations  and the
development  of  additional  GHR and  GHHC  locations  in  major  cities  as its
principal business focus.

                  On May 27,  1993,  soon after its  incorporation,  the Company
acquired all of the issued and outstanding shares of the capital stock of Love's
Enterprises,  Inc.  ("Love's"),  which has been in  business  since the  1950's.
During the quarter  ending June 29, 1997,  the company  owned and operated  four
Love's   restaurants,   and  is  the  franchisor  of  an  additional  10  Love's
restaurants.   In  December  1996,   the  Company   adopted  a  formal  plan  of
discontinuance of its Love's  subsidiary.  During the quarter,  the company sold
one Love's restaurant, and a second Love's restaurant is expected to sell in mid
to late  August  1997.  In July 1997,  the  Company  entered  escrow to sell the
remaining  two  Company-owned  restaurants  and domestic  franchise  rights to a
private  company  controlled by a  restaurateur.  The only Love's related assets
which the Company intends to retain are the  international  licensing  rights to
the Love's restaurants.

                  In April  1995,  the  Company  opened  "On  Canon," an upscale
Italian restaurant and bar, in Beverly Hills, California,  which it continues to
operate.  In June of 1994 the  Company  acquired  85% of the  stock of Il Forno,
Inc., which owns and operates an Italian restaurant in Santa Monica, California.
On  September  20, 1996,  the Company  sold its 85% interest  back to Il Forno's
former owners.

                  The  Company is  developing  a plan to market its own label of
premium  cigars.  The  Company  is  actively  seeking  other  sources of revenue
including, but not limited to, licensing GHR, GHHC and Loves internationally.






                                       9
<PAGE>

Results of Operations - Three Months Ended June 29, 1997, Compared to Three
Months Ended June 30, 1996

                  The Company  derives  revenues from three  principal  sources:
food and beverage  sales,  merchandise  sales and  membership  fees.  During the
quarter ended June 29, 1997,  the Company was operating the On Canon  Restaurant
and three Grand  Havana  Rooms.  During the  quarter  ended June 29,  1996,  the
Company was operating the Il Forno Restaurant,  the On Canon Restaurant, and one
Grand Havana Room. The operation of Love's was discontinued and accordingly, its
results of operations  for the quarter ended June 29, 1997 and June 30, 1996 are
shown  under  "Discontinued   operations"  in  the  accompanying  statements  of
operations.

                  The Company  experienced net loss of $(274,108) in the quarter
ended June 30, 1996 compared to net income of $200,228 in the quarter ended June
30, 1997. However, without a one-time recognition of a $600,000 territory rights
fee for the use of GHR's territorial rights in the Far East, the loss would have
been  $(399,772)  for  the  quarter  ended  June  30,  1997.  In both  years,  a
significant  portion of the negative operating results were due to the corporate
overhead   required  to  manage  the  further   expansion  of  GHR's  and  GHHC.
Furthermore,  in the  quarter  ended  June 29,  1997,  the  Company  charged  to
operations the opening costs  associated with its New York GHR of  approximately
$166,550.

                  During the three  months  ended  June 29,  1997,  the  Company
recorded  revenues of  $1,944,258,  compared to  revenues of  $1,286,420  in the
quarter ended June 30, 1996, an increase of $657,838.  The increase is primarily
attributable  to increased  membership fees of $328,725 due to the operations of
GHR's in New York and  Washington,  D.C.  during  this  quarter  and a  one-time
$600,000  licensing  fee for GHR in the far east.  The Company had a decrease of
revenues from food and beverage sales of approximately $300,000 from the quarter
ended June 30, 1996 compared to the quarter ended June 29, 1997 due primarily to
the sale of the Il Forno restaurant in September 1996.

                  Company costs and expenses  increased from  $1,392,779 for the
fiscal  quarter ended June 30, 1996 to $2,001,655  for the fiscal  quarter ended
June 29,  1997,  or an  increase  of  $608,876.  This  increase in costs was due
primarily to GHR's,  higher general and  administrative  costs and store opening
costs  associated  with the opening and management of GHR and GHHC in Washington
DC and New York.  Food and beverage  costs as a percentage  of sales were higher
due to the  concentration  of the Company's  efforts on more expensive,  service
intensive  locations  such as its On  Canon  and GHR  locations  and  membership
efforts for the two newer GHR's..

Results of Operations -- Nine Months Ended June 29, 1997, Compared to Nine
Months Ended June 30, 1996

                  The Company had  revenues  of  $3,776,738  for the nine months
ended June 29, 1997,  compared to $4,150,784  for the nine months ended June 30,
1996, a decrease of  $374,046.  This  decrease in revenues was due  primarily to
decreased  food  and  beverage  sales  as a  result  of the sale of the Il Forno
restaurant, which was sold in September 1996. This decrease was offset by higher
licensing and membership fee revenues from the Company's new GHR's.

                  The Company  experienced  a net loss of  $(1,289,282)  for the
nine months  ended June 29, 1997  compared to a net loss of  $(563,874)  for the
nine months ended June 30,  1996,  or an  increased  loss of $725,408.  However,
without a one-time  recognition of $200,000  territory rights fee for the use of
Love's  trademarks in the Far East, the loss would have been  $(763,874) for the
nine month period ended June 30,  1996.  With a one-time  charge of $587,306 for
loss on disposal of Love's  restaurant,  the loss would have been $(701,976) for
the nine months ended June 29, 1997. In both years, a significant portion of the
negative operating results were due to the corporate overhead required to manage
the  further  expansion  of two  GHR's and one GHHC and  costs  associated  with
opening of new facilities.

                  Company  costs and  expenses  were  lower due to fewer  stores
offset by higher  general  and  administrative  costs  and store  opening  costs
associated  with  the  opening  and  management  of the  newest  GHR and GHHC in
Washington  DC. Food and beverage costs as a percentage of sales were higher due
to the  concentration  of the  Company's  efforts  on  more  expensive,  service
intensive  locations  such as its On Canon and GHR  locations  versus  its lower
costing, family oriented Loves restaurants.  Other store-level operating expense
decreases were in line with decrease in sales and stores.


Liquidity and Capital Resources

                  The Company intends to continue the expansion of its business,
primarily through the development and operation of additional Grand Havana Rooms
and GHHC's.

                  At March  30,  1997  the  Company  had  borrowed  $775,000  in
principal amount under its financing agreement with United Leisure  Corporation,
which amount,  together with interest  thereon,  is due September 30, 1997.  See
Note 3 to "Notes to Consolidated Financial Statements." In addition, pursuant to
an agreement  dated September 10, 1996,  United Leisure  Corporation has pledged
collateral  to support a letter of credit  required by the Company in the amount
of $875,000  which  amount the Company is to replace in full by March 1998.  The
September 10, 1996 agreement also provided that the Company would apply one-half
of all its initial  membership  fees received from members of its New York,  New
York and Washington D.C. GHR's to replace collateral pledged by ULC.  Subsequent
to the quarter  ended June 29,  1997,  ULC and the  Company  agreed to amend the
September 10, 1996 agreement.  Pursuant to the amendment, the Company agreed, in
consideration for allowing the Company to forego the requirement that it replace
collateral out the membership  fees it receives from its New York and Washington
D.C.  GHR's,  to grant to ULC or its designee a  three-year  warrant to purchase
150,000  shares of the common stock of the Company  exercisable at the lessor of
$0.75 per share or 75% of the average  trading  price of the common  stock for a
ten day period prior to the exercise of the warrant.  The Chairman of the Board,
President  and Chief  Executive  Officer of the  Company is the  Chairman of the
Board, President and Chief Executive Officer of United Leisure Corporation.

                  In May 1997,  the Company  entered into a financing  agreement
with  United  Film  Distributors,  Inc.  ("UFD")  whereby  UFD agreed to provide
advances  to the  Company  from  time to time.  Interest  on any  amounts  bears
interest at the rate of prime plus 3% per annum.  The full principal  amount and
accrued  interest on any amounts  advanced is payable on demand.  As of June 29,
1997 the Company had  borrowed an  aggregate  of $337,542  under this  financing
agreement.  The Chairman of the Board,  President and Chief Executive Officer of
the Company is the Chairman of the Board and Chief Executive Officer of UFD.

                  As a result of its expansion activities, the Company's working
capital has  continually  been reduced.  At June 29,1997 the Company had cash or
cash equivalents of $227,529 and a working capital deficit of ($1,248,120).  The
Company  anticipates  that in connection with its  development  plans during the
next 12 months of operations,  the Company will require  additional funds, which
the  Company  may raise  through  a private  placement  of  securities,  sale of
discontinued operations (Love's), collection of accounts receivables on sales of
foreign  territories  (approximately  $300,000  is due at June  29,  1997 and is
expected to be collected in April 1998) or additional borrowings from affiliates
or  non-affiliates.  In this  regard,  since the end of its  fiscal  year  ended
September  30, 1996 through June 29, 1997 the Company has raised an aggregate of
$2,440,550  in proceeds  from  private  placements  and  exercising  of warrants
offered  in  private  placements.  Although  management  believes  that with its
current working capital,  the funds to be raised in future private placements of
the Company's securities,  and the monies to be received from additional initial
membership fees at its Grand Havana Rooms, the Company will be able to repay its
debts to the United Leisure  Corporation and United Film  Distributors,  operate
its present  business,  and fund the future  development  of its business for at
least the next 12 months,  however,  there can be no assurance that this will be
the case.  There can be no  assurance  that the Company  will be able to acquire
additional  financing,  or that if such financing is available,  that it will be
available to the Company on acceptable terms. The Company's  management believes
that funds  spent on the  Company's  development  activities  will accrue to the
Company's benefit in future years.

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PART II  - OTHER INFORMATION


Item 2.           Changes in Securities

                  In April 1997 the Company sold an aggregate of 270,000  shares
of its common stock to a total of 5 investors  at a purchase  price of $1.50 per
share for aggregate proceeds of $405,000.

                  In May 1997 the  Company  sold an  aggregate  of 12,500 share
of the  common  stock to 2  investors  for  aggregate proceeds to the Company
of $19,500.

                  In June 1997 the Company sold to one investor  150,000  shares
of common  stock and  warrants  to  purchase  80,000  share of common  stock for
aggregate proceeds to the Company of $225,000. Each warrant is exercisable until
June 4, 2001 at an exercise price of $1.50 per share of common stock.

                  Each  of the  forgoing  offerings  was  made  directly  by the
officers  and  directors  of  the  Company  and  no  underwriting  discounts  of
commissions were paid. Each of the foregoing transactions was exempt pursuant to
Section  4(2)  of the  Securities  Act of  1933,  as  amended  for  issuance  of
securities not involving any public offering.

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Item 6.           Exhibits and Reports on Form 8-K

Exhibits
(27)                 Financial Data Schedule

Reports on Form 8-K
The  Company  filed no reports  on Form 8-K  during  the period  covered by this
Quarterly Report on Form 10-SQB.


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                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                                 Grand Havana Enterprises, Inc.


Dated:   August 11, 1997                     By: /s/ Harry Shuster
      ---------------------                      ----------------------
                                                 Harry Shuster,
                                                 Chairman of the Board and Chief
                                                 Executive Officer

Date:    August 11, 1997                     By: /s/ David M. Kane
     ----------------------                      ----------------------
                                                 David M. Kane,
                                                 Chief Financial Officer

                                       13
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