##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 
Washington, D. C. 20549
 
FORM 10-Q



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

For the quarterly period ended December 31, 2001 or



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

For the transition period from ____________ to ____________

Commission file number      0-14050

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

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 [   ]

At February 12, 2002, the registrant had outstanding 4,525,722 shares of
its common stock, $.10 par value.



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TABLE OF CONTENTS



|                             |                                                                                                |                                                    |  |  |  |  |  | 
|---------------------------- | ---------------------------------------------------------------------------------------------- | -------------------------------------------------- |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION
|                             | Item 1. Financial Statements.                                                                 
|                             |                                                                                                | CONSOLIDATED STATEMENTS OF OPERATIONS             
|                             |                                                                                                | CONSOLIDATED BALANCE SHEETS                       
|                             |                                                                                                | CONSOLIDATED STATEMENTS OF CASH FLOWS             
|                             |                                                                                                | NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|                             | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
|                             | ITEM 3. Quantitative and Qualitative Disclosures                                              
|PART II OTHER INFORMATION   
|                             | Item 1. Legal Proceedings.                                                                    
|                             | Item 2. Changes in Securities.                                                                
|                             | Item 3. Defaults Upon Senior Securities.                                                      
|                             | Item 4. Submission of Matters to a Vote of Security Holders.                                  
|                             | Item 5. Other Information.                                                                    
|                             | Item 6. Exhibits and Reports on Form 8-K.                                                     
|SIGNATURES                  



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##### Table of Contents



THE SANDS REGENT AND SUBSIDIARY
 
FORM 10-Q
 
TABLE OF CONTENTS

|                             |                                                                                        |  |        |  |  | 
|---------------------------- | -------------------------------------------------------------------------------------- |  | ------ |  |  | 
|                             | Page No.                                                                              
|                             |                                                                                       
|PART I FINANCIAL INFORMATION
|                            
|Item 1.                      | Financial Statements.                                                                  |  | 1  8 
|                            
|                             | Consolidated Statements of Operations                                                  |  | 1  2 
|                            
|                             | Consolidated Balance Sheets                                                            |  | 3  4 
|                            
|                             | Consolidated Statements of Cash Flows                                                  |  | 5  6 
|                            
|                             | Notes to Interim Consolidated Financial Statements                                     |  | 7  8 
|                            
|Item 2.                      | Managements Discussion
and Analysis of Financial Condition and Results of Operations. |  | 9  12
|                            
|Item 3.                      | Quantitative and Qualitative
Disclosures About Market Risk.                            |  | 12    
|                            
|PART II OTHER INFORMATION   
|                            
|Item 1.                      | Legal Proceedings.                                                                     |  | 13    
|                            
|Item 2.                      | Changes in Securities.                                                                 |  | 13    
|                            
|Item 3.                      | Defaults Upon Senior
Securities.                                                       |  | 13    
|                            
|Item 4.                      | Submission of Matters to a
Vote of Security Holders.                                   |  | 13    
|                            
|Item 5.                      | Other Information.                                                                     |  | 13    
|                            
|Item 6.                      | Exhibits and Reports on
Form 8-K.                                                      |  | 13    
|                            
|SIGNATURES                   | 14                                                                                    



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##### Table of Contents






PART I FINANCIAL INFORMATION




Item 1. Financial Statements.




THE SANDS REGENT AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |        |   | 
|------------------------------------------------------------ | ---------------------------------------------------- | ------------------ | ----- | ------------------ | - | ---- | ----- | ----- | - | ---- | ------ | ------ | - | - | ------ | ------ | - | 
|(Dollars in thousands,                                       |                                                      | THREE MONTHS       |       | SIX MONTHS        
|except per share amounts)                                    |                                                      | ENDED DECEMBER 31, |       | ENDED DECEMBER 31,
|                                                             |                                                      |                    |       |                   
|                                                             |                                                      |                    |       | 2000               |   | 2001 |       | 2000  |   | 2001
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |     
|Operating revenues:                                          |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|                                                             | Gaming                                               |                    | $     | 5,380              |   |      | $     | 5,000 |   |      | $      | 10,871 |   |   | $      | 10,128 |  
|                                                             | Lodging                                              |                    |       | 1,692              |   |      |       | 1,659 |   |      |        | 4,733  |   |   |        | 4,449  |  
|                                                             | Food and beverage                                    |                    |       | 1,158              |   |      |       | 1,303 |   |      |        | 2,992  |   |   |        | 2,747  |  
|                                                             | Other                                                |                    |       | 339                |   |      |       | 324   |   |      |        | 701    |   |   |        | 709    |  
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|                                                             |                                                      |                    | 8,569 |                    |   |      | 8,286 |       |   |      | 19,297 |        |   |   | 18,033 |       
|Less complimentary lodging, food
and beverage included above |                                                      |                    | 526   |                    |   |      | 751   |       |   |      | 1,150  |        |   |   | 1,516  |       
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|                                                             |                                                      |                    | 8,043 |                    |   |      | 7,535 |       |   |      | 18,147 |        |   |   | 16,517 |       
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|Operating costs and expenses:                                |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|                                                             | Gaming                                               |                    |       | 2,578              |   |      |       | 2,502 |   |      |        | 5,178  |   |   |        | 5,043  |  
|                                                             | Lodging                                              |                    |       | 1,110              |   |      |       | 978   |   |      |        | 2,292  |   |   |        | 2,036  |  
|                                                             | Food and beverage                                    |                    |       | 936                |   |      |       | 787   |   |      |        | 2,542  |   |   |        | 1,647  |  
|                                                             | Other                                                |                    |       | 146                |   |      |       | 161   |   |      |        | 291    |   |   |        | 299    |  
|                                                             | Maintenance and utilities                            |                    |       | 780                |   |      |       | 793   |   |      |        | 1,619  |   |   |        | 1,694  |  
|                                                             | General and administrative                           |                    |       | 1,838              |   |      |       | 1,762 |   |      |        | 3,454  |   |   |        | 3,549  |  
|                                                             | Depreciation and amortization                        |                    |       | 729                |   |      |       | 780   |   |      |        | 1,453  |   |   |        | 1,562  |  
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|                                                             |                                                      |                    | 8,117 |                    |   |      | 7,763 |       |   |      | 16,829 |        |   |   | 15,830 |       
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|Income (loss) from operations                                |                                                      |                    | (74   | )                  |   |      | (228  | )     |   |      | 1,318  |        |   |   | 687    |       
|Other income (deductions):                                   |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|                                                             | Interest and other income                            |                    |       | 129                |   |      |       | 60    |   |      |        | 258    |   |   |        | 131    |  
|                                                             | Interest and other expense                           |                    |       | (289               | ) |      |       | (276  | ) |      |        | (614   | ) |   |        | (573   | )
|                                                             | Gain (loss) on disposition of
property and equipment |                    |       | 3                  |   |      |       | 53    |   |      |        | (57    | ) |   |        | 64     |  
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|                                                             |                                                      |                    | (157  | )                  |   |      | (163  | )     |   |      | (413   | )      |   |   | (378   | )     
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|Income (loss) before income taxes                            |                                                      |                    | (231  | )                  |   |      | (391  | )     |   |      | 905    |        |   |   | 309    |       
|Income tax (provision) benefit                               |                                                      |                    | 86    |                    |   |      | 139   |       |   |      | (293   | )      |   |   | (93    | )     
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       
|Net income (loss)                                            |                                                      |                    | ($145 | )                  |   |      | ($252 | )     |   | $    | 612    |        |   | $ | 216    |       
|                                                             |                                                      |                    |       |                    |   |      |       |       |   |      |        |        |   |   |        |       

(continued)

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



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##### Table of Contents



THE SANDS REGENT AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

|                                     |         |                    |  |                    |   |      |  |           |   |  |   |           |  |  |   |           | 
|------------------------------------ | ------- | ------------------ |  | ------------------ | - | ---- |  | --------- | - |  | - | --------- |  |  | - | --------- | 
|(Dollars in thousands,               |         | THREE MONTHS       |  | SIX MONTHS        
|except per share amounts)            |         | ENDED DECEMBER 31, |  | ENDED DECEMBER 31,
|                                     |         |                    |  |                   
|(continued)                          |         | 2000               |  | 2001               |   | 2000 |  | 2001     
|                                     |         |                    |  |                    |   |      |  |          
|Net income (loss) per share:         |         |                    |  |                    |   |      |  |           |   |  |   |           |  |  |   |          
|                                     | Basic   |                    |  | ($.03              | ) |      |  | ($.06     | ) |  | $ | .14       |  |  | $ | .05       | 
|                                     |         |                    |  |                    |   |      |  |           |   |  |   |           |  |  |   |          
|                                     | Diluted |                    |  | ($.03              | ) |      |  | ($.06     | ) |  | $ | .13       |  |  | $ | .05       | 
|                                     |         |                    |  |                    |   |      |  |           |   |  |   |           |  |  |   |          
|Weighted average shares outstanding: |         |                    |  |                    |   |      |  |           |   |  |   |           |  |  |   |          
|                                     | Basic   |                    |  | 4,498,722          |   |      |  | 4,525,722 |   |  |   | 4,498,233 |  |  |   | 4,525,722 | 
|                                     |         |                    |  |                    |   |      |  |           |   |  |   |           |  |  |   |          
|                                     | Diluted |                    |  | 4,498,722          |   |      |  | 4,525,722 |   |  |   | 4,743,672 |  |  |   | 4,770,942 | 
|                                     |         |                    |  |                    |   |      |  |           |   |  |   |           |  |  |   |          

| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | The accompanying notes are an integral part of these consolidated
financial statements.



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##### Table of Contents






THE SANDS REGENT AND SUBSIDIARY
 
CONSOLIDATED BALANCE SHEETS (Unaudited)

|                        |                                                                       |                             |        |              |        |  |        |        |        | 
|----------------------- | --------------------------------------------------------------------- | --------------------------- | ------ | ------------ | ------ |  | ------ | ------ | ------ | 
|(Dollars in thousands)  |                                                                       | JUNE 30,                    |        | DECEMBER 31,
|                        |                                                                       | 2001                        |        | 2001        
|                        |                                                                       |                             |        |              |        | 
|                       
|ASSETS                 
|                       
|CURRENT ASSETS:         |                                                                       |                             |        |              |        |  |        |       
|                        | Cash and cash equivalents                                             |                             | $      | 10,150       |        |  | $      | 9,705  |       
|                        | Short-term investments                                                |                             |        | 10           |        |  |        | 10     |       
|                        | Accounts receivable less allowance for
possible losses of $54 and $34 |                             |        | 551          |        |  |        | 469    |       
|                        | Note receivable, sale of subsidiaries                                 |                             |        | 180          |        |  |        | 180    |       
|                        | Inventories                                                           |                             |        | 644          |        |  |        | 586    |       
|                        | Federal income tax refund receivable                                  |                             |        | 7            |        |  |        | 144    |       
|                        | Prepaid expenses and other assets                                     |                             |        | 1,052        |        |  |        | 1,040  |       
|                        |                                                                       |                             |        |              |        |  |        |       
|                        |                                                                       | Total current assets        |        |              | 12,594 |  |        |        | 12,134 | 
|                        |                                                                       |                             |        |              |        |  |        |       
|PROPERTY AND EQUIPMENT: |                                                                       |                             |        |              |        |  |        |       
|                        | Land                                                                  |                             |        | 8,487        |        |  |        | 8,487  |       
|                        | Buildings and improvements                                            |                             |        | 38,785       |        |  |        | 38,927 |       
|                        | Equipment, furniture and fixtures                                     |                             |        | 18,802       |        |  |        | 18,679 |       
|                        | Construction in progress                                              |                             |        | 261          |        |  |        | 1,816  |       
|                        |                                                                       |                             |        |              |        |  |        |       
|                        |                                                                       |                             | 66,335 |              |        |  | 67,909 |       
|                        | Less accumulated depreciation
and amortization                        |                             |        | 32,137       |        |  |        | 33,372 |       
|                        |                                                                       |                             |        |              |        |  |        |       
|                        |                                                                       | Property and equipment, net |        |              | 34,198 |  |        |        | 34,537 | 
|                        |                                                                       |                             |        |              |        |  |        |       
|OTHER ASSETS:           |                                                                       |                             |        |              |        |  |        |       
|                        | Note receivable, sale of subsidiaries, net                            |                             |        | 669          |        |  |        | 409    |       
|                        | Other                                                                 |                             |        | 422          |        |  |        | 670    |       
|                        |                                                                       |                             |        |              |        |  |        |       
|                        |                                                                       | Total other assets          |        |              | 1,091  |  |        |        | 1,079  | 
|                        |                                                                       |                             |        |              |        |  |        |       
|                        |                                                                       | Total assets                |        | $            | 47,883 |  |        | $      | 47,750 | 
|                        |                                                                       |                             |        |              |        |  |        |       

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



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##### Table of Contents



THE SANDS REGENT AND SUBSIDIARY
 
CONSOLIDATED BALANCE SHEETS (Unaudited)

|                                      |                                                                                     |          |                                            |              |   |        |        |         |   |        | 
|------------------------------------- | ----------------------------------------------------------------------------------- | -------- | ------------------------------------------ | ------------ | - | ------ | ------ | ------- | - | ------ | 
|(Dollars in thousands)                |                                                                                     | JUNE 30, |                                            | DECEMBER 31,
|                                      |                                                                                     | 2001     |                                            | 2001        
|                                      |                                                                                     |          |                                            |              |   |        |       
|                                     
|LIABILITIES AND STOCKHOLDERS EQUITY 
|                                     
|CURRENT LIABILITIES:                  |                                                                                     |          |                                            |              |   |        |        |        
|                                      | Accounts payable                                                                    |          | $                                          | 2,257        |   |        | $      | 2,225   |  
|                                      | Accrued salaries, wages and benefits                                                |          |                                            | 1,435        |   |        |        | 1,157   |  
|                                      | Other accrued expenses                                                              |          |                                            | 192          |   |        |        | 238     |  
|                                      | Deferred federal income tax liability                                               |          |                                            | 144          |   |        |        | 176     |  
|                                      | Current maturities of long-term debt                                                |          |                                            | 181          |   |        |        | 26      |  
|                                      |                                                                                     |          |                                            |              |   |        |        |        
|                                      |                                                                                     |          | Total current liabilities                  |              |   | 4,209  |        |         |   | 3,822  | 
|LONG-TERM DEBT                        |                                                                                     |          | 10,000                                     |              |   |        | 10,000 |        
|                                      |                                                                                     |          |                                            |              |   |        |        |        
|DEFERRED FEDERAL INCOME TAX LIABILITY |                                                                                     |          | 1,055                                      |              |   |        | 1,093  |        
|                                      |                                                                                     |          |                                            |              |   |        |        |        
|                                      |                                                                                     |          | Total liabilities                          |              |   | 15,264 |        |         |   | 14,915 | 
|                                      |                                                                                     |          |                                            |              |   |        |        |        
|STOCKHOLDERS EQUITY:                 |                                                                                     |          |                                            |              |   |        |        |        
|                                      | Preferred stock, $.10 par value, 5,000,000 shares authorized, none issued           |          |                                            |             |   |        |        |        |  
|                                      | Common stock, $.10 par value, 20,000,000
shares authorized; 6,928,722 shares issued |          |                                            | 693          |   |        |        | 693     |  
|                                      | Additional paid-in capital                                                          |          |                                            | 12,777       |   |        |        | 12,777  |  
|                                      | Retained earnings                                                                   |          |                                            | 41,507       |   |        |        | 41,723  |  
|                                      |                                                                                     |          |                                            |              |   |        |        |        
|                                      |                                                                                     |          | 54,977                                     |              |   |        | 55,193 |        
|                                      | Treasury stock, at cost, 2,403,000 shares                                           |          |                                            | (22,358      | ) |        |        | (22,358 | )
|                                      |                                                                                     |          |                                            |              |   |        |        |        
|                                      |                                                                                     |          | Total stockholders equity                 |              |   | 32,619 |        |         |   | 32,835 | 
|                                      |                                                                                     |          |                                            |              |   |        |        |        
|                                      |                                                                                     |          | Total liabilities and stockholders
equity |              | $ | 47,883 |        |         | $ | 47,750 | 
|                                      |                                                                                     |          |                                            |              |   |        |        |        

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



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##### Table of Contents






THE SANDS REGENT AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                          |                                                                                   |                                                       |        |        |       |      |        |        |       |  
|----------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------- | ------ | ------ | ----- | ---- | ------ | ------ | ----- | -
|(Dollars in thousands)                    |                                                                                   | SIX
MONTHS                                           
|                                          |                                                                                   | ENDED DECEMBER 31,                                   
|                                          |                                                                                   |                                                      
|                                          |                                                                                   |                                                       |        | 2000   |       | 2001
|                                          |                                                                                   |                                                       |        |        |       |     
|OPERATING ACTIVITIES:                     |                                                                                   |                                                       |        |        |       |      |        |       
|                                          | Net income                                                                        |                                                       | $      | 612    |       |      | $      | 216    |      
|                                          | Adjustments to reconcile net income
to net cash provided by
operating activities: |                                                       |        |        |       |      |        |        |      
|                                          |                                                                                   | Depreciation and amortization                         |        |        | 1,453 |      |        |        | 1,562 |  
|                                          |                                                                                   | (Gain) loss on disposal of property
and equipment     |        |        | 57    |      |        |        | (64   | )
|                                          |                                                                                   | Decrease in accounts receivable                       |        |        | 8     |      |        |        | 82    |  
|                                          |                                                                                   | (Increase) decrease in inventories                    |        |        | (15   | )    |        |        | 58    |  
|                                          |                                                                                   | Decrease in prepaid expenses
and other current assets |        |        | 42    |      |        |        | 12    |  
|                                          |                                                                                   | (Increase) decrease in other assets                   |        |        | 5     |      |        |        | (248  | )
|                                          |                                                                                   | (Decrease) in accounts payable                        |        |        | (205  | )    |        |        | (140  | )
|                                          |                                                                                   | (Decrease) in accrued expenses                        |        |        | (318  | )    |        |        | (232  | )
|                                          |                                                                                   | Change in federal income taxes
payable/receivable     |        |        | (158  | )    |        |        | (137  | )
|                                          |                                                                                   | Change in deferred federal income taxes               |        |        | 64    |      |        |        | 70    |  
|                                          |                                                                                   |                                                       |        |        |       |      |        |       
|NET CASH PROVIDED BY OPERATING ACTIVITIES |                                                                                   |                                                       | 1,545  |        |       |      | 1,179  |       
|                                          |                                                                                   |                                                       |        |        |       |      |        |       
|INVESTING ACTIVITIES:                     |                                                                                   |                                                       |        |        |       |      |        |       
|                                          | Purchase of short-term investments                                                |                                                       |        | (200   | )     |      |        |       |      
|                                          | Sale and maturity of short-term
investments                                       |                                                       |        | 743    |       |      |        |       |      
|                                          | Payments received on note receivable                                              |                                                       |        | 259    |       |      |        | 260    |      
|                                          | Additions to property and equipment                                               |                                                       |        | (1,835 | )     |      |        | (1,640 | )    
|                                          | Payment of accounts payable on prior
period purchases of property and
equipment   |                                                       |        | (393   | )     |      |        | (173   | )    
|                                          | Proceeds from sale of property and
equipment                                      |                                                       |        | 20     |       |      |        | 84     |      
|                                          |                                                                                   |                                                       |        |        |       |      |        |       
|NET CASH USED IN INVESTING ACTIVITIES     |                                                                                   |                                                       | (1,406 | )      |       |      | (1,469 | )     
|                                          |                                                                                   |                                                       |        |        |       |      |        |       

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



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##### Table of Contents



THE SANDS REGENT AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                               |                                                     |                    |            |       |      |   |        |      |  
|---------------------------------------------- | --------------------------------------------------- | ------------------ | ---------- | ----- | ---- | - | ------ | ---- | -
|                                               |                                                     |                    | SIX MONTHS
|(Dollars in thousands)                         |                                                     | ENDED DECEMBER 31,
|                                               |                                                     |                   
|                                               |                                                     |                    | 2000       |       | 2001
|                                               |                                                     |                    |            |       |     
|FINANCING ACTIVITIES:                          |                                                     |                    |            |       |      |   |        |     
|                                               | Payments on long-term debt                          |                    |            | (140  | )    |   |        | (155 | )
|                                               | Issuance of common stock                            |                    |            | 1     |      |   |        |     |  
|                                               |                                                     |                    |            |       |      |   |        |     
|NET CASH USED IN FINANCING ACTIVITIES          |                                                     |                    | (139       | )     |      |   | (155   | )   
|                                               |                                                     |                    |            |       |      |   |        |     
|DECREASE IN CASH AND CASH EQUIVALENTS          |                                                     |                    | 0          |       |      |   | (445   | )   
|CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD |                                                     |                    | 9,186      |       |      |   | 10,150 |     
|                                               |                                                     |                    |            |       |      |   |        |     
|CASH AND CASH EQUIVALENTS, END OF PERIOD       |                                                     | $                  | 9,186      |       |      | $ | 9,705  |     
|                                               |                                                     |                    |            |       |      |   |        |     
|SUPPLEMENTAL CASH FLOW INFORMATION:            |                                                     |                    |            |       |      |   |        |     
|                                               | Property and equipment acquired by
accounts payable |                    | $          | 1,175 |      |   | $      | 281  |  
|                                               |                                                     |                    |            |       |      |   |        |     
|                                               | Interest paid, net of amount capitalized            |                    | $          | 578   |      |   | $      | 460  |  
|                                               |                                                     |                    |            |       |      |   |        |     
|                                               | Federal income taxes paid                           |                    | $          | 388   |      |   | $      | 160  |  
|                                               |                                                     |                    |            |       |      |   |        |     

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



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THE SANDS REGENT AND SUBSIDIARY
 
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
SIX MONTHS ENDED DECEMBER 31, 2000 AND 2001

NOTE 1  BASIS OF PREPARATION

These statements should be read in connection with the 2001 Annual
Report heretofore filed with the Securities and Exchange Commission as
Exhibit 13 to the Registrants Form 10-K for the year ended June 30, 2001.
The accounting policies utilized in the preparation of the financial
information herein are the same as set forth in such annual report except as
modified for interim accounting policies which are within the guidelines set
forth in Accounting Principles Board Opinion No. 28.

The Consolidated Balance Sheet at June 30, 2001 has been taken from the
audited financial statements at that date. The interim consolidated
financial information is unaudited. In the opinion of management, all
adjustments, consisting only of normal recurring accruals, necessary to
present fairly the financial condition as of December 31, 2001 and the
results of operations for the three and six months ended and cash flows for
the six months ended December 31, 2001 and 2000 have been included. Interim
results of operations are not necessarily indicative of the results of
operations for the full year.

The accompanying Consolidated Financial Statements include the accounts
of the Company and its wholly owned subsidiary Zante, Inc. (Zante)
(together the Company). Zante owns and operates the Sands Regency
Casino/Hotel in Reno, Nevada.

NOTE 2  EARNINGS PER SHARE

The weighted average number of shares outstanding for the calculation
of diluted earnings per share, for the six months ended December 31, 2000
and 2001, respectively, included the dilutive effect of Company stock
options to purchase common stock. For the six months ended December 31,
2000 and 2001, options to purchase 22,500 and 22,500 shares, respectively,
of the Companys common stock were not included because the exercise price
exceeded the average market price. For the three months ended December 31,
2000 and 2001, options to purchase 661,500 and 637,000 shares,
respectively, were not included because the Company incurred net losses
for such periods.

NOTE 3  ACQUISITION

The Company has entered into a series of agreements in December 2001 to
acquire the Gold Ranch Casino and RV Resort in Verdi, Nevada through a new
wholly owned subsidiary. Such operations consist of a 8,000 square foot
casino with approximately 300 slot machines, 2 restaurants, 2 bars, a 100
space RV Park, a California lottery station and an ARCO gas station.
Completion of the transaction is subject to several conditions including
financing and approval by the Nevada Gaming Authorities which is expected in
Spring 2002. The purchase price is based on a multiple of EBITDA (earnings
before interest, taxes, depreciation and amortization) and is to be paid in
a combination of cash, Company stock and debt.



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THE SANDS REGENT AND SUBSIDIARY
 
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
 
SIX MONTHS ENDED DECEMBER 31, 2000 AND 2001



|NOTE
4  | RECENT PRONOUNCEMENTS OF THE FINANCIAL ACCOUNTING STANDARDS BOARD
(FASB) AND OTHER AUTHORITATIVE ACCOUNTING PRONOUNCEMENTS
|-------- | ----------------------------------------------------------------------------------------------------------------------------

On January 1, 2001, the Company implemented Emerging Issues Task Force
(EITF) No. 00  22 Accounting for Points and Certain Other Time-Based
or Volume-Based Sales Incentive Offers, and Offers for Free Products or
Services to be Delivered in the Future. EITF No. 00  22 requires that
players club reward program points be reflected as a promotional item and
deducted from revenue. Prior to this pronouncement, the Company had
expensed the players club reward program activity as a gaming expense.
Reclassification has been made on the consolidated statements of operations
for the three and six months ended December 31, 2000 to conform to the
presentation for the three and six months ended December 31, 2001.

In June 2001, the FASB issued two new Statements of Financial
Accounting Standards (SFASs), SFAS No. 141 entitled Business
Combinations and SFAS No. 142 entitled Goodwill and Other Intangible
Assets. Together these statements will change the accounting for business
combinations and goodwill. SFAS No. 141 requires the purchase method of
accounting for all business combinations initiated after June 30, 2001 and
eliminates the pooling-of-interest method. SFAS No. 142 changes the
accounting for goodwill and indefinite lived intangible assets from an
amortization method to an impairment only approach. Thus, amortization of
goodwill, including goodwill recorded in past business combinations, will
cease upon the adoption of SFAS No. 142. Amortization will still be
required for identifiable intangible assets with finite lives. The Company
is required to adopt SFAS No. 142 at the beginning of its fiscal 2003 year
but earlier adoption is permitted. The Company has not yet completed its
analysis of the impact that SFAS No. 141 and SFAS No. 142 will have on the
Companys consolidated financial statements.

Also in June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which is effective for financial statements issued
for fiscal years beginning after June 15, 2002. This statement establishes
accounting standards for the recognition and measurement of a liability for
an asset retirement obligation and the associated asset retirement costs.
The Company has not yet completed its analysis of the impact of this SFAS on
the Companys consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which is effective for
financial statements for fiscal years beginning after December 15, 2001, and
the interim periods within those fiscal years. This statement addresses
financial accounting and reporting for impairment of long-lived assets and
for long-lived assets to be disposed of, and supercedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of. The Company has not completed its evaluation of
the impact that this SFAS will have on its consolidated financial
statements.



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

Results of operations  Three months ended December 31, 2001 compared
to three months ended December 31, 2000

In the three months ended December 31, 2001, compared to the three
months ended December 31, 2000, revenues decreased to $7.5 million from $8.0
million. For the same comparable quarters, the loss from operations
increased from $74,000 in the second quarter of fiscal 2001 to $228,000 in
the second quarter of fiscal 2002.

In the seasonally slower December quarter, the prior year second
quarter net loss of $145,000, or loss per share of $.03, increased slightly
to a net loss of $252,000, or loss per share of $.06, in the current year
second quarter.

The declines in revenue, increase in loss from operations and the
increase in the net loss are primarily a result of a decrease in hotel
occupancy due, in part, to the catastrophic events of September 11, 2001.

The slight decline in lodging revenue of $33,000 in the second
quarter of fiscal 2002 versus the second quarter of fiscal 2001, is due to a
decline in hotel occupancy from 83.2% to 79.2%. Such decrease was
partially offset by an increase in the average room rate from approximately
$26 to $27.

Gaming revenue declined to $5.0 million in the December 31, 2001
quarter versus $5.4 million in the December 2000 quarter. This decrease
is due to the decline in hotel occupancy and a decline in gaming revenue
per occupied room from approximately $82 to $80. The decline per occupied
room reflects, in part, disruption on the casino floor in November and
December 2001 when an updated computurized slot management and player
marketing system was being installed.

The $145,000 increase in food and beverage revenue in the three months
ended December 31, 2001, compared to the three months ended December 31,
2000, is due to an increase in beverage revenue of approximately $220,000.
Such increase is due to the increase in departmental transfer pricing for
complimentary beverages. This increase in beverage revenue was partially
offset by the elimination, in mid-October 2000, of a 24-hour restaurant
operated by the Company. Upon the closing of such restaurant, an Original
Mels diner was opened on the premises which is operated by a third party.

The increase in complimentary lodging, food and beverage of $225,000 is
due to an increase in transfer pricing for beverages provided to guests on a
complimentary basis.

The decrease in lodging costs and expenses of $132,000, in the second
quarter of fiscal 2002 compared to the same quarter in fiscal 2001, is
primarily due to the decrease in hotel occupancy.



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Results of operations  Three months ended December 31, 2002 compared
to three months ended December 31, 2001 (continued)

The decrease in food and beverage costs and expenses from $936,000 in
the quarter ended December 31, 2000 to $787,000 in the quarter ended
December 31, 2001 is due to the elimination, in mid-October 2000, of a
24-hour restaurant operated by the Company as previously discussed.

The decrease in interest and other income of $69,000, in the three
months ended December 31, 2001 versus the three months ended December 31,
2000, is primarily due to lower interest rates earned on excess invested
funds. This is a result of the overall reduction in market interest rates.

EBITDA declined slightly from $784,000 in the three months ended
December 31, 2000 to $612,000 in the three months ended December 31, 2001.
EBITDA includes earnings before: depreciation and amortization, interest
expense, income taxes and any gain (loss) on the disposal of property.
EBITDA is not a calculation determined pursuant to generally accepted
accounting principles and is not an alternative to operating income or net
income and is not a measure of liquidity. Since not all companies calculate
this measure in the same manner, the Companys EBITDA measure may not be
comparable to similarly titled measures reported by other companies. The
Company presents EBITDA as a supplemental disclosure to facilitate a more
complete analysis of the Companys financial performance. The Company
believes that this disclosure enhances the understanding of the financial
performance of a company with substantial interest expense, depreciation and
amortization.

Results of operations  First six months of fiscal 2002 compared to 2001

In the six months ended December 31, 2001, compared to the six months
ended December 31, 2000, revenues decreased from $18.1 million to $16.5
million. For the same comparable six month periods, income from
operations declined from $1.3 million in the first half of fiscal 2001 to
$687,000 in the first half of fiscal 2002.

Net income and net income per share also decreased from $612,000, or
$.13 per share (diluted), in the six months ended December 31, 2000 to
$216,000, or $.05 per share (diluted), in the six months ended December
31, 2001.

The declines in revenue, income from operations and in net income are
due to several factors. First, hotel occupancy was down by approximately 7%
in the first half of fiscal 2002 versus the first half of fiscal 2001. This
was due, in part, to the curtailment of travel due to the September 11, 2001
catastrophe. Further, revenues were down by approximately $543,000 as a
result of the elimination of the Palm Court restaurant in mid-October 2000.
Such eliminated revenues were partially offset by an increase in beverage
revenue as further discussed below.

The decline in lodging revenue to $4.4 million in the first half of
fiscal 2002, from $4.7 million in the first half of fiscal 2001, is due to a
decline in hotel occupancy from 86.3% to 79.4%. Such decrease was partially
offset by an increase in the average room rate from approximately $35.50
to $36.50.



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Results of operations  First six months of fiscal 2002 compared to 2001
(continued)

Gaming revenue declined to $10.1 million in the first half of fiscal
2002 versus $10.9 million in the first half of fiscal 2001. This decrease
is due to the decline in hotel occupancy which was partially offset by an
increase in gaming revenue per occupied room from approximately $80
to $81.

The $245,000 decrease in food and beverage revenue in the six months
ended December 31, 2001, compared to the six months ended December 31,
2000, is due to the elimination, in mid-October 2000, of a 24-hour
restaurant operated by the Company. Upon the closing of such restaurant, an
Original Mels diner was opened on the premises which is operated by a
third party. This decrease in food revenue was partially offset by an
increase in beverage revenue of approximately $445,000. Such increase is
due to the increase in departmental transfer pricing for complimentary
beverages.

The increase in complimentary lodging, food and beverage of $366,000 is
due to an increase in transfer pricing for beverages provided to guests on a
complimentary basis.

The decrease in lodging costs and expenses of $256,000, in the first
half of fiscal 2002 compared to the same six months in fiscal 2001, is
primarily due to the decrease in hotel occupancy.

The decrease in food and beverage costs and expenses from $2.5 million
in the six months ended December 31, 2000 to $1.6 million in the six
months ended December 31, 2001 is due to the elimination, in mid-October
2000, of a 24-hour restaurant operated by the Company as previously
discussed.

The increase in maintenance and utilities costs and expenses of $75,000
is due to an increase in utility costs.

The increase in general and administrative costs and expenses from
$3.4 million in the first half of fiscal 2001 to $3.5 million in the first
half of fiscal 2002 is due, in part, to increased advertising and
promotional activities intended to maintain and improve occupancy and
customer gaming activities.

The decrease in interest and other income of $127,000, in the six
months ended December 31, 2001 versus the six months ended December 31,
2000, is primarily due to lower interest rates earned on excess invested
funds. This is a result of the overall reduction in market interest rates.



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Results of operations  First six months of fiscal 2002 compared to 2001
(continued)

EBITDA declined from $3.0 million in the six months ended December
31, 2000 to $2.4 million in the six months ended December 31, 2001.
EBITDA includes earnings before: depreciation and amortization, interest
expense, income taxes and any gain (loss) on the disposal of property.
EBITDA is not a calculation determined pursuant to generally accepted
accounting principles and is not an alternative to operating income or net
income and is not a measure of liquidity. Since not all companies calculate
this measure in the same manner, the Companys EBITDA measure may not be
comparable to similarly titled measures reported by other companies. The
Company presents EBITDA as a supplemental disclosure to facilitate a more
complete analysis of the Companys financial performance. The Company
believes that this disclosure enhances the understanding of the financial
performance of a company with substantial interest expense, depreciation and
amortization.

Capital resources and liquidity

There were no material changes in The Sands Regents financial
condition nor were there any substantive changes relative to matters
discussed in the Capital Resources and Liquidity section of Managements
Discussion and Analysis of Financial Condition and Results of Operations as
presented in the 2001 Annual Report appearing as Exhibit 13 to the Companys
Form 10-K for the year ended June 30, 2001.

Cautionary statement for purposes of the Safe Harbor provisions of the
Private Securities Litigation Reform Act of 1995

The foregoing Managements Discussion and Analysis of Financial
Condition and Results of Operations contains various forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, which represent the Companys expectations or beliefs concerning
future events. Such statements are identified by the words anticipates,
believes, expects, intends, future, or words of similar import.
Various important factors that could cause actual results to differ
materially from those in the forward-looking statements include, without
limitation, the following: increased competition in existing markets or the
opening of new gaming jurisdictions; a decline in the public acceptance of
gaming; the limitation, conditioning or suspension of any of the Companys
gaming licenses; increases in or new taxes imposed on gaming revenues or
gaming devices; a finding of unsuitability by regulatory authorities with
respect to the Companys officers, directors or key employees; loss or
retirement of key executives; significant increases in fuel or
transportation prices; adverse economic conditions in the Companys key
markets; severe and unusual weather in the Companys key markets and adverse
results of significant litigation matters.




ITEM 3. Quantitative and Qualitative Disclosures

About Market Risk.

NOT APPLICABLE



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PART II OTHER INFORMATION




Item 1. Legal Proceedings.

NONE




Item 2. Changes in Securities.

NONE




Item 3. Defaults Upon Senior Securities.

NONE




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

The Annual Meeting of Shareholders was held on November 5, 2001 for the
following purpose:

1. Proposal One  The election of the following members of the Board
of Directors:

|                  |  |     |           |          |  |  |       | 
|----------------- |  | --- | --------- | -------- |  |  | ----- | 
|Name              |  | For |           | Withheld
|                  |  |     |           |         
|Louis J. Phillips |  |     | 4,284,390 |          |  |  | 9,430 | 
|Ferenc B. Szony   |  |     | 4,284,390 |          |  |  | 9,430 | 

The remaining continuing Directors are Jon N. Bengtson, Pete Cladianos,
Jr., Pete Cladianos III, Katherene Latham, Larry Tuntland and David R. Wood.




Item 5. Other Information.

NONE




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

| |                                                                                                                                           |                     
| | ----------------------------------------------------------------------------------------------------------------------------------------- | --------------------
| | (a)                                                                                                                                       | Exhibits            
|
| | NONE                                                                                                                                     
|
| | (b)                                                                                                                                       | Reports on Form 8-K:
|
| | Form 8-k, dated December 27, 2001, filed January 10, 2002;
        Includes reporting under Item 5. Other Events and Item 7(c). Exhibits.



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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: February 12, 2002 | By                                                                                 | /s/ David R. Wood
|                        |                                                                                   
|                        | David R. Wood, Executive Vice President
Principal Accounting and Financial Officer



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