<PAGE>   1
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                              --------------------
(MARK ONE)
[X]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)

                     FOR THE FISCAL YEAR ENDED JUNE 30, 1997

                                       OR

[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                         FOR THE TRANSITION PERIOD FROM:

                         COMMISSION FILE NUMBER: 0-14050

                                THE SANDS REGENT
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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

             NEVADA                                       88-0201135
   (State or other jurisdiction                        (I.R.S. Employer
 of incorporation or organization)                     Identification No.)

    345 NORTH ARLINGTON AVENUE
           RENO, NEVADA                                      89501
(Address of principal executive offices)                   (Zip Code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (702) 348-2200

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

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                          COMMON STOCK, $.05 PAR VALUE

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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

         The aggregate market value of the Registrant's $.05 par value Common
Stock held by non-affiliates of the Registrant on September 23, 1997 was
$5,320,149. The aggregate market value is computed with reference to the average
price per share on such date.

         Registrant's Common Stock outstanding at September 23, 1997 was
4,498,722 shares.

         Portions of Registrant's 1997 Annual Report to the Shareholders are
incorporated into Part II as set forth herein. Portions of Registrant's
definitive Proxy Statement for its November 3, 1997 Annual Meeting of
Shareholders are incorporated into Part III as set forth herein.


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                                     PART I

ITEM 1. BUSINESS

GENERAL
                                   THE COMPANY

         The Company, through a wholly-owned subsidiary, Zante, Inc. ("Zante"),
owns and operates the Sands Regency hotel/casino in downtown Reno, Nevada. The
Company, through three wholly-owned subsidiaries, Patrician, Inc. ("Patrician"),
Gulfside Casino, Inc. ("GCI") and Artemis, Inc., ("Artemis"), owns Gulfside
Casino Partnership (the "Partnership"), which owns the Copa Casino, a dockside
gaming vessel located in Gulfport, Mississippi. GCI, Patrician and Artemis own
60%, 39% and 1%, respectively, of the Partnership. Gaming operations for the
Copa Casino commenced in September 1993.

         Reno, Nevada. The Sands Regency hotel/casino has approximately 27,000
square feet of gaming space and 938 hotel rooms, including 32 suites of various
sizes. The complex also includes three restaurants, a Donut House, a "Pizza
Hut", and an "Arby's" restaurant, a "Baskin-Robbins" and an "Orange Julius"
operated by third parties. The facilities also include three cocktail lounges, a
gift shop, a beauty/barber shop and a liquor store, each operated by third
parties, a video arcade, a health club, a swimming pool and over 10,000 square
feet of convention and meeting space which can seat up to 650 people. The
Company maintains six parking areas on its main hotel/casino property and
adjacent to it, including two parking garages, with a total combined capacity
for approximately 1,000 vehicles. Although the Company offers, on a very limited
basis, complimentary hotel accommodations to select customers, no group
arrangements known as "junkets" are conducted.

         The average room occupancy for fiscal 1997 was 84.4% compared to 82.9%
for 1996. The hotel's average room rate for the current fiscal year was
approximately $29.00 as compared to $32.00 in the prior fiscal year.

         As of September 16, 1997, the casino offered 20 table games, including
13 blackjack tables, 1 caribbean stud table, 1 craps table, and 2 roulette
tables, 2 let it ride tables and 1 three-card poker table; 2 keno games and
approximately 684 slot machines. In connection with the supervision of its
gaming activities, the Company's policies include stringent controls,
cross-checks and recording of all receipts and disbursements.

         The Company's Reno, Nevada operations are conducted 24 hours a day,
every day of the year. The primary source of revenues and income to the Company
is its gaming activities, although the hotel, bars, shops, restaurants and other
services are an important adjunct to the gaming activities. The Company's
operating and marketing philosophy emphasizes high volume business, offering
large, attractive hotel rooms at reasonable prices to travel group wholesalers,
primarily from Western Canada, the Pacific Northwest and Northern California.
Gaming accounted for approximately 54% of the Company's revenues in fiscal 1997
and approximately 73% of the gaming revenues were generated by slot machines.
The Company generally does not extend credit to its gaming customers.

         As a result of adverse market conditions in 1996 and the uncertainty of
future market growth, the Company has cancelled its major expansion plans and
allowed its local governmental approvals to expire. In the near term, the
Company will concentrate its resources on renovating and improving existing Reno
facilities and services. Future expansion plans will be considered based upon
future market conditions and the need to add hotel rooms and other major
facilities.







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         Gulfport, Mississippi. In December 1992, the Company, through
Patrician, entered into a partnership agreement with GCI to develop and operate
a dockside gaming facility in Gulfport, Mississippi. Located approximately 75
miles from New Orleans, Louisiana and 70 miles from Mobile, Alabama, the
facility, known as the "Copa Casino," is a permanently moored 500-foot cruise
ship. Gaming operations commenced in mid- September 1993.

         On February 25, 1994, the Company acquired all of the outstanding stock
of GCI as well as certain advances to the Partnership previously due to an
affiliate of GCI. GCI's principal asset is its general partnership interest in
the Partnership. In April 1995, Artemis was formed as a wholly-owned subsidiary
of The Sands Regent and acquired a 1% ownership interest in the Partnership from
Patrician. The Company, through Patrician, GCI and Artemis, owns 100% of the
Partnership.

         Mississippi, which legalized casino gaming in September 1991, allows
for 24-hour gaming on riverboats or other floating vessels located on or
adjacent to approved navigable waterways. Such floating facilities need not
cruise into the waterways and, as such, become permanently moored as dockside
gaming facilities. Gulfport is a deep-water port located on U.S. Highway 90 on
the Mississippi gulf coast. A population of approximately 2.5 million resides
within a 100-mile radius, including New Orleans and Mobile. Interstate Highway
10, which is the main thoroughfare between Mobile and New Orleans, lies
approximately 10 miles to the north of the port area. The Gulfport-Biloxi
metropolitan area has over 7,000 hotel and motel rooms located in the immediate
Gulfport-Biloxi area.

         The Copa Casino consists of approximately 24,000 square feet of casino
space located on two decks. As of September 16, 1997, the Copa offered
approximately 735 slot machines and 26 table games, including craps, roulette,
blackjack, caribbean stud, let it ride, big six and three-card poker. In
addition, the facility also includes 4 cocktail lounges/bars, a deli-style
restaurant, a buffet restaurant, a gift shop and various ancillary services and
facilities. The deck below the two casino decks contains a surveillance area, a
vault, count rooms and security and various operations and administrative
offices. An additional three decks on the ship are available for future
expansion of gaming and dining facilities.

         The Copa Casino is permanently moored dockside at a location known as
the "Horseshoe Site." Such site, which is leased from the Mississippi Department
of Economic and Community Development and the Mississippi State Port Authority,
is between the East and West Piers of the Mississippi State Port in Gulfport,
Mississippi. This location, which includes 8.3 acres of land based facilities,
will accommodate surface parking for approximately 840 vehicles. The leased
facilities also include a docking structure which accommodates the Copa Casino
ship and will allow for mooring of additional vessels. The docking structure
also includes a roadway and pedestrian walk which provides access to the Copa
Casino entrance.

         As in Nevada, the Mississippi operations are conducted 24 hours a day
every day of the year. Present operations provide for the offering of
complimentary food and beverage on a limited basis. Group arrangements, known as
"junkets," are not conducted.


MARKETING

         Reno, Nevada. The central component of the Company's marketing
philosophy is to utilize travel wholesalers to attract group and air wholesale
business to the hotel/casino. This philosophy is based on offering attractive,
well-furnished, large hotel accommodations and quality food and beverages at
prices slightly lower than those of most major hotel/casinos in Reno. Management
believes this strategy has historically enabled the Company to maintain high
levels of hotel occupancy.




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         Significant group and air wholesale market areas continue to be Western
Canada, the Pacific Northwest and Northern California. The Company continues to
expand its marketing areas by adding additional air wholesalers and has been
successful in obtaining wholesale business in Central and Eastern Canada, the
Midwest, Southwest and Southern California.

         In addition to the group and air wholesale business, the Company
aggressively packages and markets convention and military reunion business which
require 300 rooms or less. Other travel package arrangements are also being
promoted which are geared toward individual travelers. The Company undertakes,
from time to time, direct advertising in select Western cities in order to
promote and increase the individual traveler business.

         The Company uses a flexible approach to pricing its rooms which is
designed to maintain high occupancy levels. Hotel rooms are offered at discount
prices to travel wholesalers, as much as six months in advance of arrival, for
block sales of rooms used in travel packages. This is particularly important to
the Company because of the impact of hotel occupancy on the level of gaming
activity. The Company is particularly dependent upon group business from
November through February because of the seasonal decline in other sources of
business. During these months, a substantial amount of the Sands Regency's hotel
capacity is normally prebooked 30 to 180 days in advance on a cancelable basis.
During the summer months, the Company relies on direct advertising of its room
rates to attract individual customers.

         The Sands Regency is the lead hotel/casino in the Reno area for several
major travel wholesalers who serve major cities in the West, Midwest and
Southwest United States and in Western and Central Canada. Group and air
wholesale business accounted for approximately 62% of the hotel's occupancy in
fiscal 1997 compared to 59% in fiscal 1996.

         Most advertising for the Sands Regency is done by travel wholesalers in
their markets. The Company also advertises directly in its major United States
markets through printed publications, especially during periods of the year when
group business operates at reduced levels.

         Gulfport, Mississippi. The Company has positioned the Copa Casino as a
casino for local residents. Emphasis has been placed on providing a casual and
friendly atmosphere. To maintain this marketing position, the Company's goal is
to provide its products and services at values favored by the Company's guests.
The Company also uses numerous, in-house promotional programs to attract local
residents and other customers. These Company-sponsored promotional and special
event programs include gaming and slot tournaments, football season promotions,
give-a-way programs and seasonal promotions.

         The Company has implemented a variety of outside advertising campaigns
in order to attract "drive-up" gaming customers. This includes billboards within
a 100-mile radius of Gulfport and newspaper, radio and television advertising in
the local market and in the New Orleans area on a selective basis. In addition,
the Company has implemented drive-up promotions and programs to generate more
frequent customer visits and to identify valued customers. Direct mail programs,
which have resulted in positive customer responses, will continue to be
undertaken to encourage more frequent visits by customers.

         In fiscal 1997, the Company acquired a computerized slot player
tracking and marketing system which has improved the Company's ability to offer
different and more diverse promotions. The system also provides player tracking
information so as to allow the Company to reward gaming customers with
complimentary and other promotional goods and services.

         The Company has also pursued marketing efforts toward developing group
business, primarily bus charters and, beginning in fiscal 1997, hotel
promotional programs to entice visits from hotel/motel guests staying in the
many non-casino hotel/motel rooms in the local area. The Company has been
successful in attracting bus charters from various areas within a 500-mile
radius including Atlanta, Georgia and Florida.






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         The Company will continue to utilize various marketing strategies with
a goal of increasing the frequency of casino visits by its customers which
includes implementing programs to identify and retain selected valued customers
and the establishment of promotional programs which cater to senior citizens.
The Company has employed sales representatives to market to tour operators,
travel agents, social groups, corporations and associations.


COMPETITION

         Reno, Nevada. The Company competes in the greater Reno area with
approximately sixteen major casinos and hotel/casinos, some of which are larger
than the Sands Regency. In addition, there are numerous other smaller casinos in
the greater Reno area. The Company competes for its customers based upon gaming
activities, room rates, room size and quality of rooms, food, beverages and
location. Competitors of the Company have received governmental approval to
construct an additional 2,580 hotel rooms, none of which are presently under
construction. Such governmental approval does not provide assurance that all of
these rooms will be built. If construction is completed on all hotel rooms
presently under construction or approved for construction, the hotel room
capacity in the greater Reno area will increase by approximately an additional
16%. In the event all approved hotel rooms are built, and depending on the time
frames during which they are completed, management of the Company believes that
this added capacity may have an adverse effect on operations of the Company.

         The Company's Reno operations compete, to a lesser extent, with gaming
operations in other parts of the state of Nevada, such as Laughlin, Las Vegas
and Lake Tahoe. California currently sponsors a state lottery and allows other
non-casino style gaming, including parimutuel wagering, card parlors, bingo and
off-track betting. There is also casino style gaming on various Native American
lands in California. The Company believes that such non-casino style gaming does
not have a significant impact on the Company's operations. The Company believes,
however, that Native American gaming in California does have somewhat of an
impact on the Company's gaming operation and that the general legalization of
casino-style gaming in California could have a material impact on the Company's
operations.

         Gulfport, Mississippi. The Company's operations on the Gulf Coast of
Mississippi are in competition with numerous gaming operations currently
established or to be established on vessels or barges moored on the Gulf Coast
of Mississippi, and on boats or barges cruising or moored on the Mississippi
River. Currently there are ten dockside gaming facilities, excluding the
Company, operating along the Gulf Coast of Mississippi, including one in Bay
Saint Louis, one in Gulfport and eight in Biloxi. There are also two gaming
facilities presently planned along the Gulf Coast which are licensed and under
construction.

         Along the Mississippi River, there are presently twenty Mississippi
dockside casino facilities; one in Natchez, four in Vicksburg, three in
Greenville, one near Lula and eleven in Tunica. There is one additional proposed
casino operation to be located along the Mississippi River in Vicksburg which
has been granted a gaming license and other proposed casinos which are presently
involved in litigation regarding proposed locations. There is also one casino
currently in operation on an Indian reservation near Philadelphia, Mississippi.

         In addition to the above, there are also numerous other proposed
Mississippi casino operations along the Mississippi River and the Gulf Coast.
Requiring both site approval and gaming licenses, such proposed operations are
at various stages in the developmental process without assurances that
development and operation will occur.




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         In addition to direct competition which the Company faces in the
Mississippi market, the Company faces competition from riverboats and a possibly
reopened land-based casino in the State of Louisiana, which is an important
market area for the Company's Gulfport casino. Current Louisiana legislation
permits unlimited stakes gaming and a total of fifteen riverboat licenses and
one land-based license have been authorized statewide. At present, there are
fourteen riverboats in operation. Besides these State of Louisiana gaming
operations, it is also anticipated that gaming may be implemented on Indian
reservations near Gulfport and New Orleans.

         In the event that all, or a significant number, of these proposed
facilities are licensed, built and operated, management of the Company believes
that this added capacity may have an adverse effect on its Gulfport casino
operation. Management believes that the principal competitive factors will
include ease of access, availability of parking, attractiveness of casino
vessels and surrounding property, proximity to other gaming facilities, and
quality of food and entertainment offered.

         General. To a significantly lesser extent, the Company competes with
gaming facilities in New Jersey, Colorado, South Dakota, Illinois, Iowa and
other parts of the world. The Company also competes with various gaming
operations on Native American land, including those located in California,
Arizona, Oregon, Washington, Connecticut, Michigan, Minnesota and Wisconsin.
Indian casino gaming has become a growing sector of the gaming industry as a
result of the Indian Gaming Regulatory Act of 1988, which generally permits
unrestricted gaming on Indian land in any state that allows similar forms of
gaming, whether or not restricted. Other states may legalize various forms of
gaming that may compete with the Company. In any jurisdiction where the Company
may commence operations, it will face competition for desirable sites and
qualified personnel.

EMPLOYEES

         At June 30, 1997, the Company employed 933 people at the Sands Regency
in Reno, Nevada, including 89 salaried employees and 844 hourly employees. The
Copa Casino employed 486 people, including 60 salaried employees and 426 hourly
employees. None of the Company's employees is represented by a union. The
Company has not experienced any work stoppages or other significant labor
problems and management considers its labor relations to be good.

REGULATION AND LICENSING-GAMING

         Nevada. The ownership and operation of casino gaming facilities in
Nevada are subject to (i) The Nevada Gaming Control Act and the regulations
promulgated thereunder (collectively, "Nevada Act"); and (ii) various local
regulation. The Company's gaming operations are subject to the licensing and
regulatory control of the Nevada Gaming Commission ("Nevada Commission"), the
Nevada State Gaming Control Board ("Nevada Board") and the City of Reno,
(together, the "Nevada Gaming Authorities").

         The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over the
financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of periodic
reports with the Nevada Gaming Authorities; (iv) the prevention of cheating and
fraudulent practices; and (v) to provide a source of state and local revenues
through



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taxation and licensing fees. Change in such laws, regulations and procedures
could have an adverse effect on the Company's gaming operations.

         Zante operates the Sands Regency hotel/casino and is required to be
licensed by the Nevada Gaming Authorities. The gaming license requires a
periodic payment of fees and taxes and is not transferable. The Company is
registered by the Nevada Commission as a publicly traded corporation
("Registered Corporation") and as such, it is required periodically to submit
detailed financial and operating reports to the Nevada Commission and furnish
any other information which the Nevada Commission may require. No person may
become a stockholder of, or receive any percentage of profits from Zante without
first obtaining licenses and approvals from the Nevada Gaming Authorities. The
Company and Zante have obtained from the Nevada Gaming Authorities the various
registrations, approvals, permits and licenses required in order to engage in
gaming activities in Nevada.

         The Nevada Gaming Authorities may investigate any individual who has a
material relationship to, or material involvement with, the Company or Zante in
order to determine whether such individual is suitable or should be licensed as
a business associate of a gaming licensee. Officers, directors and certain key
employees of Zante must file applications with the Nevada Gaming Authorities and
may be required to be licensed or found suitable by the Nevada Gaming
Authorities. Officers, directors and key employees of the Company who are
actively and directly involved in gaming activities of Zante may be required to
be licensed or found suitable by the Nevada Gaming Authorities. The Nevada
Gaming Authorities may deny an application for licensing for any cause which
they deem reasonable. A finding of suitability is comparable to licensing, and
both require submission of detailed personal and financial information followed
by a thorough investigation. The applicant for licensing or a finding of
suitability must pay all the costs of the investigation. Changes in licensed
positions must be reported to the Nevada Gaming Authorities and in addition to
their authority to deny an application for a finding of suitability or
licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a
change in a corporate position.

         If the Nevada Gaming Authorities were to find an officer, director or
key employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or Zante, the companies involved would have to
sever all relationships with such person. In addition, the Nevada Commission may
require the Company or Zante to terminate the employment of any person who
refuses to file appropriate applications. Determinations of suitability or of
questions pertaining to licensing are not subject to judicial review in Nevada.

         The Company and Zante are required to submit detailed financial and
operating reports to the Nevada Commission. Substantially all material loans,
leases, sales of securities and similar financing transactions by Zante must be
reported to, or approved by, the Nevada Commission.

         If it were determined that the Nevada Act was violated by Zante, the
gaming licenses it holds could be limited, conditioned, suspended or revoked,
subject to compliance with certain statutory and regulatory procedures. In
addition, Zante, the Company, and the persons involved could be subject to
substantial fines for each separate violation of the Nevada Act at the direction
of the Nevada Commission. Further, a supervisor could be appointed by the Nevada
Commission to operate the Company's gaming properties and, under certain
circumstances, earnings generated during the supervisor's appointment (except
for the reasonable rental value of the Company's gaming properties) could be
forfeited to the State of Nevada. Limitation, conditioning or suspension of any
gaming license or the appointment of a supervisor could (and revocation of any
gaming license would) materially adversely affect the Company's gaming
operations.




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         Any beneficial holder of the Company's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated, and have his suitability as a beneficial holder of the Company's
voting securities determined if the Nevada Commission has reason to believe that
such ownership would otherwise be inconsistent with the declared policies of the
State of Nevada. The applicant must pay all costs of investigation incurred by
the Nevada Gaming Authorities in conducting any such investigation.

         The Nevada Act requires any person who acquires more than 5% of the
Company's voting securities to report the acquisition to the Nevada Commission.
The Nevada Act requires that beneficial owners of more than 10% of the Company's
voting securities apply to the Nevada Commission for a finding of suitability
within thirty days after the Chairman of the Nevada Board mails the written
notice requiring such filing. Under certain circumstances, an "institutional
investor," as defined in the Nevada Act, which acquires more than 10%, but not
more than 15%, of the Company's voting securities may apply to the Nevada
Commission for a waiver of such finding of suitability if such institutional
investor holds the voting securities for investment purposes only. An
institutional investor shall not be deemed to hold voting securities for
investment purposes unless the voting securities were acquired and are held in
the ordinary course of business as an institutional investor and not for the
purpose of causing, directly or indirectly, the election of a majority of the
members of the board of the directors of the Company, any change in the
Company's corporate charter, bylaws, management, policies or operations of the
Company, or any of its gaming affiliates, or any other action which the Nevada
Commission finds to be inconsistent with holding the Company's voting securities
for investment purposes only. Activities which are not deemed to be inconsistent
with holding voting securities for investment purposes only include: (i) voting
on all matters voted on by stockholders; (ii) making financial and other
inquiries of management of the type normally made by securities analysts for
informational purposes and not to cause a change in its management, policies or
operations; and (iii) such other activities as the Nevada Commission may
determine to be consistent with such investment intent. If the beneficial holder
of voting securities who must be found suitable is a corporation, partnership or
trust, it must submit detailed business and financial information including a
list of beneficial owners. The applicant is required to pay all costs of
investigation.

         Any person who fails or refuses to apply for a finding of suitability
or a license within thirty days after being ordered to do so by the Nevada
Commission or the Chairman of the Nevada Board, may be found unsuitable. The
same restrictions apply to a record owner if the record owner, after request,
fails to identify the beneficial owner. Any stockholder found unsuitable and who
holds, directly or indirectly, any beneficial ownership of the common stock of a
Registered Corporation beyond such period of time as may be prescribed by the
Nevada Commission may be guilty of a criminal offense. The Company is subject to
disciplinary action if, after it receives notice that a person is unsuitable to
be a stockholder or to have any other relationship with the Company or Zante,
the Company (i) pays that person any dividend or interest upon voting securities
of the Company, (ii) allows that person to exercise, directly or indirectly, any
voting right conferred through securities held by that person, (iii) pays
remuneration in any form to that person for services rendered or otherwise, or
(iv) fails to pursue all lawful efforts to require such unsuitable person to
relinquish his voting securities for cash at fair market value.

         The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation to file applications, be investigated
and be found suitable to own the debt security of a Registered Corporation. If
the Nevada Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered Corporation can be
sanctioned, including the loss of its approvals, if without the prior approval
of the Nevada Commission, it: (i) pays to the unsuitable person any dividend,
interest, or any distribution whatsoever; (ii) recognizes any voting right by
such unsuitable person in connection with such securities; (iii) pays the
unsuitable person remuneration in any form; or (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation or similar transaction.



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         The Company is required to maintain a current stock ledger in Nevada
which may be examined by the Nevada Gaming Authorities at any time. If any
securities are held in trust by an agent or by a nominee, the record holder may
be required to disclose the identity of the beneficial owner to the Nevada
Gaming Authorities. A failure to make such disclosure may be grounds for finding
the record holder unsuitable. The Company is also required to render maximum
assistance in determining the identity of the beneficial owner. The Nevada
Commission has the power to require the Company's stock certificates to bear a
legend indicating that the securities are subject to the Nevada Act. The
Company's stock certificates do bear such a legend.

         The Company may not make a public offering of its securities without
the prior approval of the Nevada Commission if the securities or the proceeds
therefrom are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. Such approval, if given, does not constitute a finding, recommendation
or approval by the Nevada Commission or the Nevada Board as to the accuracy or
adequacy of the prospectus or the investment merits of the securities. Any
representation to the contrary is unlawful.

         Changes in control of the Company through merger, consolidation, stock
or asset acquisitions, management or consulting agreements, or any act or
conduct by a person whereby he obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to acquire control of a
Registered Corporation must satisfy the Nevada Board and Nevada Commission in a
variety of stringent standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated and
licensed as part of the approval process relating to the transaction.

         The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environmental for the orderly governance of
corporate affairs. Approvals are, in certain circumstances, required from the
Nevada Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to the Registered
Corporation's stockholders for the purposes of acquiring control of the
Registered Corporation.

         License fees and taxes, computed in various ways depending on the type
of gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received; (ii) the number of
gaming devices operated; or (iii) the number of table games operated. A casino
entertainment tax is also paid by casino operations where entertainment is
furnished in connection with the selling of food or refreshments. Nevada
licensees that hold a license as an operator of a slot route, or a
manufacturer's or distributor's license, also pay certain fees and taxes to the
State of Nevada.

         Any person who is licensed, required to be licensed, required to be
registered, or is under common control with such persons (collectively,
"Licensees"), and who has become involved in a gaming venture outside of



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Nevada is required to deposit with the Nevada Board, and thereafter maintain, a
revolving fund in the amount of $10,000 to pay the expenses of investigation of
the Nevada Board of their participation in such foreign gaming. The revolving
fund is subject to increase or decrease in the discretion of the Nevada
Commission. Thereafter, Licensees are required to comply with certain reporting
requirements imposed by the Nevada Act. Licensees are also subject to
disciplinary action by the Nevada Commission if it knowingly violates any laws
of the foreign jurisdiction pertaining to the foreign gaming operation, fails to
conduct the foreign gaming operation in accordance with the standards of honesty
and integrity required of Nevada gaming operations, engages in activities that
are harmful to the State of Nevada or its ability to collect gaming taxes and
fees, or employs a person in the foreign operation who has been denied a license
or finding of suitability in Nevada on the ground of personal unsuitability.

         Mississippi. The ownership and operation of a gaming business in
Mississippi is subject to extensive laws and regulations, including the
Mississippi Gaming Control Act (the "Mississippi Act") and the regulations (the
"Mississippi Regulations") promulgated thereunder by the Mississippi Gaming
Commission (the "Mississippi Commission") and the Mississippi State Tax
Commission Regulations for Gaming Establishments ("Mississippi Tax Regulations")
promulgated by the Mississippi State Tax Commission ("Mississippi Tax
Commission"). The Mississippi Commission and Mississippi Tax Commission
(together the "Mississippi Gaming Authorities") are empowered to oversee and
enforce the Mississippi Act. Gaming in Mississippi can be legally conducted only
on floating vessels of a certain minimum size in navigable waters of the
Mississippi River or in waters of the State of Mississippi (so called dockside
gambling) which lie adjacent and to the south (principally in the Gulf of
Mexico) of the counties of Hancock, Harrison and Jackson, and only in counties
in Mississippi in which the registered voters have not voted to prohibit such
activities. The voters in Jackson County, the southeastern most county of
Mississippi, have voted to prohibit gaming in that county. However, gaming could
be approved in Jackson County in any subsequently held referendum.

         The underlying policy of the Mississippi Act is to ensure that gaming
operations in Mississippi are conducted (i) honestly and competitively, (ii)
free of criminal and corruptive influences, and (iii) in a manner which protects
the rights of the creditors of gaming operations. The laws, regulations and
supervisory procedures of the Mississippi Act seek to (i) establish and maintain
response accounting practices and procedures; (ii) maintain effective control
over the financial practices of licensees, including establishing minimum
procedures for internal fiscal affairs and safeguarding assets and revenues,
providing reliable record keeping, and making periodic reports to the
Mississippi Gaming Authorities; and (iii) provide a source of state and local
revenues through taxation and licensing fees. Changes in such laws, regulations
and procedures could have an adverse effect on the Company.

         The Mississippi Act requires that a person (including any corporation
or other entity) must be licensed to conduct gaming activities in Mississippi. A
license will be issued only for a specified location which has been approved as
a gaming site by the Mississippi Commission prior to issuing such license.
Gaming licenses are issued for an initial two year period and are renewable
every two years thereafter. The Mississippi Act also requires that each officer
or director of a gaming licensee, or other person who exercises a material
degree of control over the licensee, either directly or indirectly, must be
found suitable by the Mississippi Commission. The Mississippi Commission will
not issue a license or make a finding of suitability unless it is satisfied,
only after an extensive investigation paid for by the applicant, that the
persons associated with the gaming licensee or applicant for a license are of
good character, honesty and integrity, with no relevant or material criminal
record. In addition, the Mississippi Commission will not issue a license unless
it is satisfied that the licensee is adequately financed or has a reasonable
plan to finance its proposed operations from acceptable sources, and that
persons associated with the applicant have sufficient business probity,
competence and experience to engage in the proposed gaming enterprise. Other
parties, including the Partnership's or the



                                        9

<PAGE>   11



Company's lenders, holders of evidences of indebtedness, underwriters and
employees, may be required to be licensed, and such applications for licensing,
if any, may be denied for any cause deemed reasonable by the Mississippi
Commission. The Mississippi Commission may refuse to issue a work permit to a
gaming employee (i) if the employee has committed larceny, embezzlement or any
crime of moral turpitude, or knowingly violated the Mississippi Act or
Mississippi Regulations, or (ii) for any other reasonable cause.

         The Partnership holds the gaming license to the Copa Casino gaming
facility in Gulfport, Mississippi. Patrician, GCI and Artemis, all wholly-owned
subsidiaries of the Company, have been approved as partners of the Partnership.
The license is not transferrable.

         In October 1994, the Mississippi Gaming Commission adopted a regulation
requiring, as a condition of licensure or license renewal, that a gaming
establishment's site development plan include certain infrastructure facilities
in close proximity to the casino complex which will amount to at least 25% of
the cost of the casino facility. Parking facilities, roads, sewage and water
systems or facilities normally provided by governmental entities do not meet the
infrastructure requirement. The Mississippi Gaming Commission found the Copa
Casino to be in compliance with this regulation as a result of its construction
of a general purpose pier facility and other improvements that inure to the
benefit of the Mississippi State Port Authority.

         The Mississippi Commission has the power to deny, limit, condition,
revoke and suspend any license, finding of suitability or registration, or fine
any person, as it deems reasonable and in the public interest, subject to an
opportunity for a hearing. The Mississippi Commission may fine any licensee or
persons who was found suitable up to $100,000 for each violation of the
Mississippi Act or the Mississippi Regulations, which is the subject of an
initial complaint, and up to $250,000 for each such violation which is the
subject of any subsequent complaint. The Mississippi Act provides for judicial
review of any final decision of the Mississippi Commission by petition to a
Mississippi Circuit Court, but the filing of such petition does not necessarily
stay any action taken by the Mississippi Commission pending a decision by the
Circuit Court.

         The Partnership must submit detailed financial and operating reports to
the Mississippi Gaming Authorities. Substantially all loans, leases, sales of
securities and other financing transactions entered into by the Partnership must
be reported to, and, in some cases, approved by, the Mississippi Gaming
Authorities.

         Under the Mississippi Regulations, a gaming license may not be held by
a publicly traded company, although an affiliate corporation, such as the
Company, may be publicly held so long as the Company receives the approval of
the Mississippi Commission. The Company has received such approval of the
Mississippi Commission. In addition, approval of any public offering of the
securities of the Company must be obtained from the Mississippi Commission if
any part of the proceeds from that offering are intended to be used to
construct, acquire or finance the operation of gaming facilities in Mississippi
or to retire or extend obligations incurred for any such purpose.

         Under the Mississippi Regulations, a person is prohibited from
acquiring control of the Company without prior approval of the Mississippi
Commission. The Company is also prohibited from consummating a plan of
recapitalization proposed by management in opposition to an attempted
acquisition of control of the Company and which involves the issuance of a
significant dividend to Common Stockholders, where such dividend is financed by
borrowing from financial institutions or the issuance of debt securities. In
addition, the Company is prohibited from repurchasing any of its voting
securities under circumstances (subject to certain exemptions) where the
repurchase involves more than one percent of the Company's outstanding Common
Stock at a price in excess of 110% of the then market value of the Company's
Common Stock from a person who owns and has for less than one year owned more
than three percent of the Company's outstanding Common Stock, unless the
repurchase has been approved by a majority of the Company's



                                       10

<PAGE>   12



shareholders voting on the issue (excluding the person from whom the repurchase
is being made) or the offer is made to all other shareholders for the Company.

         Any person who, directly or indirectly, or in associations with others,
acquires beneficial ownership of more than five percent of the Common Stock of
the Company must notify the Mississippi Commission of this acquisition and may
be required to be found suitable by the Mississippi Commission. Any person who
becomes a beneficial owner of more than 10% of the Company's Common Stock must
apply for a finding of suitability by the Mississippi Commission. Furthermore,
regardless of the amount of securities purchased, any person who acquires any
beneficial ownership in the Common Stock of the Company may be required to be
found suitable if the Mississippi Commission has reason to believe that the
acquisition and ownership would be inconsistent with the declared policy of
Mississippi. Any person who is required to be found suitable must apply for a
finding of suitability from the Mississippi Commission within 30 days after
being requested to do so, and must deposit with the State Tax Commission a sum
of money which is adequate to pay the anticipated investigatory costs associated
with such finding. Any person who is found not to be suitable by the Mississippi
Commission shall not be permitted to have any direct or indirect ownership in
the Company's Common Stock. Any person who is required to apply for a finding of
suitability and fails to do so, or who fails to dispose of his or her interest
in the Company's Common Stock if found unsuitable, is guilty of a misdemeanor.
If a finding of suitability with respect to any person is not applied for where
required, or if it is denied or revoked by the Mississippi Commission, the
Company is not permitted to pay such person for services rendered, or to employ
or enter into any contract with such person.

         The Mississippi legislature has declared that some corporate
acquisitions opposed by management, repurchases of voting securities and other
corporate defense tactics that affect corporate gaming licensees in Mississippi,
and corporations whose stock is publicly traded that are affiliated with those
operations, may be injurious to stable and productive corporate gaming. The
Mississippi Commission has established a regulatory scheme to ameliorate the
potentially adverse effects of these business practices upon Mississippi's
gaming industry and to further Mississippi's policy to (i) assure the financial
stability of corporate gaming operators and their affiliates; (ii) preserve the
beneficial aspects of conducting business in the corporate form; and (iii)
promote a neutral environmental for the orderly governance of corporate affairs.
Approvals are, in certain circumstances, required from the Mississippi
Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof (commonly referred to as
"greenmail") and before a corporate acquisition opposed by management can be
consummated. Mississippi's gaming regulations also requires prior approval by
the Mississippi Commission if the Company were to adopt a plan of
recapitalization proposed by the Company's Board of Directors in opposition to a
tender offer made directly to its stockholders for the purposes of acquiring
control of the Company.

         Neither the Partnership, the Company nor any controlled affiliate may
engage in gaming activities in Mississippi and outside of Mississippi without
approval of the Mississippi Commission. The Mississippi Commission may require,
among other things, that there be adequate governmental regulation of gaming in
the out-of-state location and that there is a means of the Mississippi
Commission to have access to information concerning the out-of-state gaming
operations and persons associated with them.

REGULATION AND LICENSING - ALCOHOLIC BEVERAGES

         Nevada. The sale of alcoholic beverages by the Company is subject to
supervision, control and regulation by the City of Reno, which issues licenses
deemed to be nontransferable, revocable privileges, and which has full power to
limit, condition, suspend or revoke such licenses. The Company is presently
licensed to sell alcoholic beverages. Any adverse regulatory act with respect to
this license could have an adverse effect upon the operations of the Company.



                                       11

<PAGE>   13




         Mississippi. The sale of alcoholic beverages by the Copa Casino is
subject to regulation by the Mississippi State Tax Commission, which issues
licenses which are both revocable and non-transferable, and which has full power
to limit, condition, suspend or revoke any such license. The Partnership is
currently licensed to sell alcoholic beverages as an "On-Premises Retailer." Any
adverse regulatory act with respect to this license could have an adverse effect
upon the operation of the Partnership. The sale of light wine and beer by Copa
Casino is also subject to regulation by the Mississippi State Tax Commission,
which issues licenses which are both revocable and non-transferable, and which
has the full power to limit, condition, suspend or revoke any such license.
However, the enforcement of laws regulating the acquisition, use, sale and
distribution of light wine and beer is left to local law enforcement agencies.
The Partnership is currently licensed to sell light wine and beer as a
"Retailer" under a beer permit and privilege license. Any adverse regulatory act
with respect to this license could have an adverse effect upon the operation of
the Partnership.




                                       12

<PAGE>   14



ITEM 2.  PROPERTIES

         Reno, Nevada. The Company operates the casino and hotel towers at the
Sands Regency on a Company-owned 6.3 acre site in downtown Reno. The
hotel/casino site also includes the original three-story motor lodge and
four-story hotel tower and other buildings and facilities. Garage and surface
parking is provided at the hotel/casino site and also on a 2.7 acre site located
adjacent to the hotel/casino site. In addition, the Company's personnel office
and certain storage facilities are located one-half block from the hotel/casino
site on a Company-owned .5 acre lot. Management considers the Company's facility
to be in good condition and well-maintained.

         In addition to the main hotel/casino facility, the Company owns a
smaller property in Reno consisting of an area of approximately .2 acres.

         The Company's Reno hotel/casino property is subject to aggregate
encumbrances of approximately $11.0 million as of June 30, 1997.

         Gulfport, Mississippi. The Copa Casino gaming facilities are located on
two decks of a 500 foot cruise ship owned by Gulfside Casino Partnership. These
two decks also include four cocktail lounges/bars, a deli-style restaurant, a
buffet restaurant operated by a third party and a gift shop. The deck below the
two casino decks contains a surveillance area, a vault, count rooms, security
and various operations and administrative offices. An additional three decks on
the ship are available for future expansion of gaming and dining facilities. The
engines for such cruise ship are disabled. All gaming activities are conducted
while moored dockside.

         The Copa Casino is permanently moored dockside at a location known as
the "Horseshoe Site." Such site, which is leased from the Mississippi Department
of Economic and Community Development and the Mississippi State Port Authority,
is between the East and West Piers of the Mississippi State Port in Gulfport,
Mississippi. This location, which includes 8.3 acres of land-based facilities,
will accommodate surface parking for approximately 840 vehicles. The leased
facilities also include a docking structure which accommodates the Copa Casino
ship and will allow for mooring of additional vessels. The docking structure
also includes a four-lane roadway and a pedestrian walk which provides access to
the Copa Casino entrance.

         The initial term of the lease, as amended, is seven years and ends in
October 1999. The lease provides for three renewal periods of five years each
and one renewal period of ten years if the Partnership, within the first ten
years of the lease agreement, constructs, on the leased premises or within the
city limits of Gulfport, a hotel with a minimum of 350 units. If any of such
renewal options are exercised, the lease term will be extended under the same
terms and provisions of the lease agreement except that the rental amounts will
be adjusted and revised annually, in years six through thirty-two, in accordance
with changes in the Consumer Price Index.

         The lease provides for an annual rental of $500,000 (the "Minimum
Rental") plus five percent (5%) of the gross annual gaming revenues over
$25,000,000 (the "Percentage Rental"). In addition to the Minimum Rental and
Percentage Rental set forth above, the Partnership is also required to pay,
monthly, 3% of the gross monthly revenues on all activities other than gaming
(the "Additional Percentage Rent"). The Minimum Rental is to be paid in advance,
in equal monthly installments of $41,667 on the first day of every month during
the lease year. For each month, the Percentage Rental and the Additional
Percentage Rental must be calculated and the amounts due, if any, are to be paid
on or before the 10th day of the following month.

         In July 1996, Copa Casino was notified by the Mississippi Department of
Economic and Community Development and the Mississippi State Port Authority that
its lease will be cancelled and terminated at the end of the initial lease term
in October 1999 because the Copa Casino's leased site is needed by the
Mississippi State Port Authority to accommodate a purported expansion of Port
facilities. Such notice of termination, among other items, is presently the
subject of litigation between the Copa Casino and the Mississippi



                                       13

<PAGE>   15



Department of Economic and Community Development and the Mississippi State Port
Authority as further described in Item 3. Legal Proceedings. If the Copa Casino
is required to vacate its existing site and no suitable replacement sites can be
found, the Company's results of operations could be materially adversely
affected.


ITEM 3.  LEGAL PROCEEDINGS

GCI MATTER

         In December 1994, a lawsuit was filed by Terry W. Green and Joel R.
Carter, Sr. ("Green and Carter") in the Chancery Court of Harrison County,
Mississippi, First Judicial District against GCI because of GCI's failure to
make payments on promissory note obligations of GCI to Green and Carter. These
note obligations, in the aggregate amount of $6 million, plus interest, are
secured by a pledge of GCI's partnership interest in GCP. Although these
promissory notes and the accrued interest thereon are obligations of GCI, they
are reflected as current liabilities in the Company's Consolidated Balance
Sheets at June 30, 1997 and 1996 upon consolidation.

         In addition to demanding payment of the $6 million plus interest, for
which a partial summary judgment was entered, the lawsuit by Green and Carter
also demanded the appointment of a receiver to take possession of and sell GCI's
ownership interest in GCP and sought attorneys fees which were subsequently
awarded in January 1997 in the amount of $54,000. In May 1995, GCP and Patrician
were joined as necessary parties to the lawsuit.

         In August 1995, a Charging Order was entered which required GCP to
respond to inquiries by Green and Carter for the purpose, among other things, of
determining what distributions, if any, have been paid by the partnership to its
partners. Moreover, a court order was granted whereby any amounts due or to
become due GCI by GCP are to be paid to Green and Carter, pro-rata, until the
summary judgment against GCI is satisfied.

         In July 1996, following a court hearing, the Chancery Court rendered a
judgment that the reallocation of GCI's interest in the partnership may be
appropriate as to the GCP partners but had no effect on the lien position of
Green and Carter. This ruling related to the reduction in GCI's ownership
interest in GCP from an original 60% interest to a .006% interest as a result of
an amendment to the partnership agreement and a partner capital call. The
amendment to the GCP partnership agreement was entered in April 1994 whereby the
profit and loss allocation percentages were amended from 40% to 80% for
Patrician and from 60% to 20% for GCI. Such amendment was entered into to cure a
monetary partnership breach by GCI which occurred prior to the Company's
acquisition of GCI and to properly reflect the relative financial risks of
Patrician and GCI. The partner capital call occurred in January 1996 and was for
the purpose of improving the partnership capital structure. Patrician and
Artemis complied with the capital call; however, GCI failed to comply. As a
result, and in accordance with the partnership agreement, GCI's interest in GCP
was reduced from 20% to .006%. In May 1997, the Partnership Agreement was again
amended to restore the original 60% interest as to GCI. Such was done to resolve
the Chancery Court ruling dilemma.

         In the above July 1996 court ruling, Green and Carter were also given
until November 1996 to exhaust their legal remedies in collecting against the
judgment. Failing collection or other resolution by November 1996, the Court
would consider additional measures including, but not limited to, the
appointment of a receiver.

         In January 1997, the Chancery Court issued an amendment judgment which
reaffirmed the prior judgments and reserved ruling on the necessity to appoint a
receiver. The ruling also charged GCP, under Mississippi law, with the
obligation to pay the GCI judgment amounts to Green and Carter and to pay Green
and Carter 60% of all monies not designated for normal operational expenses on a
monthly basis, commencing February 1, 1997, until the judgments due Green and
Carter were satisfied. GCP was also required to provide a monthly accounting of
income and operating expenses to Green and Carter.



                                       14

<PAGE>   16



         To date, the required monthly reports have been made which report that
no monies are available for distribution by GCP and that no monies have been
distributed by GCP. Such reports continue to be made irrespective of the fact
that GCI had filed for bankruptcy protection under Chapter 11 of the United
States Bankruptcy Code.

         GCI, GCP and Patrician, as joined parties to such lawsuit, have filed
an appeal with the Mississippi Supreme Court because it is the Company's belief
that the Chancery Court's rulings are incorrect and not supported by the facts
or the law. A hearing has not yet been scheduled on such appeal.

         On January 31, 1997, GCI filed for bankruptcy protection under Chapter
11 of the United States Bankruptcy Code in the United States Bankruptcy Court of
the Southern District of Mississippi, Southern Division. A Plan of
Reorganization was filed with the related Disclosure Statement expected to be
filed in late September 1997. Actions have not yet been taken to dispose of the
bankruptcy case.

         Green and Carter have filed a motion in the United States Bankruptcy
Court for relief from the automatic stay provisions under Section 3 of the
Bankruptcy Code which prohibits payments on pre-petition obligations. Such
motion contends that the automatic stay provisions should not apply because the
obligations are payable by GCP and not the bankrupt entity GCI. It is the
Company's belief that the automatic stay provisions under the United States
Bankruptcy Code, which are applicable to the creditors of GCI, appropriately
apply to Green and Carter and that GCP is prohibited from making any payment or
distribution to these individuals who are creditors of GCI.

         GCP and GCI have filed briefs in opposition to the motion for relief
from the automatic stay properly stating that the debtor to Green and Carter is
GCI and not GCP. Further, that the Chancery Court judgment created, or
clarified, an obligation of GCP to make payments to Green and Carter only to the
extent that GCP may otherwise have a requirement to make payments to GCI.
Notwithstanding this, GCI and GCP further contend that any payments that may be
required to be made by GCP to GCI should appropriately be paid into the bankrupt
estate of GCI and should not be distributed to pre-petition, or other, creditors
of GCI. A hearing on such motion is presently scheduled for October 1, 1997. In
the event the motion for relief from the automatic stay is granted, Green and
Carter may continue legal action in the Chancery Court which was consistent with
a May 28, 1997 Chancery Court ruling and which could include the appointment of
a receiver.

         GCI's only tangible asset is its partnership interest in GCP. GCI has
filed for Chapter 11 Bankruptcy protection and is also not otherwise in the
financial position to make any payments with respect to the note obligations due
Green and Carter. It is the Company's belief that GCI's Plan of Reorganization,
which contemplates making certain payments to Green and Carter from new equity
funding to GCI, represents a reasonable, equitable and final resolution and
settlement to the GCI litigation and bankruptcy issues. However, confirmation
and acceptance of the filed Plan of Reorganization is not assured. As such, the
ultimate resolution of this matter is not presently subject to reasonable
estimation and could include a dispossession of a 60% right to receive
partnership profits and surplus.

         In February 1997, Carter and Green also each filed separate lawsuits in
U. S. District Court for the Southern District of Mississippi, Biloxi Division,
against The Sands Regent and certain officers and directors of The Sands Regent
and GCI. Such lawsuits allege breach of various common law duties and
contractual interference by the defendants and seek compensatory and punitive
damages. Such actions are in the preliminary discovery stages. Management, and
the individual defendants, believe these actions to be without merit and will
vigorously defend them.





                                       15

<PAGE>   17



PORT MATTER

         In July 1996, the Mississippi Department of Economic and Community
Development ("MDECD") and the Mississippi State Port Authority at Gulfport (the
"Port") filed a declaratory judgment action against GCP in the Chancery Court of
Harrison County, Mississippi, First Judicial District. Such lawsuit seeks Court
interpretation of certain provisions of the lease between MDECD and the Port and
GCP including whether the Port may terminate the lease on a date certain,
whether the Port must approve the substitution of another gaming vessel for the
present gaming vessel and whether the Port must approve the construction of a
hotel on the lease premises. In addition to the lawsuit, MDECD and the Port also
notified GCP that its lease will be cancelled and terminated at the end of the
initial lease term in October 1999 because GCP's current leased site is needed
by the Port to accommodate a purported expansion of Port facilities.

         In July 1997, the MDECD and the Port filed a second amended complaint,
in addition to the original declaratory relief action, seeking damages and to
immediately terminate the lease related to certain dredging activities conducted
on GCP's leased premises by contractors engaged by GCP.

         In response to the initial MDECD and Port action and the second amended
complaint, GCP filed counterclaims against the MDECD and Port claiming various
tort and contract breaches including wrongful failure to approve the
substitution of a gaming barge for the present gaming ship, wrongful failure to
allow GCP to construct a hotel on the leased premises, breach of covenant of
good faith and fair dealing, misrepresentation, breach of covenant of quiet
enjoyment and wrongfully allowing activities at the Port to cause the
accumulation of sand and silt under and adjacent to the GCP gaming vessel. GCP's
lawsuit seeks an award for compensatory damages in an amount not less than $200
million and a declaratory judgment quieting the lease term and allowing the
development of the leased premises.

         The lawsuit is presently set for trial on October 6, 1997 with respect
to the liability issues and both parties have been engaged in active discovery
matters, including depositions and exchange of documents, for most of calendar
1997. In the event GCP is successful on any or all of its claims and
counterclaims, a separate trial on damages will be held which is currently
scheduled during the first week of December 1997.

         Management believes that the outcome of this lawsuit is not presently
predictable or subject to reasonable estimation.


OTHER

         The Company is also a party to various other legal actions, proceedings
and pending claims arising in the normal course of its business. Management does
not expect the outcome of these claims or suits to have a material adverse
effect on the Company's financial position or results of future operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company did not submit any matters to a vote of security holders in
the fourth quarter of fiscal 1997.



                                       16

<PAGE>   18
                                     PART II


ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS

    The Common Stock of the Company is traded in the NASDAQ National Market
System under the symbol "SNDS" and the following table sets forth the range of
high and low closing sales prices as reported by NASDAQ.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,                                       HIGH               LOW           DIVIDEND
----------------------------                                       ----               ---           --------
<S>                                                                <C>              <C>                <C>  
       1996
           First Quarter.......................................... $6.25            $ 4.50             $.05
           Second Quarter.........................................  6.25              4.50             $.05
           Third Quarter..........................................  5.50              3.62             $.05
           Fourth Quarter.........................................  5.75              3.50               -

       1997
           First Quarter.......................................... $5.13             $3.13               -
           Second Quarter.........................................  3.75              2.63               -
           Third Quarter..........................................  3.13              2.50               -
           Fourth Quarter.........................................  3.50              1.63               -
</TABLE>

 -----------

         In fiscal 1996, the Board of Directors of the Company suspended the
payment of cash dividends. The declaration and payment of dividends in the
future, if any, will be determined by the Board of Directors in light of the
conditions then existing, including the Company's earnings, financial condition,
capital requirements and other factors.

         As of September 22, 1997, the Company had 158 shareholders of record
and in excess of 400 beneficial shareholders.


ITEM 6. SELECTED FINANCIAL DATA

         There is hereby incorporated by reference the information appearing
under the caption "The Sands Regent - Selected Financial Data" in the Company's
1997 Annual Report, filed as Exhibit 13 to this Form 10-K.


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

         There is hereby incorporated by reference the information appearing
under the caption "The Sands Regent - Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's 1997 Annual
Report, filed as Exhibit 13 to this Form 10-K.







                                       17

<PAGE>   19



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         There is hereby incorporated by reference the Consolidated Financial
Statements and the Notes to the Consolidated Financial Statements in the
Company's 1997 Annual Report, filed as Exhibit 13 to this Form 10-K. Reference
is made to the Consolidated Financial Statements and the Notes to Consolidated
Financial Statements in Item 14(a)(1) hereof.

         With the exception of the aforementioned information and the
information in Items 6 and 7, the Company's 1997 Annual Report is not deemed
filed as part of this Form 10-K.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

         None.






                                       18

<PAGE>   20



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         There is hereby incorporated by reference the information appearing
under the caption "Directors and Executive Officers" in the Company's definitive
Proxy Statement for the Annual Meeting of Shareholders to be held on November 3,
1997, filed or to be filed with the Securities and Exchange Commission.


ITEM 11. EXECUTIVE COMPENSATION

         There is hereby incorporated by reference the information appearing
under the caption "Compensation of Executive Officers" in the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held on
November 3, 1997, filed or to be filed with the Securities and Exchange
Commission.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         There is hereby incorporated by reference the information appearing
under the captions "Principal Shareholders" and "Directors and Executive
Officers" in the Company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on November 3, 1997, filed or to be filed with the
Securities and Exchange Commission.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         There is hereby incorporated by reference the information appearing
under the caption "Certain Relationships and Related Transactions" in the
Company's definitive Proxy Statement for the Annual Meeting of Shareholders to
be held on November 3, 1997, filed or to be filed with the Securities and
Exchange Commission.





                                       19

<PAGE>   21



                                     PART IV

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


(A)(1) FINANCIAL STATEMENTS.

         Included in Part II of this Report:

               Independent Auditors' Report

               Consolidated Balance Sheets -- June 30, 1997 and 1996

               Consolidated Statements of Operations -- Years Ended June 30,
               1997, 1996 and 1995

               Consolidated Statements of Stockholders' Equity -- Years Ended
               June 30, 1997, 1996 and 1995

               Consolidated Statements of Cash Flows -- Years Ended June 30,
               1997, 1996 and 1995

               Notes to Consolidated Financial Statements

(A)(2) FINANCIAL STATEMENT SCHEDULES.

         Included in Part IV of this Report:

               As of and for the Years Ended June 30, 1997, 1996 and 1995:

               Independent Auditors' Report on Schedules

               Schedule II -- Valuation and Qualifying Accounts

         All other schedules have been omitted because they are not applicable
or the required information is shown in the financial statements or notes
thereto.




                                       20

<PAGE>   22



(A)(3)     EXHIBITS

               3(a)(i)   Restated Articles of Incorporation of the Company
                         (Exhibit 3(a) to the Company's Registration Statement
                         (Registration No. 2-93453) on Form S-1).*

               3(a)(ii)  Certificate of Amendment to the Restated Articles of
                         Incorporation of the Company, dated November 2, 1987
                         (Exhibit 4(a) to the Company's Form 10-Q for the
                         quarter ended December 31, 1987).*

               3(b)(i)   Amended and Restated Bylaws of the Company, as amended
                         April 29, 1985, and currently in effect (Exhibit 3(b)
                         to the Company's Form 10-K for the fiscal year ended
                         June 30, 1985).*

               3(b)(ii)  Resolution of Amendment to the Bylaws of the Company,
                         dated November 2, 1987 (Exhibit 4(b) to the Company's
                         Form 10-Q for the quarter ended December 31, 1987).*

               3(b)(iii) Certificate of Amendment of the Amended and Restated
                         Code of Bylaws, as Amended, of The Sands Regent, dated
                         January 10, 1996 (Exhibit 3(b)(iii) to the Company's
                         Form 10-K for the fiscal year ended June 30, 1996).*

               4(a)      Amended Trust Agreement, dated February 22, 1987, among
                         Antonia Cladianos II as trustor and beneficiary and
                         Pete Cladianos, Jr. as trustee (Exhibit 4(a) to the
                         Company's Form 10-K for the fiscal year ended June 30,
                         1987).*

               4(b)      Amended Trust Agreement, dated February 19, 1987, among
                         Pete Cladianos III as trustor and beneficiary and Pete
                         Cladianos, Jr. as trustee (Exhibit 4(b) to the
                         Company's Form 10-K for the fiscal year ended June 30,
                         1987).*

               10(a)     Amended and Restated Stock Option Plan for Executive
                         and Key Employees of the Sands Regent and Forms of
                         Stock Option Agreements (Exhibit 4(a) to the Company's
                         Registration Statement (Registration No. 33-59574) on
                         Form S-8).*

               10(b)     Deferred Compensation Plan for Directors of the Company
                         (Exhibit 10(e) to the Company's Registration Statement
                         (Registration No. 2-93453) on Form S-1).*

               10(c)     Form of Indemnity Agreement for Directors and Officers
                         of the Company (Exhibit 10(f) to the Company's Form
                         10-K for the fiscal year ended June 30, 1988).*

               10(d)     Loan Agreement, dated March 31, 1993, by and between
                         First Interstate Bank of Nevada, National Association,
                         First Interstate Bank of California, The Daiwa Bank,
                         Limited and Zante, Inc. and the related Term and
                         Revolving Credit Promissory Note; Guarantee of Loan by
                         the Sands Regent; Deed of Trust, Fixture Filing and
                         Security Agreement with Assignment of Rents (Exhibit
                         10(b) to the Company's Form 10-Q for the Quarter ended
                         March 31, 1993).*

               10(e)     First Amendment to Loan Agreement, dated June 27, 1994,
                         by and between First Interstate Bank of Nevada,
                         National Association, The Daiwa Bank Limited and Zante,
                         Inc., Borrower, and The Sands Regent, Guarantor
                         (Exhibit 10(e) to the Company's Form 10-K for the
                         fiscal year ended June 30, 1994).*

               10(f)     Second Amendment to Loan Agreement and Term and
                         Revolving Credit Promissory Note, dated October 15,
                         1996, by and between Wells Fargo Bank, National
                         Association, The Sumitomo Bank Limited and Zante, Inc.,
                         Borrower, and The Sands Regent, Guarantor.**



                                       21

<PAGE>   23


               10(g)     International Swap Dealers Association, Inc. Master
                         Agreement for interest rate swap, dated March 23,1994,
                         by and between First Interstate Bank of Nevada N.A. and
                         Zante, Inc., and the related Guarantee by The Sands
                         Regent and Letter Agreement of Confirmation (Exhibit
                         10(f) to the Company's Form 10-K for the fiscal year
                         ended June 30, 1994).*

               10(h)     General Partnership Agreement, effective as of December
                         31, 1992, between Gulfside Casino, Inc. and Patrician,
                         Inc. (a wholly-owned subsidiary of the Sands Regent)
                         (Exhibit 10(a) to the Company's Form 10-Q for the
                         Quarter ended March 31, 1993).*

               10(i)     First Amendment to Gulfside Casino, a Mississippi
                         General Partnership, General Partnership Agreement,
                         dated April 15, 1994, between Gulfside Casino, Inc. and
                         Patrician, Inc. (both wholly owned subsidiaries of The
                         Sands Regent) (Exhibit 10(a) to the Company's Form 10-Q
                         for the Quarter ended March 31, 1994).*

               10(j)     Second Amendment to Gulfside Casino, a Mississippi
                         General Partnership, General Partnership Agreement,
                         dated December 9, 1994, between Gulfside Casino, Inc.
                         and Patrician, Inc., (both wholly-owned subsidiaries of
                         The Sands Regent)(Exhibit 10(a) to the Company's Form
                         10-Q for the Quarter ended December 31, 1994).*

               10(k)     Unanimous Consent to Action in Lieu of Special Call
                         Meeting of the Board for Gulfside Casino Partnership,
                         amending, among other items, the Gulfside Casino
                         General Partnership Agreement, dated May 30, 1997, by
                         and between Patrician, Inc., Gulfside Casino, Inc. and
                         Artemis, Inc.**

               10(l)     Agreement for the Purchase of Stock of the Gulfside
                         Casino, Inc. and certain Assets of McDonald Limited,
                         dated February 25,1994 (Exhibit 2(a) to the Company's
                         Form 8-K/A for event reporting date of February 14,
                         1994).*

               10(m)     Gulfside Casino, Inc. Settlement Agreement, dated
                         August 20, 1993, by and between Gulfside Casino, Inc.,
                         a Mississippi Corporation, and Joel R. Carter, Sr. and
                         Terry Green (Exhibit 10(j) to the Company's Form 10-K
                         for the year ended June 30,1994).*

               10(n)     Settlement Agreement dated November 2, 1984, by and
                         between Hughes Properties, Inc., and Zante, Inc.
                         (Exhibit 10(u) to the Company's Registration Statement
                         (Registration No. 2-93453) on Form S-1).*

               10(o)     Franchise Agreement dated October 9, 1986 and as
                         amended on October 9, 1986, by and between Roma
                         Corporation and Zante, Inc. (Exhibit 10(r) to the
                         Company's Form 10-K for the fiscal year ended June 30,
                         1987).*

               10(p)     Agreement, dated as of January 2, 1995, between David
                         R. Wood and The Sands Regent (Exhibit 10(n) to the
                         Company's Form 10-K for the fiscal year ended June 30,
                         1995).*

               10(q)     Lease Agreement by and between the Mississippi
                         Department of Economic and Community Development and
                         the Mississippi State Port Authority at Gulfport and
                         Gulfside Casino, Inc., dated August 20, 1992 (Exhibit
                         10(o) to the Company's Form 10-K for the fiscal year
                         ended June 30, 1996).*






                                       22

<PAGE>   24



               10(r)     Amendment to Lease and Approval of Stock Purchase by
                         and between the Mississippi Department of Economic and
                         Community Development and the Mississippi State Port
                         Authority at Gulfport and Gulfside Casino, Inc., dated
                         October 28, 1992 (Exhibit 10(p) to the Company's Form
                         10-K for the fiscal yer ended June 30, 1996).*

               10(s)     Second Lease Amendment by and between the Mississippi
                         Department of Economic and Community Development and
                         the Mississippi State Port Authority at Gulfport and
                         Gulfside Casino, Inc., Lessee, and Gulfside Casino
                         Partnership, Substitute Lessee, dated May 12, 1993
                         (Exhibit 10(q) to the Company's Form 10-K for the
                         fiscal year ended June 30, 1996).*

               10(t)     Third Lease Amendment by and between the Mississippi
                         Department of Economic and Community Development and
                         the Mississippi State Port Authority at Gulfport and
                         Gulfside Casino Partnership, dated June 21, 1994
                         (Exhibit 10(r) to the Company's Form 10-K for the
                         fiscal year ended June 30, 1996).*

               13        1997 Annual Report to Shareholders.**

               21        Subsidiaries: Zante, Inc., Patrician, Inc., and
                         Artemis, Inc., Nevada Corporations, and Gulfside
                         Casino, Inc., a Mississippi corporation, are wholly
                         owned by the Company. Patrician, Inc., Gulfside Casino,
                         Inc.,and Artemis, Inc., are the sole partners in
                         Gulfside Casino Partnership, a Mississippi general
                         partnership.

               23        Independent Auditors' Consent to the incorporation by
                         reference into specified registration statement on Form
                         S-8 of their reports contained in or incorporated by
                         reference into this report.**

               27        Financial Data Schedule.

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

               *           Incorporated by reference
               **          Filed herewith




(B) REPORTS ON FORM 8-K.

         The Company did not file any reports on Form 8-K during the last
quarter of fiscal 1997.

(C) INDEX TO EXHIBITS.

(D) FINANCIAL STATEMENT SCHEDULES.

      Financial statement schedules required by Regulation S-X are excluded from
      the 1997 Annual Report to the Shareholders by Rule 14a-3(b)(1). See
      Schedule II to the Financial Statements appearing under Item 14(a)(2)
      hereof.





                                       23

<PAGE>   25



                                   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.

                                         THE SANDS REGENT

Date: September 25, 1997                 By:    PETE CLADIANOS, JR.
                                                -------------------
                                                Pete Cladianos, Jr., President
                                                and Chief Executive Officer

         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 dates indicated.

<TABLE>
<CAPTION>

SIGNATURE                         CAPACITY                                       DATE
---------                         --------                                       ----
<S>                           <C>                                        <C>

PETE CLADIANOS, JR.           President (Chief                            September 25, 1997
-------------------           Executive Officer)
Pete Cladianos, Jr.           and Director

KATHERENE  LATHAM             Chairman of the                             September 25, 1997
-------------------           Board of Directors
Katherene Latham              

JON N. BENGTSON               Executive Vice President,                   September 25, 1997
-------------------           Chief Operating Officer and
Jon N. Bengtson               Director

DAVID R. WOOD                 Executive Vice President,                   September 25, 1997
-------------------           Treasurer, Chief Financial and
David R. Wood                 Accounting Officer and Director

PETE CLADIANOS III            Executive Vice President,                   September 25, 1997
-------------------           Secretary and Director
Pete Cladianos III            

JOSEPH G. FANELLI             Director                                    September 25, 1997
-------------------
Joseph G. Fanelli

WELDON C. UPTON               Director                                    September 25, 1997
-------------------
Weldon C. Upton
</TABLE>




                                       24

<PAGE>   26



INDEPENDENT AUDITORS' REPORT
----------------------------



To the Board of Directors and Shareholders of The Sands Regent:



We have audited the consolidated financial statements of The Sands Regent and
subsidiaries as of June 30, 1997 and 1996, and for each of the three years in
the period ended June 30, 1997, and have issued our report thereon dated August
8, 1997. Such consolidated financial statements and report are included in your
1997 Annual Report to Shareholders and are incorporated herein by reference. Our
audits also included the consolidated financial statement schedule of The Sands
Regent and subsidiaries, listed in Item 14. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such consolidated financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.




Deloitte & Touche LLP
Reno, Nevada
August 8, 1997


                                       25

<PAGE>   27

                                The Sands Regent

                                   Schedule II

                        Valuation and Qualifying Accounts

                                 (in thousands)

<TABLE>
<CAPTION>

                                                                   Additions
                                                 Balance at        Charged to
                                                  Beginning        Costs and                         Balance at
            Description                            of Year          Expenses        Deductions(1)    End of Year
            -----------                          ----------        -----------      -------------    -----------

Allowance for Doubtful Accounts Receivable:

<S>                                              <C>              <C>                 <C>            <C>    
    Year ended June 30, 1997 . . . . . . . .      $  107           $  103              $ ( 91)        $   119

    Year ended June 30, 1996 . . . . . . . .         147              136                (176)            107

    Year ended June 30, 1995 . . . . . . . .         111               92                 (56)            147

</TABLE>


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

(1)  Write-offs of uncollectible accounts receivable, net of recoveries


                                       26

<PAGE>   28
                                INDEX TO EXHIBITS


<TABLE>
<CAPTION>
                                                                                                          SEQUENTIALLY
EXHIBIT                                                                                                     NUMBERED
NUMBER                                                                                                        PAGE
------                                                                                                      --------
<S>            <C>                                                                                          <C>
10(f)          Second Amendment to Loan Agreement and Term and Revolving Credit
               Promissory Note, dated October 15, 1996, by and between Wells
               Fargo Bank, National Association, The Sumitomo Bank Limited and
               Zante, Inc., Borrower, and The Sands Regent, Guarantor . . . . . . . . . . . . . . . . . .

10(k)          Unanimous Consent to Action in Lieu of Special Call Meeting of the
               Board for Gulfside Casino Partnership, amending, among other items,
               the Gulfside Casino General Partnership Agreement, dated May 30, 1997,
               by and between Patrician, Inc., Gulfside Casino, Inc. and Artemis, Inc . . . . . . . . . .

13             1997 Annual Report to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23             Independent Auditors' Consent to the incorporation by reference
               into specified registration statement on Form S-8 of their
               reports contained in or incorporated by reference into 
               this report  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27             Financial Data Schedule  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .


</TABLE>