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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549



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FORM 10-Q



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



For the quarterly period ended September 30, 2003 or



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 |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)



|345 North Arlington Avenue, Reno, Nevada |  | 89501     
|---------------------------------------- |  | ----------
|(Address of principal executive offices) |  | (Zip code)



Registrant's
telephone number, including area code (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 126-2 of the Exchange Act. Yes ̈No  x



On November 10, 2003, the registrant had outstanding 5,044,055 shares of its common stock, $.10 par value.



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THE SANDS REGENT AND SUBSIDIARIES



FORM 10-Q



TABLE OF CONTENTS



|                             |  |                                                                                       |  | Page No.
|---------------------------- |  | ------------------------------------------------------------------------------------- |  | --------
|PART I FINANCIAL INFORMATION |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Financial Statements                                                                  |  |         
|                             |  |                                                                                      
|                             |  | Condensed Consolidated Statements of Operations (unaudited)                           |  | 1       
|                             |  |                                                                                      
|                             |  | Condensed Consolidated Balance Sheets (unaudited)                                     |  | 2       
|                             |  |                                                                                      
|                             |  | Condensed Consolidated Statements of Cash Flows (unaudited)                           |  | 3       
|                             |  |                                                                                      
|                             |  | Notes to Interim Condensed Consolidated Financial Statements (unaudited)              |  | 4-6     
|                             |  |                                                                                      
|Item 2.                      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 7-12    
|                             |  |                                                                                      
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 13      
|                             |  |                                                                                      
|Item 4.                      |  | Controls and Procedures                                                               |  | 13      
|                             | 
|PART II OTHER INFORMATION    |  |                                                                                      
|                             |  |                                                                                      
|Item 1.                      |  | Legal Proceedings                                                                     |  | 14      
|                             |  |                                                                                      
|Item 2.                      |  | Changes in Securities                                                                 |  | 14      
|                             |  |                                                                                      
|Item 3.                      |  | Defaults Upon Senior Securities                                                       |  | 14      
|                             |  |                                                                                      
|Item 4.                      |  | Submission of Matters to a Vote of Security Holders                                   |  | 14      
|                             |  |                                                                                      
|Item 5.                      |  | Other Information                                                                     |  | 14      
|                             |  |                                                                                      
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                      |  | 14      
|                             | 
|SIGNATURES                   |  | 15                                                                                   
|CERTIFICATIONS               |  |                                                                                      



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PART I    FINANCIAL INFORMATION



Item 1.    Financial Statements



THE SANDS REGENT AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)



|                                                |  | Three Months Ended September 30, |          
|----------------------------------------------- |  | -------------------------------- | ---------
|                                                | 
|(Dollars in thousands except per share amounts) |  | 2002                             |          
|Operating revenues                              |  |                                  |          
|Gaming                                          |  | $                                | 7,471    
|Lodging                                         |  |                                  | 3,104    
|Food and beverage                               |  |                                  | 1,920    
|Fuel and convenience store                      |  |                                  | 3,737    
|Other                                           |  |                                  | 438      
|                                                |  |                                  |          
|Gross revenues                                  |  |                                  | 16,670   
|Promotional allowances                          |  |                                  | 969      
|                                                |  |                                  |          
|Net revenues                                    |  |                                  | 15,701   
|                                                |  |                                  |          
|Operating expenses                              |  |                                  |          
|Gaming                                          |  |                                  | 3,030    
|Lodging                                         |  |                                  | 1,115    
|Food and beverage                               |  |                                  | 1,205    
|Fuel and convenience store                      |  |                                  | 3,523    
|Other                                           |  |                                  | 150      
|Maintenance and utilities                       |  |                                  | 1,159    
|General and administrative                      |  |                                  | 2,204    
|Depreciation and amortization                   |  |                                  | 882      
|                                                |  |                                  |          
|                                                |  |                                  | 13,268   
|                                                |  |                                  |          
|Income from operations                          |  |                                  | 2,433    
|                                                |  |                                  |          
|Other income (expense)                          |  |                                  |          
|Interest expense                                |  |                                  | (350     
|Gain on sale of subsidiaries                    |  |                                  |         
|Other loss                                      |  |                                  | (68      
|                                                |  |                                  |          
|                                                |  |                                  | (418     
|                                                |  |                                  |          
|Income before income taxes                      |  |                                  | 2,015    
|Income tax provision                            |  |                                  | (681     
|                                                |  |                                  |          
|Net income                                      |  | $                                | 1,334    
|                                                |  |                                  |          
|Net income per share                            |  |                                  |          
|Basic                                           |  | $                                | 0.27     
|Diluted                                         |  |                                  | 0.26     
|Weighted average of shares outstanding          |  |                                  |          
|Basic                                           |  |                                  | 4,922,805
|Diluted                                         |  |                                  | 5,148,355



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)



|                                                                                                                                       |  | June 30, 2003 |         |   | September 30, 2003 |  
|-------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ------------------ | -
|(Dollars in thousands)                                                                                                                 |  |              
|ASSETS                                                                                                                                 |  |               |         |   |                    |  
|Cash and cash equivalents                                                                                                              |  | $             | 3,965   |   |                    | $
|Accounts receivable, net of allowance                                                                                                  |  |               | 675     |   |                    |  
|Inventories                                                                                                                            |  |               | 637     |   |                    |  
|Federal income tax refund receivable                                                                                                   |  |               | 611     |   |                    |  
|Prepaid expenses and other assets                                                                                                      |  |               | 1,247   |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Total current assets                                                                                                                   |  |               | 7,135   |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Land                                                                                                                                   |  |               | 8,506   |   |                    |  
|Buildings and improvements                                                                                                             |  |               | 40,999  |   |                    |  
|Equipment, furniture and fixtures                                                                                                      |  |               | 20,569  |   |                    |  
|Construction in progress                                                                                                               |  |               | 157     |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Total property and equipment                                                                                                           |  |               | 70,231  |   |                    |  
|Less accumulated depreciation and amortization                                                                                         |  |               | 34,700  |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Property and equipment, net                                                                                                            |  |               | 35,531  |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Goodwill                                                                                                                               |  |               | 11,018  |   |                    |  
|Other intangibles                                                                                                                      |  |               | 1,356   |   |                    |  
|Other                                                                                                                                  |  |               | 406     |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Total other assets                                                                                                                     |  |               | 12,780  |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Total assets                                                                                                                           |  | $             | 55,446  |   |                    | $
|                                                                                                                                       |  |               |         |   |                    |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                   |  |               |         |   |                    |  
|Accounts payable                                                                                                                       |  | $             | 2,669   |   |                    | $
|Accrued salaries, wages and benefits                                                                                                   |  |               | 1,612   |   |                    |  
|Other accrued expenses                                                                                                                 |  |               | 254     |   |                    |  
|Federal income tax payable                                                                                                             |  |               |        |   |                    |  
|Deferred federal income tax liability                                                                                                  |  |               | 206     |   |                    |  
|Current maturities of long-term debt                                                                                                   |  |               | 806     |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Total current liabilities                                                                                                              |  |               | 5,547   |   |                    |  
|Long-term debt                                                                                                                         |  |               | 12,620  |   |                    |  
|Deferred federal income tax liability                                                                                                  |  |               | 1,747   |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Total liabilities                                                                                                                      |  |               | 19,914  |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Common stock ($.10 par value, 20,000,000 shares authorized; 7,357,055 issued at June 30, 2003; 7,407,055 issued at September 30,
2003) |  |               | 736     |   |                    |  
|Additional paid-in capital                                                                                                             |  |               | 13,967  |   |                    |  
|Retained earnings                                                                                                                      |  |               | 43,187  |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|                                                                                                                                       |  |               | 57,890  |   |                    |  
|Treasury stock (at cost; 2,403,000 shares)                                                                                             |  |               | (22,358 | ) |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Total stockholders' equity                                                                                                             |  |               | 35,532  |   |                    |  
|                                                                                                                                       |  |               |         |   |                    |  
|Total liabilities and stockholders equity                                                                                             |  | $             | 55,446  |   |                    | $
|                                                                                                                                       |  |               |         |   |                    |  



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



2



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THE SANDS REGENT AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)



|                                                                                 |  | Three Months Ended September 30, |       
|-------------------------------------------------------------------------------- |  | -------------------------------- | ------
|                                                                                 | 
|(Dollars in thousands)                                                           |  | 2002                             |       
|Operating Activities                                                             |  |                                  |       
|Net income                                                                       |  | $                                | 1,334 
|Adjustment to reconcile net income to net cash provided by operating activities: |  |                                  |       
|Depreciation and amortization                                                    |  |                                  | 882   
|Loss on disposal of property and equipment                                       |  |                                  | 12    
|Increase in accounts receivable                                                  |  |                                  | (205  
|Increase in inventories                                                          |  |                                  | (5    
|Decrease in prepaid expenses and other current assets                            |  |                                  | 6     
|Decrease in other long term assets                                               |  |                                  | 12    
|Decrease in accounts payable                                                     |  |                                  | (188  
|Increase (decrease) in other accrued expenses                                    |  |                                  | 384   
|Change in federal income taxes payable/receivable                                |  |                                  | 352   
|Change in deferred federal income taxes                                          |  |                                  | 328   
|                                                                                 |  |                                  |       
|Net cash provided by operating activities                                        |  |                                  | 2,912 
|                                                                                 |  |                                  |       
|Investing Activities                                                             |  |                                  |       
|Payments received on notes receivable                                            |  |                                  | 187   
|Acquisitions of property and equipment                                           |  |                                  | (380  
|Payment for prior year purchases of property and equipment                       |  |                                  | (1,098
|Proceeds from sale of assets                                                     |  |                                  | 5     
|                                                                                 |  |                                  |       
|Net cash used in investing activities                                            |  |                                  | (1,286
|                                                                                 |  |                                  |       
|Financing Activities                                                             |  |                                  |       
|Payments on long-term debt                                                       |  |                                  | (1,145
|Issuance of Company common stock                                                 |  |                                  |      
|                                                                                 |  |                                  |       
|Net cash used in financing activities                                            |  |                                  | (1,145
|                                                                                 |  |                                  |       
|Increase (decrease) in cash and cash equivalents                                 |  |                                  | 481   
|Cash and cash equivalents, beginning of period                                   |  |                                  | 5,628 
|                                                                                 |  |                                  |       
|Cash and cash equivalents, end of period                                         |  | $                                | 6,109 
|                                                                                 |  |                                  |       
|Supplemental disclosure of cash flow information                                 |  |                                  |       
|Interest paid, net of amount capitalized                                         |  | $                                | 342   
|Federal income taxes paid                                                        |  | $                                |      
|Supplemental disclosure of non-cash investing and financing activities           |  |                                  |       
|Property and equipment acquired by accounts payable                              |  | $                                | 15    



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



3



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THE SANDS REGENT AND SUBSIDIARIES



NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED SEPTEMBER 30,
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, were 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 September 30, 2003, and the results of operations and cash
flows for the three months ended September 30, 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 September 30, | 
|-------------------------------- |  | -------------------------------- | 
|                                 |  | 2002                             | 
|                                 |  | Shares                           | 
|                                 |  |                                  | 
|Net income (loss).               |  | 4,923                            | 
|Effect of dilutive stock options |  | 225                              | 
|                                 |  |                                  | 
|Diluted                          |  | 5,148                            | 
|                                 |  |                                  | 



In the three months ended September
30, 2003, there were no antidilutive shares, the exercise price of all vested shares exceeded the weighted average stock price for these periods.



4



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THE SANDS REGENT AND SUBSIDIARIES



NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED SEPTEMBER 30, 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 Months Ended September 30, |       
|--------------------------------------------------------- |  | -------------------------------- | ------
|                                                          | 
|                                                          |  | 2002                             |       
|Net revenues (Gross revenues less promotional allowances) |  |                                  |       
|Sands Regency Casino/Hotel                                |  | $                                | 9,796 
|Gold Ranch Casino and RV Resort                           |  |                                  | 5,905 
|                                                          |  |                                  |       
|Total net revenues                                        |  | $                                | 15,701
|                                                          |  |                                  |       
|Income from operations                                    |  |                                  |       
|Sands Regency Casino/Hotel                                |  | $                                | 1,793 
|Gold Ranch Casino and RV Resort                           |  |                                  | 725   
|Corporate costs                                           |  |                                  | (85   
|                                                          |  |                                  |       
|Total consolidated income from operations                 |  | $                                | 2,433 
|                                                          |  |                                  |       
|Depreciation and amortization                             |  |                                  |       
|Sands Regency Casino/Hotel                                |  | $                                | 788   
|Gold Ranch Casino and RV Resort                           |  |                                  | 94    
|                                                          |  |                                  |       
|Total consolidated depreciation and amortization          |  | $                                | 882   
|                                                          |  |                                  |       



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 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.



5



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THE SANDS REGENT AND SUBSIDIARIES



NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002



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.



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 Months EndedSeptember 30, |      
|------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------- | -----
|                                                                                                                               | 
|                                                                                                                               |  | 2002                            |      
|Net income as reported                                                                                                         |  | $                               | 1,334
|Total stock-based employee compensation expense under the fair-value based method for awards net of related income tax
effects |  |                                 | (17  
|                                                                                                                               |  |                                 |      
|Proforma net income                                                                                                            |  | $                               | 1,317
|                                                                                                                               |  |                                 |      
|Basic earnings (loss) per share:                                                                                               |  |                                 |      
|As reported                                                                                                                    |  | $                               | 0.27 
|Pro forma                                                                                                                      |  |                                 | 0.27 
|Diluted earnings (loss) per share:                                                                                             |  |                                 |      
|As reported                                                                                                                    |  | $                               | 0.26 
|Pro forma                                                                                                                      |  |                                 | 0.26 



6



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THE SANDS REGENT AND SUBSIDIARIES



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

THREE MONTHS ENDED SEPTEMBER 30, 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 836 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 587 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 property which straddles the Nevada/California state line, and a Leroys sportsbook. Additionally, Gold Ranch has a 105 space RV park, 2 restaurants, and an ARCO gas station and convenience store.



Significant 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.



Three months ended September 30, 2003, as compared to the three ended September 30, 2002



CONSOLIDATED RESULTS.    For the three months ended September 30, 2003,
the Companys net revenues (operating revenues less promotional allowances) increased from $15.7 million to $15.9 million, or .7%, from the three months ended September 30, 2002. The increase in revenues was due specifically to the spike in
wholesale gas prices in the quarter. Consolidated net revenues without fuel and convenience store revenue declined from $12.1 million in the three months ended September 30, 2002 to $11.3 million, or 6.2%, in the three months ended September 30,
2003. High fuel prices had a negative effect on tourism in the Reno area; as did the lingering economic malaise felt in California. Additionally, increased competition from Native American casinos was a factor in the revenue decline; in particular,
many Northern California customers trialed Thunder Valley Casino near Rocklin, California, which opened June 9, 2003.



Consolidated income from operations was $1.7 million for the three months ended September 30, 2003, a $761 thousand decrease from the $2.4 million operating income
reported in the three months ended September 30, 2002. The Company generated consolidated net income of $1.1 million, or 22 cents per share (20 cents diluted) for the three months ended September 30, 2003. These results compare to consolidated net
income of $1.3 million, or 27 cents per share (26 cents diluted) for the same three months of 2002.



7



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THE SANDS REGENT AND SUBSIDIARIES



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

THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002



SANDS REGENCY HOTEL AND CASINO.    For the three months ended September 30, 2003, the Sands had
net revenues of $9.2 million compared to $9.9 million for the same three month period of 2002. The Sands gaming revenues were $5.4 million for the quarter ended September 30, 2003, decreasing 7.2%, from $5.9 million for the same quarter last
year. Lodging revenues experienced a less than 1% quarter-to-quarter decline. The average daily hotel rate increased from $44 to $45, however, the total number of hotel rooms sold declined by 3% from the comparable quarterly period. The number rooms
sold for the quarter ended September 30, 2002 was the most rooms sold in a quarter since the Sands took 102 rooms out of service in March 1999. Despite the increased competition from Native American casinos; in particular, Thunder Valley Casino,
which opened June 9, 2003, in nearby Rocklin, California, hotel room occupancy remained relatively strong; however, our interactions with many guests have suggested they arrived with decreased gaming budgets. Another reason for the net revenue
shortfall was the ReTRAC project currently underway. For a more complete description of ReTRAC, see Other factors affecting current or future operations in this section of this report. Local patrons, in particular, were inconvenienced by
the ReTRAC project, in some instances during the quarter, road closures and detours made getting to the Sands more difficult and, during peak periods, valuable parking spaces were at times unavailable or inconvenient.



Income from operations decreased from $1.8 million in the three months ended September 30,
2002 to $1.1 million in the three months ended September 30, 2003. The overall operating expense margin for the Sands increased from 81.7% in the September 2002 quarter to 88.3% in the quarter ended September 30, 2003. The gaming expense margin and
the food and beverage expense margin both increased as lower guest volumes made it difficult to achieve the economies of scale experienced in the Summer of 2002. Further, these departments absorbed new gaming and alcohol taxes effective July 1,
2003, which increased expense by approximately $25,000 in the quarter-to-quarter comparisons. General and administration costs were $303,000 higher in the quarter ended September 30, 2003, compared with the quarter ended September 30, 2002, as
a result of a concerted marketing campaign by the Sands 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 ReTRAC roadwork nearby.



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



|                           |  | Three Months Ended September 30, |      
|-------------------------- |  | -------------------------------- | -----
|(dollars in thousands)     |  | 2002                             |      
|Gaming revenues            |  | $                                | 5,851
|Gaming expenses            |  | $                                | 2,473
|Expense margin             |  |                                  | 42.3 
|Lodging revenues           |  | $                                | 2,965
|Lodging expenses           |  | $                                | 1,059
|Expense margin             |  |                                  | 35.7 
|Food and beverage revenues |  | $                                | 1,421
|Food and beverage expenses |  | $                                | 835  
|Expense margin             |  |                                  | 58.8 
|Total net revenues         |  | $                                | 9,796
|Total operating expenses   |  | $                                | 8,003
|Expense margin             |  |                                  | 81.7 
|Maintenance and utilities  |  | $                                | 955  
|Percent of net revenues    |  |                                  | 9.7  
|General and Administrative |  | $                                | 1,593
|Percent of net revenues    |  |                                  | 16.3 



8



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THE SANDS REGENT AND SUBSIDIARIES



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

THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002



|GOLD RANCH CASINO AND RV RESORT.    Net revenues for Gold Ranch were $6.7 million for the quarter
ended September 30,2003, as compared to $5.9 million for the quarter ended September 30, 2002. The largest revenue component at the Gold Ranch is ahigh volume ARCO gas station and convenience store, which accounted for nearly all of
increased revenues quarter-to-quarter, nearlyall of the revenue increase. A change in the price of gasoline can greatly influence total revenues but have a minimal impact onprofitability. The average price of a gallon of gas was $1.81 for
the quarter ended September 30, 2003 versus an average price of$1.47 in the same quarter last year. Despite the gas price increase, the gas station sold 4.5% more gallons in the current quarter thanthe same quarter last year.  Gaming revenue at Gold Ranch for the comparable quarters, which is comprised of slot machine
revenue and, to a lesser degree,revenue from the California Lottery station, was substantially flat to last year at $1.6 million. Slot machine volume, as measured bythe amount of coin and cash wagered in machines increased from $28.5 million
in the three months ended September 30, 2002 to$29.5 million in the three months ended 2003, or 3.5%. However, the Gold Ranch slot machines did not hold as well, 5.1%compared to 5.4% in the prior year, amounting to $88,000 lower
gaming revenues in the current quarter. (Hold is the percentage ofcoin and cash amount wagered that is retained or won the by house).  Gold Ranch income from operations for the quarter ended September 30, 2003 was $675,000 as compared to $725,000 for the quarterended September 30, 2002. Gold Ranch
sponsored several special promotions during the most recent quarter, including a Jeep 4-wheel drive giveaway, and direct mail pieces, which supported incremental customer volume, but also increased costs.  The following table highlights Gold Ranchs various sources of revenues and expenses for
the:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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|                                    |  | Three Months Ended September 30, |      
|----------------------------------- |  | -------------------------------- | -----
|(dollars in thousands)              |  | 2002                             |      
|Gaming revenues                     |  | $                                | 1,620
|Gaming expenses                     |  | $                                | 496  
|Expense margin                      |  |                                  | 30.6 
|Lodging revenues                    |  | $                                | 139  
|Lodging expenses                    |  | $                                | 36   
|Expense margin                      |  |                                  | 25.9 
|Food and beverage revenues          |  | $                                | 479  
|Food and beverage expenses          |  | $                                | 273  
|Expense margin                      |  |                                  | 57.0 
|Fuel and convenience store revenues |  | $                                | 3,737
|Fuel and convenience store expenses |  | $                                | 3,523
|Expense margin                      |  |                                  | 94.3 
|Total net revenues                  |  | $                                | 5,905
|Total operating expenses            |  | $                                | 5,180
|Expense margin                      |  |                                  | 87.7 
|Maintenance and utilities           |  | $                                | 204  
|Percent of net revenues             |  |                                  | 3.5  
|General and Administrative          |  | $                                | 526  
|Percent of net revenues             |  |                                  | 8.9  



9



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THE SANDS REGENT AND SUBSIDIARIES



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

THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002



CORPORATE COSTS.    Corporate costs, including public company reporting and related legal and
accounting fees, were

$79,000 in the three months ended September 30, 2003, lower than the $85,000 experienced in three months ended September 30,

2003. The prior year had one-time costs associated with the acquisistion of Gold Ranch.



INTEREST INCOME.    Interest expense was $218,000 for the three month period ended September 30, 2003, versus $350,000
for

the three months ended September 30, 2002, a decrease of $132,000. The primary reason for a reduction was the Companys

continued pay down of its long-term line of credit with cash generated from operations.



GAIN ON SALE OF SUBSIDIARIES.    In December 1998, the Company closed an agreement selling all of its ownership interest
in

Patrician, GCI, and Artemis, which included a 100% ownership interest in the Copa Casino, for $8.5 million. The consideration for

the sale consisted of $500,000 in cash and an $8.0 million note in favor of the Company. The note is non-interest bearing and

originally required the Copa to pay monthly to the Company the greater of 2% of its gross gaming revenues, or $15,000, until the

$8.0 million is satisfied. Effective July 2004, the amount the Copa must pay the Company increases to 4% of gross gaming

revenues. Due to competitive, regulatory, environmental, financial, and other potential risks facing the current ownership of the

Copa, the Company recognized only $2.2 million of the $8.0 million face value of the note to reflect an estimated allowance for

uncollectability at the time the sales transaction was finalized and recorded. In January 2003, the original $2.2 million recorded by

the Company was paid in full, and during the quarter ended September 30, 2003, the Company realized an additional $231,000 gain

related to the sale of the Copa. Since January 2003, the Company has recognized $644,000 in gains on the $5.8 million on the note

balance, which was originally reserved. The Copa ownership has upgraded the property extensively and the Company feels it

has perfected a lien on the newly revitalized property. Based solely on the new terms and recent payments, it would take the

Company between 3-4 years to collect fully on the note, however, as of the date of this report, the Company continues to believe

that the risks facing the current ownership of the Copa has not materially changed, and continues to record gains only as

payments are received.



10



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THE SANDS REGENT AND SUBSIDIARIES



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

THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002



Capital resources and liquidity



The Companys working capital decreased from $1.6 million at June 30, 2003, to $512,000 at September 30, 2003. The Companys cash
and cash equivalents decreased from $4.0 million at June 30, 2003, to $3.6 million at September 30, 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 $2.3 million during the three month period ended September 30, 2003, and long-term debt was reduced by $2.3 million. Additionally, net cash used in investing activities was $423,000. As of September 30, 2003, the Company had
unused credit lines under its reducing revolving credit facility of $8.8 million.



At September 30, 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; 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 September 30, 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      
|Long term debt       |  | $     | 11,124,773 |                       
|Operating leases (1) |  |       | 5,127,083  |                       
|Other (2)            |  |       | 1,811,109  |                       
|                     |  |       |            |                       
|                     |  | $     | 18,062,965 |                       
|                     |  |       |            |                       

---

|(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.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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.



11



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THE SANDS REGENT AND SUBSIDIARIES



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

THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002



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 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 Nevada in general, and some analysts have predicted the impact will be more significant on the Reno-Tahoe market. The extent of the impact to the Company is difficult to predict. A significant portion of the Companys customer base
is made up of Reno area residents. However, if other Reno area casinos lose business due to competition from Native American casinos, they may intensify their marketing efforts to Reno area residents as well, which could also result in a decline in
our results of operations.



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 between 3-4 years to be completed. Currently, Union Pacifics railroad tracks dissect downtown Reno, as well as the Sands Regencys 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.



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 $583,000 for its contribution to the project. The Company is amortizing $483,000 of the proceeds over the
anticipated length of the project (May 2003 through November 2006). Part of the proceeds, $153,000 represented land that was effectively sold to the City of Reno, and the Companys basis in land was reduced. 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 carefully monitoring the situation, and analyzing 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 no assurance can be given that this project will not have an adverse material impact on the business levels of its downtown Reno property.



12



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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 $4.6 million at September 30,
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 $46 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.



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 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.



13



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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



Not applicable



Item
5.    
Other Information



None



Item 6.    
Exhibits and Reports on Form 8-K



|(a) | Exhibits.
|--- | ---------



|             | 
|------------ | 
|Exhibit 31.1 | 
|             | 
|Exhibit 31.2 | 
|             | 
|Exhibit 32   | 



( b ) Reports on Form 8-K



None



14



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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: November 10, 2003 |  |  |  | By:                          
|                        |  |  |  |                              
|                        |  |  |  |                              
|                        |  |  | 
|Date: November 10, 2003 |  |  |  | By:                          
|                        |  |  |  |                              
|                        |  |  |  |                              



15