<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                  FORM 10-QSB

(Mark One)

[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
    Act of 1934

                For the quarterly period ended June 24, 2001.

                                      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.
            (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, 3rd Floor
       Los Angeles, California                                  90025
(Address of Principal 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 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 practicable date.

      Class                                   Outstanding as of August 1, 2001
      -----                                   --------------------------------
  Common Stock, par                                  14,174,306 shares
value $.01 per share

Transitional Small Business Disclosure Format (check one):

                             YES [_]       NO [X]

<PAGE>

                               TABLE OF CONTENTS
                               -----------------

                                    PART I

                             FINANCIAL INFORMATION

                                                                            Page
                                                                            ----
Item 1.   Financial Statements                                              3-7

Item 2.   Management's Discussion and Analysis or Plan of                   8
          Operation.


                                    PART II

                               OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K.                                 12

                                       2
<PAGE>

                         PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                    June 24,           September 24,
                                                                                      2001                 2000
                                                                                ------------------   ------------------
                                                                                   (unaudited)
<S>                                                                             <C>                  <C>
                                   ASSETS

CURRENT ASSETS
   Cash and cash equivalents                                                            $ 125,873             $ 97,161
   Accounts receivable, net                                                               118,375               73,098
   Short-term note receivable                                                                   -              115,000
   Inventories                                                                            384,569              395,545
   Prepaid expenses                                                                       113,899              133,438
                                                                                ------------------   ------------------

      TOTAL CURRENT ASSETS                                                                742,715              814,242
                                                                                ------------------   ------------------

PROPERTY AND EQUIPMENT, net of accumulated depreciation                                 3,111,783            3,356,589

OTHER ASSETS
   Restricted cash                                                                        908,969              895,729
   Due from related parties                                                                62,430              158,875
   Deposits and other assets                                                               41,906               51,666
                                                                                ------------------   ------------------

      TOTAL OTHER ASSETS                                                                1,013,304            1,106,270
                                                                                ------------------   ------------------

                                   TOTAL                                              $ 4,867,802          $ 5,277,101
                                                                                ==================   ==================

                    LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
   Notes payable to related parties                                                   $ 1,488,246          $ 1,554,654
   Bank overdraft                                                                         410,513              248,403
   Accounts payable                                                                       712,433              854,631
   Accrued liabilities                                                                    347,854              264,941
   Due to lessor for release of lease obligation                                          110,000                    -
   Deferred revenues                                                                      220,825              321,391
   Due to related parties                                                               1,702,972            1,679,915
   Deferred rent payable                                                                  538,805              505,913
   Other current liabilities                                                               23,308               23,308
                                                                                ------------------   ------------------

      TOTAL CURRENT LIABILITIES                                                         5,554,954            5,453,156
                                                                                ------------------   ------------------

STOCKHOLDERS' DEFICIT
   Preferred stock, $.01 par value; authorized - 3,000,000 shares; issued and
      outstanding - none
   Common stock, $.01 par value; authorized -
      50,000,000 shares; issued and outstanding -
      14,174,306 shares in 2000 and 1999                                                  141,744              141,744
   Additional paid-in capital                                                          13,279,044           13,279,044
   Accumulated deficit                                                                (14,107,940)         (13,596,843)
                                                                                ------------------   ------------------

      TOTAL STOCKHOLDERS' DEFICIT                                                         (687,152)            (176,055)
                                                                                ------------------   ------------------

                                   TOTAL                                              $ 4,867,802          $ 5,277,101
                                                                                ==================   ==================
</TABLE>

    See accompanying Notes to Condensed Consolidated Financial Statements

                                       3
<PAGE>

                GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
                                                          Nine Months Ended                          Three Months Ended
                                                   June 24,              June 25,             June 24,               June 25,
                                                     2001                  2000                 2001                   2000
                                               ------------------    ------------------   ------------------    -------------------
                                                  (unaudited)           (unaudited)          (unaudited)            (unaudited)
<S>                                            <C>                   <C>                  <C>                   <C>
REVENUES
   Food and beverage                                 $ 2,290,870           $ 2,448,298            $ 683,629              $ 778,395
   Merchandise sales                                     438,649               496,455              132,246                148,250
   Membership fees                                     1,544,419             1,490,642              521,094                530,628
   Club activities/Private events                        701,868               559,600              141,510                142,866
                                               ------------------    ------------------   ------------------    -------------------

      TOTAL REVENUES                                   4,975,806             4,994,995            1,478,479              1,600,139
                                               ------------------    ------------------   ------------------    -------------------

COSTS AND EXPENSES
   Food and beverage                                     857,044               847,804              272,973                285,685
   Merchandise                                           231,251               242,727               73,702                 68,075
   Operating expenses
      Direct labor and benefits                        1,577,858             1,558,104              508,134                534,653
      Occupancy and other                              1,668,467             1,782,281              566,169                573,472
   General and administrative                            421,854               312,309              135,997                134,062
   Depreciation and amortization                         333,958               336,857              111,462                112,624
                                               ------------------    ------------------   ------------------    -------------------

      TOTAL COSTS AND EXPENSES                         5,090,432             5,080,082            1,668,437              1,708,571
                                               ------------------    ------------------   ------------------    -------------------

LOSS BEFORE OTHER INCOME (EXPENSE)                       (114,625)              (85,087)            (189,957)              (108,432)
                                               ------------------    ------------------   ------------------    -------------------

OTHER INCOME (EXPENSE)
   Interest income                                        36,727                34,904               12,308                 10,590
   Interest expense                                     (173,199)             (168,853)             (56,934)               (55,162)
   Expense from release of lease obligation             (260,000)                    -                    -                      -
                                               ------------------    ------------------   ------------------    -------------------

TOTAL OTHER INCOME (EXPENSE)                            (396,472)             (133,949)             (44,626)               (44,572)
                                               ------------------    ------------------   ------------------    -------------------

NET LOSS                                              $ (511,097)           $ (219,036)          $ (234,583)            $ (153,004)
                                               ==================    ==================   ==================    ===================

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                           14,174,306            14,174,306           14,174,306             14,174,306

BASIC AND DILUTED LOSS PER SHARE                         $ (0.04)              $ (0.02)             $ (0.02)               $ (0.01)
                                               ==================    ==================   ==================    ===================
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements

                                       4
<PAGE>

                GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
                                                                                                      Nine Months Ended
                                                                                               June 24,              June 25,
                                                                                                 2001                  2000
                                                                                           ------------------    ------------------
                                                                                              (unaudited)           (unaudited)
<S>                                                                                        <C>                   <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                                                       $ (511,097)           $ (219,036)
   Adjustments to reconcile net loss to net cash used in
    operating activities:
      Depreciation and amortization                                                                  333,958               224,233
      Expense from release of lease obligation                                                       260,000                     -
      Changes in operating assets and liabilities:
         Accounts receivable                                                                         (45,277)              (90,966)
         Inventories                                                                                  10,976                  (231)
         Prepaid expenses                                                                             19,539                39,203
         Accounts payable and other accrued liabilities                                              (71,228)              (21,516)
         Deferred revenues                                                                          (100,566)               23,900
         Deferred rent payable                                                                        32,892                76,834
                                                                                           ------------------    ------------------

         NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                         (70,804)               32,421
                                                                                           ------------------    ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of property and equipment                                                               (89,151)              (29,947)
   Due from related parties                                                                           96,445                (8,363)
   Deposits and other assets                                                                           9,760                     -
   Restricted cash                                                                                   (13,240)              (60,391)
                                                                                           ------------------    ------------------

         NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                           3,814               (98,701)
                                                                                           ------------------    ------------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Bank overdraft                                                                                    162,110               (54,727)
   Due from related parties                                                                          (66,408)                    -
                                                                                           ------------------    ------------------

        NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES                                           95,701               (54,727)
                                                                                           ------------------    ------------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                  28,712              (121,007)

CASH AND CASH EQUIVALENTS, beginning of period                                                        97,161                94,523
                                                                                           ------------------    ------------------

CASH AND CASH EQUIVALENTS, end of period                                                           $ 125,873             $ (26,484)
                                                                                           ==================    ==================
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements

                                       5
<PAGE>

                GRAND HAVANA ENTERPRISES, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)


1.  BASIS OF PRESENTATION

    The interim condensed consolidated financial statements presented have been
    prepared by Grand Havana Enterprises, Inc. (the "Company") without audit,
    and in the opinion of the management, reflect all adjustments of a normal
    recurring nature necessary for a fair statements of (a) the consolidated
    results of operations for the nine and three months ended June 24, 2001 and
    June 25, 2000, (b) the consolidated financial position at June 24, 2001 and
    September 24, 2000, and (c) the consolidated cash flows for the nine months
    ended June 24, 2001 and June 25, 2000. Interim results are not necessarily
    indicative of the results for a full year.

    The consolidated balance sheet presented as of September 24, 2000 has been
    derived from the consolidated financial statements that have been audited by
    the Company's independent auditors. The consolidated financial statements
    and notes are condensed as permitted by Form 10-QSB and do not contain
    certain information included in the annual financial statements and notes of
    the Company. The consolidated financial statements and notes included herein
    should be read in conjunction with the financial statements and notes
    included in the Company's Annual Report on Form 10-KSB.

2.  RECLASSIFICATIONS

    Certain fiscal year ending 2000 balances have been reclassified to conform
    to 2001 presentation.

3.  RELATED PARTY TRANSACTIONS

    On September 30, 1998, United Leisure Corporation, a publicly-held company
    located in Irvine, California ("United Leisure") agreed to make a new
    installment loan to the Company in the amount of up to $1,250,000 in
    replacements of the previous loan between United Leisure and the Company.
    The Company executed a Secured Promissory Note date September 30, 1998 (the
    "Promissory Note"). The Promissory Note was secured by a first lien security
    interest in certain collateral. The Promissory Note's due date was extended
    to be on demand. On January 31, 2001, United Leisure assigned the Promissory
    Note to Harry Shuster, former Chairman of the Board, President, Chief
    Executive Officer and director of the Company. The President of United
    Leisure is Brian Shuster, the son of Harry Shuster and the brother of
    Stanley Shuster, the current Chairman of the Board, President, Chief
    Executive Officer, Chief Financial Officer, Executive Vice President,
    director and principal stockholder of the Company. The Company entered into
    a new amended promissory note (the "Amended Note"), with Harry Shuster for
    $740,245.71, which included all accrued interest from the Promissory Note,
    and the Amended Note bears interest at 10% per annum. The Amended Note is
    due and payable on October 1, 2003. Since the inception of the Amended Note,
    the Company paid $100,000 in principal and $27,268 in interest to Harry
    Shuster. On June 24, 2001, the Company owed an aggregate of $640,245.71.

    Notes Payable to Related Parties: Notes payable to related parties at June
    24, 2001 and September 24, 2000 consisted of principal amounts due to the
    following:

<TABLE>
<CAPTION>
                                                          2001                  2000
                                                    ------------------    ------------------
    <S>                                             <C>                   <C>
    Harry Shuster                                           $  300,000            $  300,000
    Harry Shuster                                              640,246                     -
    United Leisure Corporation                                       -               682,154
    United Film Distributors, Inc.                             489,000               507,000
    Stanley Shuster                                             59,000                65,500
                                                    ------------------    ------------------
                                                            $1,488,246            $1,554,654
                                                    ==================    ==================
</TABLE>

                                       6
<PAGE>

    Due from Related Parties: Due from related parties at June 24, 2001 and
    September 24, 2000 consisted of the following:

<TABLE>
<CAPTION>
                                                                            2001                  2000
                                                                      ------------------    ------------------
    <S>                                                               <C>                   <C>
    Harry Shuster                                                                $50,171              $ 48,616
    United Leisure Corporation                                                    12,208                96,576
    Hit Entertainment                                                                  -                 4,074
    United Film Distributors, Inc.                                                     -                 6,032
    1990 Westwood Blvd, Inc.                                                           -                 3,526
    Medical Monitors                                                                  51                    51
                                                                      ------------------    ------------------
                                                                                 $62,430              $158,875
                                                                      ==================    ==================
</TABLE>

    Due to Related Parties: Due to related parties at June 24, 2001 and
    September 24, 2000 consisted of the following:

<TABLE>
<CAPTION>
                                                                           2001                  2000
                                                                      ------------------    ------------------
    <S>                                                               <C>                   <C>
    Advances from Harry Shuster                                               $  744,869            $  744,869
    Accrued health insurance premiums and
      interest expense to United Leisure                                               -               142,903
    Accrued interest expense to United Film Distributors, Inc.                   213,931               183,484
    Accrued consulting fees and interest expense to
      Harry Shuster                                                              605,052               482,339
    Accrued rent to 1990 Westood Blvd                                            139,120               126,320
                                                                      ==================    ==================
                                                                              $1,702,972            $1,679,915
                                                                      ==================    ==================
</TABLE>

4.  RELEASE OF LEASE OBLIGATION

    On August 25, 2000, the Company filed a lawsuit in the Superior Court of the
    District of Columbia against Thursdays Restaurant Group, L.L.C.
    ("Thursdays") after Thursdays failed to timely pay the principal in the
    amount of $115,000 plus accrued interest on a promissory note. Thursdays
    issued the promissory note to the Company in connection with the sale of the
    Company's Washington D.C. operations to Thursdays which included a sublease
    on the premises formerly occupied by the Company. The Superior Court entered
    a judgment against Thursdays on January 17, 2001. On February 1, 2001, the
    Company obtained a writ of attachment against Thursdays that was
    subsequently served on Thursdays. Pursuant to the writ of attachment, the
    Company garnished certain of Thursdays' accounts and obtained approximately
    $12,500. On or around March 30, 2001, Thursdays vacated the premises
    occupied pursuant to the sublease. As a result of Thursdays departure and
    failure to pay rent, the landlord of the premises indicated that the Company
    would remain liable under the lease agreement for the premises. In order to
    settle its liability for Thursdays' failure to pay rent, additional rent and
    other lease obligations, the Company reached an agreement with the landlord
    whereby, in exchange for a full release, the Company assigned its right in
    the judgment against Thursdays to the landlord, transferred $12,500 of
    garnished funds to the landlord, and agreed to pay $145,000 to the landlord
    ($25,000 upon execution of the agreement with monthly payments of $10,000
    until the full amount is paid, without interest on amounts outstanding).

                                       7
<PAGE>

ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

     The following discussion should be read in conjunction with the Company's
consolidated financial statements and the notes thereto appearing elsewhere in
this Quarterly Report on Form 10-QSB. Certain statements contained herein that
are not related to historical results, including, without limitation, statements
regarding the Company's business strategy and objectives, future financial
position and estimated cost savings, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and section 21E of the Securities Exchange Act, as amended
(the "Exchange Act"), and involve risks and uncertainties. Although the Company
believes that the assumptions on which these forward-looking statements are
based are reasonable, there can be no assurance that such assumptions will prove
to be accurate and actual results could differ materially from those discussed
in the forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, risks and uncertainties
associated with the ability to obtain adequate working capital on terms
favorable to the Company, compliance with regulatory requirements, the Company's
ability to sell more memberships, a decline in public consumption of cigars and
other tobacco products, significant increases in excise taxes which could
substantially increase the price of cigars and general economic factors. All
forward-looking statements contained in the Quarterly Report on Form 10-QSB are
qualified in their entirety by this statement.

     Grand Havana Enterprises, Inc. (the "Company" or "Registrant") is engaged
in the business of the ownership and operation of private membership restaurants
and cigar clubs known as "Grand Havana Rooms," and in the ownership and
operation of retail cigar stores known as "Grand Havana House of Cigars." Unless
the context otherwise indicates, the "Company" means Grand Havana Enterprises,
Inc. and its consolidated subsidiaries.

     The Company currently owns and operates two Grand Havana Rooms, one in
Beverly Hills, California, which opened in June 1995 and one in New York, New
York, which opened in May 1997. The Company formerly operated a third Grand
Havana Room and House of Cigars in Washington, D.C. That location was closed in
February 1999 and substantially all of the assets were sold. In addition, the
Company currently owns and operates two Grand Havana House of Cigars locations,
one in Beverly Hills, California, which opened in December 1997 and one in Las
Vegas, Nevada, which opened in November 1997. The Company's primary business
focus is on operating its existing cigar clubs and retail stores.

                                       8
<PAGE>

     For the quarter ended June 24, 2001, the Company had a net loss of
($234,583) compared to a net loss of ($153,004) for the fiscal quarter ended
June 25, 2000. This is primarily due to a reduction in revenue, resulting from
the general economic slowdown.

     The two House of Cigars locations are still experiencing operating losses.
The Las Vegas House of Cigars location had an operating loss of ($25,837) for
the quarter ended June 24, 2001, as compared to ($9,949) for the quarter ended
June 25, 2000. The Beverly Hills House of Cigars had an operating loss of
($2,688) for the quarter ended June 24, 2001, as compared to an operating loss
of ($5,021) for the quarter ended June 25, 2000.

     The Company was incorporated under the laws of the State of Delaware on
April 13, 1993 under the name "United Restaurants, Inc." The Company was
originally formed in order to acquire all of capital stock of Love's
Enterprises, Inc. ("LEI"), which company was the franchiser, owner and operator
of the Love's restaurant chain. The Company acquired the stock of LEI in May
1993. In December 1996, due to less than anticipated operating results from the
Love's restaurant chain, the Company adopted a plan of discontinuance with
respect to the Love's restaurant chain, which plan was completed in July 1998.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 24, 2001 COMPARED TO THREE MONTHS ENDED JUNE 25, 2000.

REVENUES

     The Company derives revenues from continuing operations from four principal
sources: (1) Sales of cigars and related merchandise, (2) membership fees, (3)
food and beverage sales, and (4) Private Events. During the fiscal quarter ended
June 24, 2001, the Company had revenues for $1,478,479 compared to revenues of
$1,600,139 for fiscal quarter ended June 25, 2000, a decrease of $121,660 or
approximately 7.6%. This decrease in revenues is primarily due to a decrease in
food and beverage sales.

     Membership Fees.  Revenue from membership fees decreased from $530,628 in
the fiscal quarter ended June 25, 2000 to $521,094 in the fiscal quarter ended
June 24, 2001, a decrease of $9,534 or approximately 1.8%.

     Merchandise Sales.  Revenue from merchandise sales decreased from $148,250
in the fiscal quarter ended June 25, 2000 to $132,246 in the fiscal quarter
ended June 24, 2001, a decrease of $16,004 or approximately 10.8%. This decrease
is principally due to the overall public decline in tobacco and other tobacco
products usage.

     Food and Beverage.  Revenue from food and beverage decreased from $778,395
in the fiscal quarter ended June 25, 2000 to $683,629 in the fiscal quarter
ended June 24, 2001, a decrease of $94,766 or approximately 12.2%. This decrease
is primarily due to the general economic slowdown.

     Private Events.  Revenue from private events decreased from $142,866 in the
fiscal quarter ended June 25, 2000 to $141,510 in the fiscal quarter ended June
24, 2001, a decrease of $1,356 or approximately 0.9%.

COSTS AND EXPENSES

During the fiscal quarter ended June 24, 2001 the Company incurred total costs
and expenses of $1,668,437 compared to $1,708,571 for the fiscal quarter ended
June 25, 2000, a decrease of $40,134 or approximately 2.3%.

                                       9
<PAGE>

     Food and Beverage.  During the quarter ended June 24, 2001, food and
beverage expenses were $272,973, a decrease of $12,712 or 4.4% over food and
beverage expenses for the quarter ended June 25, 2000. This decrease was
attributable to reduction in food and beverage sales. The Company also closed
its kitchen in Beverly Hills at the end of January 2001, and entered into a
contract with Mistral's Brasserie L.L.C. to provide food for the club. The
contract calls for food costs to be 72% of sales.

     Merchandise.  During the quarter ended June 24, 2001, merchandise expenses
were $73,702 an increase of $5,627 or 8.3% over merchandise expenses for the
quarter ended June 25, 2000. This increase was due to increase in cost of
merchandise.

     Operating Expenses.  During the quarter ended June 24, 2001, operating
expenses were $1,074,304, a decrease of $33,821 or 3.1% over operating expenses
for the quarter ended June 25, 2000. This decrease was attributable the
reduction of complimentary meals in New York and Beverly Hills, and the
elimination of outside consultants in New York.

     Depreciation and Amortization.  Depreciation and amortization expenses
decreased by approximately 1.0% from $112,624 in the fiscal quarter ended June
25, 2000 to $111,462 in the fiscal quarter ended June 24, 2001.

     General and Administrative.  General and administrative expenses increased
by approximately 1.4% from $134,062 in the fiscal quarter ended June 25, 2000 to
$135,997 in the fiscal quarter ended June 24, 2001.

NET LOSS

     The Company experienced a net loss of ($234,583) or ($0.017) per share for
the fiscal quarter ended June 24, 2001, compared to a net loss of ($153,004) or
($0.011) per share for fiscal quarter ended June 25, 2000, an increase of
$84,291 or approximately 55.1%.

NINE MONTHS ENDED JUNE 24, 2001 COMPARED TO NINE MONTHS ENDED JUNE 25, 2000.

REVENUES

     During the nine months ended June 24, 2001, the Company had revenues of
$4,975,806 compared to revenues of $4,994,995 for the nine months ended June 25,
2000, a decrease of ($19,189) or approximately 0.4%. This decrease in revenues
is primarily due to the general economic slowdown.

     Membership Fees. Revenue from membership fees increased from $1,490,642 in
the nine months ended June 25, 2000 to $1,544,419 in the nine months ended June
24, 2001, an increase of 53,777 or approximately 3.6%.

     Merchandise Sales. Revenue from merchandise sales decreased from $496,455
in the nine months ended June 25, 2000 to $438,649 in the nine months ended June
24, 2001, a decrease of $57,806 or approximately 11.6%.

     Food and Beverage. Revenue from food and beverage decreased from
$2,448,298, in the nine months ended June 25, 2000 to $2,290,870 in the nine
months ended June 24, 2001, a decrease of ($157,428) or approximately 6.4%. This
decrease is primarily attributable to the general economic slowdown.

     Private Events. Revenue from private events increased from $559,600 in the
nine months ended June 25, 2000 to $701,868 in the nine months ended June 24,
2001, an increase of $142,268 or approximately 25.4%. This increase was a result
of an increase in private parties, auctions, and the rental income from
Mistral's Brasserie, LLC.

COSTS AND EXPENSES

     During the nine months ended June 24, 2001 the Company incurred total costs
and expenses of $5,090,432 compared to $5,080,082 for the nine months ended June
25, 2000, an increase of $10,350 or approximately 0.2%.

                                      10
<PAGE>

     Food and Beverage. During the nine months ended June 24, 2001, food and
beverage expenses were $857,044, an increase of $9,240 or 1.1% over food and
beverage expenses for the nine months ended June 25, 2000.

     Merchandise. During the nine months ended June 24, 2001, merchandise
expenses were $231,251; a decrease of ($11,476) or 4.7% over merchandise
expenses for the nine months ended June 25, 2000. This decrease was attributable
to a decrease in merchandise sales.

     Operating Expenses.  During the quarter ended June 24, 2001, operating
expenses were $3,246,325, a decrease of $94,059 or 2.8% over operating expenses
for the nine months ended June 25, 2000. This decrease was attributable to
reduction in the kitchen staff in Beverly Hills, the reduction in complimentary
meals, and the elimination of outside consultants in New York.

     Depreciation and Amortization.  Depreciation and amortization expenses
decreased by approximately 0.9% from $336,857 in the nine months ended June 25,
2000 to $333,958 in the nine months ended June 24, 2001.

     General and Administrative.  General and administrative expenses increased
by approximately 35.1% from $312,309 in the nine months ended June 25, 2000 to
$421,854 in the nine months ended June 24, 2001. This increase is primarily due
to additional legal and banking expenses.

NET LOSS

     The Company experienced a net loss of ($511,097) or ($0.036) per share for
the nine months ended June 24, 2001, compared to a net loss of ($219,036) or
($0.015) per share for the nine months ended June 25, 2000, an increase of
$292,061 or 133.3%.

LIQUIDITY AND CAPITAL RESOURCES

     At June 24, 2001, the Company had cash or cash equivalents of $125,873.

     On August 15, 1998, Harry Shuster, former Chairman of the Board, President,
Chief Executive Officer and director of the Company and the father of Stanley
Shuster, the current Chairman of the Board, President, Chief Executive Officer,
Chief Financial Officer, Executive Vice President, director and principal
stockholder of the Company, agreed to lend the Company $300,000. The Company
delivered to Harry Shuster its secured promissory note dated August 15, 1998
(the "Shuster Note"). The Shuster Note bears interest at 10% per annum. Its due
date has been extended by agreement with Harry Shuster to on demand. The Shuster
Note is secured by a second lien security interest in certain collateral. As of
June 24, 2001, the entire principal amount of the Shuster Note, $300,000,
remained outstanding. As of June 24, 2001, the Company is indebted to Harry
Shuster in the amount of $1,044,869 for amounts due under the Shuster Note and
for advances made from time to time by Harry Shuster to the Company.

     On September 30, 1998, United Leisure Corporation, a publicly-held company
located in Irvine, California ("United Leisure") agreed to make a new
installment loan to the Company in the amount of up to $1,250,000 in
replacements of the previous loan between United Leisure and the Company. The
Company executed a Secured Promissory Note date September 30, 1998 (the
"Promissory Note"). The Promissory Note was secured by a first lien security
interest in certain collateral. The Promissory Note's due date was extended to
be on demand. On January 31, 2001, United Leisure assigned the Promissory Note
to Harry Shuster, former Chairman of the Board, President, Chief Executive
Officer and director of the Company. The President of United Leisure is Brian
Shuster, the son of Harry Shuster and the brother of Stanley Shuster, the
current Chairman of the Board, President, Chief Executive Officer, Chief
Financial Officer, Executive Vice President, director and principal stockholder
of the Company. The Company entered into a new amended promissory note (the
"Amended Note"), with Harry Shuster for $740,245.71, which included all accrued
interest from the Promissory Note, and the Amended Note bears interest at 10%
per annum. The Amended Note is due and payable on October 1, 2003. Since the
inception of Amended Note, $100,000 of the principal has been paid, and interest
in the amount

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<PAGE>

of $27,268 also has been paid to Harry Shuster. On June 24, 2001, the Company
owed an aggregate of $640,245.71.

     In addition, as of June 24, 2001, an aggregate of $489,000 in principal
amount remained outstanding under a financing agreement with United Film
Distributors, Inc., an affiliate of the Company, the full amount of which,
together with all accrued but unpaid interest thereon, is due and payable by the
Company on demand, which demand could not be made prior to November 1, 1998.
Stanley Shuster, the current Chairman of the Board, President, Chief Executive
Officer, Chief Financial Officer, Executive Vice President, director and
principal stockholder of the Company, is the brother of Brian Shuster, the
President of United Film Distributors, Inc.

     The Company believes that it will meet its working capital needs, in the
current fiscal year, from the operations of its Grand Havana Rooms and Grand
Havana House of Cigars locations. Due to the fact that the trading price of the
Company's Common Stock has remained low in the last twelve months and because it
is currently trading on the OTC Bulletin Board, the Company does not anticipate
that it will be able to sell its securities in private placements on terms that
are acceptable to the Company for the foreseeable future. If the Company is
unable to raise additional funds through private placement of its securities it
may seek financing from affiliated or unaffiliated third parties. There can be
no assurance, however, that such financing would be available to the Company
when and if it is needed, or that if available, that it will be available on
terms acceptable to the Company. If the Company is unable to obtain financing to
meet is working capital needs and to repay indebtedness as it becomes due, the
Company may have to consider such options as selling or pledging portions of its
assets in order to meet such obligations.

                          PART II  OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

    (a) Exhibits

        None.

    (b) Reports on Form 8-K

        No reports on Form 8-K were filed during the quarter ended June 24,
2001.

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<PAGE>

                                   SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.


                                             GRAND HAVANA ENTERPRISES, INC.



Date: August 6, 2001                         /s/ Stanley Shuster
                                             -----------------------------------
                                             Stanley Shuster
                                             Chairman, Chief Executive Officer,
                                             and Chief Financial Officer

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