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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549



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FORM 10-Q



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|x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended December 31, 2005

or



| ̈ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission file number 0-14050



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THE SANDS REGENT

(exact name of registrant as specified in charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Nevada                                                         |  | 88-0201135                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|345 North Arlington Avenue, Reno, Nevada                       |  | 89501                               
|(Address of principal executive offices)                       |  | (Zip code)                          

Registrants telephone number, including area code (775) 348-2200



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Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes  x    No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated
filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.



|                         |  |                    |  |                         
|------------------------ |  | ------------------ |  | ------------------------
|Large accelerated filer ̈ |  | Accelerated filer ̈ |  | Non-accelerated filer  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ̈No  x

On March 16, 2006, the registrant had outstanding 7,115,204 shares of its common stock, $.10 par value.



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##### Table of Contents

THE SANDS REGENT

FORM 10-Q

TABLE OF CONTENTS



|               |  |                                                                                       |  |   
|-------------- |  | ------------------------------------------------------------------------------------- |  | --
|PART I         |  | FINANCIAL INFORMATION                                                                 |  | 1 
|               |  |                                                                                      
|Item 1.        |  | Financial Statements                                                                  |  | 1 
|               |  |                                                                                      
|               |  | Condensed Consolidated Statements of Income (unaudited)                               |  | 1 
|               |  |                                                                                      
|               |  | Condensed Consolidated Balance Sheets (unaudited)                                     |  | 2 
|               |  |                                                                                      
|               |  | Condensed Consolidated Statements of Cash Flows (unaudited)                           |  | 3 
|               |  |                                                                                      
|               |  | Notes to Condensed Consolidated Financial Statements (unaudited)                      |  | 5 
|               |  |                                                                                      
|Item 2.        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 11
|               |  |                                                                                      
|Item 3.        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 22
|               |  |                                                                                      
|Item 4.        |  | Controls and Procedures                                                               |  | 22
|               |  |                                                                                      
|PART II        |  | OTHER INFORMATION                                                                     |  | 24
|               |  |                                                                                      
|Item 1.        |  | Legal Proceedings                                                                     |  | 24
|               |  |                                                                                      
|Item 2.        |  | Changes in Securities                                                                 |  | 24
|               |  |                                                                                      
|Item 3.        |  | Defaults Upon Senior Securities                                                       |  | 24
|               |  |                                                                                      
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                   |  | 24
|               |  |                                                                                      
|Item 5.        |  | Other Information                                                                     |  | 24
|               |  |                                                                                      
|Item 6.        |  | Exhibits                                                                              |  | 25
|               | 
|SIGNATURES     |  | 26                                                                                   
|               | 
|CERTIFICATIONS |  |                                                                                      



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##### Table of Contents

PART I FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

THE SANDS REGENT

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)



|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|------------------------------------------------ |  | ------------------------------- | --------- | - | ----------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                 |  | THREE MONTHS ENDED DECEMBER 31, |           |   | SIX MONTHS ENDED DECEMBER 31, |  
|(Dollars in thousands, except per share amounts) |  | 2005                            |           |   | 2004                          |   |           | 2005 |  |   | 2004      |  
|Operating revenues                               |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Gaming                                           |  | $                               | 14,170    |   |                               | $ | 11,907    |      |  | $ | 27,589    |   |  | $ | 24,331    |  
|Lodging                                          |  |                                 | 1,864     |   |                               |   | 1,809     |      |  |   | 5,050     |   |  |   | 4,863     |  
|Food and beverage                                |  |                                 | 2,912     |   |                               |   | 2,786     |      |  |   | 5,958     |   |  |   | 5,833     |  
|Fuel and convenience store                       |  |                                 | 4,693     |   |                               |   | 4,080     |      |  |   | 10,658    |   |  |   | 8,783     |  
|Other                                            |  |                                 | 483       |   |                               |   | 470       |      |  |   | 985       |   |  |   | 949       |  
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Gross revenues                                   |  |                                 | 24,122    |   |                               |   | 21,052    |      |  |   | 50,240    |   |  |   | 44,759    |  
|Promotional allowances                           |  |                                 | 1,858     |   |                               |   | 1,695     |      |  |   | 3,846     |   |  |   | 3,527     |  
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Net revenues                                     |  |                                 | 22,264    |   |                               |   | 19,357    |      |  |   | 46,394    |   |  |   | 41,232    |  
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Operating expenses                               |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Gaming                                           |  |                                 | 5,574     |   |                               |   | 4,806     |      |  |   | 10,869    |   |  |   | 9,801     |  
|Lodging                                          |  |                                 | 952       |   |                               |   | 936       |      |  |   | 2,026     |   |  |   | 2,041     |  
|Food and beverage                                |  |                                 | 2,075     |   |                               |   | 1,865     |      |  |   | 4,154     |   |  |   | 3,803     |  
|Fuel and convenience store                       |  |                                 | 4,528     |   |                               |   | 3,915     |      |  |   | 10,266    |   |  |   | 8,388     |  
|Other                                            |  |                                 | 196       |   |                               |   | 143       |      |  |   | 357       |   |  |   | 300       |  
|Maintenance and utilities                        |  |                                 | 1,511     |   |                               |   | 1,382     |      |  |   | 3,084     |   |  |   | 2,874     |  
|General and administrative                       |  |                                 | 3,837     |   |                               |   | 3,424     |      |  |   | 7,137     |   |  |   | 6,469     |  
|Depreciation and amortization                    |  |                                 | 1,791     |   |                               |   | 1,516     |      |  |   | 3,440     |   |  |   | 3,061     |  
|Loss on early termination of land lease          |  |                                 | 419       |   |                               |   |          |      |  |   | 419       |   |  |   |          |  
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|                                                 |  |                                 | 20,883    |   |                               |   | 17,987    |      |  |   | 41,752    |   |  |   | 36,737    |  
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Income from operations                           |  |                                 | 1,381     |   |                               |   | 1,370     |      |  |   | 4,642     |   |  |   | 4,495     |  
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Other income (expense)                           |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Interest expense                                 |  |                                 | (434      | ) |                               |   | (799      | )    |  |   | (862      | ) |  |   | (1,405    | )
|Insurance settlement                             |  |                                 |          |   |                               |   | 200       |      |  |   |          |   |  |   | 200       |  
|Other, net                                       |  |                                 | (43       | ) |                               |   | (18       | )    |  |   | (34       | ) |  |   | (64       | )
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|                                                 |  |                                 | (477      | ) |                               |   | (617      | )    |  |   | (896      | ) |  |   | (1,269    | )
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Income before income taxes                       |  |                                 | 904       |   |                               |   | 753       |      |  |   | 3,746     |   |  |   | 3,226     |  
|Income tax provision                             |  |                                 | (301      | ) |                               |   | (255      | )    |  |   | (1,262    | ) |  |   | (1,088    | )
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Net income                                       |  | $                               | 603       |   |                               | $ | 498       |      |  | $ | 2,484     |   |  | $ | 2,138     |  
|                                                 |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Net income per share                             |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Basic                                            |  | $                               | 0.09      |   |                               | $ | 0.08      |      |  | $ | 0.35      |   |  | $ | 0.36      |  
|Diluted                                          |  | $                               | 0.08      |   |                               | $ | 0.07      |      |  | $ | 0.33      |   |  | $ | 0.33      |  
|Weighted average of shares outstanding           |  |                                 |           |   |                               |   |           |      |  |   |           |   |  |   |           |  
|Basic                                            |  |                                 | 7,095,103 |   |                               |   | 6,327,852 |      |  |   | 7,087,453 |   |  |   | 5,987,204 |  
|Diluted                                          |  |                                 | 7,539,993 |   |                               |   | 6,921,535 |      |  |   | 7,533,118 |   |  |   | 6,529,771 |  

The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.



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THE SANDS REGENT

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)



|                                                                                                   |  |                   |         |   |               |   |         |  
|-------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ------------- | - | ------- | -
|(Dollars in thousands except share data)                                                           |  | DECEMBER 31, 2005 |         |   | JUNE 30, 2005 |  
|ASSETS                                                                                             |  |                   |         |   |               |   |         |  
|Cash and cash equivalents                                                                          |  | $                 | 6,285   |   |               | $ | 3,272   |  
|Accounts receivable, net                                                                           |  |                   | 876     |   |               |   | 580     |  
|Inventories                                                                                        |  |                   | 685     |   |               |   | 692     |  
|Prepaid expenses and other assets                                                                  |  |                   | 2,240   |   |               |   | 1,805   |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Total current assets                                                                               |  |                   | 10,086  |   |               |   | 6,349   |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Property and equipment:                                                                            |  |                   |         |   |               |   |         |  
|Land                                                                                               |  |                   | 13,208  |   |               |   | 10,007  |  
|Buildings and improvements                                                                         |  |                   | 47,323  |   |               |   | 43,597  |  
|Equipment, furniture and fixtures                                                                  |  |                   | 29,222  |   |               |   | 27,264  |  
|Leasehold improvements                                                                             |  |                   | 178     |   |               |   | 178     |  
|Construction in progress                                                                           |  |                   | 1,848   |   |               |   | 854     |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Total property and equipment                                                                       |  |                   | 91,779  |   |               |   | 81,900  |  
|Less accumulated depreciation and amortization                                                     |  |                   | 45,933  |   |               |   | 42,992  |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Property and equipment, net                                                                        |  |                   | 45,846  |   |               |   | 38,908  |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Other assets:                                                                                      |  |                   |         |   |               |   |         |  
|Goodwill                                                                                           |  |                   | 33,388  |   |               |   | 28,642  |  
|Other intangibles                                                                                  |  |                   | 12,168  |   |               |   | 12,426  |  
|Other                                                                                              |  |                   | 979     |   |               |   | 1,202   |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Total other assets                                                                                 |  |                   | 46,535  |   |               |   | 42,270  |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Total assets                                                                                       |  | $                 | 102,467 |   |               | $ | 87,527  |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                               |  |                   |         |   |               |   |         |  
|Accounts payable                                                                                   |  | $                 | 2,509   |   |               | $ | 2,578   |  
|Accrued salaries, wages and benefits                                                               |  |                   | 2,198   |   |               |   | 1,884   |  
|Other accrued expenses                                                                             |  |                   | 1,431   |   |               |   | 398     |  
|Federal income tax payable                                                                         |  |                   | 1,092   |   |               |   | 774     |  
|Deferred federal income tax liability                                                              |  |                   | 388     |   |               |   | 338     |  
|Current maturities of long-term debt                                                               |  |                   | 3,992   |   |               |   | 2,198   |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Total current liabilities                                                                          |  |                   | 11,610  |   |               |   | 8,170   |  
|Long-term debt                                                                                     |  |                   | 25,953  |   |               |   | 17,744  |  
|Deferred federal income tax liability                                                              |  |                   | 2,330   |   |               |   | 2,209   |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Total liabilities                                                                                  |  |                   | 39,893  |   |               |   | 28,123  |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Common stock ($.10 par value, 20,000,000 shares authorized; 9,518,204 and 9,376,766 shares issued) |  |                   | 952     |   |               |   | 938     |  
|Additional paid-in capital                                                                         |  |                   | 28,034  |   |               |   | 26,938  |  
|Unearned compensation                                                                              |  |                   | (424    | ) |               |   |        |  
|Retained earnings                                                                                  |  |                   | 56,370  |   |               |   | 53,886  |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|                                                                                                   |  |                   | 84,932  |   |               |   | 81,762  |  
|Treasury stock (at cost; 2,403,000 shares)                                                         |  |                   | (22,358 | ) |               |   | (22,358 | )
|                                                                                                   |  |                   |         |   |               |   |         |  
|Total stockholders equity                                                                         |  |                   | 62,574  |   |               |   | 59,404  |  
|                                                                                                   |  |                   |         |   |               |   |         |  
|Total liabilities and stockholders equity                                                         |  | $                 | 102,467 |   |               | $ | 87,527  |  
|                                                                                                   |  |                   |         |   |               |   |         |  

The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.



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THE SANDS REGENT

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)



|                                                                                  |  |                              |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                  |  | SIX MONTHS ENDED DECEMBER 31 |        
|(Dollars in thousands)                                                            |  | 2005                         |         |   | 2004 |  
|Operating Activities                                                              |  |                              |         |   |      |   |         |  
|Net income                                                                        |  | $                            | 2,484   |   |      | $ | 2,138   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                              |         |   |      |   |         |  
|Depreciation and amortization                                                     |  |                              | 3,440   |   |      |   | 3,061   |  
|Loss on early termination of land lease                                           |  |                              | (419    | ) |      |   |        |  
|Loss on disposal of property and equipment                                        |  |                              | 34      |   |      |   | 64      |  
|(Increase) decrease in accounts receivable, net                                   |  |                              | (296    | ) |      |   | 223     |  
|(Decrease) increase in inventories                                                |  |                              | (30     | ) |      |   | 17      |  
|(Increase) decrease in prepaid expenses and other current assets                  |  |                              | (359    | ) |      |   | (26     | )
|Increase (decrease) in other assets                                               |  |                              | 970     |   |      |   | (137    | )
|Increase (decrease) in accounts payable                                           |  |                              | (80     | ) |      |   | 302     |  
|Increase (decrease) in accrued expenses                                           |  |                              | 1,348   |   |      |   | (591    | )
|Change in federal income taxes payable                                            |  |                              | (318    | ) |      |   | (243    | )
|Change in deferred federal income taxes                                           |  |                              | (171    | ) |      |   | 532     |  
|                                                                                  |  |                              |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                              | 6,603   |   |      |   | 5,340   |  
|                                                                                  |  |                              |         |   |      |   |         |  
|Investing Activities                                                              |  |                              |         |   |      |   |         |  
|Investment in property and equipment                                              |  |                              | (3,114  | ) |      |   | (2,011  | )
|Payment for prior year purchases of property and equipment                        |  |                              |        |   |      |   | (295    | )
|Net cash paid for wholly-owned subsidiary                                         |  |                              | (10,490 | ) |      |   |        |  
|Proceeds from sale of assets                                                      |  |                              |        |   |      |   | 32      |  
|                                                                                  |  |                              |         |   |      |   |         |  
|Net cash used in investing activities                                             |  |                              | (13,604 | ) |      |   | (2,274  | )
|                                                                                  |  |                              |         |   |      |   |         |  
|Financing Activities                                                              |  |                              |         |   |      |   |         |  
|Payments on long-term debt                                                        |  |                              | (3,100  | ) |      |   | (12,891 | )
|Amortization of debt discount                                                     |  |                              | 16      |   |      |   | 47      |  
|Payment of costs relative to the issuance of long-term debt                       |  |                              | (51     | ) |      |   | (41     | )
|Issuance of long-term debt                                                        |  |                              | 13,100  |   |      |   |        |  
|Issuance of Company common stock                                                  |  |                              | 49      |   |      |   | 9,562   |  
|Payment of costs relative to the issuance of common stock                         |  |                              |        |   |      |   | (668    | )
|                                                                                  |  |                              |         |   |      |   |         |  
|Net cash provided by (used) in financing activities                               |  |                              | 10,014  |   |      |   | (3,991  | )
|                                                                                  |  |                              |         |   |      |   |         |  
|Net increase (decrease) in cash and cash equivalents                              |  |                              | 3,013   |   |      |   | (925    | )
|Cash and cash equivalents, beginning of period                                    |  |                              | 3,272   |   |      |   | 5,443   |  
|                                                                                  |  |                              |         |   |      |   |         |  
|Cash and cash equivalents, end of period                                          |  | $                            | 6,285   |   |      | $ | 4,518   |  
|                                                                                  |  |                              |         |   |      |   |         |  
|Supplemental disclosure of cash flow information                                  |  |                              |         |   |      |   |         |  
|Interest paid, net of amount capitalized of $116 and $ 107                        |  | $                            | 747     |   |      | $ | 999     |  
|Federal income taxes paid                                                         |  | $                            | 774     |   |      | $ | 800     |  



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THE SANDS REGENT



|                                                                               |  |   |        |   |  |   |    
|------------------------------------------------------------------------------ |  | - | ------ | - |  | - | ---
|Supplemental disclosure of non-cash investing and financing activities         |  |   |        |   |  |   |    
|Property and equipment acquired by accounts payable                            |  | $ | 357    |   |  | $ | 99 
|Issuance of common stock to acquire subsidiary                                 |  | $ | 551    |   |  | $ |   
|Debt to equity conversion                                                      |  | $ |       |   |  | $ | 845
|Disqualifying dispositions of incentive stock options                          |  | $ |       |   |  | $ | 157
|Fair value of assets acquired and liabilities assumed in business combinations |  |   |        |   |  |   |    
|Current assets other than cash                                                 |  |   | 51     |   |  |   |   
|Property and equipment                                                         |  |   | 5,707  |   |  |   |   
|Goodwill                                                                       |  |   | 4,883  |   |  |   |   
|Intangibles                                                                    |  |   | 305    |   |  |   |    
|Other assets                                                                   |  |   | 107    |   |  |   |    
|Current liabilities                                                            |  |   | (12    | ) |  |   |   
|Common stock issued                                                            |  |   | (551   | ) |  |   |   
|                                                                               |  |   |        |   |  |   |    
|Cash paid net of cash acquired                                                 |  | $ | 10,490 |   |  | $ |   
|                                                                               |  |   |        |   |  |   |    

The accompanying notes are an integral part of these unaudited condensed consolidated financial
statements.



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##### Table of Contents

THE SANDS REGENT

Notes to Condensed Consolidated Financial Statements (unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying condensed
consolidated financial statements include the accounts of The Sands Regent (the Company) and its wholly-owned subsidiaries: Zante, Inc. (Zante), Last Chance, Inc. (Last Chance), Plantation Investments, Inc.
(Plantation), and Dayton Gaming, Inc. (Dayton). The Company and its subsidiaries are incorporated in Nevada. Zante owns and operates the Sands Regency Casino/Hotel (Sands Regency) in downtown Reno, Nevada. Last
Chance owns and operates the Gold Ranch Casino and RV Resort in Verdi, Nevada, and California Prospectors, Ltd. (California Prospectors), a Nevada limited liability company, which operates a California lottery station. Together, Last
Chance and California Prospectors are presented as Gold Ranch. Plantation owns and operates Rail City Casino (Rail City). On September 1, 2005, the Company acquired, through Dayton Gaming, Inc., the assets of Dayton
Depot and Red Hawk Sports Bar (Dayton Depot Casino) in Dayton, Nevada. (See Note 6)

The accounting policies followed in the preparation of the
financial information herein are the same as those summarized in the Companys 2005 Annual Report on Form 10-K, except for the Companys adoption of Statement of Financial Accounting Standards (SFAS) No. 123R on
July 1, 2005 (see Notes 4 and 5). The condensed consolidated balance sheet at June 30, 2005 was derived from audited consolidated financial statements at that date. The interim condensed consolidated financial information is unaudited and
should be read in conjunction with the Companys 2005 Form 10-K. In the opinion of management, all adjustments and normally recurring accruals necessary to fairly present the financial condition of the Company as of December 31, 2005 and
the results of its operations and its cash flows for the three months and six months ended December 31, 2005 and 2004 have been included. Interim results of operations are not necessarily indicative of the results of operations for the full
year due to seasonality and other factors.

NOTE 2 - EARNINGS PER SHARE

Earnings per share is calculated in accordance with SFAS No. 128Earnings Per Share. SFAS 128 provides for the reporting of basic, or undiluted earnings per share, and
diluted earnings per share. Basic earnings per share is computed by dividing net income by the weighted average number of shares outstanding during the period. Diluted earnings per share reflects the addition of potentially dilutive
securities, which for the Company, consist of stock options, restricted shares, convertible debt and warrants. Dilution is determined based upon the assumption that the options, the convertible debt, and the warrants are exercised or converted. The
weighted average number of shares outstanding for the calculation of diluted earnings per share include the dilutive effect of the Companys stock options, restricted shares, convertible debt and outstanding warrants unless the associated
strike price(s) exceeds the average closing price in the period.

The following is a reconciliation of the number of shares (denominator) used in the basic
and diluted earnings per share computations (in thousands):



|                                                             |  |                                |  |                 |                              |   |        |       |                 |   |       |        |  |                 |  |   |        |   |                 |       |  |   |       |  
|------------------------------------------------------------ |  | ------------------------------ |  | --------------- | ---------------------------- | - | ------ | ----- | --------------- | - | ----- | ------ |  | --------------- |  | - | ------ | - | --------------- | ----- |  | - | ----- | -
|                                                             |  | THREE MONTHS ENDED DECEMBER 31 |  |                 | SIX MONTHS ENDED DECEMBER 31 |  
|                                                             |  | 2005                           |  |                 | 2004                         |   |        | 2005  |                 |   | 2004  |       
|                                                             |  | Shares                         |  | Per ShareAmount |                              |   | Shares |       | Per ShareAmount |   |       | Shares |  | Per ShareAmount |  |   | Shares |   | Per ShareAmount |      
|Basic net income per share                                   |  | 7,095                          |  | $               | 0.09                         |   |        | 6,328 |                 | $ | 0.08  |        |  | 7,087           |  | $ | 0.35   |   |                 | 5,987 |  | $ | 0.36  |  
|Effect of dilutive securities, convertible debt and warrants |  | 445                            |  |                 | (0.01                        | ) |        | 594   |                 |   | (0.01 | )      |  | 446             |  |   | (0.02  | ) |                 | 543   |  |   | (0.03 | )
|                                                             |  |                                |  |                 |                              |   |        |       |                 |   |       |        |  |                 |  |   |        |   |                 |       |  |   |       |  
|Diluted net income per share                                 |  | 7,540                          |  | $               | 0.08                         |   |        | 6,922 |                 | $ | 0.07  |        |  | 7,533           |  | $ | 0.33   |   |                 | 6,530 |  | $ | 0.33  |  
|                                                             |  |                                |  |                 |                              |   |        |       |                 |   |       |        |  |                 |  |   |        |   |                 |       |  |   |       |  



5



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##### Table of Contents

THE SANDS REGENT

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



NOTE 3 - BUSINESS SEGMENTS

The company reports business segment information by geographic location. The following is a breakdown of relevant data by location.



|                                |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|------------------------------- |  | ----------------------------- | ------ | - | --------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                |  | THREE MONTHS ENDEDDECEMBER 31 |        |   | SIX MONTHS ENDEDDECEMBER 31 |  
|(Dollars in thousands)          |  | 2005                          |        |   | 2004                        |   |        | 2005 |  |   | 2004   |  
|Net Revenues                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Rail City Casino                |  | $                             | 6,572  |   |                             | $ | 6,186  |      |  | $ | 12,690 |   |  | $ | 12,256 |  
|Sands Regency Casino/Hotel      |  |                               | 7,759  |   |                             |   | 7,406  |      |  |   | 17,307 |   |  |   | 16,408 |  
|Gold Ranch Casino and RV Resort |  |                               | 6,434  |   |                             |   | 5,765  |      |  |   | 14,536 |   |  |   | 12,568 |  
|Dayton Depot Casino             |  |                               | 1,499  |   |                             |   |       |      |  |   | 1,861  |   |  |   |       |  
|                                |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|                                |  | $                             | 22,264 |   |                             | $ | 19,357 |      |  | $ | 46,394 |   |  | $ | 41,232 |  
|                                |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Income from operations          |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Rail City Casino                |  | $                             | 1,446  |   |                             | $ | 1,588  |      |  | $ | 3,218  |   |  | $ | 3,037  |  
|Sands Regency Casino/Hotel      |  |                               | 33     |   |                             |   | 89     |      |  |   | 1,573  |   |  |   | 1,412  |  
|Gold Ranch Casino and RV Resort |  |                               | 190    |   |                             |   | 241    |      |  |   | 676    |   |  |   | 921    |  
|Dayton Depot Casino             |  |                               | 434    |   |                             |   |       |      |  |   | 525    |   |  |   |       |  
|Corporate                       |  |                               | (722   | ) |                             |   | (548   | )    |  |   | (1,350 | ) |  |   | (875   | )
|                                |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|                                |  | $                             | 1,381  |   |                             | $ | 1,370  |      |  | $ | 4,642  |   |  | $ | 4,495  |  
|                                |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Depreciation and amortization   |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Rail City Casino                |  | $                             | 497    |   |                             | $ | 522    |      |  | $ | 984    |   |  | $ | 1,009  |  
|Sands Regency Casino/Hotel      |  |                               | 960    |   |                             |   | 882    |      |  |   | 1,836  |   |  |   | 1,758  |  
|Gold Ranch Casino and RV Resort |  |                               | 191    |   |                             |   | 137    |      |  |   | 419    |   |  |   | 275    |  
|Dayton Depot Casino             |  |                               | 136    |   |                             |   |       |      |  |   | 187    |   |  |   |       |  
|Corporate                       |  |                               | 7      |   |                             |   | (25    | )    |  |   | 14     |   |  |   | 19     |  
|                                |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|                                |  | $                             | 1,791  |   |                             | $ | 1,516  |      |  | $ | 3,440  |   |  | $ | 3,061  |  
|                                |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  

NOTE 4 - ADOPTION OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT

In December 31, 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS 123R),
replacing SFAS No. 123, Accounting for Stock-Based Compensation, and superceding Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. SFAS 123R requires recognition
of share-based compensation in the financial statements. SFAS 123R is effective as of the first annual reporting period that begins after June 15, 2005 and has been adopted by the Company on July 1, 2005. See Note 5 for further details.

In March 2005, the FASB issued Interpretation 47 (FIN 47) Accounting for Conditional Asset Retirement Obligations  an
interpretation of FASB Statement No. 143. This interpretation clarified the term conditional asset retirement obligation and also clarified the requirement to recognize a liability for the fair value of such an obligation when
incurred if the liabilitys fair value can be reasonably estimated. The 2006 adoption of FIN 47 did not have a material impact on our consolidated statements.

In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections. This statement requires retrospective application to prior periods financial statements of changes in accounting principle, unless it is
impracticable to determine either the period-specific effects or the cumulative effect of the change. Additionally, this statement provides guidance on recording and disclosing changes in accounting estimates. We will adopt this statement on
July 1, 2006 and do not expect its adoption to have a material effect on our financial statements.



6



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##### Table of Contents

THE SANDS REGENT

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



NOTE 5 - STOCK-BASED COMPENSATION

On July 1, 2005, the Company adopted SFAS No. 123R, Share-Based Payments (SFAS No. 123R) which requires companies to measure the cost of employee services received in exchange
for an award of equity instruments based on the grant date fair value of the award. The Company has elected to use the Modified Prospective Transition method such that SFAS No. 123R applies to new awards and to awards modified, repurchased or
canceled after the effective date. The Company has equity incentive plans that provide for the issuance of stock options and/or restricted stock. Generally, stock options granted to employees fully vest four years from the grant date and in one year
for directors and have a term of ten years. No new stock options were granted subsequent to July 1, 2005.

In September 2005, the Company issued
36,600 shares of restricted stock to employees. These shares vest 25% annually, starting one year from the date of grant. On November 7, 2005, the Company issued 17,500 shares of restricted stock to independent members of the board of directors
vesting one year from the date of grant. On November 11 and November 16, 2005, 2,600 restricted shares of stock previously issued to employees were forfeited due to cancellation of employment with the Company. The Company recognizes
stock-based compensation expense over the requisite service period of the individual grants and awards are generally equal to the vesting period.

Prior to
July 1, 2005, the Company accounted for these plans under the intrinsic value method described in APB Opinion No. 25, Accounting for Stock Issued to Employees and related interpretation. The Company, applying the intrinsic
value method, did not record stock-based compensation cost in net income because the exercise price of its stock options equaled the market price of the underlying stock at the date of grant. Upon the adoption of SFAS 123R on July 1, 2005,
compensation costs for the portion of unvested stock options for which the required service period has not been rendered that are outstanding as of July 1, 2005 shall be recognized as the remaining required services are rendered. The
compensation costs relating to unvested awards are based on the grant date fair value of those awards as calculated under SFAS No. 123R.

For the
three and six months ended December 31, 2005, compensation expense of $61,000 and $146,000 relate to stock options issued prior to July 1, 2005. A total of $196,000 of unrecognized compensation costs related to nonvested stock options is
expected to be recognized over future periods. Costs associated with these expenses are included in general and administrative expenses.

For the three and
six months ended December 31, 2005, $71,000 and $87,000 related to the grant of restricted stock in September and November 2005 is included in general and administrative expenses.

SFAS No. 123R requires the Company to present proforma information for periods prior to the adoption as if it had accounted for all stock-based compensation under the fair value method. Had compensation costs
under the Companys plans been recorded last year, the effect on the Companys net income and earnings per share would have been as follows (in thousands, except per share amounts):



|                                                                                                                              |  |                                      |      |   |                                    |   |       |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------ | ---- | - | ---------------------------------- | - | ----- | -
|                                                                                                                              |  | Three Months Ended December 31, 2004 |      |   | Six Months Ended December 31, 2004 |  
|Net Income, as reported                                                                                                       |  | $                                    | 498  |   |                                    | $ | 2,138 |  
|Total stock-based employee compensation expense determined under fair value method for all awards, net of income tax benefits |  |                                      | (33  | ) |                                    |   | (79   | )
|                                                                                                                              |  |                                      |      |   |                                    |   |       |  
|Pro forma net income                                                                                                          |  | $                                    | 465  |   |                                    | $ | 2,059 |  
|                                                                                                                              |  |                                      |      |   |                                    |   |       |  
|Earnings per share:                                                                                                           |  |                                      |      |   |                                    |   |       |  
|Basic-as reported                                                                                                             |  | $                                    | 0.08 |   |                                    | $ | 0.36  |  
|                                                                                                                              |  |                                      |      |   |                                    |   |       |  
|Basic-pro forma                                                                                                               |  | $                                    | 0.07 |   |                                    | $ | 0.34  |  
|                                                                                                                              |  |                                      |      |   |                                    |   |       |  
|Diluted-as reported                                                                                                           |  | $                                    | 0.07 |   |                                    | $ | 0.33  |  
|                                                                                                                              |  |                                      |      |   |                                    |   |       |  
|Diluted-pro forma                                                                                                             |  | $                                    | 0.07 |   |                                    | $ | 0.32  |  
|                                                                                                                              |  |                                      |      |   |                                    |   |       |  



7



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##### Table of Contents

THE SANDS REGENT

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



NOTE 6 - ACQUISITIONS

On September 1, 2005, the Company completed its acquisition of the assets of Dayton Depot and Red Hawk Sports Bar (Dayton Depot Casino) through its subsidiary, Dayton Gaming, Inc., a Nevada corporation, pursuant to an Asset
Purchase Agreement dated February 28, 2005 (the Agreement).

The preliminary purchase price of $11 million (including acquisition costs)
was calculated based on EBITDA (earnings before interest, taxes, depreciation and amortization) for Dayton Depot Casino for the twelve months preceding the closing date of the acquisition as prescribed in the Agreement. The purchase was funded with
the payment of $10.5 million in cash and issuance of 69,438 shares of Company stock. The cash paid in connection with the transaction came primarily from an amended and restated credit facility (Note 8), which, in concert with the stock, funded the
acquisition including net working capital. The Company stock issued to the seller contains a two year trading restriction from the date of the acquisition. The value of the stock issued in the transaction has been recorded at a 20% discount to
market value to account for the impact of the trading restriction.

The purchase price of Dayton Depot Casino was preliminarily allocated based on the fair
market value of assets acquired net of liabilities assumed. We have retained a third party valuation of significant identifiable assets acquired as well as other assets acquired and certain liabilities. The purchase price amount in excess of net
assets acquired was allocated to goodwill. The following table includes total consideration paid including cash and company stock. The fair values of the assets acquired and liabilities assumed at the date of acquisition were:



|                                  |  |   |        |  
|--------------------------------- |  | - | ------ | -
|Current assets other than cash    |  | $ | 51     |  
|Property and equipment            |  |   | 5,707  |  
|Goodwill                          |  |   | 4,883  |  
|Intangibles                       |  |   | 305    |  
|Other                             |  |   | 107    |  
|                                  |  |   |        |  
|Total assets acquired             |  |   | 11,053 |  
|Total current liabilities assumed |  |   | (12    | )
|                                  |  |   |        |  
|Net assets acquired               |  | $ | 11,041 |  
|                                  |  |   |        |  

The pro forma consolidated results of operations, as if the acquisition of Dayton Depot Casino had occurred on
July 1, 2004, are as follows (in thousands except per share data):



|                             |  |                                   |        |                                   |   |       
|---------------------------- |  | --------------------------------- | ------ | --------------------------------- | - | ------
|                             |  | Six months endedDecember 31, 2005 |        | Six months endedDecember 31, 2004
|Net revenues                 |  | $                                 | 47,308 |                                   | $ | 43,971
|Net income                   |  | $                                 | 2,565  |                                   | $ | 2,382 
|Basic net income per share   |  | $                                 | 0.36   |                                   | $ | 0.40  
|Diluted net income per share |  | $                                 | 0.34   |                                   | $ | 0.37  
|Basic Shares Outstanding     |  |                                   | 7,087  |                                   |   | 5,987 
|Diluted Shares Outstanding   |  |                                   | 7,533  |                                   |   | 6,530 



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##### Table of Contents

THE SANDS REGENT

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



NOTE 7 - INTANGIBLES AND GOODWILL

Intangible Balances



|                                    |  |                      |        |                         |   |     |  |                      |        |                         |   |        |  |   |     |  |   |       
|----------------------------------- |  | -------------------- | ------ | ----------------------- | - | --- |  | -------------------- | ------ | ----------------------- | - | ------ |  | - | --- |  | - | ------
|                                    |  | December 31, 2005    |        | June 30, 2005          
|(Dollars in thousands)              |  | Gross CarryingAmount |        | AccumulatedAmortization |   | Net |  | Gross CarryingAmount |        | AccumulatedAmortization |   | Net   
|Finite-lived intangible assets:     |  |                      |        |                         |   |     |  |                      |        |                         |   |        |  |   |     |  |   |       
|Customer list/relationships         |  | $                    | 1,190  |                         | $ | 843 |  | $                    | 347    |                         | $ | 1,190  |  | $ | 709 |  | $ | 481   
|Under-market land lease (1)         |  |                      | 448    |                         |   | 28  |  |                      |       |                         |   | 448    |  |   | 21  |  |   | 427   
|Non-compete agreement               |  |                      | 45     |                         |   | 3   |  |                      | 42     |                         |   |       |  |   |    |  |   |      
|                                    |  |                      |        |                         |   |     |  |                      |        |                         |   |        |  |   |     |  |   |       
|                                    |  |                      | 1,683  |                         |   | 874 |  |                      | 389    |                         |   | 1,638  |  |   | 730 |  |   | 908   
|                                    |  |                      |        |                         |   |     |  |                      |        |                         |   |        |  |   |     |  |   |       
|Indefinite-lived intangible assets: |  |                      |        |                         |   |     |  |                      |        |                         |   |        |  |   |     |  |   |       
|Grandfathered gaming license        |  |                      | 7,205  |                         |   |    |  |                      | 7,205  |                         |   | 7,205  |  |   |    |  |   | 7,205 
|Trademark/tradename                 |  |                      | 4,479  |                         |   |    |  |                      | 4,479  |                         |   | 4,303  |  |   |    |  |   | 4,303 
|Other                               |  |                      | 95     |                         |   |    |  |                      | 95     |                         |   | 10     |  |   |    |  |   | 10    
|                                    |  |                      |        |                         |   |     |  |                      |        |                         |   |        |  |   |     |  |   |       
|                                    |  |                      | 11,779 |                         |   |    |  |                      | 11,779 |                         |   | 11,518 |  |   |    |  |   | 11,518
|                                    |  |                      |        |                         |   |     |  |                      |        |                         |   |        |  |   |     |  |   |       
|                                    |  | $                    | 13,462 |                         | $ | 874 |  | $                    | 12,168 |                         | $ | 13,156 |  | $ | 730 |  | $ | 12,426
|                                    |  |                      |        |                         |   |     |  |                      |        |                         |   |        |  |   |     |  |   |       



|(1) | With the purchase of 2.58 acres of the land adjacent to Rail City Casino on December 20, 2005, for $901,000, the Company recorded a non-cash charge of $419,000 for the
unamortized value of the under-market land lease relating to early termination of the lease on the land from the State of Nevada.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Amortization of Intangibles

The aggregate amortization expense was $64,000 and $154,000 for the three months ended December 31, 2005
and 2004. The aggregate amortization expense was $ 144,000 and $ 309,000 for the six months ended December 31, 2005 and 2004, respectively. Estimated amortization expense for the current and succeeding fiscal years is as follows:



|                       |  |            |  |              |     |  |        |  
|---------------------- |  | ---------- |  | ------------ | --- |  | ------ | -
|(Dollars in thousands) |  | FiscalYear |  | Amortization |     |  |       
|                       |  | 2006       |  | $            | 139 |  | (6 Mos | )
|                       |  | 2007       |  | $            | 147 |  |        |  
|                       |  | 2008       |  | $            | 81  |  |        |  
|                       |  | 2009       |  | $            | 13  |  |        |  
|                       |  | 2010       |  | $            | 9   |  |        |  



9



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##### Table of Contents

THE SANDS REGENT

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



Goodwill Changes and Balance by Segment



|                                |  |           |        |            |   |              |  |       |       |  |   |       
|------------------------------- |  | --------- | ------ | ---------- | - | ------------ |  | ----- | ----- |  | - | ------
|(Dollars in thousands)          |  | Rail City |        | Gold Ranch |   | Dayton Depot |  | Total
|Balance at beginning of period  |  | $         | 17,624 |            | $ | 11,019       |  | $     |      |  | $ | 28,643
|Dayton Depot Casino acquisition |  |           |       |            |   |             |  |       | 4,745 |  |   | 4,745 
|                                |  |           |        |            |   |              |  |       |       |  |   |       
|Balance at December 31, 2005    |  | $         | 17,624 |            | $ | 11,019       |  | $     | 4,745 |  | $ | 33,388
|                                |  |           |        |            |   |              |  |       |       |  |   |       

NOTE 8  RECENTLY AMENDED AND RESTATED CREDIT FACILITIES

In connection with the acquisition of Dayton Depot Casino, the Company executed an amended and restated syndicated financing arrangement (Credit Agreement)
through Wells Fargo Bank. The Credit Agreement provides for a 5-year, $22,000,000 term loan collateralized by substantially all property and equipment of Zante, Inc., Plantation Investments, Inc., and Dayton Gaming, Inc., and the furniture, fixtures
and equipment of Last Chance, Inc. The balance of the term loan was $20.3 million at December 31, 2005 and $16.1 million at June 30, 2005. The loan has a variable interest rate based on LIBOR or the U.S. Prime Index plus an applicable
margin as detailed in the Credit Agreement. The interest rate at December 31, 2005 was LIBOR plus 2.25% or Prime plus .75%. The interest rate at June 30, 2005 was LIBOR plus 2% or Prime plus .5%. At December 31, 2005 and June 30,
2005, the weighted average interest rate on the term loan was 7.08% and 5.38% respectively. The loan has a 5-year amortization schedule, and matures on September 1, 2010, with interest and any unpaid principal due and payable on that date.
Additionally, as part of the Credit Agreement, the Company secured a Wells Fargo Bank syndicated, 5-year $25,000,000 revolving credit facility with collateralization and terms which are substantially similar to the term loan. The balance of the
revolving credit facility was $ 9.1 million at December 31, 2005 and $ 3.4 million at June 30, 2005. The weighted average interest rate on the revolving credit facility at December 31, 2005 and June 30, 2005 was 7.02%
and 6.50% respectively. The credit facility requires interest-only payments and matures September 1, 2010, with interest and any unpaid principal due and payable on that date. Together, the bank term loan and revolving credit facility requires
the Company to be in compliance with certain financial and other covenants, restricts future encumbrances, and limits situations where a change in control in the Company may occur. The financial covenants include the requirement that a minimum
EBITDA (earnings before interest expense, taxes, depreciation and amortization) and certain other financial ratios be maintained. The Company believes that it is in compliance with all covenants and restrictions at December 31, 2005. For a more
complete description of the credit facilities, refer to the Companys Annual Report on Form 10-K for the year ended June 30, 2005.

NOTE 9
 SUBSEQUENT EVENTS

As of the filing of this report, the scope of the expansion of the Rail City Casino has been increased and the budgeted
project costs have been revised to approximately $13.8 million versus the previous estimate of $8.5 million. Increased construction costs, refinements to the project scope, careful sequencing of construction activity to minimize the impact of
construction and the acquisition of additional land for customer parking, during and after the construction of the expansion, are the primary drivers of the increased cost estimates. As previously announced in the Companys filing on Form 8-K
dated March 21, 2006, Plantation Investments, Inc., a subsidiary of the Company, has contracted to purchase a .5 acre site that is adjacent to the casino which currently has a 27 unit motel on the site for $1.3 million. The company plans to
demolish substantially all of the motel units for additional customer parking during construction and continuing once the expansion is completed. Closing of the transaction is scheduled to occur on or before April 3, 2006.



10



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##### Table of Contents

THE SANDS REGENT

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The Sands Regent and its subsidiaries (the Company, we, our, or us) operate the Rail City Casino (Rail City) in Sparks, Nevada, the Sands Regency Casino
Hotel (the Sands) in downtown Reno, Nevada, the Gold Ranch Casino and RV Resort (the Gold Ranch) on Interstate-80 in Verdi, Nevada and, effective September 1, 2005, the Dayton Depot Casino and Red Hawk Sports Bar
(Dayton Depot Casino) in Dayton, Nevada. The Sands has 833 hotel rooms and 5 restaurants, including Tony Romas Famous for Ribs, Mels the Original diner, and Arbys. It has a full selection of gaming options, including
544 slot machines, 17 table games, poker, keno, bingo, and a sportsbook operated by a third party. Additionally, the Sands has a Just for Laughs comedy club, a cabaret lounge, and a health spa.

Gold Ranchs gaming options include 243 slot machines, a California lottery station on Gold Ranchs property which straddles the Nevada/California border, and
a sportsbook operated by a third party. Additionally, Gold Ranch has a 105-space RV park, 2 restaurants (a family style restaurant and a Jack-in-the-Box), a bar and an ARCO gas station and convenience store.

Rail City has approximately 16,600 square feet of gaming space housing 650 slots, 6 table games, keno, a sportsbook operated by a third party, a 24-hour family-style
restaurant and a bar.

On September 1, 2005, the Company acquired Dayton Depot Casino in Dayton, Nevada. Dayton Depot has 16,000 square feet of casino
and a family-style restaurant, two bars, 250 slot machines and a sportsbook operated by a third party. The Red Hawk Sports Bar, located across Highway 50 from the Depot Casino, houses 33 slot machines and a convenience store. The results of
operations for the three months and six months ended December 31, 2005 include the results of Dayton Depot Casino beginning September 1, 2005.

Critical Accounting Policies and Estimates

The Company prepares its consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America. Certain of the Companys policies, including the estimated lives assigned to long-lived assets, asset impairment, goodwill and other intangibles impairment, the adequacy of our
allowance for uncollectible receivables, self insurance reserves, litigation reserves, and customer rewards program liability requires that the Company apply significant judgment in defining the appropriate assumptions for calculating financial
estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. The Companys judgments are based on historical experience, terms of existing contracts, observations of trends in the industry, information provided
by customers and information available from other outside sources, as appropriate. There can be no assurance that actual results will not differ from Company estimates.

Results of Operations  Comparisons of Three Months and Six Months ended December 31, 2005 and 2004.

CONSOLIDATED RESULTS. For the three months and six months ended December 31, 2005, the Companys consolidated net revenues increased 15.0% and 12.6% from $19.4 million to $22.2 million and from $41.2 million to $46.4 respectively,
million compared to the same periods of the prior year.

On a by-property basis, the net revenue for Rail City increased 6.2% and 3.5% from the
corresponding three months and six months of the prior year, while net revenue for the Sands increased 4.7% and 5.5% from the corresponding three months and six months of the prior year. Gold Ranch net revenue increased 11.6% and 15.7% from the
corresponding three month and six months of the prior year, attributable to increases in the retail price of gasoline. Consolidated net revenues include Dayton Depot Casino which was acquired by the Company on September 1, 2005. The factors
that are attributed to the financial results of the business are discussed below. The Companys consolidated income from operations was $1.4 million for the quarter ended December 31, 2005 and $4.6 million for the six months ended
December 31, 2005 compared to $1.4 million and $4.5 million for the respective periods of the prior year. Rail City achieved income from operations of $1.4 million and $3.2 million for the three and six months ended December 31, 2005, a
10.0% decrease and 6.0% increase compared to the same periods of the prior year. The Sands achieved income from operations of $33,000 and $1.6 million, a 70.0% decrease and 11.4% increase from the same periods of the prior year. Income from
operations at Gold Ranch for



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



the three months of $190,000 and $676,000 six months ended December 31, 2005 represents a 26.8% and 36.2% decrease for the same three months and six
month periods of the prior year. Rising gasoline prices contributed to decreases in weekend traffic on Interstate-80 which resulted in an adverse impact to Gold Ranch. The competitive nature of gasoline prices does not allow the property to increase
its profit margins in spite of increased retail pricing. Total gallons of gasoline pumped at Gold Ranch, a key indicator of customer traffic to the property, decreased 11.6% from the same period in the prior year. Consolidated income from operations
includes a partial quarter of Dayton Depot Casino. Dayton Depot Casino was acquired by the Company on September 1, 2005.

Corporate expenses increased
to $721,000 and $1,350,000 for the three and six months ended December 31, 2005, compared to $548,000 and $875,000 for the same periods of the prior year. Increases from the prior period reflect the implementation in the current quarter and six
months ended of the requirements of SFAS 123R Share-Based Payment of $61,000 and $146,000 for stock options issued prior to July 1, 2005 and $71,000 and $87,000 for current year grants of restricted stock and $31,000 and $65,000 for
accrued management incentive awards to be awarded in the future based on fiscal 2006 performance. The following amounts, net of tax effects, were allocated to the various properties and are included in General and Administrative Expenses: Sands
Regency - $27,000; Gold Ranch - $6,200; Rail City Casino - $12,250; and Dayton Depot Casino - $5,100. In addition, the Company incurred $121,000 and $263,000 for the three months and six months ended December 31, 2005 of costs related to
preparation to meet the new internal control requirements of the Sarbanes-Oxley Act of 2002.

The Company had consolidated net income of $603,000 and $2.5
million, or $.09 per share ($.08 diluted) and $.35 per share ($.33 diluted), for the three months and six months ended December 31, 2005, compared to $498,000 and $ 2.1 million, or $.08 per share ($.07 diluted) and $.36 per share ($.33
diluted), for the three months and six months December 31, 2004.

RAIL CITY CASINO

The following table highlights Rail City Casinos sources of revenues and expenses for the periods indicated:



|                           |  |                               |       |   |                             |   |       |         |  |      |      |  |   |        |   |  |         |        |   |  |       |  
|-------------------------- |  | ----------------------------- | ----- | - | --------------------------- | - | ----- | ------- |  | ---- | ---- |  | - | ------ | - |  | ------- | ------ | - |  | ----- | -
|                           |  | THREE MONTHS ENDEDDECEMBER 31 |       |   | SIX MONTHS ENDEDDECEMBER 31 |  
|(Dollars in thousands)     |  | 2005                          |       |   | 2004                        |   |       | PERCENT |  |      | 2005 |  |   | 2004   |   |  | PERCENT |       
|Gaming revenues            |  | $                             | 6,120 |   |                             | $ | 5,572 |         |  | 9.8  | %    |  | $ | 11,719 |   |  | $       | 11,065 |   |  | 5.9   | %
|Gaming expenses            |  | $                             | 2,128 |   |                             | $ | 2,012 |         |  | 5.8  | %    |  | $ | 4,153  |   |  | $       | 4,123  |   |  | 0.7   | %
|Expense margin             |  |                               | 34.8  | % |                             |   | 36.1  | %       |  |      |      |  |   | 35.4   | % |  |         | 37.3   | % |  |       |  
|Food and beverage revenues |  | $                             | 1,186 |   |                             | $ | 1,278 |         |  | -7.2 | %    |  | $ | 2,367  |   |  | $       | 2,554  |   |  | -7.3  | %
|Food and beverage expenses |  | $                             | 835   |   |                             | $ | 811   |         |  | 3.0  | %    |  | $ | 1,646  |   |  | $       | 1,614  |   |  | 2.0   | %
|Expense margin             |  |                               | 70.4  | % |                             |   | 63.5  | %       |  |      |      |  |   | 69.5   | % |  |         | 63.2   | % |  |       |  
|Total net revenues         |  | $                             | 6,572 |   |                             | $ | 6,186 |         |  | 6.2  | %    |  | $ | 12,690 |   |  | $       | 12,256 |   |  | 3.5   | %
|Total operating expenses   |  | $                             | 5,126 |   |                             | $ | 4,598 |         |  | 11.5 | %    |  | $ | 9,472  |   |  | $       | 9,219  |   |  | 2.7   | %
|Expense margin             |  |                               | 78.0  | % |                             |   | 74.3  | %       |  |      |      |  |   | 74.6   | % |  |         | 75.2   | % |  |       |  
|Maintenance and utilities  |  | $                             | 344   |   |                             | $ | 327   |         |  | 5.2  | %    |  | $ | 717    |   |  | $       | 697    |   |  | 2.9   | %
|Percent of net revenues    |  |                               | 5.2   | % |                             |   | 5.3   | %       |  |      |      |  |   | 5.7    | % |  |         | 5.7    | % |  |       |  
|General and administrative |  | $                             | 892   |   |                             | $ | 917   |         |  | -2.7 | %    |  | $ | 1,526  |   |  | $       | 1,754  |   |  | -13.0 | %
|Percent of net revenues    |  |                               | 13.6  | % |                             |   | 14.8  | %       |  |      |      |  |   | 12.0   | % |  |         | 14.3   | % |  |       |  

RAIL CITY CASINO. Gaming revenue of $ 6.1 million and $ 11.7 million for the three months and six months
ending December 31, 2005 reflects a 9.8% and 5.9% increase or $ 548,000 and $ 654,000 from the three months and six months ended December 31, 2004. The slot machine win percentage remained constant for the three months and six months ended
December 31, 2005 and 2004. However, the total coin-in, an indicator of total slot



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



machine wagering, increased $2.1 million and $1.9 million for the three months and six months ended December 31, 2005 to $104.2 million and $109.5
million compared to the same periods in 2004. The win percentage which remained consistent with the prior year quarter on increased total coin-in, represents the total increased gaming revenue for three months and six months ended December 31,
2005.

Gaming operating expenses for the three and six months ended December 31, 2005 were $2.1 million, and $4.1 million, compared to $2.0 and
$4.1 for the same periods a year ago, an increase of $116,000 and $30,000 respectively.

Food and beverage revenue of $1.1 million and $2.3 million for the
three and six months ended December 31, 2005 decreased $92,000 from $1.2 million and $187,000 from $2.5 million for the same periods in 2004. Cover counts (number of meals served) for the three months and six months ended December 31, 2005
are 14.0% and 12% less than for the same periods one year ago.

General and administrative expenses for the three months and six months ended
December 31, 2005 were $892,000 and $1.5 million compared to $917,000 and $1.8 million for same period a year ago, a decrease of $25,000 and $228,000 respectively. The decrease was primarily attributable to payroll and related tax and benefit
reductions of $116,000. Since the beginning of the current 2006 fiscal year, the property had several temporary vacancies in management positions that have been subsequently filled.

On December 20, 2005, Plantation Investments Inc., a subsidiary of The Sands Regent purchased 2.58 acres of land adjacent to the Rail City Casino for a total price of $901,000. The land will be utilized in the
expansion of the casino and food and beverage operations at Rail City, with plans to expand floor space by 23,500 square feet under a revised budget of $13.8 million. Initially, the propertys current 650 slot machines will be increased to 850,
with ultimate plans for a total of 1,000 games. Pending completion of the permit process with the City of Sparks, management plans to begin a six-month, phased construction process in mid calendar year 2006. Included in the scope of the expansion
will be an additional restaurant and bar venue. Upon close of escrow, the Company recorded a $419,000 non-cash charge to income for the unamortized value of the intangible asset relating to the early termination of the lease from the State of Nevada
which is included in total operating expenses.

There can be no assurance that the construction process will proceed as currently planned due to factors
outside the Companys control. As of the filing of this report, the scope of the expansion has been increased and the budgeted project costs have been revised to be approximately $13.8 million versus the previous estimate of $8.5 million.
Increased construction costs, refinement of the project scope, careful sequencing of construction activity to minimize customer inconvenience and the acquisition of additional land for customer parking are the primary drivers of the increased cost
estimates. As previously announced, Plantation Investments, Inc., a subsidiary of the Company, has contracted to purchase a .5 acre site that is adjacent to the casino which currently has a 27 unit motel on the site for $1.3 million. The company
plans to demolish substantially all of the motel units for additional customer parking during construction and continuing once the expansion is completed. Closing of the transaction is scheduled to occur on or before April 3, 2006.



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THE SANDS REGENT

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



SANDS REGENCY HOTEL AND CASINO

The following table highlights the Sands sources of revenues and expenses for the periods indicated:



|                           |  |                               |       |   |                             |   |       |         |  |      |      |  |   |        |   |  |         |        |   |  |      |  
|-------------------------- |  | ----------------------------- | ----- | - | --------------------------- | - | ----- | ------- |  | ---- | ---- |  | - | ------ | - |  | ------- | ------ | - |  | ---- | -
|                           |  | THREE MONTHS ENDEDDECEMBER 31 |       |   | SIX MONTHS ENDEDDECEMBER 31 |  
|(Dollars in thousands)     |  | 2005                          |       |   | 2004                        |   |       | PERCENT |  |      | 2005 |  |   | 2004   |   |  | PERCENT |       
|Gaming revenues            |  | $                             | 5,409 |   |                             | $ | 5,069 |         |  | 6.7  | %    |  | $ | 11,356 |   |  | $       | 10,459 |   |  | 8.6  | %
|Gaming expenses            |  | $                             | 2,505 |   |                             | $ | 2,323 |         |  | 7.8  | %    |  | $ | 5,113  |   |  | $       | 4,747  |   |  | 7.7  | %
|Expense margin             |  |                               | 46.3  | % |                             |   | 45.8  | %       |  |      |      |  |   | 45.0   | % |  |         | 45.4   | % |  |      |  
|Lodging revenues           |  | $                             | 1,794 |   |                             | $ | 1,718 |         |  | 4.4  | %    |  | $ | 4,799  |   |  | $       | 4,565  |   |  | 5.1  | %
|Lodging expense            |  | $                             | 914   |   |                             | $ | 894   |         |  | 2.2  | %    |  | $ | 1,936  |   |  | $       | 1,934  |   |  | 0.1  | %
|Expense margin             |  |                               | 50.9  | % |                             |   | 52.0  | %       |  |      |      |  |   | 40.3   | % |  |         | 42.4   | % |  |      |  
|Food and beverage revenues |  | $                             | 1,011 |   |                             | $ | 1,097 |         |  | -7.8 | %    |  | $ | 2,286  |   |  | $       | 2,407  |   |  | -5.0 | %
|Food and beverage expenses |  | $                             | 763   |   |                             | $ | 784   |         |  | -2.7 | %    |  | $ | 1,678  |   |  | $       | 1,601  |   |  | 4.8  | %
|Expense margin             |  |                               | 75.5  | % |                             |   | 71.5  | %       |  |      |      |  |   | 73.4   | % |  |         | 66.5   | % |  |      |  
|Total net revenues         |  | $                             | 7,759 |   |                             | $ | 7,406 |         |  | 4.8  | %    |  | $ | 17,307 |   |  | $       | 16,408 |   |  | 5.5  | %
|Total operating expenses   |  | $                             | 7,726 |   |                             | $ | 7,317 |         |  | 5.6  | %    |  | $ | 15,733 |   |  | $       | 14,996 |   |  | 4.9  | %
|Expense margin             |  |                               | 99.6  | % |                             |   | 98.8  | %       |  |      |      |  |   | 90.9   | % |  |         | 91.4   | % |  |      |  
|Maintenance and utilities  |  | $                             | 927   |   |                             | $ | 882   |         |  | 5.1  | %    |  | $ | 1,923  |   |  | $       | 1,822  |   |  | 5.5  | %
|Percent of net revenues    |  |                               | 11.9  | % |                             |   | 11.9  | %       |  |      |      |  |   | 11.1   | % |  |         | 11.1   | % |  |      |  
|General and administrative |  | $                             | 1,519 |   |                             | $ | 1,424 |         |  | 6.7  | %    |  | $ | 2,978  |   |  | $       | 2,868  |   |  | 3.8  | %
|Percent of net revenues    |  |                               | 19.6  | % |                             |   | 19.2  | %       |  |      |      |  |   | 17.2   | % |  |         | 17.5   | % |  |      |  

SANDS REGENCY HOTEL AND CASINO. Net revenue for the Sands Regency was $7.8 million and $17.3 million for the three
months and six months ended December 31, 2005. This represents a 4.8% increase and 5.6% increase over the net revenue of $7.4 million and $16.4 million for the three months and six months ended December 31, 2004. Gaming revenue for the
three months and six months ended December 31, 2005 increased 6.7% and 8.6% over the prior year periods. The increase in gaming revenue is comprised of a increase of $114,623 and $474,429 in slot revenue to $1.2 million and $8.7 million for the
three months and six months ended December 31, 2005, compared to $1.0 million and $8.3 million for the prior year periods. Live poker generated revenue of $121,000 and $238,000 for the three months and six months ended December 31, 2005
and was not offered in the prior year periods. Keno revenue for the three months and six months ending December 31, 2005 was $82,000 and $140,000. Keno is currently operated by the Company compared to having been a leased operation in the prior
year period.

Gaming expenses for the three months and six months ended December 31, 2005 were $2.5 million and $5.1 million an increase of 8.0% and
7.7%, from the prior year periods. Increased expenses are related to the addition of poker and the return of keno to a Company offered product.

Lodging
revenue for the three months and six months ending December 31, 2005 were $1.8 million and $4.8 million, an increase of 4.4% and 5.1% over the prior year periods. Hotel room occupancy was 78.8% and 86.0% for the three months and six months
ended December 31, 2005, compared to 77.6% and 84.6% for the same periods of the prior year. Average daily room rate increased 5.0% and 4.0% from the prior year periods.



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THE SANDS REGENT

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



GOLD RANCH CASINO AND RV RESORT

The following table highlights Gold Ranchs sources of revenues and expenses for the periods indicated:



|                                    |  |                               |       |   |                             |   |       |         |  |       |      |  |   |        |   |  |         |        |   |  |       |  
|----------------------------------- |  | ----------------------------- | ----- | - | --------------------------- | - | ----- | ------- |  | ----- | ---- |  | - | ------ | - |  | ------- | ------ | - |  | ----- | -
|                                    |  | THREE MONTHS ENDEDDECEMBER 31 |       |   | SIX MONTHS ENDEDDECEMBER 31 |  
|(Dollars in thousands)              |  | 2005                          |       |   | 2004                        |   |       | PERCENT |  |       | 2005 |  |   | 2004   |   |  | PERCENT |       
|Gaming revenues                     |  | $                             | 1,365 |   |                             | $ | 1,266 |         |  | 7.8   | %    |  | $ | 2,920  |   |  | $       | 2,807  |   |  | 4.0   | %
|Gaming expenses                     |  | $                             | 510   |   |                             | $ | 471   |         |  | 8.3   | %    |  | $ | 1,045  |   |  | $       | 931    |   |  | 12.2  | %
|Expense margin                      |  |                               | 37.4  | % |                             |   | 37.2  | %       |  |       |      |  |   | 35.8   | % |  |         | 33.2   | % |  |       |  
|Lodging revenues                    |  | $                             | 70    |   |                             | $ | 91    |         |  | -23.1 | %    |  | $ | 252    |   |  | $       | 298    |   |  | -15.4 | %
|Lodging expense                     |  | $                             | 38    |   |                             | $ | 42    |         |  | -9.5  | %    |  | $ | 90     |   |  | $       | 107    |   |  | -15.9 | %
|Expense margin                      |  |                               | 54.3  | % |                             |   | 46.2  | %       |  |       |      |  |   | 35.7   | % |  |         | 35.9   | % |  |       |  
|Food and beverage revenues          |  | $                             | 441   |   |                             | $ | 411   |         |  | 7.3   | %    |  | $ | 957    |   |  | $       | 872    |   |  | 9.7   | %
|Food and beverage expenses          |  | $                             | 262   |   |                             | $ | 270   |         |  | -3.0  | %    |  | $ | 581    |   |  | $       | 588    |   |  | -1.2  | %
|Expense margin                      |  |                               | 59.4  | % |                             |   | 65.7  | %       |  |       |      |  |   | 60.7   | % |  |         | 67.4   | % |  |       |  
|Fuel and convenience store revenues |  | $                             | 4,696 |   |                             | $ | 4,080 |         |  | 15.1  | %    |  | $ | 10,658 |   |  | $       | 8,783  |   |  | 21.3  | %
|Fuel and convenience store expenses |  | $                             | 4,533 |   |                             | $ | 3,915 |         |  | 15.8  | %    |  | $ | 10,266 |   |  | $       | 8,388  |   |  | 22.4  | %
|Expense margin                      |  |                               | 96.5  | % |                             |   | 96.0  | %       |  |       |      |  |   | 96.3   | % |  |         | 95.5   | % |  |       |  
|Total net revenues                  |  | $                             | 6,434 |   |                             | $ | 5,765 |         |  | 11.6  | %    |  | $ | 14,536 |   |  | $       | 12,568 |   |  | 15.7  | %
|Total operating expenses            |  | $                             | 6,244 |   |                             | $ | 5,524 |         |  | 13.0  | %    |  | $ | 13,860 |   |  | $       | 11,647 |   |  | 19.0  | %
|Expense margin                      |  |                               | 97.0  | % |                             |   | 95.8  | %       |  |       |      |  |   | 95.3   | % |  |         | 92.7   | % |  |       |  
|Maintenance and utilities           |  | $                             | 170   |   |                             | $ | 173   |         |  | -1.7  | %    |  | $ | 363    |   |  | $       | 355    |   |  | 2.3   | %
|Percent of net revenues             |  |                               | 2.6   | % |                             |   | 3.0   | %       |  |       |      |  |   | 2.5    | % |  |         | 2.8    | % |  |       |  
|General and administrative          |  | $                             | 547   |   |                             | $ | 510   |         |  | 7.3   | %    |  | $ | 1,096  |   |  | $       | 991    |   |  | 10.6  | %
|Percent of net revenues             |  |                               | 8.5   | % |                             |   | 8.8   | %       |  |       |      |  |   | 7.5    | % |  |         | 7.9    | % |  |       |  

GOLD RANCH CASINO AND RV RESORT. For the three months and six months ending December 31, 2005, Gold Ranch had
net revenue of $6.4 million and $14.5 million, compared to $5.8 million and $12.6 million for prior year periods. Gold Ranch gasoline revenues were 23.0% and 29.0% higher during the three months and six months ended December 31, 2005, resulting
from increases in the retail price of gasoline, which averaged $2.73 and $1.75 per gallon versus $2.03 and $2.29 in the same periods of the prior year. Gasoline gallons sold were 7% and 5% lower for the three months and six months ended
December 31, 2005, compared to the same periods last year due, to the increasing cost of fuel that resulted in reduced traffic counts on I-80, immediately adjacent to the property.

Gaming revenue for Gold Ranch, comprised principally of slot machine revenue, increased to $1.4 million and $2.9 million in the three months and six months ended December 31, 2005 compared to $1.3 million and
$2.8 million for the prior year periods. During the three months and six months ending December 31, 2005, the property increased its marketing and promotional activities in an effort to increase tracked customer play. However, the continued
escalation in the retail price of gas and the resulting decrease in traffic offset much of the growth achieved in tracked customer play. The Company believes and historical performance of the property has shown that there is a relationship between
gasoline gallons sold and gaming revenue.

Gold Ranch income from operations for the three months and six months ended December 31, 2005 was $190,000,
and $676,000 a $51,000 decrease from $241,000 and $245,000 decrease from $921,000 in the same periods of the prior year. The decline in Gold Ranchs income from operations was primarily due to a $63,000 increase in marketing costs intended to
provide incentives to encourage customers to sign up for the Slot Club, to use the facilities and to increase the number of customers in the database. In addition, depreciation expense increased $90,000 resulting from the installation in the spring
of 2005 of an automated slot customer tracking system.



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THE SANDS REGENT

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



DAYTON DEPOT CASINO

The operating results of Dayton Depot Casino which was acquired on September 1, 2005, are reflected below. The following table highlights Dayton Depot Casinos sources of revenues and expenses for the three
months and six months ended December 31, 2005:



|                           |  |                               |       |                             |      |   |         |   |      |   |       |      |  |         |  |  
|-------------------------- |  | ----------------------------- | ----- | --------------------------- | ---- | - | ------- | - | ---- | - | ----- | ---- |  | ------- |  | -
|                           |  | THREE MONTHS ENDEDDECEMBER 31 |       | SIX MONTHS ENDEDDECEMBER 31
|(Dollars in thousands)     |  | 2005                          |       |                             | 2004 |   | PERCENT |   | 2005 |   |       | 2004 |  | PERCENT
|Gaming revenues            |  | $                             | 1,282 |                             |      |  |         |  |      | $ | 1,594 |      |  |        |  | 
|Gaming expenses            |  | $                             | 427   |                             |      |  |         |  |      | $ | 558   |      |  |        |  | 
|Expense margin             |  |                               | 33.3  | %                           |      |   |         |   |      |   | 35.0  | %    |  |         |  |  
|Food and beverage revenues |  | $                             | 274   |                             |      |  |         |  |      | $ | 348   |      |  |        |  | 
|Food and beverage expenses |  | $                             | 215   |                             |      |  |         |  |      | $ | 249   |      |  |        |  | 
|Expense margin             |  |                               | 78.5  | %                           |      |   |         |   |      |   | 71.6  | %    |  |         |  |  
|Total net revenues         |  | $                             | 1,499 |                             |      |  |         |  |      | $ | 1,861 |      |  |        |  | 
|Total operating expenses   |  | $                             | 1,065 |                             |      |  |         |  |      | $ | 1,336 |      |  |        |  | 
|Expense margin             |  |                               | 71.0  | %                           |      |   |         |   |      |   | 71.8  | %    |  |         |  |  
|Maintenance and utilities  |  | $                             | 69    |                             |      |  |         |  |      | $ | 81    |      |  |        |  | 
|Percent of net revenues    |  |                               | 4.6   | %                           |      |   |         |   |      |   | 4.4   | %    |  |         |  |  
|General and administrative |  | $                             | 168   |                             |      |  |         |  |      | $ | 199   |      |  |        |  | 
|Percent of net revenues    |  |                               | 11.2  | %                           |      |   |         |   |      |   | 10.7  | %    |  |         |  |  

We are implementing a new operating strategy at Dayton Depot Casino that includes upgrading slot products,
implementing marketing and promotional programs that have been successful for the other properties within the Company, finalizing design and remodeling of the restaurant and a new slot player tracking system installed in January 2006.

CORPORATE COSTS. Corporate costs include the salaries and benefits of corporate officers and management, public company reporting costs, and related legal and accounting
fees. Corporate costs were $722,000 and $1,350,000 for the three months and six months ended December 31, 2005, compared to $548,000 and $875,000 for the prior year periods.

The $174,000 and $475,000 increase for the three months and six months ended December 31, 2005, is primarily due to $121,000 and $263,000 of costs directly attributable to fees to outside professionals retained
to assist in compliance with the new internal controls requirements of the Sarbanes  Oxley Act of 2002 (SOX), specifically SOX Section 404. There were no outside costs relating to SOX compliance in the three months and six
months ended December 31, 2004. The Company currently qualifies as a non-accelerated filer. The Securities and Exchange Commission recently extended the required compliance dates for non-accelerated filers, and we are now required to report on
our systems of internal controls (SOX 404) as of June 30, 2008. The Company has begun to shift the emphasis of the SOX 404 effort to be more focused on internal resources and reduced use of outside professionals. In addition, management
compensation expense related to the adoption of SFAS 123R ShareBased Payment totaled $ $65,000 and $168,000 ($132,000 and $233,000 on a consolidated basis) for the three months and six months ended December 31, 2005. There was no
management compensation expense related to SFAS 123R in the same periods of the prior year. For further explanation of the compensation expense related to SFAS 123R and those that are the recipients under the plans, refer to Note 5.



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



INTEREST EXPENSE. Interest expense was $434,000 and $ 862,000 for the three months and six months ended
December 31, 2005, compared to $799,000 and $1.4 million for the same periods in 2004. The decrease of $365,000 and $538,000 for the three months and six months ended December 31, 2005, are primarily due to several factors listed below.



| |  |  | Interest expense in the three months and six months ended December 31, 2004 includes $252,000 of accelerated interest on the portion of the convertible debt which was converted
to equity as outlined in the Companys Form 10-Q dated December 31, 2004, Note 6.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Long term debt for the quarters ending September 30, 2004 and December 31, 2004 was $34.9 million and $23.2 million compared to $28.8 million and $29.9 million for the
same periods in 2005. The majority of the reduction occurred in November and December 2004 due to issuance of 1,120,000 shares of common stock and conversion of additional debt of $1.1 million by Mr. Belding. Please refer to the Companys
Form 10-Q dated December 31, 2004 for more information on the long term debt.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Weighted average interest rates on both the term loan and revolving credit facility for the quarters ended September 30, 2004 and December 31,2004 were 5.40% and 5.44% as
compared to 6.47% and 7.05% for the same periods in 2005. Please refer to the Companys Form 10-Q dated December 31, 2004 for additional information regarding the credit facilities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Had the accelerated interest not been recorded, interest expense for the three months and six months ended December 31, 2004, would have been approximately $500,000
and $1.1 million as compared to $434,000 and $862,000. The decrease of $66,000 and $238,000 is due to the higher long term debt balances in 2004.

Our
long-term debt balance at December 31, 2005 of $29.9 million, includes $10.5 million incurred on September 1, 2005, in connection with the acquisition of Dayton Depot Casino. This represents an increase of $6.7 million for the same period
in 2004.



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THE SANDS REGENT

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Capital Resources and Liquidity

At December 31, 2005, the Companys cash and cash equivalents were $6.3 million, an increase of $3 million from June 30, 2005. We had negative working capital of $1.5 million as of December 31,
2005, consistent with our policy to use any available cash, which is not needed in operations, to pay down our line of credit to minimize interest expense. At December 31, 2005, the Company had $15.9 million of borrowings available under its
revolving credit facility.

Cash flow from operations provided $6.3 million during the six month period ended December 31, 2005, compared to $4.5
million for the corresponding period of the prior year. This was primarily attributable to a $1.3 million increase in accrued expenses when compared to June 30, 2005. To facilitate a transition to a new accounting system on July 1, 2005,
all invoice payments were expedited at June 30, 2005. This resulted in lower accrued expenses and accounts payable at June 30, 2005. To appropriately gain visibility into the true net change between June 30, 2005 and December 31,
2005, combining accounts payable and other accrued expenses provides a net increase of $1.3 million primarily attributable to increases in accrued gaming taxes and licenses, accrued salaries and wages and accounts payable.

Investing activities accounted for a $13.6 million of cash for the six months ended December 31, 2005, compared with $2.3 million for the six months ended
December 31, 2004. The difference represents the net cash paid for the purchase of Dayton Depot Casino on September 1, 2005 and an increase in investment of property and equipment. Financing activities accounted for $10 million of cash
inflows during the six month period ended December 31, 2005, compared to a $4 million cash outflow for the six month period ended December 31, 2004. The change from the prior period related to the purchase of the Dayton Depot Casino. The
purchase was funded with the payment of $10.5 million in cash and issuance of 69,438 shares of Company Stock. The cash paid in connection with the transaction came primarily from an amended and restated credit facility (See Note 8).

Our amended and restated bank term loan and revolving credit facility, which totaled $47.0 million as of December 31, 2005, requires the Company to be in compliance
with certain financial and other covenants, restricts future encumbrances and limits situations where a change in control in the Company may occur. The financial covenants include the requirement that a minimum EBITDA (earnings before interest
expense, taxes, depreciation and amortization) and certain other financial ratios be maintained. The Company believes that it is in compliance with all covenants and restrictions at December 31, 2005.

The Company believes that its cash funds, cash generated from operations, and available borrowing capacity will be sufficient to fund its operations, meet current debt
obligations, and fulfill its capital expenditure obligations for the next 12 months; however, the Companys operations are subject to financial, economic, competitive, regulatory, and other factors, many of which are beyond its control. If the
Company is unable to generate sufficient cash flow, it could be required to adopt one or more alternatives, such as reducing or delaying planned capital expenditures, selling assets, restructuring debt, or obtaining additional equity capital.

Commitments and Contingencies

The following table
summarizes the Companys contractual obligations as of December 31, 2005.



|                              |  |       |            |                        |   |             |  |             |            |               |   |            |  |   |          
|----------------------------- |  | ----- | ---------- | ---------------------- | - | ----------- |  | ----------- | ---------- | ------------- | - | ---------- |  | - | ---------
|                              |  |       |            | Payments due by period
|                              |  | Total |            | Less than 1 year       |   | 1 - 3 years |  | 4 - 5 years |            | After 5 years
|Long term debt                |  | $     | 29,944,845 |                        | $ | 3,992,072   |  | $           | 10,065,273 |               | $ | 15,887,500 |  | $ |         
|Interest on long-term debt(1) |  |       | 8,515,751  |                        |   | 2,239,710   |  |             | 3,892,916  |               |   | 2,383,125  |  |   |         
|Operating Leases(2)           |  |       | 9,775,068  |                        |   | 575,004     |  |             | 1,725,012  |               |   | 1,150,008  |  |   | 6,325,044
|Other(3)                      |  |       | 4,868,869  |                        |   | 236,015     |  |             | 612,062    |               |   | 472,030    |  |   | 3,548,762
|                              |  |       |            |                        |   |             |  |             |            |               |   |            |  |   |          
|                              |  | $     | 53,104,533 |                        | $ | 7,042,801   |  | $           | 16,295,263 |               | $ | 19,892,663 |  | $ | 9,873,806
|                              |  |       |            |                        |   |             |  |             |            |               |   |            |  |   |          



|(1) | Interest is calculated by assuming a weighted average interest rate of 7.5% of the current December 31, 2005 balance less payouts until maturity. All long-term debt matures
within 5 years.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



|(2) | Represents contractual lease obligations to Prospector Gaming Enterprises (PGE) on real property in connection with the Gold Ranch acquisition agreement. Amounts reflect
a minimum base payment schedule. The lease is subject to escalation based on the property meeting certain revenue thresholds. Management does not believe these thresholds will be met without major expansion of the gaming facilities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Represents management fees due to PGE in connection with the RV park at Gold Ranch. Future amounts payable are subject to adjustment based on changes in interest rates.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Cautionary Note Regarding Forward-looking Statements

This quarterly report on Form 10-Q includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. You can
identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain words such as may, will, project, might, expect,
believe, anticipate, intend, could, would, estimate, continue or pursue, or the negative or other variations thereof or comparable terminology. In
particular, they include statements relating to, among other things, future actions, strategies, future performance, and future financial results. We have based these forward-looking statements on our current expectations and projections about
future events. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements,
whether as a result of new information, future events or otherwise.

We caution the reader that forward-looking statements involve risks and uncertainties
that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors
described below under Risks Related to our Business, as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission. The Securities and Exchange Commission has issued amendments to
Form 10-K requiring disclosure of risk factors for filers that have fiscal years ending on or after December 31, 2005. The disclosure required in the Form 10-Q must be included only after the disclosure in the Form 10-K. Since the
Companys Annual Form 10-K ends June 30, 2006, we will comply with the amended disclosure requirement in that report and in subsequent Form 10-Qs.

Risks Relating to our Business

An investment in our common stock involves a high degree of risk. You should consider the risks described
below and the other information contained in this report carefully before deciding to invest in the Company. If any of the following risks actually occur, our business, financial condition and operating results would be materially harmed. As a
result, the trading price of our common stock could decline, and you could lose a part or all of your investment.

Our business may be adversely
impacted if the Reno economy declines.

We heavily market to and rely upon business from Reno area residents. In recent years, Reno has enjoyed robust
business growth and has attracted a number of technology, product distribution and marketing companies. These businesses have created jobs and helped fuel residential development, including the Reno metropolitan area. Should there be negative
changes in the business and job conditions in Reno, our locals business, which is a substantial part of our overall business, could be adversely impacted.



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THE SANDS REGENT

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



The gaming industry is highly competitive and increased competition could have a material adverse effect on our
future operations.

The gaming industry is highly competitive. As new casinos are developed in the Reno area and competitive pressures from California
Native American casinos increase, other Reno area casinos may intensify their targeting of the Reno area resident market, which is one of our key markets. Increased competitive pressures in the local market could adversely impact our ability to
continue to attract local residents to our facilities, or require us to use more expensive and therefore less profitable promotions to compete more efficiently. In addition, Native American gaming facilities in California and other jurisdictions in
some instances operate under regulatory requirements less stringent than those imposed on Nevada licensed casinos, which could afford them a competitive advantage in our markets.

Our business may be adversely impacted by expanded Native American gaming operations in California and the Pacific Northwest.

Our largest sources of tourist customers are California and the Pacific Northwest, including a large number who drive to Reno from the San Francisco and Sacramento metropolitan areas. The expansion of Native American casinos in California,
Oregon and Washington will be significant on the Reno-Tahoe market. For example, Thunder Valley Casino, a large new Native American casino opened June 9, 2003, 100 miles west of Reno in Rocklin, California. Californias well-documented
budgetary problems have state officials renegotiating certain contracts with Native American casinos. Several contracts have already been changed to allow for additional slot machines. The effect of increased gaming in California and other states is
difficult to predict. However, our business would be adversely impacted if Thunder Valley and other casinos attract patrons who would otherwise travel to Reno. In addition, a significant portion of our customer base is made up of Reno area
residents. Several of the existing Reno area casinos are expanding and another competitor has announced plans to build a new casino and hotel in Reno as well. The impact of these could adversely impact our business and financial results in the
future. In addition, if other Reno area casinos lose business due to competition from Native American casinos, they may intensify their marketing efforts to Reno area residents which could potentially materially and adversely impact our business and
financial results.

Adverse winter weather conditions in the Sierra Nevada Mountains and Reno-Lake Tahoe area could have a material adverse effect on
our results of operations and financial condition.

Adverse winter weather conditions, particularly snowfall, can deter our customers from traveling or
make it difficult for them to frequent our facilities. Adverse winter weather would most significantly affect our drive-in customers from northern California and the Pacific Northwest. If the Reno area itself were to experience prolonged adverse
winter weather conditions, our results of operations and financial condition could also be materially adversely affected.

Terrorist attacks may
seriously harm our business.

The terrorist attacks that took place in the United States on September 11, 2001 were unprecedented events that
created economic and business uncertainties, especially for the travel and tourism industry. The potential for future terrorist attacks, the national and international responses, and other acts of war or hostility have created economic and political
uncertainties that could materially adversely affect our business, results of operations, and financial condition in ways we currently cannot predict.

If we lose key personnel, our business could be materially adversely affected

We depend on the continued performance of our Chief Executive
Officer and his management team. If we lose the services of our senior management personnel, and cannot replace such persons in a timely manner, our business could be materially adversely affected.



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THE SANDS REGENT

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Our business is subject to restrictions and limitations imposed by regulatory authorities that could adversely
affect us.

The ownership and operation of casino gaming facilities are subject to extensive state and local regulation. The State of Nevada and the
applicable local authorities require various licenses, registrations, permits and approvals to be held by us. The Nevada Gaming Commission may, among other things, limit, condition, suspend, or revoke or decline to renew a license for any cause
deemed reasonably by such licensing authority. If we violate gaming laws or regulations, substantial fines could be levied against us and we could be forced to forfeit a portion of our assets. The suspension, revocation or non-renewal of any of our
licenses or the levy on us of substantial fines or forfeiture of assets would have a material and adverse effect on our business, financial condition and results of operations.

If the State of Nevada or other local municipalities increase gaming taxes and fees, our results of operations could be adversely affected.

State and local authorities raise a significant amount of revenue through taxes and fees on gaming activities. From time to time, legislators and officials have proposed changes in tax laws, or in the administration
of such laws, affecting the gaming industry. In addition, worsening economic conditions could intensify the efforts of state and local governments to raise revenues through increases in gaming taxes. If the State of Nevada or the cities or counties
in which we operate were to increase gaming taxes and fees, our results of operations could be adversely affected.

Recently issued standards, rules and
regulations of governing agencies and bodies could result in material increases to our corporate expense which could adversely affect our financial results.

We keep abreast of new generally acceptable accounting principles and rules and regulations issued or adopted by the Financial Accounting Standards Board, the Securities and Exchange Commission, the NASDAQ and other standard setting
agencies. These principles, rules and regulations often require us to expend funds in order to meet additional requirements. As a result, our expenses could materially increase, which could adversely affect our financial results. Recently issued
accounting standards affecting our financial results are described in Note 4 to our consolidated financial statements.

Our substantial indebtedness
after recent acquisitions could adversely affect our operations and financial results.

At December 31, 2005, we had total consolidated long-term
debt, less current maturities, of approximately $29.9 million. We expect that our long-term indebtedness will substantially increase in connection with the capital expenditures we anticipate making as a result of our planned expansion, development
and renovation projects. Our substantial indebtedness could have important consequences. For example it could:



| |  |  | make it more difficult for us to satisfy our obligations under our current indebtedness;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | increase our vulnerability to general adverse economic and industry conditions;
| | - |  | -------------------------------------------------------------------------------



| |  |  | require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, which would reduce the availability of our cash flows to fund working
capital, capital expenditures, expansion efforts and other general corporate purposes;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | place us at a competitive disadvantage compared to our competitors that have less debt; and
| | - |  | -------------------------------------------------------------------------------------------



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



| |  |  | limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds. Failure to comply with these
covenants could result in an event of default. which, if not cured or waived, could have a significant adverse effect on us
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We may be
unable to successfully integrate the operations of our recent and future acquisitions and/or experience significant charges to earnings as a result of the acquisition that may adversely affect our stock price and financial condition.

We have experienced significant growth due to our recent acquisition of gaming facilities, which is a key strategy to our long term growth plans. The future success of
the Companys acquisitions will depend on a number of factors, including the successful integration of the newly acquired operations with existing operations. Potential difficulties of combining operations of acquirees with that of the Company
include, among others:



| |  | retaining key employees;
|- |  | ------------------------



| |  | consolidating administrative infrastructures;
|- |  | ---------------------------------------------



| |  | coordinating sales and marketing functions; and
|- |  | -----------------------------------------------



| |  | minimizing the diversion of managements attention from ongoing business concerns.
|- |  | ----------------------------------------------------------------------------------

Even if the Company is able to integrate its acquisitions successfully, this integration may not result in the realization of the full benefits and growth opportunities that we expect or these benefits may not be
achieved within the anticipated time frame.

In addition, as a result of the recent acquisitions we have experienced, and will likely continue to
experience, significant charges to earnings for merger and related expenses that may include due diligence costs, transaction costs or closure costs. These costs may include substantial fees for investment bankers, attorneys, accountants and
financial printing costs. Charges that we may incur in connection with acquisitions could adversely affect our results of operations.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

With
our amended and restated Credit Agreement executed in September 2005 in connection with the acquisition of Dayton Depot Casino, the Company has substantial variable interest rate debt. The Company does not use interest rate derivative instruments to
manage exposure to interest rate changes. Assuming the reducing credit facilities are fully advanced, a principal amount currently equal to $47.0 million, the Company would be subject to substantial market interest rate risks. A one percent increase
in interest rates would result in an increase in interest expense of approximately $470,000 annually.

Additionally, terms of the Companys RV park
management agreement with Prospector Gaming Enterprises (PGE), referenced as (3) in the Commitments and Contingencies section of this report, state that the Company pay monthly an amount equal to 120% of PGEs debt
service on the underlying RV park note, which varies directly with changes in the Prime index. The financial impact to the Company of a full one percent increase in the Prime index is less than $25,000 per year.



|Item 4. | Controls and Procedures
|------- | -----------------------

We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed by the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the SECs rules and forms,
and that such information is accumulated and communicated to our management including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating
the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well



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THE SANDS REGENT

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

On February 6, 2006, the Companys Audit
Committee commenced the independent investigation it announced it would undertake in its Form 12(b)-25 filing dated February 14, 2006 and has completed its investigation. The Audit Committee was aided in its review by outside counsel and a
forensic accountant. During its investigation, the Audit Committee did not become aware of any facts that caused it to believe that there was any material misstatement or omission in the Companys previously issued financial statements or that
otherwise would necessitate a restatement of any of the Companys previously issued financial statements. Consequently, no restatement of any previously issued financial statements will be made. With the filing of the Form 10-Q, the Company
will regain compliance with Marketplace Rule 4310(c)(14), and will notify the NASDAQ Listing Qualifications Panel of this development.

As required by SEC
rule 13a15(b), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the
reasonable assurance level.

During the first quarter of fiscal 2006, the Company implemented the Microsoft Great Plains financial accounting and reporting
system at all of its business units. The Company plans to continue to implement additional modules of the system through fiscal year 2006. Based on managements evaluation, the necessary steps have been taken to monitor and maintain appropriate
internal controls during the period of change.

Other than as disclosed above, there has been no change in our internal controls over financial reporting
during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.



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THE SANDS REGENT



PART II OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

The Company is party to various
lawsuits, which have arisen in the normal course of its business. At the time of this filing, the liability arising from unfavorable outcomes of lawsuits is not expected to have a material impact on the Companys financial condition or
financial results.



|Item 2. | Changes in Securities
|------- | ---------------------

None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

On November 7, 2005, the Company conducted its annual meeting in Reno, Nevada, in which one proposal was put before the shareholders.

Proposal 1

To elect a board of seven directors, each serving for a one-year term or until their respective successors are
duly elected and qualified. The proposal passed as follows:



|                   |  |           |  |         |  |                    
|------------------ |  | --------- |  | ------- |  | -------------------
|Votes Cast         |  | For       |  | Against |  | Abstain or withheld
|Jon N. Bengston    |  | 5,651,363 |  | 23,987  |  |                   
|Louis J. Phillips  |  | 5,291,168 |  | 384,182 |  |                   
|Larry Tuntland     |  | 5,628,917 |  | 46,433  |  |                   
|David R. Grundy    |  | 5,651,063 |  | 24,287  |  |                   
|Douglas M. Hayes   |  | 5,651,363 |  | 23,987  |  |                   
|Ferenc B. Szony    |  | 5,650,063 |  | 25,287  |  |                   
|Pete Cladianos III |  | 5,582,817 |  | 92,533  |  |                   



|Item 5. | Other Information
|------- | -----------------

None.



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##### Table of Contents

|Item 6. | Exhibits
|------- | --------

( a ) Exhibits



|     |  |                                                                                                                             
|---- |  | ----------------------------------------------------------------------------------------------------------------------------
|     | 
|31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                         
|     | 
|31.2 |  | Certification of Chief Financial and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|     | 
|32   |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                    

( b ) Reports on Form 8-K

None



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##### Table of Contents

THE SANDS REGENT AND SUBSIDIARIES



SIGNATURES

Pursuant to the requirements 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 (Registrant)
|                     |  |  | 
|Date: March 22, 2006 |  |  |  | By:                           |  | /S/ Ferenc B. Szony   
|                     |  |  |  |                               |  |                        |  | Ferenc B. Szony, President and Chief Executive Officer              
|                     |  |  | 
|Date: March 22, 2006 |  |  |  | By:                           |  | /S/ Cornelius T. Klerk
|                     |  |  |  |                               |  |                        |  | Cornelius T. Klerk, Chief Financial and Principal Accounting Officer



26