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UNITED STATES

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, 2003



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 ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Exchange Act. Yes ̈No x



On February 13, 2004, the registrant had outstanding 5,106,555 shares of its common stock, $.10 par value.



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##### Table of Contents



THE SANDS REGENT AND
SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS



|               |  |                                                                                       |  |         
|-------------- |  | ------------------------------------------------------------------------------------- |  | --------
|               |  |                                                                                       |  | Page No.
|PART I         |  | FINANCIAL INFORMATION                                                                 |  |         
|               |  |                                                                                      
|Item 1.        |  | Financial Statements                                                                  |  | 1-3     
|               |  |                                                                                      
|               |  | Condensed Consolidated Statements of Operations (unaudited)                           |  | 1       
|               |  |                                                                                      
|               |  | Condensed Consolidated Balance Sheets (unaudited)                                     |  | 2       
|               |  |                                                                                      
|               |  | Condensed Consolidated Statements of Cash Flows (unaudited)                           |  | 3       
|               |  |                                                                                      
|               |  | Condensed Notes to Interim Consolidated Financial Statements (unaudited)              |  | 4-8     
|               |  |                                                                                      
|Item 2.        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 9-16    
|               |  |                                                                                      
|Item 3.        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 16      
|               |  |                                                                                      
|Item 4.        |  | Controls and Procedures                                                               |  | 17      
|               |  |                                                                                      
|PART II        |  | OTHER INFORMATION                                                                     |  |         
|               |  |                                                                                      
|Item 1.        |  | Legal Proceedings                                                                     |  | 18      
|               |  |                                                                                      
|Item 2.        |  | Changes in Securities                                                                 |  | 18      
|               |  |                                                                                      
|Item 3.        |  | Defaults Upon Senior Securities                                                       |  | 18      
|               |  |                                                                                      
|Item 4.        |  | Submission of Matters to a Vote of Security Holders                                   |  | 18      
|               |  |                                                                                      
|Item 5.        |  | Other Information                                                                     |  | 18      
|               |  |                                                                                      
|Item 6.        |  | Exhibits and Reports on Form 8-K                                                      |  | 19      
|               | 
|SIGNATURES     |  | 20                                                                                   
|               | 
|CERTIFICATIONS |  |                                                                                      





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##### Table of Contents



THE SANDS REGENT AND
SUBSIDIARIES

PART I FINANCIAL INFORMATION



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



CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)



|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|----------------------------------------------- |  | ------------------------------- | --------- | - | ---------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                |  | THREE MONTHS ENDED DECEMBER 31, |           |   | SIX MONTHS ENDEDDECEMBER 31, |  
|(Dollars in thousands except per share amounts) |  | 2002                            |           |   | 2003                         |   |           | 2002 |  |   | 2003      |  
|Operating revenues                              |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Gaming                                          |  | $                               | 6,237     |   |                              | $ | 6,418     |      |  | $ | 13,708    |   |  | $ | 13,448    |  
|Lodging                                         |  |                                 | 1,779     |   |                              |   | 1,835     |      |  |   | 4,883     |   |  |   | 4,909     |  
|Food and beverage                               |  |                                 | 1,593     |   |                              |   | 1,496     |      |  |   | 3,513     |   |  |   | 3,225     |  
|Fuel and convenience store                      |  |                                 | 3,319     |   |                              |   | 3,580     |      |  |   | 7,056     |   |  |   | 8,177     |  
|Other                                           |  |                                 | 368       |   |                              |   | 379       |      |  |   | 806       |   |  |   | 836       |  
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Gross revenues                                  |  |                                 | 13,296    |   |                              |   | 13,708    |      |  |   | 29,966    |   |  |   | 30,595    |  
|Promotional allowances                          |  |                                 | 850       |   |                              |   | 963       |      |  |   | 1,819     |   |  |   | 1,930     |  
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Net revenues                                    |  |                                 | 12,446    |   |                              |   | 12,745    |      |  |   | 28,147    |   |  |   | 28,665    |  
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Operating expenses                              |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Gaming                                          |  |                                 | 2,733     |   |                              |   | 2,877     |      |  |   | 5,763     |   |  |   | 5,917     |  
|Lodging                                         |  |                                 | 1,048     |   |                              |   | 1,002     |      |  |   | 2,163     |   |  |   | 2,093     |  
|Food and beverage                               |  |                                 | 1,018     |   |                              |   | 1,016     |      |  |   | 2,223     |   |  |   | 2,153     |  
|Fuel and convenience store                      |  |                                 | 3,163     |   |                              |   | 3,408     |      |  |   | 6,686     |   |  |   | 7,712     |  
|Other                                           |  |                                 | 137       |   |                              |   | 145       |      |  |   | 287       |   |  |   | 290       |  
|Maintenance and utilities                       |  |                                 | 1,005     |   |                              |   | 986       |      |  |   | 2,157     |   |  |   | 2,107     |  
|General and administrative                      |  |                                 | 2,419     |   |                              |   | 2,085     |      |  |   | 4,623     |   |  |   | 4,582     |  
|Depreciation and amortization                   |  |                                 | 878       |   |                              |   | 986       |      |  |   | 1,760     |   |  |   | 1,901     |  
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|                                                |  |                                 | 12,401    |   |                              |   | 12,505    |      |  |   | 25,662    |   |  |   | 26,755    |  
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Income from operations                          |  |                                 | 45        |   |                              |   | 240       |      |  |   | 2,485     |   |  |   | 1,910     |  
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Other income (expense)                          |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Interest expense                                |  |                                 | (318      | ) |                              |   | (171      | )    |  |   | (668      | ) |  |   | (389      | )
|Gain on previously reserved note receivable     |  |                                 |          |   |                              |   | 4,163     |      |  |   |          |   |  |   | 4,393     |  
|Loss on abandonment of new projects             |  |                                 |          |   |                              |   | (46       | )    |  |   | (59       | ) |  |   | (46       | )
|Other income (loss)                             |  |                                 | (75       | ) |                              |   | 6         |      |  |   | (83       | ) |  |   | (41       | )
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|                                                |  |                                 | (393      | ) |                              |   | 3,952     |      |  |   | (810      | ) |  |   | 3,917     |  
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Income before income taxes                      |  |                                 | (348      | ) |                              |   | 4,192     |      |  |   | 1,675     |   |  |   | 5,827     |  
|Income tax (provision) benefit                  |  |                                 | 104       |   |                              |   | 143       |      |  |   | (575      | ) |  |   | (410      | )
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Net income (loss)                               |  | $                               | (244      | ) |                              | $ | 4,335     |      |  | $ | 1,100     |   |  | $ | 5,417     |  
|                                                |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Net income (loss) per share                     |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Basic                                           |  | $                               | (0.05     | ) |                              | $ | 0.86      |      |  | $ | 0.22      |   |  | $ | 1.08      |  
|Diluted                                         |  |                                 | (0.05     | ) |                              |   | 0.81      |      |  |   | 0.21      |   |  |   | 1.02      |  
|Weighted average of shares outstanding          |  |                                 |           |   |                              |   |           |      |  |   |           |   |  |   |           |  
|Basic                                           |  |                                 | 4,922,805 |   |                              |   | 5,052,908 |      |  |   | 4,922,805 |   |  |   | 5,017,938 |  
|Diluted                                         |  |                                 | 4,922,805 |   |                              |   | 5,370,167 |      |  |   | 5,176,131 |   |  |   | 5,318,975 |  



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



1



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THE SANDS REGENT AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)



|                                                                                                                                      |  |              |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ----------------- | - | ------- | -
|(Dollars in thousands)                                                                                                                |  | JUNE 30,2003 |         |   | DECEMBER 31, 2003 |  
|ASSETS                                                                                                                                |  |              |         |   |                   |   |         |  
|Cash and cash equivalents                                                                                                             |  | $            | 3,965   |   |                   | $ | 3,407   |  
|Accounts receivable, net of allowance                                                                                                 |  |              | 675     |   |                   |   | 503     |  
|Inventories                                                                                                                           |  |              | 637     |   |                   |   | 636     |  
|Federal income tax refund receivable                                                                                                  |  |              | 611     |   |                   |   | 20      |  
|Prepaid expenses and other assets                                                                                                     |  |              | 1,247   |   |                   |   | 1,217   |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Total current assets                                                                                                                  |  |              | 7,135   |   |                   |   | 5,783   |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Land                                                                                                                                  |  |              | 8,506   |   |                   |   | 8,448   |  
|Buildings and improvements                                                                                                            |  |              | 40,999  |   |                   |   | 41,333  |  
|Equipment, furniture and fixtures                                                                                                     |  |              | 20,569  |   |                   |   | 20,920  |  
|Construction in progress                                                                                                              |  |              | 157     |   |                   |   | 79      |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Total property and equipment                                                                                                          |  |              | 70,231  |   |                   |   | 70,780  |  
|Less accumulated depreciation and amortization                                                                                        |  |              | 34,700  |   |                   |   | 36,005  |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Property and equipment, net                                                                                                           |  |              | 35,531  |   |                   |   | 34,775  |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Goodwill                                                                                                                              |  |              | 11,018  |   |                   |   | 11,018  |  
|Other intangibles                                                                                                                     |  |              | 1,356   |   |                   |   | 1,356   |  
|Other                                                                                                                                 |  |              | 406     |   |                   |   | 1,464   |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Total other assets                                                                                                                    |  |              | 12,780  |   |                   |   | 13,838  |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Total assets                                                                                                                          |  | $            | 55,446  |   |                   | $ | 54,396  |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                  |  |              |         |   |                   |   |         |  
|Accounts payable                                                                                                                      |  | $            | 2,669   |   |                   | $ | 2,834   |  
|Accrued salaries, wages and benefits                                                                                                  |  |              | 1,612   |   |                   |   | 1,102   |  
|Other accrued expenses                                                                                                                |  |              | 254     |   |                   |   | 178     |  
|Deferred federal income tax liability                                                                                                 |  |              | 206     |   |                   |   | 126     |  
|Current maturities of long-term debt                                                                                                  |  |              | 806     |   |                   |   | 828     |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Total current liabilities                                                                                                             |  |              | 5,547   |   |                   |   | 5,068   |  
|Long-term debt                                                                                                                        |  |              | 12,620  |   |                   |   | 6,060   |  
|Deferred federal income tax liability                                                                                                 |  |              | 1,747   |   |                   |   | 2,052   |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Total liabilities                                                                                                                     |  |              | 19,914  |   |                   |   | 13,180  |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Common stock ($.10 par value, 20,000,000 shares authorized; 7,357,055 issued at June 30, 2003; 7,559,555 issued at December 31,
2003) |  |              | 736     |   |                   |   | 756     |  
|Additional paid-in capital                                                                                                            |  |              | 13,967  |   |                   |   | 14,215  |  
|Retained earnings                                                                                                                     |  |              | 43,187  |   |                   |   | 48,603  |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|                                                                                                                                      |  |              | 57,890  |   |                   |   | 63,574  |  
|Treasury stock (at cost; 2,403,000 shares)                                                                                            |  |              | (22,358 | ) |                   |   | (22,358 | )
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Total stockholders equity                                                                                                            |  |              | 35,532  |   |                   |   | 41,216  |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  
|Total liabilities and stockholders equity                                                                                            |  | $            | 55,446  |   |                   | $ | 54,396  |  
|                                                                                                                                      |  |              |         |   |                   |   |         |  



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



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THE SANDS REGENT AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)



|                                                                                 |  |                             |        |   |      |   |        |  
|-------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ------ | -
|                                                                                 |  | SIX MONTHSENDEDDECEMBER 31, |       
|(Dollars in thousands)                                                           |  | 2002                        |        |   | 2003 |  
|Operating Activities                                                             |  |                             |        |   |      |   |        |  
|Net income                                                                       |  | $                           | 1,100  |   |      | $ | 5,417  |  
|Adjustment to reconcile net income to net cash provided by operating activities: |  |                             |        |   |      |   |        |  
|Depreciation and amortization                                                    |  |                             | 1,760  |   |      |   | 1,901  |  
|Loss on disposal of property and equipment                                       |  |                             | 88     |   |      |   | 40     |  
|Gain on previously reserved note receivable                                      |  |                             |       |   |      |   | (4,393 | )
|(Increase) decrease in accounts receivable                                       |  |                             | (18    | ) |      |   | 172    |  
|(Increase) decrease in inventories                                               |  |                             | (3     | ) |      |   | 1      |  
|(Increase) decrease in prepaid expenses and other current assets                 |  |                             | (180   | ) |      |   | 30     |  
|Decrease in other long term assets                                               |  |                             | 18     |   |      |   | 53     |  
|Increase (decrease) in accounts payable                                          |  |                             | (320   | ) |      |   | 152    |  
|Increase (decrease) in other accrued expenses                                    |  |                             | 132    |   |      |   | (586   | )
|Change in federal income taxes payable/receivable                                |  |                             | 334    |   |      |   | 591    |  
|Change in deferred federal income taxes                                          |  |                             | 115    |   |      |   | 225    |  
|                                                                                 |  |                             |        |   |      |   |        |  
|Net cash provided by operating activities                                        |  |                             | 3,026  |   |      |   | 3,603  |  
|                                                                                 |  |                             |        |   |      |   |        |  
|Investing Activities                                                             |  |                             |        |   |      |   |        |  
|Payments received on note receivable sale of subsidiaries                       |  |                             | 308    |   |      |   | 4,393  |  
|Acquisitions of property and equipment                                           |  |                             | (774   | ) |      |   | (1,162 | )
|Deposit and other costs related to the acquisition of new property               |  |                             |       |   |      |   | (1,111 | )
|Payment for prior year purchases of property and equipment                       |  |                             | (1,098 | ) |      |   | (181   | )
|Proceeds from sale of assets                                                     |  |                             | 24     |   |      |   | 170    |  
|                                                                                 |  |                             |        |   |      |   |        |  
|Net cash used in investing activities                                            |  |                             | (1,540 | ) |      |   | 2,109  |  
|                                                                                 |  |                             |        |   |      |   |        |  
|Financing Activities                                                             |  |                             |        |   |      |   |        |  
|Payments on long-term debt                                                       |  |                             | (3,045 | ) |      |   | (6,538 | )
|Issuance of Company common stock                                                 |  |                             |       |   |      |   | 268    |  
|                                                                                 |  |                             |        |   |      |   |        |  
|Net cash used in financing activities                                            |  |                             | (3,045 | ) |      |   | (6,270 | )
|                                                                                 |  |                             |        |   |      |   |        |  
|Decrease in cash and cash equivalents                                            |  |                             | (1,559 | ) |      |   | (558   | )
|Cash and cash equivalents, beginning of period                                   |  |                             | 5,628  |   |      |   | 3,965  |  
|                                                                                 |  |                             |        |   |      |   |        |  
|Cash and cash equivalents, end of period                                         |  | $                           | 4,069  |   |      | $ | 3,407  |  
|                                                                                 |  |                             |        |   |      |   |        |  
|Supplemental disclosure of cash flow information                                 |  |                             |        |   |      |   |        |  
|Interest paid                                                                    |  | $                           | 422    |   |      | $ | 389    |  
|Federal income taxes paid                                                        |  | $                           | 125    |   |      | $ |       |  
|Supplemental disclosure of non-cash investing and financing activities           |  |                             |        |   |      |   |        |  
|Property and equipment acquired by accounts payable                              |  | $                           | 16     |   |      | $ | 194    |  



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



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THE SANDS REGENT AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



NOTE 1 - BASIS OF PRESENTATION



The accompanying Consolidated Financial Statements include the accounts of The Sands Regent (the Company) and its wholly-owned subsidiaries: Zante, Inc.
(Zante), a Nevada corporation, and Last Chance, Inc. (Last Chance), a Nevada corporation. 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). The accounting policies followed in the preparation of the financial information herein are the same as those summarized in the Companys 2003 Form 10-K. The Consolidated Balance
Sheet at June 30, 2003, was derived from the audited financial statements at that date.



The interim consolidated financial information is unaudited and should be read in conjunction with the Companys Annual Report on Form 10-K for the year ended June 30, 2003. In the opinion of management, all adjustments and normally
recurring accruals necessary to present fairly the financial condition of the Company as of December 31, 2003, and the results of operations and cash flows for the three and six months ended December 31, 2003 and 2002 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. Reclassifications have been made to the prior year consolidated financial statements to conform to the 2003
presentation.



NOTE 2 - EARNINGS PER SHARE



The Company reports basic earnings per share and diluted earnings
per share in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. Basic earnings per share is computed by dividing reported net earnings by the weighted average
number of common shares outstanding during the period. Diluted earnings per share reflect the additional dilution for all potentially dilutive securities such as stock options. The following is a reconciliation of the number of shares (denominator)
used in the basic and diluted earnings per share computations (shares in thousands):



|                                 |  |                                 |  |                 |                               |   |        |       |                 |   |       |        |  |                 |  |   |        |   |                 |       |  |   |       |  
|-------------------------------- |  | ------------------------------- |  | --------------- | ----------------------------- | - | ------ | ----- | --------------- | - | ----- | ------ |  | --------------- |  | - | ------ | - | --------------- | ----- |  | - | ----- | -
|                                 |  | THREE MONTHS ENDED DECEMBER 31, |  |                 | SIX MONTHS ENDED DECEMBER 31, |  
|                                 |  | 2002                            |  |                 | 2003                          |   |        | 2002  |                 |   | 2003  |       
|                                 |  | Shares                          |  | Per ShareAmount |                               |   | Shares |       | Per ShareAmount |   |       | Shares |  | Per ShareAmount |  |   | Shares |   | Per ShareAmount |      
|Net income (loss)                |  | 4,923                           |  | $               | (0.05                         | ) |        | 5,053 |                 | $ | 0.86  |        |  | 4,923           |  | $ | 0.22   |   |                 | 5,018 |  | $ | 1.08  |  
|Effect of dilutive stock options |  | 0                               |  |                 |                              |   |        | 317   |                 |   | (0.05 | )      |  | 253             |  |   | (0.01  | ) |                 | 301   |  |   | (0.06 | )
|                                 |  |                                 |  |                 |                               |   |        |       |                 |   |       |        |  |                 |  |   |        |   |                 |       |  |   |       |  
|Diluted                          |  | 4,923                           |  | $               | (0.05                         | ) |        | 5,370 |                 | $ | 0.81  |        |  | 5,176           |  | $ | 0.21   |   |                 | 5,319 |  | $ | 1.02  |  
|                                 |  |                                 |  |                 |                               |   |        |       |                 |   |       |        |  |                 |  |   |        |   |                 |       |  |   |       |  



In the three and six months ended
December 31, 2003, there were no antidilutive shares, the exercise price of all vested shares exceeded the weighted average stock price for these periods. In the three months ended December 31, 2002, the effect of dilutive stock options was not
presented because the Company reported a loss for the period.



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THE SANDS REGENT AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



NOTE 3 - BUSINESS SEGMENTS



The Company reports business segment information based on geographic location. The following is a breakdown of relevant data by location.
(Dollars in thousands)



|                                                          |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|--------------------------------------------------------- |  | ----------------------------- | ------ | - | --------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                          |  | THREE MONTHSENDEDDECEMBER 31, |        |   | SIX MONTHSENDEDDECEMBER 31, |  
|                                                          |  | 2002                          |        |   | 2003                        |   |        | 2002 |  |   | 2003   |  
|Net revenues (Gross revenues less promotional allowances) |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Sands Regency Casino/Hotel                                |  | $                             | 7,355  |   |                             | $ | 7,346  |      |  | $ | 17,151 |   |  | $ | 16,530 |  
|Gold Ranch Casino and RV Resort                           |  |                               | 5,091  |   |                             |   | 5,399  |      |  |   | 10,996 |   |  |   | 12,135 |  
|                                                          |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Total net revenues                                        |  | $                             | 12,446 |   |                             | $ | 12,745 |      |  | $ | 28,147 |   |  | $ | 28,665 |  
|                                                          |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Income from operations                                    |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Sands Regency Casino/Hotel                                |  | $                             | (190   | ) |                             | $ | (59    | )    |  | $ | 1,610  |   |  | $ | 1,015  |  
|Gold Ranch Casino and RV Resort                           |  |                               | 350    |   |                             |   | 359    |      |  |   | 1,075  |   |  |   | 1,034  |  
|Corporate costs                                           |  |                               | (115   | ) |                             |   | (60    | )    |  |   | (200   | ) |  |   | (139   | )
|                                                          |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Total consolidated income from operations                 |  | $                             | 45     |   |                             | $ | 240    |      |  | $ | 2,485  |   |  | $ | 1,910  |  
|                                                          |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Depreciation and amortization                             |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Sands Regency Casino/Hotel                                |  | $                             | 779    |   |                             | $ | 864    |      |  | $ | 1,567  |   |  | $ | 1,675  |  
|Gold Ranch Casino and RV Resort                           |  |                               | 99     |   |                             |   | 122    |      |  |   | 193    |   |  |   | 226    |  
|                                                          |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Total consolidated depreciation and amortization          |  | $                             | 878    |   |                             | $ | 986    |      |  | $ | 1,760  |   |  | $ | 1,901  |  
|                                                          |  |                               |        |   |                             |   |        |      |  |   |        |   |  |   |        |  



NOTE 4 - RECENTLY ISSUED ACCOUNTING
PRONOUNCEMENTS



In November 2002, the FASB issued FASB Interpretation
(FIN) 45, Guarantors Accounting and Disclosure Requirements for Guarantees, including indirect Guarantees of Indebtedness of Others. FIN 45 expands the information disclosures required by guarantors obligations under certain types of
guarantees. It also requires initial recognition at fair value of a liability for such guarantees. We adopted the disclosure requirements of FIN 45 and apply liability recognition requirements to all guarantees issued or modified after June 30,
2003. The adoption of these requirements did not have a material impact on our results of operations or financial position.



In January 2003, the Financial Accounting Standards Board (FASB) issued FIN 46 (revised December 2003), Consolidation of Variable Interest Entities (VIEs). FIN 46
clarifies the application of Accounting Research Bulletin 51, Consolidated Financial Statements, and establishes standards for determining under what circumstances VIEs should be consolidated with their primary beneficiary, including those to which
the usual condition for consolidation does not apply. FIN 46 also requires disclosures about unconsolidated VIEs in which the Company has a significant variable interest. The consolidation requirements of FIN 46 apply immediately to VIEs created
after December 31, 2003, and apply to older entities in the first period ending after March 15, 2004. Certain disclosure requirements apply to all financial statements issued after December 31, 2003. The Company does not have Variable Interest
Entities, as such, the adoption of these requirements does not have a material impact on our results of operations or financial position.



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THE SANDS REGENT AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of FASB Statement No. 123 to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method used on reported results. The Company adopted the annual and interim disclosure requirements of SFAS No. 148 and it did not have a material impact on the consolidated
financial statements.



In April 2003, the FASB issued SFAS 149,
Amendments of Statement 133 on Derivative Instruments and Hedging Activities. This Statement amends SFAS 133, Accounting for Derivative and Instruments and Hedging Activities, and clarifies financial accounting and reporting
for derivative instruments, including certain derivative instruments embedded in other contracts and or hedging activities under SFAS 133. This statement is effective for contracts entered into or modified after June 30, 2003, except as stated below
and for hedging relationships designated after June 30, 2003. The provisions of this statement that relate to Statement 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003, should continue to be
applied in accordance with their respective effective dates. The adoption of this statement did not have a material impact on the Companys results of operations or financial position.



In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Financial instruments that
are within the scope of the statement, which previously were often classified as equity, must now be classified as liabilities. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise shall be
effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of this statement did not have a material effect on the Companys results of operations or financial position.



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THE SANDS REGENT AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



NOTE 5 - STOCK OPTION AND STOCK INCENTIVE PLANS



The Company accounts for its stock option plan under the recognition and measurement principles of Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees and related interpretations in accounting for its plan. No stock-based compensation costs are reflected in net income, as all options granted under those plans had an exercise price equal to
the market value of the underlying common stock on the date of the grant. If the Company had elected to recognize compensation cost on the fair market value at the grant dates for awards under the stock option plans, consistent with the method
prescribed by Statement of Financial Accounting Standards (SFAS No. 123), Accounting for Stock-Based Compensation, as amended by SFAS No. 148 - Accounting for Stock-based Compensation - Transition and Disclosure,
using the Black-Scholes option pricing model with managements assumptions disclosed, net income and income per share would have been changed to the pro forma amounts indicated below:



|                                                                                                                               |  |                               |       |   |                             |   |       |      |  |   |       |   |  |   |       |  
|------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------- | ----- | - | --------------------------- | - | ----- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                                                                               |  | THREE MONTHSENDEDDECEMBER 31, |       |   | SIX MONTHSENDEDDECEMBER 31, |  
|                                                                                                                               |  | 2002                          |       |   | 2003                        |   |       | 2002 |  |   | 2003  |  
|Net income (loss) as reported                                                                                                  |  | $                             | (244  | ) |                             | $ | 4,335 |      |  | $ | 1,100 |   |  | $ | 5,417 |  
|Total stock-based employee compensation expense under the fair-value based method for awards net of related income tax effects |  |                               | (17   | ) |                             |   | (55   | )    |  |   | (34   | ) |  |   | (79   | )
|                                                                                                                               |  |                               |       |   |                             |   |       |      |  |   |       |   |  |   |       |  
|Proforma net income (loss)                                                                                                     |  | $                             | (261  | ) |                             | $ | 4,280 |      |  | $ | 1,066 |   |  | $ | 5,338 |  
|                                                                                                                               |  |                               |       |   |                             |   |       |      |  |   |       |   |  |   |       |  
|Basic earnings (loss) per share:                                                                                               |  |                               |       |   |                             |   |       |      |  |   |       |   |  |   |       |  
|As reported                                                                                                                    |  | $                             | (0.05 | ) |                             | $ | 0.86  |      |  | $ | 0.22  |   |  | $ | 1.08  |  
|Pro forma                                                                                                                      |  |                               | (0.05 | ) |                             |   | 0.85  |      |  |   | 0.22  |   |  |   | 1.06  |  
|Diluted earnings (loss) per share:                                                                                             |  |                               |       |   |                             |   |       |      |  |   |       |   |  |   |       |  
|As reported                                                                                                                    |  | $                             | (0.05 | ) |                             | $ | 0.81  |      |  | $ | 0.21  |   |  | $ | 1.02  |  
|Pro forma                                                                                                                      |  |                               | (0.05 | ) |                             |   | 0.80  |      |  |   | 0.21  |   |  |   | 1.00  |  



NOTE 6 - ACQUISITION PLANS /
COMMITMENT TO PURCHASE RAIL CITY CASINO



On December 8, 2003, the Company
announced the signing of an agreement to purchase Rail City Casino in Sparks, Nevada, from Alliance Gaming Corporation. The expected purchase price is approximately $38.0 million, consisting of approximately $35.0 million in cash and approximately
$3.0 million in subordinated debt carried by the seller. The final purchase amount will be based on the twelve-month financial performance of Rail City prior to closing of the sale expected to be in the spring of 2004, pending regulatory approval.
The Company has made a $1.0 million non-refundable deposit as earnest money in the transaction.



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THE SANDS REGENT AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



NOTE 7 - GAIN ON NOTE RECEIVABLE - FINANCIAL AND TAX IMPLICATIONS



On November 13, 2003, the Company reached an agreement with Gulfside Casino Partnership
(d/b/a the Copa Casino in Gulfport, Mississippi), regarding a final settlement of amounts owing to the Company pursuant to a non-interest bearing promissory note issued to the Company in connection with its December 1998 sale of its interest in
Copa. The terms of the note required the Copa to make a monthly payment to the Company in an amount equal to the greater of $15,000 or 2% of the Copas gross gaming revenues (4% beginning July 2004) until paid in full. At the time of
settlement, the unpaid balance of the note was $5.0 million. On November 28, 2003, the Company received a $4.0 million cash payment as final settlement under the note. The Company had not previously recognized a gain on the settlement amount due
primarily to the Companys uncertainty of the Copas current managements ability to obtain long-term financing, as well as competitive, legal, financial, environmental and various other risks facing the casino. As a result, in the
six months ended December 31, 2003, the Company has recognized a gain of the full settlement amount of $4.0 million plus debt service payments of $387,000 made during the period.



At the time of the Copa sale the Companys tax basis in the Copa was $7.3 million. The full value of the note, $8.0 million, and the
$500,000 initial cash payment, were recorded for tax purposes without an allowance for uncollectibility. This created a deferred tax gain of $1.2 million. For tax purposes, no gain is realized on the settlement amount as all proceeds have been
applied first to the deferred gain and then to the Companys tax basis in the property. Further, a tax benefit of $348,000 has been recognized on the $1.0 million forgiven as terms of the settlement, further reducing the tax provision for the
six months ended December 31, 2003 and increasing the tax benefit for the three months ended December 31, 2003.



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THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



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



The Sands Regent and its subsidiaries (the Company) operate the Sands Regency Casino Hotel (the Sands) in Downtown
Reno, Nevada and the Gold Ranch Casino and RV Resort (the Gold Ranch) on Interstate-80 in Verdi, Nevada. The Sands has 830 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 alternatives, including 589 slot machines, 19 table games, keno, bingo, and a sportsbook operated by Leroys Race and Sportsbooks, a third party. Additionally, the Sands has a Just for
Laughs comedy club, a cabaret lounge, health spa, and a large outdoor pool. The Company acquired Gold Ranch on June 1, 2002. Gold Ranchs gaming alternatives include 256 slot machines, a California lottery station on Gold Ranchs
property which straddles the Nevada/California border; and a Leroys sportsbook. Additionally, Gold Ranch has a 105 space RV park, 2 restaurants, and an ARCO gas station and convenience store. The Company also owns a slot machine route with 14
locations in the Reno area.



On December 8, 2003, the Company announced the
signing of an agreement to purchase Rail City Casino in Sparks, Nevada, from Alliance Gaming Corporation. The expected purchase price is approximately $38 million, consisting of approximately $35 million in cash and approximately $3 million in
subordinated debt carried by the seller. The final purchase amount will be based on the twelve-month financial performance of Rail City prior to closing of the sale. The closing of the acquisition is subject to customary closing conditions and is
expected to close in the spring of 2004, pending regulatory approval.



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-Three months and six months ended December 31,
2003, as compared to the three and six months ended December 31, 2002



CONSOLIDATED RESULTS. For the three months ended December 31, 2003, the Companys net revenues (operating revenues less promotional allowances) increased from $12.6 million to $12.7 million, or 1.5%, from the three months ended
December 31, 2002. For the six months ended December 31, 2003, net revenues increased from $28.1 million to $28.7 million, or 2.1%, from the comparable six month period of the prior year. The increase in current year revenues for both periods was
due specifically to higher retail gasoline prices. Current year consolidated net revenues, excluding fuel and convenience store, declined $76,000, or .83% from the comparable quarter ended December 2002; and declined $716,000, or 3.4%, from the
comparable six month period ended December 2002. Higher fuel prices, a lingering economic malaise in California, and increased competition from Native American casinos were factors in the consolidated net revenue declines.



Consolidated income from operations was $240,000 for the quarter ended December 31, 2003
compared to $45,000 for the quarter ended December 31, 2002. The increase of $195,000 was due to lower general and administrative costs, in particular, lower management salaries and bonus accruals, which decreased $306,000 for the current quarter as
compared with the same quarter of 2002.



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THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



For the six months ended December 31, 2003, consolidated income from operations was $1.9 million, compared with $2.5
million for the comparable six months of the prior year. The decrease in consolidated income from operations was primarily attributable to increased operating expenses and the fact that the quarter ended December 31, 2002, was an exceptionally
strong revenue quarter for both the Sands and Gold Ranch. The Company spent an additional $303,000 on advertising and marketing costs in the September 2003 quarter as compared to the quarter ended September 30, 2002, to achieve two goals: 1)
maintain and enhance its marketing presence in the Northern California feeder market with the opening of the new Thunder Valley Casino, and 2) maintain the Sands local marketing presence to counter traffic and parking problems associated with the
ongoing roadwork nearby related to the new downtown railroad trench project also known as ReTRAC. (See Other factors affecting current and future results later in this section.)



Net income was $4.3 million, or $.86 per share ($.81 diluted) for the three months ended
December 31, 2003 and $5.4 million, or $1.08 per share ($1.02 diluted) for the six months ended December 31, 2003. These results compare to a consolidated net loss of $244,000, or $.05 per share (basic and diluted) for the three months ended
December 31, 2002, and net income of $1.1 million, or $.22 ($.21 diluted) for the six months ended December 31, 2002. The large improvement was due to payments received by the Company of $4.2 million for the quarter and $4.4 million for the six
month period as settlement of a previously fully reserved note receivable the Company possessed in connection with its December 1998 sale of the Copa Casino (see Gain on previously reserved note receivable below).



SANDS REGENCY HOTEL AND CASINO. The Sands had marginally higher net revenues in the quarter
ended December 31, 2003, as compared with the quarter ended December 31, 2002; both periods having approximately $7.4 million. In the six months ended December 31, 2003, net revenues remained less than prior year, $16.5 million compared to $17.2
million. Similarly, gaming revenues were higher for the quarter, $5.0 million in 2003 versus $4.9 million in 2002, but remained less for the six month period; $10.5 million for the current year compared with $10.7 million for 2002. The decrease in
net revenues for the six months ended December 31, 2003, was primarily attributable to the disruption caused by the ReTRAC project and increased competition from Native American casinos.



Lodging revenues were higher for the quarter, $1.7 million in 2003 compared to $1.6 million in 2002, and were flat year over year at $4.6
million for the six month comparison. The Sands average room rate was slightly greater than last year for the quarterly period, $27.35 per room sold compared with $27.24. However, the average room rate for the six month period decreased
compared to prior year, $34.79 compared to $35.08. The primary reason for the lodging revenue increase in the quarter was an additional 3,800, or 6.4%, rooms sold in the quarter ended December 31, 2003, than in the comparable quarter of 2002,
despite the new Thunder Valley Casino, which opened June 9, 2003. Sands managements interactions with California patrons found their interest in coming to Reno and to the Sands remained strong, but that many had trialed the new casino and
anecdotal evidence suggested many Californians had arrived in Reno with smaller than normal gaming budgets.



The Sands income from operations was a $59,000 loss in the quarter ended December 31, 2003, as compared to a loss of $183,000 in the quarter ended December 31, 2002. The expense margin for the Sands improved
from 102.5% to 100.8% in the quarter-to-quarter comparison mainly due to changes in the Sands management structure and a smaller projected management bonus due to operational profit tracking behind established goals.



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THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



For the six months ended December 31, 2003, the Sands had income from operations of $1.0 million, compared to $1.6
million in the six months ended December 31, 2002. In contrast to the quarterly results, the expense margin for the six month period ended December 31, 2003 was higher than the prior year, 93.9% compared to 90.6%. The decline in income from
operations was primarily due to the Sands not achieving the economies of scale associated with the heavy business volumes of the summer of 2002, increased marketing and advertising costs during the current fiscal year, and new taxes enacted by the
2003 Nevada Legislature.



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



|                           |  |                                |       |   |                              |   |       |         |  |       |      |  |   |        |   |  |         |        |   |  |      |  
|-------------------------- |  | ------------------------------ | ----- | - | ---------------------------- | - | ----- | ------- |  | ----- | ---- |  | - | ------ | - |  | ------- | ------ | - |  | ---- | -
|                           |  | THREE MONTHS ENDEDDECEMBER 31, |       |   | SIX MONTHS ENDEDDECEMBER 31, |  
|(dollars in thousands)     |  | 2002                           |       |   | 2003                         |   |       | PERCENT |  |       | 2002 |  |   | 2003   |   |  | PERCENT |       
|Gaming revenues            |  | $                              | 4,861 |   |                              | $ | 5,027 |         |  | 3.4   | %    |  | $ | 10,712 |   |  | $       | 10,459 |   |  | -2.4 | %
|Gaming expenses            |  | $                              | 2,245 |   |                              | $ | 2,321 |         |  | 3.4   | %    |  | $ | 4,778  |   |  | $       | 4,752  |   |  | -0.5 | %
|Expense margin             |  |                                | 46.2  | % |                              |   | 46.2  | %       |  |       |      |  |   | 44.6   | % |  |         | 45.4   | % |  |      |  
|Lodging revenues           |  | $                              | 1,709 |   |                              | $ | 1,729 |         |  | 1.2   | %    |  | $ | 4,674  |   |  | $       | 4,604  |   |  | -1.5 | %
|Lodging expenses           |  | $                              | 1,010 |   |                              | $ | 960   |         |  | -5.0  | %    |  | $ | 2,089  |   |  | $       | 1,994  |   |  | -4.5 | %
|Expense margin             |  |                                | 59.1  | % |                              |   | 55.5  | %       |  |       |      |  |   | 44.7   | % |  |         | 43.3   | % |  |      |  
|Food and beverage revenues |  | $                              | 1,167 |   |                              | $ | 1,118 |         |  | -4.2  | %    |  | $ | 2,608  |   |  | $       | 2,396  |   |  | -8.1 | %
|Food and beverage expenses |  | $                              | 725   |   |                              | $ | 742   |         |  | 2.3   | %    |  | $ | 1,656  |   |  | $       | 1,592  |   |  | -3.9 | %
|Expense margin             |  |                                | 62.1  | % |                              |   | 66.4  | %       |  |       |      |  |   | 63.5   | % |  |         | 66.4   | % |  |      |  
|Total net revenues         |  | $                              | 7,355 |   |                              | $ | 7,346 |         |  | -0.1  | %    |  | $ | 17,151 |   |  | $       | 16,530 |   |  | -3.6 | %
|Total operating expenses   |  | $                              | 7,538 |   |                              | $ | 7,405 |         |  | -1.8  | %    |  | $ | 15,541 |   |  | $       | 15,515 |   |  | -0.2 | %
|Expense margin             |  |                                | 102.5 | % |                              |   | 100.8 | %       |  |       |      |  |   | 90.6   | % |  |         | 93.9   | % |  |      |  
|Maintenance and utilities  |  | $                              | 837   |   |                              | $ | 809   |         |  | -3.3  | %    |  | $ | 1,792  |   |  | $       | 1,753  |   |  | -2.2 | %
|Percent of net revenues    |  |                                | 11.4  | % |                              |   | 11.0  | %       |  |       |      |  |   | 10.4   | % |  |         | 10.6   | % |  |      |  
|General and Administrative |  | $                              | 1,791 |   |                              | $ | 1,584 |         |  | -11.6 | %    |  | $ | 3,384  |   |  | $       | 3,480  |   |  | 2.8  | %
|Percent of net revenues    |  |                                | 24.4  | % |                              |   | 21.6  | %       |  |       |      |  |   | 19.7   | % |  |         | 21.1   | % |  |      |  



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THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



GOLD RANCH CASINO AND RV RESORT. For the three months and six month periods ended December 31, 2003, Gold Ranch had
net revenues of $5.4 million and $12.1 million, respectively. This reflects an increase from the $5.1 million and $11.0 million in net revenues for Gold Ranch in the respective periods of 2002.



The largest revenue component at the Gold Ranch is a high volume ARCO gas station and
convenience store, and this revenue center accounted for nearly all of the revenue increases. A change in the price of gasoline can greatly influence total revenues but have a minimal impact on profitability. The average retail price of a gallon of
gasoline was $1.62 for the quarter ended, and $1.72 for the six months ended, December 31, 2003. This compares with an average price of $1.42 and $1.44 for the respective three and six month periods in 2002. Despite the price increase, the gas
station sold 1.8% more gallons of gasoline in the six months ended December 31, 2003 than in the six months ended December 31, 2002.



Gaming revenue for Gold Ranch is comprised of slot machine revenue and, to a lesser degree, revenue from a California Lottery station. Gaming revenue was essentially flat
to last year for both the three month period, $1.4 million, and the six month period, $3.0 million. Company management feels the first quarter of the current fiscal years gaming results were negatively impacted by the timing of an unusually
large number of jackpots and the second quarter was affected by poor weather on weekends and unusually competitive gasoline prices on the I-80 corridor in California.



Gold Ranch income from operations for the quarter ended December 31, 2003 was $359,000, a small increase from $350,000 for the quarter ended
December 31, 2002. Income from operations was higher primarily due to lower management bonus accruals as the property tracked below operating targets. For the six months ended December 31, 2003, income from operations was $41,000 lower than the six
months ended December 31, 2002, primarily attributable to several direct mail and other promotions, which supported incremental customer volume, but also increased costs.



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



|                                    |  |                                |       |   |                              |   |       |         |  |       |      |  |   |        |   |  |         |        |   |  |      |  
|----------------------------------- |  | ------------------------------ | ----- | - | ---------------------------- | - | ----- | ------- |  | ----- | ---- |  | - | ------ | - |  | ------- | ------ | - |  | ---- | -
|                                    |  | THREE MONTHS ENDEDDECEMBER 31, |       |   | SIX MONTHS ENDEDDECEMBER 31, |  
|(dollars in thousands)              |  | 2002                           |       |   | 2003                         |   |       | PERCENT |  |       | 2002 |  |   | 2003   |   |  | PERCENT |       
|Gaming revenues                     |  | $                              | 1,376 |   |                              | $ | 1,390 |         |  | 1.0   | %    |  | $ | 2,996  |   |  | $       | 2,989  |   |  | -0.2 | %
|Gaming expenses                     |  | $                              | 488   |   |                              | $ | 557   |         |  | 14.1  | %    |  | $ | 984    |   |  | $       | 1,166  |   |  | 18.5 | %
|Expense margin                      |  |                                | 35.5  | % |                              |   | 40.1  | %       |  |       |      |  |   | 32.8   | % |  |         | 39.0   | % |  |      |  
|Lodging revenues                    |  | $                              | 69    |   |                              | $ | 106   |         |  | 53.6  | %    |  | $ | 208    |   |  | $       | 305    |   |  | 46.6 | %
|Lodging expenses                    |  | $                              | 38    |   |                              | $ | 41    |         |  | 7.9   | %    |  | $ | 74     |   |  | $       | 99     |   |  | 33.8 | %
|Expense margin                      |  |                                | 55.1  | % |                              |   | 38.7  | %       |  |       |      |  |   | 35.6   | % |  |         | 32.5   | % |  |      |  
|Food and beverage revenues          |  | $                              | 426   |   |                              | $ | 378   |         |  | -11.3 | %    |  | $ | 905    |   |  | $       | 829    |   |  | -8.4 | %
|Food and beverage expenses          |  | $                              | 293   |   |                              | $ | 275   |         |  | -6.1  | %    |  | $ | 566    |   |  | $       | 562    |   |  | -0.7 | %
|Expense margin                      |  |                                | 68.8  | % |                              |   | 72.8  | %       |  |       |      |  |   | 62.5   | % |  |         | 67.8   | % |  |      |  
|Fuel and convenience store revenues |  | $                              | 3,387 |   |                              | $ | 3,647 |         |  | 7.7   | %    |  | $ | 7,124  |   |  | $       | 8,244  |   |  | 15.7 | %
|Fuel and convenience store expenses |  | $                              | 3,175 |   |                              | $ | 3,429 |         |  | 8.0   | %    |  | $ | 6,698  |   |  | $       | 7,733  |   |  | 15.5 | %
|Expense margin                      |  |                                | 93.7  | % |                              |   | 94.0  | %       |  |       |      |  |   | 94.0   | % |  |         | 93.8   | % |  |      |  
|Total net revenues                  |  | $                              | 5,091 |   |                              | $ | 5,399 |         |  | 6.0   | %    |  | $ | 10,996 |   |  | $       | 12,135 |   |  | 10.4 | %
|Total operating expenses            |  | $                              | 4,741 |   |                              | $ | 5,040 |         |  | 6.3   | %    |  | $ | 9,921  |   |  | $       | 11,101 |   |  | 11.9 | %
|Expense margin                      |  |                                | 93.1  | % |                              |   | 93.4  | %       |  |       |      |  |   | 90.2   | % |  |         | 91.5   | % |  |      |  
|Maintenance and utilities           |  | $                              | 161   |   |                              | $ | 177   |         |  | 9.9   | %    |  | $ | 365    |   |  | $       | 354    |   |  | -3.0 | %
|Percent of net revenues             |  |                                | 3.2   | % |                              |   | 3.3   | %       |  |       |      |  |   | 3.3    | % |  |         | 2.9    | % |  |      |  
|General and Administrative          |  | $                              | 513   |   |                              | $ | 441   |         |  | -14.0 | %    |  | $ | 1,039  |   |  | $       | 963    |   |  | -7.3 | %
|Percent of net revenues             |  |                                | 10.1  | % |                              |   | 8.2   | %       |  |       |      |  |   | 9.4    | % |  |         | 7.9    | % |  |      |  



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##### Table of Contents

THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



CORPORATE COSTS. Corporate costs, including public company reporting and related legal and accounting fees, were
$60,000 and $139,000 in the three and six months ended December 31, 2003, respectively, a decline from $114,000 and $200,000 in the three and six months ended December 31, 2002. The prior year had one-time legal and accounting costs associated with
the acquisition of Gold Ranch, and the Company reduced the amount spent on the production of its annual report and other public reporting.



INTEREST EXPENSE. Interest expense was $171,000 and $389,000 for the three and six month periods ended December 31, 2003, versus $318,000 and $668,000 for the three
months ended December 31, 2002. The primary reason for the reduction was the Companys continued pay down of its long-term line of credit with cash generated from operations. Additionally, during the six months ended December 31, 2003 the
Company received settlements of $4.4 million on a note receivable it held in connection with its December 1998 sale of the Copa Casino and much of the proceeds were used to reduce the line of credit. See related disclosure Gain on Previously
Reserved Note Receivable below.



LOSS ON DISCONTINUATION/ABANDONMENT OF
NEW PROJECTS. The Company had pursued an opportunity to expand the number of slot machines it had in one of its slot route locations from the current 8 machines to 150. The Company feels it maintains the required non-restricted state license to turn
this operation into a casino; however, in January 2004, the Reno city council denied the Companys request to expand, and a loss was taken in the amount of the $46,000 costs incurred to-date. The Company feels the action taken by the council
was erroneous and plans to take action against the city in this case. In the prior year six month period, the Company abandoned its plans to build a casino in Minden, Nevada, resulting in a loss of $59,000.



GAIN ON PREVIOUSLY RESERVED NOTE RECEIVABLE. On November 13, 2003, the Company reached an
agreement with Gulfside Casino Partnership (d/b/a the Copa Casino in Gulfport, Mississippi), regarding a final settlement of amounts owing to the Company pursuant to a non-interest bearing promissory note issued to the Company in connection with its
December 1998 sale of its interest in Copa. The terms of the note required the Copa to make a monthly payment to the Company in an amount equal to the greater of $15,000 or 2% of the Copas gross gaming revenues (4% beginning July 2004) until
paid in full. At the time of settlement, the unpaid balance of the note was $5.0 million. On November 28, 2003, the Company received a $4.0 million cash payment as final settlement under the note. The Company had not previously recognized a gain on
the settlement amount due primarily to the Companys uncertainty of the Copas current managements ability to obtain long-term financing, as well as competitive, legal, financial, environmental and various other risks facing the
casino. As a result, in the six months ended December 31, 2003, the Company has recognized a gain of the full settlement amount of $4.0 million plus debt service payments of $387,000 made during the period.



TAX PROVISION- GAIN ON NOTE RECEIVABLE. At the time of the Copa Casino sale the
Companys tax basis in the Copa was $7.3 million. The full value of the note, $8.0 million, and the $500,000 initial cash payment, were recorded for tax purposes without an allowance for collectibility. This created a deferred tax gain of $1.2
million. For tax purposes, no gain is realized on the settlement amount as all proceeds have been applied first to the deferred gain and then to the to the Companys tax basis in the property. Further, a tax benefit of $348,000 has been
recognized on the $1.0 million forgiven as terms of the settlement, further reducing the tax provision for the six months ended December 31, 2003 and increasing the tax benefit for the three months ended December 31, 2003.



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##### Table of Contents

THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



Capital resources and liquidity



The Companys working capital decreased from $1.6 million at June 30, 2003, to $715,000 at December 31, 2003. The Companys cash
and cash equivalents decreased from $4.0 million at June 30, 2003, to $3.4 million at December 31, 2003, as the Company continued to use all available operating cash to pay down its line of credit and reduce interest charges. Cash flow from
operations provided $3.6 million during the six month period ended December 31, 2003, compared to $3.0 million for the comparable period of the prior year. Investing activities provided $4.4 million from the settlement of a note receivable and used
$1.3 million acquiring capital assets and used $1.1 million on costs and a deposit associated with the acquisition of a casino (see next paragraph). Long-term debt was reduced by $6.5 million during the six month period ended December 31, 2003, and
on that date, the Company had unused credit lines under its reducing revolving credit facility of $12.1 million.



On December 8, 2003, the Company announced the signing of an agreement to purchase Rail City Casino in Sparks, Nevada, from Alliance Gaming Corporation. The expected
purchase price is approximately $38 million, consisting of approximately $35 million in cash and approximately $3 million in subordinated debt carried by the seller. The final purchase amount will be based on the twelve-month financial performance
of Rail City prior to closing of the sale expected to be in the spring of 2004, pending regulatory approval. The Company intends to fund the acquisition primarily through the refinancing of its current line of credit.



At December 31, 2003, 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 foreseeable future; 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, 2003. Other than those identified as item (1) and (2) below, the Company has no off-balance sheet obligations.



|                    |  |       |            |                        |   |             |  |             |           |               |   |           |  |   |          
|------------------- |  | ----- | ---------- | ---------------------- | - | ----------- |  | ----------- | --------- | ------------- | - | --------- |  | - | ---------
|                    |  |       |            | Payments due by period
|                    |  | Total |            | Less than 1 year       |   | 1 - 3 years |  | 4 - 5 years |           | After 5 years
|Long term debt      |  | $     | 6,186,273  |                        | $ | 828,089     |  | $           | 1,629,428 |               | $ | 2,027,411 |  | $ | 1,701,345
|Operating leases(1) |  |       | 4,983,333  |                        |   | 575,000     |  |             | 1,150,000 |               |   | 1,150,000 |  |   | 2,108,333
|Other(2)            |  |       | 1,760,330  |                        |   | 203,115     |  |             | 406,230   |               |   | 406,230   |  |   | 744,755  
|                    |  |       |            |                        |   |             |  |             |           |               |   |           |  |   |          
|                    |  | $     | 12,929,936 |                        | $ | 1,606,204   |  | $           | 3,185,658 |               | $ | 3,583,641 |  | $ | 4,554,433
|                    |  |       |            |                        |   |             |  |             |           |               |   |           |  |   |          



|(1) | 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 significant expansion of the gaming facilities.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | 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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company has made a $1.0 million non-refundable
deposit as earnest money toward the purchase of the Rail City Casino.



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THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



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
contains 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.



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 as well as other factors described from time to time in our reports filed with the
Securities and Exchange Commission:



| |  | the effect of economic, credit and capital market conditions on the economy in general, and on gaming and hotel companies in particular; companies in particular;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our ability to timely and cost effectively integrate into our operations the companies and assets that we acquire;
| | - | ------------------------------------------------------------------------------------------------------------------



| |  | access to available and feasible financing;
| | - | -------------------------------------------



| |  | changes in laws or regulations, third party relations and approvals, and decisions of courts, regulators and governmental governmental bodies; bodies; including judicial actions,
gaming legislative action, referenda and taxation;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | abnormal gaming holds;
| | - | ----------------------



| |  | the effects terrorists attacks or war may have on the gaming industry; and
| | - | --------------------------------------------------------------------------



| |  | the effects of competition, including locations of competitors and operating and market competition.
| | - | ----------------------------------------------------------------------------------------------------



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.



Other factors affecting current and future results



NATIVE AMERICAN GAMING. The expansion of Native American casinos in California, Oregon, and Washington continues to have an impact on casino revenues in the Reno-Tahoe
market. The extent of the impact to the Company is difficult to isolate and the future impact is difficult to predict. A significant portion of the Companys customer base is substantially unaffected by the proliferation of gaming as it is made
up of western Nevada and eastern California residents, which are geographically much closer to the Reno area than existing Native American casinos. However, if other Reno area casinos lose tourist business due to competition from Native American
casinos, they may intensify their marketing efforts to local residents as well, which could have a material adverse effect on the Companys operational performance.



DOWNTOWN RENO RAILROAD TRENCH. Work has begun on a project to build a trench through downtown Reno for the purpose of constructing a below
grade rail transport corridor. Known as ReTRAC (Reno Transportation Railroad Access Corridor), the project is anticipated to take approximately 3 years to be completed. Currently, Union Pacifics railroad tracks dissect downtown Reno, as well
as the Sands parking facilities. ReTRAC has temporarily taken nearly 300 of the Sands parking spaces to build an interim railroad track known as the shoo-fly. The Company has also been informed that a small number of parking spaces
and Sands pedestrian overpass structure will be permanently lost.



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##### Table of Contents

THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



The law requires that the Sands be given alternate parking or compensation for spaces and structures permanently or
temporarily lost due to the project. In July 2003, the Sands received compensation amounting to approximately $582,000 for its contribution to the project. The Company is amortizing $428,000 of the proceeds over the anticipated length of the project
(May 2003 through November 2006). Part of the proceeds, $154,000 represents land, specifically parking spaces, that were effectively sold to the City of Reno. The Company feels it may not have been compensated fully for its contribution to the
project. Negotiations are continuing for a replacement bridge and additional parking, and as of the date of this report, the Company is in active negotiations with ReTRAC, and reviewing its alternatives.



The effect of trench construction on downtown Renos business levels, and specifically
the business levels of the Sands, is hard to quantify, as any potential downside due to customer inconvenience could be somewhat offset by opportunities, such as the effect this major construction project will have on the Reno area economy. In light
of these uncertainties, the Company feels this project could have an adverse material impact on the business levels of its downtown Reno property.



ACQUISITION OF RAIL CITY. On December 5, 2003, the Company entered into an agreement to acquire Rail City Casino. The closing of the acquisition is subject to customary
closing conditions and we cannot make any assurances that the acquisition will be completed as expected. We will have to successfully obtain financing in order to complete this acquisition. In addition, the success of our acquisition of Rail City
will depend on a number of factors, including the successful integration of the operations of Rail City. The difficulties of combining the operations of Rail City 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.
| | - | ----------------------------------------------------------------------------------



In addition, even if we are able to integrate Rail Citys operations successfully, this integration may not result in the realization
of the full benefits and growth opportunities that we expect or that these benefits will be achieved within the anticipated time frame. We cannot assure you that will be able to obtain the necessary financing to close the acquisition or that the
integration of Rail City with us will result in the realization of the full benefits anticipated by us to result from the acquisition. Our failure to achieve these benefits could have a material adverse effect on our results of operations.



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



The Companys long-term debt is variable relative to changes in interest rates. Specifically, the interest rate of the Companys primary debt, a reducing,
revolving credit facility through Nevada State Bank, is currently fixed at 7.17% per annum. However, effective June 1, 2007, the interest rate will be adjusted to a new five-year fixed rate of 2.40% plus the five-year U.S. Dollar Swap Market rate.
At the time of this rate adjustment, the maximum principal balance of this obligation will be $8.5 million. Accordingly, each 1% rate adjustment at that time will have a maximum impact to the Company of $85 thousand per year.



Additionally, the interest rate of the Companys subordinated debt, which has a
principal balance of $4.4 million at December 31, 2003, varies directly with a change in the Prime index. A full percentage point change in the Prime index will have a maximum yearly financial impact of less than $44 thousand, declining as principal
is paid down. This subordinated debt is limited to a maximum increase or decrease of 1% per year, and a maximum fluctuation of 3% over the term of the note.



Finally, terms of the Companys RV park management agreement with Prospector Gaming Enterprises (PGE), referenced as (2) 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 thousand per year. The Company does not use interest rate derivative instruments to manage exposure to interest rate changes. A more complete discussion of these debt instruments is
included in the Companys 2003 Form 10-K.



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##### Table of Contents

THE SANDS REGENT AND SUBSIDIARIES

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

THREE AND SIX MONTHS ENDED DECEMBER 31, 2003 AND 2002



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



We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act of 1934, as amended,
reports is recorded, processed, summarized and reported within the time periods specified in 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
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.



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.



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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##### Table of Contents

THE SANDS REGENT AND SUBSIDIARIES

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
|------- | ---------------------



Not applicable



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



Not applicable



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



On November 3, 2003, the Company conducted its annual meeting in Reno, Nevada, in which 3 proposals were put before the shareholders. Each proposal passed
as follows:



Proposal 1



To amend the Companys Articles of Incorporation to
eliminate the staggered Board of Directors and provide for the annual election of all Directors.



|                                                                                                                                                                                                                                                                                                |  |                |  |       |  |                               |  |      |  |             |  |      |  |                  |  |      
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------- |  | ----- |  | ----------------------------- |  | ---- |  | ----------- |  | ---- |  | ---------------- |  | -----
|                                                                                                                                                                                                                                                                                                |  | Votes cast for |  |       |  | Votes cast againstor withheld |  |      |  | Abstentions |  |      |  |                  |  |      
|                                                                                                                                                                                                                                                                                                |  | 4,769,293      |  | 99.4% |  | 26,490                        |  | 0.6% |  | 2,004       |  | 0.0% |  |                  |  |      
|                                                                                                                                                                                                                                                                                               
|Proposal 2  To elect three (3) directors, each to serve for a one-year term (or for three-year terms if Proposal No. 1 is not
adopted and approved) or until their respective successors are duly elected and qualified.                                                                       
|                                                                                                                                                                                                                                                                                                |  |                |  |       |  |                               |  |     
|                                                                                                                                                                                                                                                                                                |  | Votes cast for |  |       |  | Votes cast againstor withheld |  |      |  |             |  |      |  |                  |  |      
|Jon N. Bengtson                                                                                                                                                                                                                                                                                 |  | 4,792,242      |  | 99.9% |  | 5,545                         |  | 0.1% |  |             |  |      |  |                  |  |      
|                                                                                                                                                                                                                                                                                                |  |                |  |       |  |                               |  |     
|Larry Tuntland                                                                                                                                                                                                                                                                                  |  | 4,792,252      |  | 99.9% |  | 5,535                         |  | 0.1% |  |             |  |      |  |                  |  |      
|                                                                                                                                                                                                                                                                                                |  |                |  |       |  |                               |  |     
|David R. Grundy                                                                                                                                                                                                                                                                                 |  | 4,792,252      |  | 99.9% |  | 5,535                         |  | 0.1% |  |             |  |      |  |                  |  |      
|                                                                                                                                                                                                                                                                                               
|Proposal 3  To amend the Companys Articles of Incorporation to reduce the votes required for certain corporate transactions
from two-thirds of the outstanding shares of each class of stock entitled to vote to a majority of the outstanding shares of each class of stock entitled to vote.
|                                                                                                                                                                                                                                                                                                |  |                |  |       |  |                               |  |     
|                                                                                                                                                                                                                                                                                                |  | Votes cast for |  |       |  | Votes cast againstor withheld |  |      |  | Abstentions |  |      |  | Broker non-votes |  |      
|                                                                                                                                                                                                                                                                                                |  | 3,407,187      |  | 71.0% |  | 40,471                        |  | 0.8% |  | 3,668       |  | 0.1% |  | 1,346,441        |  | 28.1%



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



None



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##### Table of Contents

THE SANDS REGENT AND SUBSIDIARIES

PART II OTHER INFORMATION



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



( a ) Exhibits



|             |  |                                                                                                                                                                                                    
|------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|             | 
|Exhibit 10.1 |  | Stock Purchase Agreement by and among Alliance Gaming Corporation, APT Games, Inc. and The Sands Regent with respect to Plantation Investments, Inc. d/b/a Rail City Casino dated December 5,
2003.
|             | 
|Exhibit 31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,                                                                                                
|             | 
|Exhibit 31.2 |  | Certification of Chief Financial and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                       
|             | 
|Exhibit 32   |  | Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                           



( b ) Reports on Form 8-K



Form 8-K filed December 1, 2003 with the SEC relating to
the note settlement with Gulfside Casino Partnership.

Form 8-K filed December 8, 2003 with the SEC relating to the purchase of Rail City
Casino in Sparks, Navada.



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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: February 17, 2004 |  |  |  | By:                           |  | /S/    FERENC B. SZONY
|                        |  |  |  |                               |  |                        | 
|                        |  |  |  |                               |  |                        |  | Ferenc B. Szony, President and Chief Executive Officer



|                        |  |  |  |     |  |                           |  |                                                                     
|----------------------- |  |  |  | --- |  | ------------------------- |  | --------------------------------------------------------------------
|                        |  |  | 
|Date: February 17, 2004 |  |  |  | By: |  | /S/    ROBERT J. MEDEIROS
|                        |  |  |  |     |  |                           | 
|                        |  |  |  |     |  |                           |  | Robert J. Medeiros, Chief Financial and Principal Accounting Officer



20