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                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, DC 20549

                                    FORM 10-QSB
(Mark one)

     |X|   Quarterly Report under Section 13 or 15(d) of the Securities
           Exchange Act of 1934

     |_|   For the quarterly period ended June 30, 2007

           Transition Report under Section 13 or 15(d) of the Exchange Act

           For the transition period from __________ to __________

                         Commission file number 333-112603

                             CATSKILL LITIGATION TRUST
   (Exact Name of Small Business Issuer as Specified in Its Declaration of Trust)

              DELAWARE                                 16-6547621
-------------------------------------    -----------------------------------------
  (State or Other Jurisdiction of         (I.R.S. Employer Identification No.)
   Incorporation or Organization)

                        C/O CHRISTIANA BANK & TRUST COMPANY
                                  1314 King Street
                             Wilmington, Delaware 19801
----------------------------------------------------------------------------------
                      (Address of Principal Executive Offices)


                                   (302) 888-7400
----------------------------------------------------------------------------------
                  (Issuer's Telephone Number, Including Area Code)


----------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Check  whether the issuer (1) filed all reports  required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter  period
that Catskill Litigation Trust was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|

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


  As of August 20, 2007, 43,825,738 Units of beneficial interest were outstanding.

     Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

==================================================================================



                            CATSKILL LITIGATION TRUST


                                   FORM 10-QSB


                                      INDEX

PART I - FINANCIAL INFORMATION                                                Page

      ITEM 1. CONDENSED FINANCIAL STATEMENTS (unaudited)

      Condensed Balance Sheet as of June 30, 2007                                     3

      Condensed Statements of Operations for the Three and Six Months Ended
        June 30, 2007 and June 30, 2006                                               4

      Condensed Statements of Cash Flows for the Six Months Ended June 30, 2007
        and June 30, 2006                                                             5

      Notes to Condensed Financial Statements                                         6-11

      ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
      OR PLAN OF OPERATION                                                            12-17

      ITEM 3.  CONTROLS AND PROCEDURES                                                17

PART II - OTHER INFORMATION

      ITEM 1.  LEGAL PROCEEDINGS                                                      18-20

      ITEM 6.  EXHIBITS                                                               20

SIGNATURES                                                                            20


                                       2



                              FINANCIAL INFORMATION


ITEM 1.     FINANCIAL STATEMENTS

                            CATSKILL LITIGATION TRUST
                             CONDENSED BALANCE SHEET
                                  June 30, 2007
                                   (Unaudited)

ASSETS
   Current Assets
         Cash and Cash Equivalents                                 $    413,491
                                                                   ------------
   Total Current Assets                                                 413,491

    Intangible Assets, net                                           17,493,774
                                                                   ------------
TOTAL ASSETS                                                       $ 17,907,265
                                                                   ============

LIABILITIES AND TRUST EQUITY
      Current Liabilities
           Accrued expenses                                        $     93,914
           Accounts payable                                             327,941
           Line of credit-related party                               2,145,000
                                                                   ------------
      Total Liabilities                                               2,566,855
                                                                   ------------


      Trust Equity
           Units of Beneficial Interest: 43,825,738
           authorized, issued and outstanding, stated as             17,748,204
      Accumulated deficit                                            (2,407,794)
                                                                   ------------
      Total Trust Equity                                             15,340,409
                                                                   ------------
TOTAL LIABILITIES AND TRUST EQUITY                                 $ 17,907,265
                                                                   ============


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


                                       3


                                                      CATSKILL LITIGATION TRUST
                                                      STATEMENTS OF OPERATIONS
                                                             (Unaudited)

                                                                For the             For the           For the           For the
                                                          Three Months Ended  Three Months Ended Six Months Ended   Six Months Ended
                                                             June 30, 2007      June 30, 2006      June 30, 2007      June 30, 2006
                                                          --------------------------------------------------------------------------
General and Administrative Expenses:

Litigation Trustee Fees                                       $     30,000       $     30,000       $     60,000       $     60,000
Administrative Trustee Fees                                          1,500              1,500              3,000              3,000
Consulting Fees                                                      4,767              1,500              7,167              3,000
Legal Fees                                                         361,854            120,400            640,726            134,768
Accounting Fees                                                      9,750              7,000             21,750             19,000
Interest Expense                                                    35,356             19,436             66,556             42,347
Amortization of Intangible Assets                                   36,521               --               36,521               --
Other                                                               17,360              1,344             22,332              3,174
                                                              ------------       ------------       ------------       ------------
Total General and Administrative Expenses                          497,108            181,180            858,052            265,289
Dividend Income                                                      2,575                460              3,854                521
                                                              ------------       ------------       ------------       ------------
Net Loss                                                      $   (494,533)      $   (180,720)      $   (854,198)      $   (264,768)
                                                              ============       ============       ============       ============

Loss per unit outstanding                                     $      (0.02)      $      (0.01)      $      (0.04)      $      (0.01)
                                                              ============       ============       ============       ============

Weighted Average Number of Units Outstanding                    23,860,680         21,912,869         22,886,774         21,912,869


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


                                                                 4


                                                 CATSKILL LITIGATION TRUST
                                                  STATEMENT OF CASH FLOWS
                                                        (Unaudited)


                                                                                              For the           For the
                                                                                         Six Months Ended  Six Months Ended
                                                                                           June 30, 2007     June 30, 2006
                                                                                            ------------      ------------
Cash flow from operating activities
Net loss                                                                                    $   (817,677)     $   (264,768)
   Adjustments to reconcile net loss to net cash used in operating activities:
      Imputed interest expense                                                                    66,556            42,347
  Changes in operating assets and liabilites:
      Accounts payable                                                                           327,941           134,246
      Accrued expenses                                                                            86,718               --
                                                                                            ------------      ------------
Net cash used in operating activities                                                           (336,462)          (88,175)

Cash flow from financing activities
      Increase in line of credit-related party                                                   630,000            80,000
                                                                                            ------------      ------------
Increase (decrease) in Cash and Cash Equivalents                                                 293,538            (8,175)

                                                                                            ------------      ------------
Cash and Cash Equivalents - beginning of period                                                  119,953            17,235
                                                                                            ------------      ------------
Cash and Cash Equivalents - end of period                                                   $    413,491      $      9,060
                                                                                            ============      ============
Non cash investing and financing activities
       Intangible Assets Acquired in exchange for issuance
       of units of beneficial interest                                                        17,530,295               --


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



                                                             5


                            CATSKILL LITIGATION TRUST

       Notes to Condensed Financial Statements--June 30, 2007 (Unaudited)

NOTE 1 - THE TRUST AND MANAGEMENT'S PLANS AND LIQUIDITY

         The  Catskill  Litigation  Trust is a  Delaware  statutory  trust  (the
         "Litigation Trust") formed by Empire Resorts,  Inc. ("Empire Resorts"),
         Monticello  Raceway  Management,  Inc.,  ("MRMI"),   Monticello  Casino
         Management,  L.L.C.,  Monticello Raceway  Development  Company,  L.L.C.
         ("MRDC") and Mohawk Management, L.L.C. ("Mohawk"). On January 12, 2004,
         22,702,896 units of beneficial  interest were issued to the members and
         stockholders of those entities. At that time, Empire Resorts,  Catskill
         Development,  L.L.C.  ("Catskill"),  MRMI, Mohawk, Joseph E. Bernstein,
         Paul  A.   deBary  and   Christiana   Bank  and  Trust   Company   (the
         "Administrative  Trustee")  entered  into the  Declaration  of Trust of
         Catskill  Litigation  Trust (the  "Declaration of Trust").  Pursuant to
         Amendment No. 1 to the  Declaration of Trust,  dated as of November 15,
         2004, the number of units issued was reduced to 21,912,869.

         In the Declaration of Trust, Catskill,  MRDC and Mohawk assigned to the
         Litigation Trust all of their claims under or related to the alienation
         and frustration of their agreements and business relations with the St.
         Regis Mohawk Tribe and their rights to any judgment or settlement  that
         may arise from any  litigation  relating  to two  litigations  entitled
         Catskill  Development,  L.L.C., Mohawk Management L.L.C. and Monticello
         Raceway   Development   Company   L.L.C.,   Plaintiffs  v.  Park  Place
         Entertainment  Corporation,  Defendant  (the "PPE  Case") and  Catskill
         Development,  L.L.C.,  Mohawk  Management,  L.L.C.,  Monticello Raceway
         Development Company,  L.L.C.,  Plaintiffs v. Gary Melius, Ivan Kaufman,
         Walter Horn,  President  R.C. - St. Regis  Management  Company,  et al,
         Defendants  (the  "President RC Case").  If at any time the  Litigation
         Trustees determine,  in their absolute  discretion,  that the assets of
         the Litigation Trust are not sufficient to justify its continuance, the
         Litigation  Trustees are authorized to terminate the Litigation  Trust.
         In addition,  the Litigation Trust is to terminate on the date that all
         litigation  has been fully  prosecuted to final  judgment or dismissal,
         including  all  appeals,  and all  Litigation  Trust  assets  have been
         distributed to the Litigation Trust's beneficiaries.

         In June  2006,  two of the  plaintiffs  in the PPE Case were  dismissed
         without  prejudice on  jurisdictional  grounds as a result of a finding
         that these parties lacked diversity of citizenship. A new complaint was
         subsequently  filed by the  Trustees  on  behalf  of these  plaintiffs.
         Pursuant to a stipulation  entered into by all parties to the PPE Case,
         the parties accepted all previous  determinations of the trial court as
         applicable to the new complaint and the case was consolidated with that
         of the remaining  plaintiff,  essentially  restoring the parties to the
         status that had existed prior to the dismissal. Accordingly, references
         to  the  "PPE  Case"  subsequent  to  the  consolidation  refer  to the
         consolidated case.

         On January 24, 2007,  the  Litigation  Trust  entered into an agreement
         (the  "Joint  Alliance  Agreement")  with the St.  Regis  Mohawk  Tribe
         providing for the assignment to the Litigation  Trust of certain claims
         of Tribal  members  against  Park Place  Entertainment,  Inc. and Clive
         Cummis,  former General Counsel of Park Place  Entertainment,  Inc. The
         Joint Alliance  Agreement  provided that the claims were to be assigned
         in exchange for a  certificate  evidencing  the ownership by the Tribal
         members of 21,912,869 Units in the Litigation Trust (representing a 50%
         beneficial  interest  in the  Litigation  Trust).  The  Trustees of the
         Litigation  Trust then obtained the consent of the holders of more than
         66 2/3% of the units of the  Litigation  Trust to an  amendment  of the
         Declaration  of  Trust  to  implement  the  Joint  Alliance  Agreement,
         including an increase in the  authorized  number of units to 43,825,738
         units. In accordance with its terms, this amendment ("Amendment No. 2")
         became effective upon  satisfaction of the condition that the claims of
         the Tribal  members were duly and properly  assigned to the  Litigation
         Trust in  accordance  with the Joint  Alliance  Agreement.  On June 21,
         2007,  pursuant to the Joint  Alliance  Agreement,  the trustees of the
         Catskill  Litigation  Trust, in exchange for the delivery of 21,912,869
         newly issued units of the Litigation Trust, received an assignment of a
         judgment  rendered  against PPE in  connection  with certain  claims of


                                       6


         members of the St. Regis Mohawk Tribe against Park Place  Entertainment
         and Clive Cummis.  The assignment  was  previously  approved by the St.
         Regis Mohawk Tribal Court.

         As a  result  of  the  assignment  to  consummate  the  Joint  Alliance
         Agreement, an aggregate of 43,825,738 units are issued and outstanding.
         In addition,  in connection  with  Amendment No. 2, Mr. Dennis C. Vacco
         agreed to serve as a Litigation Trustee of the Litigation Trust and Mr.
         Paul A. deBary,  who had  previously  served as a  Litigation  Trustee,
         agreed to serve as Litigation Trustee Advisor. (See Note 6.) References
         to the  "Litigation  Trustees"  herein refer to Messrs.  Bernstein  and
         deBary  prior  to June 21,  2007 and to  Messrs.  Bernstein  and  Vacco
         thereafter.

         On June 22, 2007, Dennis C. Vacco and Joseph Bernstein, acting in their
         capacities as Litigation  Trustees of the  Litigation  Trust,  filed an
         enforcement  action  (the  "Judgment  Enforcement  Case") in the United
         States  District  Court for the  Northern  District  of New  York.  The
         enforcement action was filed against Harrah's  Operating Company,  Inc.
         (a wholly owned subsidiary of Harrah's  Entertainment,  Inc. (HET)), as
         successor  to Park  Place  Entertainment,  Inc.,  and  Clive  Cummis to
         enforce an order of default  judgment  issued by the St.  Regis  Mohawk
         Court on March 20,  2001.  The order of default  judgment  ordered  the
         defendants  to pay $1.782  billion of actual  damages and $5 million of
         punitive damages.  On July 12, 2007, pursuant to a duly noticed motion,
         the St. Regis Mohawk Tribal Court issued an order that clarified  that,
         under  Tribal law,  the annual  rate of nine  percent  provided  for in
         sections  5003 and 5004 of the New York  Civil  Practice  Law and Rules
         applies for the  purpose of  calculating  interest  on any  unsatisfied
         amount  of the  Tribal  Court  judgment  that the Trust is  seeking  to
         enforce in the Judgment  Enforcement  Case.  No portion of the judgment
         has  currently  been  satisfied.  There  can be no  assurance  that the
         Litigation  Trust will receive any net proceeds from this  judgment.  A
         previous suit to enforce the default  judgment was  dismissed,  without
         prejudice to the  recommencement  of the suit,  after the Judge had not
         heard further from the parties  concerning  efforts to settle the case.
         Harrah's Entertainment, Inc., the parent of Harrah's operating company,
         has indicated in its public  filings that it believed that the case had
         been  settled and intends to  vigorously  defend any attempt to enforce
         the  judgment.  The PPE Case,  the  President  RC Case and the Judgment
         Enforcement   Case  are  herein   collectively   referred   to  as  the
         "Litigations".

         As discussed in Note 4, Empire  Resorts,  Inc.  ("Empire  Resorts"),  a
         related party,  has provided the Litigation Trust with a line of credit
         of up to  $2,500,000  to  pay  all  expenses  of the  Litigation  Trust
         permitted  under the  Declaration of Trust.  The line of credit expires
         upon the  termination  of the  Litigation  Trust.  Empire  Resorts is a
         holding company,  owning all the capital stock or membership  interests
         of certain other  entities.  Empire  Resorts is therefore  dependent on
         these other entities to pay dividends or make distributions in order to
         generate  internal cash flow and to satisfy its obligations,  including
         its  obligations  under the line of credit.  There can be no assurance,
         however,  that  these  other  entities  will  generate  enough  revenue
         sufficient for such  purposes.  Although  Empire Resorts  significantly
         increased  its  level of  operations  in  recent  years,  it has yet to
         demonstrate  that such  operations can be profitable.  In addition,  as
         also  discussed in Note 4, the  Litigation  Trust has also entered into
         separate  lines of credit in the aggregate  amount of $250,000 with two
         of its  unitholders.  There  can be no  assurance  that  either  Empire
         Resorts  or these  unitholders  will have the  ability  to fund  future
         borrowings under these lines of credit.

         Although funds currently  available to the Litigation  Trust are deemed
         sufficient to cover its operations in connection with the appeal of the
         PPE case,  it is  anticipated  that the  Litigation  Trust will need to
         raise additional funds in order to complete a trial in the PPE case and
         recommence  the  President  RC case in the  event  that the  appeal  is
         successful or if the  unitholders  approve the assignment of the Tribal
         Court judgment  pursuant to the Joint Alliance  Agreement.  There is no
         assurance that the Litigation  Trust will have sufficient  liquidity to
         cover its operations.


                                       7


NOTE  2  -  BASIS  OF   PRESENTATION   AND  SUMMARY  OF  SIGNIFICANT   ACCOUNTING
         POLICIES

         BASIS OF PRESENTATION

         These unaudited  condensed  financial  statements have been prepared in
         accordance with accounting  principles generally accepted in the United
         States  of  America  ("GAAP"),  and with  Form  10-QSB  and Item 310 of
         Regulation S-B of the Securities and Exchange  Commission  (the "SEC").
         In the opinion of the Litigation Trustees,  the accompanying  unaudited
         condensed  financial  statements contain all the adjustments  necessary
         (consisting only of normal recurring accruals) for a fair presentation.
         The interim results are not necessarily  indicative of the results that
         would be expected for the full year and do not contain all  information
         included in the  Litigation  Trust's  annual  financial  statements and
         notes for the year ended December 31, 2006.

         Certain  information  and  footnote  disclosures  normally  included in
         financial statements prepared in accordance with accounting  principles
         generally  accepted in the United States of America have been condensed
         or omitted. It is suggested that these financial  statements be read in
         conjunction  with the audited  financial  statements  and notes thereto
         included in the report on Form 10-KSB for the year ended  December  31,
         2006.

         USE OF ESTIMATES IN THE FINANCIAL STATEMENTS

         The  preparation of financial  statements in conformity with accounting
         principles  generally accepted in the United States of America requires
         the Litigation  Trustees to make estimates and assumptions  that affect
         the  reported  amounts  of assets and  liabilities  and  disclosure  of
         contingent  assets  and  liabilities  at  the  date  of  the  financial
         statements and the reported amounts of revenues and expenses during the
         reporting  period.  Significant  estimates  include  the fair  value of
         intangible  assets, as described in Note 3. Actual results could differ
         from those estimates.

         CASH AND CASH EQUIVALENTS

         Cash and cash equivalents include cash on account,  demand deposits and
         certificates  of deposit with  original  maturities  of three months or
         less at  acquisition  and money market  funds.  From time to time,  the
         Litigation  Trust maintains  significant cash balances in excess of the
         amounts  covered by the  Federal  Deposit  Insurance  Corporation.  The
         Litigation  Trust has not incurred any losses in such  accounts and the
         Litigation Trustees believe it is not exposed to any significant credit
         risk on cash.

         INCOME TAXES

         For federal income tax purposes,  the Litigation  Trust is treated as a
         grantor trust.  Under the grantor trust rules, each holder of a unit of
         beneficial  interest is treated as the owner of his or her share of the
         Litigation  Trust's  assets.  The treatment of income and expense items
         under GAAP may differ from the tax  treatment  of such items.  Expenses
         incurred by the Litigation Trust are capitalized for tax purposes.

         The Litigation Trust has adopted the provisions of Financial Accounting
         Standards  Board  ("FASB")   Interpretation  No.  48,  "Accounting  for
         Uncertainty in Income Taxes - an  interpretation  of FASB Statement No.
         109" ("FIN 48"), on January 1, 2007.  FIN 48 clarifies  the  accounting
         for uncertainty in income taxes recognized in an enterprise's financial
         statements  in  accordance  with SFAS No. 109,  "Accounting  for Income
         Taxes," and prescribes a recognition  threshold and measurement process
         for financial  statement  recognition and measurement of a tax position
         taken or  expected to be taken in a tax  return.  FIN 48 also  provides
         guidance on  derecognition,  classification,  interest  and  penalties,
         accounting in interim period, disclosure and transition.

         The  Litigation  Trust's  policy for  recording  interest and penalties
         associated with audits is to record such items as a component of income
         before  income  taxes.  Penalties  are  recorded  in other  expense and
         interest  paid or received is recorded in interest  expense or interest
         income,  respectively,  in the statement of  operations.  There were no
         amounts accrued for penalties or interest as of or during the three and
         six months ended June 30, 2007. The  Litigation  Trust has performed an
         evaluation and  determined  that it is not required to file Federal tax
         returns due to its Grantor Trust status.  Accordingly,  the  Litigation
         Trust does not expect its  unrecognized  tax benefit position to change
         during the next twelve months.  The  Litigation  Trustees are currently
         unaware of any issues  under  review that could  result in  significant
         payments, accruals or material deviations from its position.

NOTE 3 - INTANGIBLE ASSETS

         As described in Note 1, on June 21, 2007, the Litigation Trust received
         an assignment of a judgment  rendered against Park Place  Entertainment
         Corporation,  Inc. and Clive Cummis.  This judgment was assigned to the
         Litigation Trust in exchange for the issuance of 21,912,869  units. The
         Litigation  Trust has  estimated  the fair value of the  judgment to be
         $17,530,295.  This value was based on the  estimated  fair value of the
         units issued in exchange for the judgment.  For purposes of determining
         the fair value of a unit, the Litigation  Trustees applied the per unit
         price  reflected in a transaction  in 2005 in which a limited number of
         units were  purchased  from a unitholder by a third party at a price of
         $0.80 per unit.  As an active  market  for  shares of the units did not
         exist at the  time  and  continues  not to  exist  at this  time,  this
         transaction  may not reflect the price at which a  unitholder  would be
         able to obtain for their shares at any given point in time. However, it
         is the most recent  information  available to the  Litigation  Trustees
         concerning sales of units and represents the Litigation  Trustees' best
         estimate of the fair value that should be assigned to the  judgment for
         financial  reporting  purposes.  The Litigation Trustees are continuing
         their  efforts  to assess the fair  value of the  judgments,  including


                                       8


         efforts to obtain a more recent third party  valuation.  The fair value
         is dependent  on those  efforts and may differ  significantly  from the
         currently  estimated  amount.  The  estimated  life  of  the  asset  is
         considered  to be twelve  years,  based on the  applicable  statute  of
         limitations  and the potential  duration of enforcement  efforts and/or
         settlement  terms. The asset will be amortized on a straight line basis
         over the  estimated  life.  Amortization  expense for the three and six
         months ended June 30, 2007 amounted to $36,520.

NOTE 4 - LINES OF CREDIT-RELATED PARTIES

         As discussed in Note 1, Empire Resorts,  a related party,  has provided
         the  Litigation  Trust with a line of credit of up to  $2,500,000.  The
         line of credit can be used to pay all expenses of the Litigation  Trust
         permitted under the Declaration of Trust,  including but not limited to
         professional  fees and the  fees and  expenses  of the  Litigation  and
         Administrative Trustees. The line of credit is non-interest bearing and
         is to be repaid from any amounts  received from litigation  settlements
         or  awards.  The line of credit  expires  upon the  termination  of the
         Litigation Trust.

         As of June 30,  2007,  $2,145,000  had been drawn  against  the line of
         credit.

         The  Litigation  Trust  imputed  interest on the  borrowings  at Empire
         Resorts'  borrowing  rate (8.00% per annum at June 30, 2007).  Interest
         expense for the three and six months  ended June 30,  2007  amounted to
         $35,356 and $66,556,  respectively.  Imputed interest expense is deemed
         contributed capital to the Litigation Trust.

         On June 21, 2007, the  Litigation  Trust entered into separate lines of
         credit with two of its unitholders,  Robert Berman and Ralph Bernstein,
         each of which provides for advances of up to $125,000, with interest at
         the rate of 10% per annum, upon written demand of the Litigation Trust.
         Repayment of such advances is to be made solely from amounts  available
         in the  Recovery  Fund  held by the  Administrative  Trustee  under the
         Declaration  of Trust.  As of June 30, 2007,  no amounts had been drawn
         under these agreements.

NOTE 5 - DISTRIBUTIONS

         The  distribution  of any net proceeds from  litigation  settlements or
         awards,  after  amounts  are  applied to cover all  current or expected
         expenses of the Litigation  Trust, is to be made at the sole discretion
         of the Litigation Trustees and will be distributed as follows:

         First:  To pay  the  Litigation  Trustees  and  the  Litigation
         Trustee Advisor their fees arising from litigation  settlements
         or awards. (See Note 6.)

         Second: To reimburse $7,500,000 to Empire Resorts for expenses incurred
         in  connection  with  the  Litigation  prior  to the  formation  of the
         Litigation Trust and, in addition,  to repay Empire Resorts any amounts
         outstanding under the line of credit.

         Third: If any amount remains after the above requirements are met, such
         amount  remaining  is to be  divided  among  the  beneficiaries  of the
         Litigation  Trust in proportion  to their  ownership of units as of the
         date the distribution is made.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

         COMPENSATION OF LITIGATION TRUSTEES

         Each of the two Litigation  Trustees and the Litigation Trustee Advisor
         is entitled to annual  compensation  of $60,000 plus  reimbursement  of
         expenses  incurred carrying out the purpose of the Litigation Trust. In
         addition,  one  Litigation  Trustee is entitled to 4.0%,  and the other
         2.0%,  and the Litigation  Trustee  Advisor is entitled to 1.0%, of any
         litigation settlements or awards.


                                       9


         COMPENSATION OF THE ADMINISTRATIVE TRUSTEE

         The Administrative  Trustee is entitled to a monthly administrative fee
         of $500.  In  addition,  the  Administrative  Trustee is  entitled to a
         custody fee on certain cash balances and marketable  securities of 0.5%
         per annum on the first $10,000,000 of fair value and 3.0% on the excess
         and reimbursement for certain fees and expenses.

         EXPENSES PAID PRIOR TO THE FORMATION OF THE LITIGATION TRUST

         As  discussed  in Note 5, the  Litigation  Trust is obligated to pay to
         Empire  Resorts  up to  $7,500,000.  This  amount  represents  expenses
         incurred prior to the formation of the Litigation  Trust. The amount is
         payable solely from the proceeds of litigation settlements or awards.

         REPAYMENTS OF AMOUNTS DRAWN UNDER THE LINE OF  CREDIT-RELATED
         PARTY

         As  discussed  in Note 5, the  expenses  of the  Litigation  Trust  are
         expected to be paid from draws under the line of credit.  Amounts drawn
         under the line of credit  are to be repaid  from any  amounts  received
         from litigation settlements or awards.

         ADDITIONAL AMOUNTS PAYABLE TO APPEALS COUNSEL

         Under the terms of the Litigation Trust's arrangement with the law firm
         handling  its appeal,  additional  fees in an  aggregate  amount not to
         exceed $100,000 may be payable to that firm.

         The exact amount  payable in the event of a reversal of the decision by
         the trial  court will vary from  $50,000 to $100,000  depending  on the
         precise nature of the outcome.

         CONTINGENT FEE PAYABLE TO CONSULTANT

         On January 24, 2007, the Litigation  Trust retained the services of JAF
         Management,  LLC  ("JAF") to serve as a  consultant  to the  Litigation
         Trust concerning strategic and structuring alternatives, capital market
         and industry conditions and financial  valuations relating to potential
         settlement opportunities or active settlement negotiations. The term of
         the consulting agreement expires on March 31, 2008. As compensation for
         the services of JAF, the  Litigation  Trust has agreed to pay a success
         fee in  connection  with any  out-of-court  settlement  or  termination
         arrangement  with  respect  to any of the  litigations  equal  to three
         percent (3%) of the amount by which the gross  realizable value of such
         settlement  or  termination  arrangement  exceeds  $200  million.  This
         consulting  agreement was  terminated,  without  cause,  upon notice as
         permitted in accordance with its terms, on July 28, 2007.

NOTE 7 - CERTAIN RELATIONSHIPS

         The Litigation Trustee Advisor is currently a member of Empire Resorts'
         Board of Directors.  Mr. Bernstein, one of the Litigation Trustees, was
         also a member of the Empire  Resort's Board of Directors,  but resigned
         from his position as a director of Empire Resorts on June 21, 2007.

         Dennis C. Vacco, one of the Litigation  Trustees,  is of counsel to the
         firm of Crane,  Parente  &  Cherubin.  Crane,  Parente and Cherubin
         served as counsel to the St. Regis Mohawk  Tribal  Council prior to the
         time that Mr. Vacco became a Litigation  Trustee and performed  certain
         services  that were paid for by the  Litigation  Trust  pursuant to the
         Joint Alliance  Agreement.  In conjunction with Mr. Vacco's appointment
         as a Litigation  Trustee,  Crane Parente and Cherubin revised the terms
         of its engagement  with the Litigation  Trust to provide that Mr. Vacco
         will  receive no share of the  proceeds of any work  performed  for the
         Litigation Trust by Crane,  Parente and Cherubin.  As of June 30, 2007,
         the  Litigation  Trust had accrued and unpaid  expenses of $136,526 for
         fees  payable to Crane,  Parente and  Cherubin,  including  expenses of
         $108,469 and $136,526 for the three and six months ended June 30, 2007.


                                       10


NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS


         In  June  2006,  the  Financial   Accounting   Standards  Board  issued
         Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
         Interpretation of FASB Statement No. 109" (the  "Interpretation").  The
         Interpretation  establishes  for all entities a minimum  threshold  for
         financial  statement  recognition of the benefit of tax positions,  and
         requires certain expanded disclosures.  The Interpretation is effective
         for fiscal  years  beginning  after  December  31,  2006,  and is to be
         applied  to all open tax  years  as of the date of  effectiveness.  The
         adoption of the  Interpretation  did not have a material  impact on the
         financial statements of the Litigation Trust.

         In  September   2006,  the  FASB  issued  SFAS  No.  157,  "Fair  Value
         Measurements"  ("SFAS No.  157").  This  Statement  defines fair value,
         establishes a framework for measuring fair value and expands disclosure
         of fair value measurements. SFAS No. 157 applies under other accounting
         pronouncements  that  require  or permit  fair value  measurements  and
         accordingly, does not require any new fair value measurements. SFAS No.
         157 is  effective  for  financial  statements  issued for fiscal  years
         beginning after November 15, 2007. The Litigation Trust does not expect
         adoption of SFAS No. 157 to have an impact on the results of operations
         and financial condition of the Litigation Trust.

         In  September  2006,  the  staff  of the SEC  issued  Staff  Accounting
         Bulletin No. 108 ("SAB 108") which  provides  interpretive  guidance on
         how  the   effects  of  the   carryover   or  reversal  of  prior  year
         misstatements  should be  considered  in  quantifying  a  current  year
         misstatement.  SAB 108 is effective for fiscal years ending on or after
         November 15, 2006.  Adoption of SAB 108 did not have a material  impact
         on the Litigation Trust's consolidated  financial position,  results of
         operations or cash flows.

         In February  2007,  the FASB issued  Statement of Financial  Accounting
         Standards  No.  159,  The Fair Value  Option for  Financial  Assets and
         Financial Liabilities ("SFAS 159"), to permit all entities to choose to
         elect,  at specified  election  dates,  to measure  eligible  financial
         instruments at fair value. An entity shall report  unrealized gains and
         losses on items for which the fair  value  option  has been  elected in
         earnings at each subsequent reporting date, and recognize upfront costs
         and  fees  related  to those  items in  earnings  as  incurred  and not
         deferred. SFAS 159 applies to fiscal years beginning after November 15,
         2007, with early adoption permitted for an entity that has also elected
         to apply the provisions of SFAS 157, Fair Value Measurements. An entity
         is prohibited from retrospectively applying SFAS 159, unless it chooses
         early  adoption.  SFAS 159 also applies to eligible  items  existing at
         November 15, 2007 (or early  adoption  date).  The adoption of the SFAS
         159 did not have a material  impact on the financial  statements of the
         Litigation Trust.

NOTE 9 - SUBSEQUENT EVENTS

        On August 13,  2007,  Harrah's  filed a motion to dismiss  the  Judgment
        Enforcement  Case on the grounds that the  Litigation  Trustees were not
        proper  parties  to  maintain  the  suit  and  that  the  case  had been
        previously  settled.  A hearing on the motion to  dismiss  the  Judgment
        Enforcement  Case has been scheduled for September 28, 2007. A dismissal
        as a result of this motion would not affect the  transactions  providing
        for the  issuance  of units to the  enrolled  members  of the St.  Regis
        Mohawk  Tribe  entered into in  connection  with the  assignment  of the
        judgment,   but  would  be  expected  to  result  in  an  impairment  of
        substantially all the estimated fair value of this intangible asset.


                                       11


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD-LOOKING STATEMENTS

      This Report on Form 10-QSB contains  "forward-looking  statements"  within
the meaning of Section 27A of the Securities Act of 1933, as amended and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All
statements  other than  statements of historical  facts included in this Report,
including without limitation, the statements under "General," and "Liquidity and
Capital Resources," are forward-looking  statements.  All subsequent written and
oral forward-looking  statements attributable to the Litigation Trust or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements.

      The following discussions should be read in conjunction with our financial
statements  and the  related  notes  thereto  and  other  financial  information
appearing   elsewhere  in  this  report.  The  following   discussion   contains
forward-looking  statements  that involve  risks and  uncertainties.  Our actual
results could differ  materially from those  anticipated in the  forward-looking
statements as a result of various factors,  including those discussed  elsewhere
in this report.

GENERAL

      We are a statutory  trust created under  Delaware law. Our formation was a
condition to the merger of Empire Resorts,  Inc. ("Empire Resorts"),  Monticello
Raceway  Management,  Inc.,  ("MRMI"),   Monticello  Casino  Management,  L.L.C.
("MCM"),  Monticello Raceway  Development  Company,  L.L.C.  ("MRDC") and Mohawk
Management,  L.L.C.  ("Mohawk").  Also as a condition  to that  merger,  each of
Catskill Development, L.L.C. ("Catskill"), MRDC, and Mohawk, agreed to assign to
us all of their claims under or related to the  alienation  and  frustration  of
their  agreements and business  relations with the St. Regis Mohawk Tribe.  That
assignment included rights to any proceeds from any settlement or award that may
arise from any litigation  relating to that claim.  We currently  maintain a web
site  at  WWW.CATSKILLTRUST.COM  to  facilitate  communications  and  provide  a
convenient  source of more detailed  information for our  unit-holders and other
interested parties.

      Our  litigation  claims arise from the efforts of each of Catskill,  MRDC,
and  Mohawk  to  develop  with the St.  Regis  Mohawk  Tribe a gaming  casino in
Monticello,  New York. These entities spent several years and substantial  funds
to develop and obtain  required  approvals  for the casino.  Subsequently,  Park
Place  Entertainment  Corporation,  the world's  largest gaming  corporation and
Atlantic City's largest casino operator, entered into an agreement providing for
the St.  Regis  Mohawk  Tribe to commit its future  casino  development  efforts
exclusively to Park Place Entertainment  Corporation.  That agreement conflicted
with the Mohawk Tribe's agreements with Catskill, MRDC and Mohawk.

      Several  lawsuits were commenced as a result of these  circumstances.  The
first was commenced by certain  members of the St. Regis Mohawk Tribe in the St.
Regis Mohawk Tribal Court.  The defendants  refused to recognize the validity of
the court and a default  judgment was entered.  The Litigation  Trustees are now
seeking to enforce this  judgment in the United  States  District  Court for the
Northern  District of New York. This case is referred to herein as the "Judgment
Enforcement  Case".  Two other lawsuits were commenced on behalf of the original
business  entities  who were  working to develop  the  casino.  One of these was
brought  against Park Place  Entertainment,  Inc.  ("PPE") in the United  States
District  Court for the Southern  District of New York and was  dismissed  after
summary  judgment was rendered  for the  defendant.  This lawsuit is referred to
herein as the "PPE Case".  The other was brought in the Sullivan  County Supreme
Court of the State of New York Court against  certain  business  partners of PPE
and has been discontinued,  under an agreement that permits it to be re-filed at
a future  date  without  being  barred by the  statute of  limitations,  pending
resolution of the issues in the PPE Case. This case is referred to herein as the
"President RC Case".


                                       12


      The PPE Case was  initially  dismissed  on a motion for summary  judgment.
However,  the trial court  subsequently  vacated the earlier  decision  granting
summary judgment to Park Place Entertainment,  in order to consider new evidence
and  allow  additional  discovery  proceedings.  After  these  proceedings  were
completed, the dismissal was reinstated.  An appeal was taken in the PPE Case in
late 2004. In January of 2005, the Litigation Trust was created to pursue claims
in the PPE Case and subsequently  filed briefs on the appeal.  Oral arguments on
this appeal were initially heard on October 17, 2005. On March 8, 2006, however,
the Court of Appeals for the Second  Circuit  vacated  the  judgment in the case
because it  determined,  based on  information  brought to the  attention of the
Court  by the  plaintiffs,  that  there  was  no  jurisdiction  over  two of the
plaintiffs  in the case.  The case was then  remanded to the District  Court for
additional  findings as to the jurisdiction over the remaining  plaintiff and as
to the possible third party beneficiary status of that plaintiff with respect to
contracts entered into by the other plaintiffs.

      Consistent with the  determination  of the Court of Appeals,  the District
Court  dismissed  Catskill  Development  and  Mohawk  Management  from the case.
Following  the  dismissal,  the  Trustees  of the  Litigation  Trust filed a new
complaint on behalf of the beneficiaries of the Trust against Harrah's Operating
Company,  the  successor  in interest  to Park Place  Entertainment,  Inc.  with
respect to the claims of Catskill  Development and Mohawk Management.  The state
citizenship  of the Trustees of the Trust,  which had received the claims of the
two non-diverse  parties by assignment,  entitled them to claim  jurisdiction in
the  federal  court.  The  parties to the case had  previously  agreed  that all
parties to the newly  filed case would be subject to the  decisions  made in the
original case. This allowed the Judge to consolidate the two cases, re-enter its
original decision  granting summary judgment and dismiss the consolidated  case.
This  effectively  restored  the case to the  status it had been at the time the
appeal was filed,  with all  parties and all claims  represented  and all of the
decisions made in the case applicable to all the parties.

      On November  20, 2006,  the District  Court issued a decision on the third
party  beneficiary issue presented by the 2nd Circuit's remand. As a consequence
of the  consolidation  process,  the  issue of third  party  beneficiary  status
becomes  less  important  to a proper  resolution  of the  appeal.  However,  as
requested  by the 2nd  Circuit,  the District  Court  addressed  the question of
whether Monticello Raceway Development, the one plaintiff whose claim to federal
diversity jurisdiction in the original case had not been in question, would be a
third  party  beneficiary  of any of the  contracts  entered  into by the  other
plaintiffs.  The  plaintiffs  argued  that  all of the  contracts  were  clearly
interdependent  as part of an  overall  structure  designed  to  accomplish  the
development  and  operation  of the casino  and that,  in  particular,  the Land
Purchase  Agreement  contained  an express  obligation  to support the  approval
process for the other  contracts.  However,  the Court found that the references
made in the Land  Purchase  Agreement  and other  documents  to the  development
agreement between Monticello Raceway Development and the Tribal Gaming Authority
were  too  vague  to  form  the  basis  for a  third  party  beneficiary  claim,
particularly in light of express language in the development  agreement that she
believed  indicated that it was intended to stand on its own.  Accordingly,  the
District  Court  determined  that there were no third party  beneficiary  rights
under the development agreement.

      Following the issuance of this  decision and order,  the  plaintiffs  have
filed a new appeal to the 2nd Circuit.  Since the  restoration  of the claims of
the two  non-diverse  plaintiffs  to the case has  resulted in all of the issues
remaining the same as on the previous appeal,  it was anticipated by the parties
that the 2nd Circuit would be able to review the original  briefs in the case as
they were originally  filed, and that the only additional  briefing that will be
necessary would be supplemental briefs to deal with cases and other developments
that have arisen since those briefs were issued.  The ultimate  decision on this
question  rests with the Court,  however.  There is also no  assurance  that the
original panel that was assigned to the appeal last year will be assigned again.
Whether  or not a new panel is  assigned,  it is  likely  that  additional  oral
arguments will be heard.


                                       13


      On June 1, 2004, we filed a Voluntary Discontinuance and Tolling Agreement
with respect to the  President RC Case.  Since there are many issues of fact and
law in the PPE Case which relate to matters that are also at issue in the second
lawsuit,  we believe that,  as long as the right to recommence  the suit without
regard to the statute of limitations was preserved,  the  discontinuance of this
suit was  appropriate  in order to avoid the cost of  maintaining  two  separate
lawsuits.

      On January 24, 2007, the Litigation Trust assumed  responsibility  for the
Judgment  Enforcement  Case  pursuant  to  an  agreement  (the  "Joint  Alliance
Agreement") with the original  litigants in the Tribal Court litigation  against
PPE and Clive Cummis.  That lawsuit pursued claims on behalf of enrolled members
of the St. Regis Mohawk Tribe that are similar to the claims that the Litigation
Trust is pursuing  on behalf of its  beneficiaries.  The  lawsuit  resulted in a
$1.787 billion  judgment against PPE, which was rendered in the St. Regis Mohawk
Tribal Court (the "Tribal  Court") on March 20, 2001. An  enforcement  action by
the  plaintiffs  to  enforce  that  judgment  in a  federal  district  court was
subsequently  dismissed,  without  prejudice.  At the  time  of the  enforcement
action,  the validity of the Tribal Court was in question and the matter was the
subject of other judicial and administrative proceedings.

      As  a  result  of  the  common   interests  of  the   Litigation   Trust's
beneficiaries and the class of enrolled tribal members, the parties to the Joint
Alliance  Agreement agreed to work together to merge their respective  interests
and share in any  recoveries  of their  respective  claims.  The Joint  Alliance
Agreement  provided  that the  claims  were to be  assigned  in  exchange  for a
certificate  evidencing the ownership by the Tribal members of 21,912,869  Units
in  the  Litigation  Trust  (representing  a  50%  beneficial  interest  in  the
Litigation  Trust).  The  Trustees of the  Litigation  Trust then  obtained  the
consent of the holders of more than 66 2/3% of the units of the Litigation Trust
to an amendment of the  Declaration  of Trust to  implement  the Joint  Alliance
Agreement,   including  an  increase  in  the  authorized  number  of  units  to
43,825,738.  In accordance  with its terms,  this amendment  ("Amendment No. 2")
became  effective  upon  satisfaction  of the  condition  that the claims of the
Tribal  members  were duly and  properly  assigned  to the  Litigation  Trust in
accordance with the Joint Alliance Agreement.  On June 21, 2007, pursuant to the
Joint Alliance  Agreement,  the trustees of the Catskill  Litigation  Trust,  in
exchange for the  delivery of  21,912,869  newly issued units of the  Litigation
Trust,  received an  assignment  of certain  claims of members of the St.  Regis
Mohawk Tribe against Park Place  Entertainment and Clive Cummis.  The assignment
was previously approved by the St. Regis Mohawk Tribal Court.

      As a result of the assignment to consummate the Joint Alliance  Agreement,
an  aggregate  of  43,825,738  units of the  Litigation  Trust  are  issued  and
outstanding.  In addition,  in  connection  with  Amendment No. 2, Mr. Dennis C.
Vacco agreed to serve as a Litigation  Trustee of the  Litigation  Trust and Mr.
Paul A. deBary,  who had previously  served as a Litigation  Trustee,  agreed to
serve as Litigation  Trustee  Advisor.  References to the "Litigation  Trustees"
herein  refer to  Messrs.  Bernstein  and deBary  prior to June 21,  2007 and to
Messrs. Bernstein and Vacco thereafter.

      On June 22, 2007,  Dennis C. Vacco and Joseph  Bernstein,  acting in their
capacities as Litigation  Trustees of the Litigation Trust, filed an enforcement
action (the "Judgment Enforcement Case") in the United States District Court for
the Northern  District of New York.  The  enforcement  action was filed  against
Harrah's  Operating  Company,  Inc.  (a  wholly  owned  subsidiary  of  Harrah's
Entertainment, Inc. (HET)), as successor to Park Place Entertainment,  Inc., and
Clive  Cummis to  enforce  an order of final  judgment  issued by the St.  Regis
Mohawk  Court on March 20,  2001.  The order of  default  judgment  ordered  the
defendants  to pay $1.782  billion of actual  damages and $5 million of punitive
damages On July 12,  2007,  pursuant to a duly  noticed  motion,  the St.  Regis
Mohawk Tribal Court issued an order that clarified  that,  under Tribal law, the
annual rate of nine percent  provided  for in sections  5003 and 5004 of the New
York Civil  Practice  Law and Rules,  will apply for the purpose of  calculating
interest on any unsatisfied  amount of the order of final judgment issued by the
Tribal Court.  No portion of the judgment has currently been satisfied and there
is no  assurance  that the  Litigation  Trust will receive any net proceeds as a
result of the  enforcement  of the  judgment.  A previous  suit to  enforce  the
default judgment was dismissed,  without prejudice to the  recommencement of the


                                       14


suit, after the Judge had not heard further from the parties  concerning efforts
to  settle  the case.  Harrah's  Entertainment,  Inc.,  the  parent of  Harrah's
operating company, has indicated in its public filings that it believed that the
case had been  settled and intends to  vigorously  defend any attempt to enforce
the judgment.  The PPE Case, the President RC Case and the Judgment  Enforcement
Case are herein collectively referred to as the "Litigations".

      As a  result  of the  acquisition  of the  claims  of  the  class  action,
Plaintiffs in the Judgment  Enforcement  Case,  the enrolled  members of the St.
Regis Mohawk Tribe, as beneficial  owners of the new units issued in conjunction
with  the  transfer,  will be  entitled  to  share  in any  future  recovery  or
settlement in all litigation currently being prosecuted by the Litigation Trust.
Similarly,  the  existing  unitholders  will be  entitled to share in any future
recovery or  settlement  relating to the new claims  that the  Litigation  Trust
acquired.

      Our purposes are the  prosecution  of our  litigation  claims  through the
recovery of any settlement or final  judgments and the  distribution  of the net
amount of any such recoveries to our  beneficiaries.  The  administration of our
Litigation  Trust  will  involve  the  authentication  and  payment  of fees and
expenses  for legal and  related  services  in  connection  with our  litigation
claims,  reporting and regulatory  compliance and the maintenance of litigation,
financial and unit-holder records. Administrative expenses, exclusive of imputed
interest and legal fees, are currently  estimated to be  approximately  $300,000
per  year,   comprised  of  the  fees  and  expenses  of  the   litigation   and
administrative trustees and advisors, auditors and accountants and other support
services.  Legal fees and other  expenses  involved in pursuing  our  litigation
claims are  impossible to predict with any degree of accuracy.  No assurance can
be given that the amounts available to us for the payment of such expenses under
our line of credit will be sufficient to carry our litigation  claims through to
a successful  conclusion  or that  alternative  funds will be available for such
purpose.

      The  Litigation  Trust is not  engaged  in  settlement  negotiations  with
respect to any of the claims at this time. The defendants  have raised  numerous
defenses  to the  various  claims  in the  litigations  and  have  pursued  them
vigorously  resulting in dismissals or judgments in their favor.  The ability of
the  Litigation  Trust to prevail in the  various  litigations  will depend on a
number of factors,  including  the ability to obtain  reversals in the appellate
courts  and  to  pursue  the  litigations   successfully  in  the  trial  courts
notwithstanding potential defenses to the claims and the St. Regis Mohawk Tribal
Court judgment, including the alleged invalidity of the Tribal Court.

      Our  unit-holders  will  only be  entitled  to the net  proceeds  from any
settlement or award,  if any, of our litigation  claims after the payment of our
expenses, the fees of our litigation trustees, any amounts outstanding under our
line of credit and  $7,500,000  to Empire  Resorts  for  reimbursement  of prior
expenses incurred in connection with our litigation claims.

      Under our agreement with counsel arguing the appeal, a portion of the fees
related to arguing  the appeal will be  contingent  on the  resulting  decision.
However,  these contingent fees do not relate to the additional matters relating
to jurisdiction  that arose subsequent to the initial briefing of the case. As a
result,  we currently  expect  significant  additional  expenses  related to the
appeal. We do not expect additional  expenses related to a trial in the PPE Case
(which is itself  dependent  on the  outcome of the  appeal)  until at least the
second quarter of 2008.


RESULTS OF OPERATIONS

The  expenditures  for legal fees in the first six months of 2007,  as  compared
with the comparable period for 2006, reflect the considerably increased level of
activity necessary to make submissions of briefs to the Court of Appeals for the
Second  Circuit  as well as to  consummate  the  Joint  Alliance  Agreement  and
commence  the  prosecution  of the  Judgment  Enforcement  Case.  Administrative
expenses,  excluding legal fees, also increased in the first six months of 2007,


                                       15


as  compared  with the first six months of 2006,  due  principally  to  expenses
associated with the  implementation of the Joint Alliance  Agreement,  including
printing and mailing fees  associated  with notifying  unitholders in connection
with Amendment No. 2 to the Declaration of Trust.  Imputed  interest expense has
increased significantly due to the additional withdrawals on the line of credit.

      For the three  months  ended  June 30,  2007,  we  reported  a net loss of
$494,533.  Included  in net  loss are  legal  fees of  $361,854,  administrative
expenses of $63,376,  amortization  of $36,521 and imputed  interest of $35,356,
offset by dividend  income of $2,575.  For the three months ended June 30, 2006,
we reported a net loss of $180,720.  Included in these net losses are legal fees
of $120,400, administrative expenses of $41,344 and imputed interest of $19,436,
offset by dividend income of $460.

      For the six  months  ended  June  30,  2007,  we  reported  a net  loss of
$854,198.  Included in this net loss are legal fees of $640,726,  administrative
expenses of $114,248,  amortization of $36,521 and imputed  interest of $66,556,
offset by dividend income of $3,854.  For the six months ended June 30, 2006, we
reported a net loss of $264,768.  Included in these net losses are legal fees of
$134,768,  administrative  expenses of $88,174 and imputed  interest of $42,347,
offset by dividend income of $521.


LIQUIDITY AND CAPITAL RESOURCES

      Empire Resorts has provided us with an irrevocable line of credit of up to
$2,500,000 to provide funds to pay any and all of our expenses  permitted  under
the  Declaration of Trust.  Although no interest is payable on amounts  advanced
under  our  line  of  credit,  the  Litigation  Trust  imputes  interest  on the
borrowings at Empire Resorts  borrowing rate (8% per annum at June 30, 2007). As
of June 30, 2007,  $2,145,000 had been drawn down and was outstanding under this
line of credit. Amounts outstanding under our line of credit are to be repaid by
us from proceeds  received from any  settlement or award in connection  with our
litigation  claims after  payment of an amount  necessary to pay our  Litigation
Trustees the fees for their  services as set forth in the  Declaration of Trust.
Repayments  of  amounts  outstanding  under our line of credit  may be made as a
whole or in part from time to time at any time without notice.  We may re-borrow
any  amounts  repaid.  Our line of credit  will  remain in full force and effect
until our termination.

      Empire  Resorts  is a holding  company,  owning all the  capital  stock or
membership  interests of certain  other  entities.  Empire  Resorts is therefore
dependent  on these other  entities to pay  dividends or make  distributions  in
order to generate  internal cash flow and to satisfy its obligations,  including
its obligations  under our line of credit.  There can be no assurance,  however,
that these other entities will generate  enough revenue to pay cash dividends or
make cash  distributions.  In addition,  these entities may enter into contracts
that limit or prohibit their ability to pay dividends or make distributions.

      Empire  Resorts  had no  operating  revenue  during the fiscal  year ended
December 31, 2003 and  operating  revenue of $45.0  million,  $86.8  million and
$98.1  million for the fiscal years ended  December 31, 2004,  2005 and 2006 and
sustained net losses of approximately $6.5 million, $12.7 million, $18.5 million
and $7.1 million,  respectively,  during such periods.  Although  Empire Resorts
significantly increased its level of operations during 2005 and 2006, it has yet
to demonstrate that such operations can be profitable.  Therefore,  there can be
no assurance that Empire  Resorts will have the ability to meet its  obligations
under our line of credit.

      On June 21, 2007,  the Litigation  Trust entered into separate  agreements
with two of its unitholders,  Robert Berman and Ralph  Bernstein,  each of which
provides for advances of up to $125,000  upon written  demand of the  Litigation
Trust. Repayment of such advances is to be made solely from amounts available in
the Recovery Fund held by the  Administrative  Trustee under the  Declaration of
Trust.


                                       16


CRITICAL ACCOUNTING ESTIMATES

The Trustees use estimates and assumptions in preparing our financial statements
in preparing our financial  statements in  accordance  with  generally  accepted
accounting  principles  (United States).  These estimates and assumptions affect
the  reported  amounts of assets  and  liabilities  and  reported  revenues  and
expenses. The fair value of our cash and equivalents approximates their carrying
value.

OFF BALANCE SHEET ARRANGEMENTS

As of August 20, 2007, the Litigation  Trust does not have any off balance sheet
arrangements.


ITEM 3.  CONTROLS AND PROCEDURES

(a) The Litigation  Trust carried out an evaluation,  under the  supervision and
with the participation of the Litigation Trust's management, including Joseph E.
Bernstein  (acting  Chief  Executive  Officer)  and Paul  deBary  (acting  Chief
Financial  Officer),   the  Litigation  Trust's  Litigation  Trustees,   of  the
effectiveness of the design and operation of the Litigation Trust's  "disclosure
controls and procedures",  as such term is defined in Exchange Act Rule 15d-15e,
as of the end of the period covered by this report.  Based upon that evaluation,
Messrs.  Bernstein and Paul deBary have concluded  that the  Litigation  Trust's
disclosure  controls and procedures  were effective as of the end of the periods
covered by this report to provide reasonable assurance that information required
to be  disclosed  by the  Litigation  Trust in reports  that it files or submits
under the Exchange Act is recorded,  processed,  summarized and reported  within
the time periods specified in SEC rules and forms.

(b) There have been no significant  changes in the Litigation  Trust's  internal
controls or in other  factors  that could  significantly  affect the  Litigation
Trust's  internal  controls  subsequent to the date the Litigation Trust carried
out this evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.

      A control system,  no matter how well conceived and operated,  can provide
only  reasonable,  not absolute  assurance  that the  objectives  of the control
system are met. Because of the inherent  limitations in all control systems,  no
internal  controls can provide  absolute  assurance  that all control issues and
instances of fraud, if any, within a company have been detected.


                                       17


      OTHER INFORMATION

ITEM 2.  LEGAL PROCEEDINGS

      We are a statutory  trust created under  Delaware law. Our formation was a
condition to the  consolidation  of Empire  Resorts with MRMI,  MCM,  MRDC,  and
Mohawk. Also, as a condition to that consolidation,  each of Catskill,  MRDC and
Mohawk,  agreed to  assign to us all of their  claims  under or  related  to the
alienation and frustration of their  agreements and business  relations with the
St. Regis Mohawk Tribe. That assignment included rights to any proceeds from any
settlement or award that may arise from any  litigation  relating to that claim.
Our  litigation  claims  arise from the efforts of each of Catskill,  MRDC,  and
Mohawk to develop with the St. Regis Mohawk Tribe a gaming casino in Monticello,
New York.  These entities spent several years and  substantial  funds to develop
and  obtain  required  approvals  for  the  casino.  Subsequently,   Park  Place
Entertainment  Corporation,  the world's largest gaming corporation and Atlantic
City's largest casino operator,  entered into an agreement providing for the St.
Regis Mohawk Tribe to commit its future casino development  efforts  exclusively
to Park Place  Entertainment  Corporation.  That agreement  conflicted  with the
Mohawk Tribe's agreements with Catskill, MRDC and Mohawk.

      Several  lawsuits were commenced as a result of these  circumstances.  The
first was  commenced  against  PPE and Clive  Cummis,  its General  Counsel,  by
certain  members of the St. Regis  Mohawk  Tribe in the St. Regis Mohawk  Tribal
Court.  The  defendants  refused to  recognize  the  validity of the court and a
default judgment was entered.  In the Judgment  Enforcement Case, the Litigation
Trustees  are now seeking to enforce  this  judgment of the Tribal  Court in the
United  States  District  Court for the Northern  District of New York,  as more
fully  described  below.  Two other  lawsuits  were  commenced  on behalf of the
original business entities who were working to develop the casino. The first was
the PPE Case,  which was brought against PPE in the United States District Court
for the  Southern  District  of New York in  2001.  The  Presidents  RC Case was
brought  in the  Sullivan  County  Supreme  Court of the State of New York Court
against  Presidents,  RC, Inc. and certain of its  principals  and other alleged
partners of PPE and has been discontinued, under an agreement that permits it to
be re-filed at a future date without being barred by the statute of limitations,
pending resolution of the issues in the PPE Case.

      The PPE Case was  initially  dismissed  on a motion for summary  judgment.
However,  the trial court  subsequently  vacated the earlier  decision  granting
summary judgment to Park Place Entertainment,  in order to consider new evidence
and  allow  additional  discovery  proceedings.  After  these  proceedings  were
completed, the dismissal was reinstated.  An appeal was taken in the PPE Case in
late 2004. In January of 2005, the Litigation Trust was created to pursue claims
in the PPE Case and subsequently  filed briefs on the appeal.  Oral arguments on
this appeal were initially heard on October 17, 2005. On March 8, 2006, however,
the Court of Appeals for the Second  Circuit  vacated  the  judgment in the case
because it  determined,  based on  information  brought to the  attention of the
Court  by the  plaintiffs,  that  there  was  no  jurisdiction  over  two of the
plaintiffs in the case.  The case was then remanded it to the District Court for
additional  findings as to the jurisdiction over the remaining  plaintiff and as
to the possible third party beneficiary status of that plaintiff with respect to
contracts entered into by the other plaintiffs.

      Consistent with the  determination  of the Court of Appeals,  the District
Court  dismissed  Catskill  Development  and  Mohawk  Management  from the case.
Following  the  dismissal,  the  Trustees  of the  Litigation  Trust filed a new
complaint on behalf of the beneficiaries of the Trust against Harrah's Operating
Company,  the  successor  in interest  to Park Place  Entertainment,  Inc.  with
respect to the claims of Catskill  Development and Mohawk Management.  The state
citizenship  of the Trustees of the Trust,  which had received the claims of the
two non-diverse  parties by assignment,  entitled them to claim  jurisdiction in
the  federal  court.  The  parties to the case had  previously  agreed  that all
parties to the newly  filed case would be subject to the  decisions  made in the
original case. This allowed the Judge to consolidate the two cases, re-enter its
original decision  granting summary judgment and dismiss the consolidated  case.


                                       18


This  effectively  restored  the case to the  status it had been at the time the
appeal was filed,  with all  parties and all claims  represented  and all of the
decisions made in the case applicable to all the parties.

      Following the issuance of this  decision and order,  the  plaintiffs  have
filed a new appeal to the 2nd Circuit.  Since the  restoration  of the claims of
the two  non-diverse  plaintiffs  to the case has  resulted in all of the issues
remaining the same as on the previous appeal,  it was anticipated by the parties
that the 2nd Circuit would be able to review the original  briefs in the case as
they were originally  filed, and that the only additional  briefing that will be
necessary would be supplemental briefs to deal with cases and other developments
that have arisen since those briefs were issued.  The ultimate  decision on this
question  rests with the Court,  however.  There is also no  assurance  that the
original panel that was assigned to the appeal last year will be assigned again.
Whether  or not a new panel is  assigned,  it is  likely  that  additional  oral
arguments will be heard.

      On June 1, 2004, we filed a Voluntary Discontinuance and Tolling Agreement
with respect to the  President RC Case.  Since there are many issues of fact and
law in the PPE Case which relate to matters that are also at issue in the second
lawsuit,  we believe that,  as long as the right to recommence  the suit without
regard to the statute of limitations was preserved,  the  discontinuance of this
suit was  appropriate  in order to avoid the cost of  maintaining  two  separate
lawsuits.

      The Litigation Trust assumed  responsibility for the Judgment  Enforcement
Case pursuant to an agreement (the "Joint Alliance Agreement") with the original
litigants  in the Tribal Court  litigation  against PPE and Clive  Cummis.  That
lawsuit  pursued  claims on behalf of enrolled  members of the St.  Regis Mohawk
Tribe that are  similar to the claims that the  Litigation  Trust is pursuing on
behalf of its  beneficiaries.  The lawsuit resulted in a $1.787 billion judgment
against  PPE,  which was  rendered in the St.  Regis  Mohawk  Tribal  Court (the
"Tribal  Court") on March 20, 2001. An  enforcement  action by the plaintiffs to
enforce that judgment in a federal  district court was  subsequently  dismissed,
without  prejudice.  At the time of the enforcement  action, the validity of the
Tribal  Court was in question  and the matter was the subject of other  judicial
and administrative proceedings.

      As  a  result  of  the  common   interests  of  the   Litigation   Trust's
beneficiaries and the class of enrolled tribal members, the parties to the Joint
Alliance  Agreement agreed to work together to merge their respective  interests
and share in any  recoveries  of their  respective  claims.  The Joint  Alliance
Agreement  provided  that the  claims  were to be  assigned  in  exchange  for a
certificate  evidencing the ownership by the Tribal members of 21,912,869  Units
in  the  Litigation  Trust  (representing  a  50%  beneficial  interest  in  the
Litigation  Trust).  The  Trustees of the  Litigation  Trust then  obtained  the
consent of the holders of more than 66 2/3% of the units of the Litigation Trust
to an amendment of the  Declaration  of Trust to  implement  the Joint  Alliance
Agreement.  In accordance  with its terms,  this amendment  ("Amendment  No. 2")
became  effective  upon  satisfaction  of the  condition  that the claims of the
Tribal  members  were duly and  properly  assigned  to the  Litigation  Trust in
accordance with the Joint Alliance Agreement.  On June 21, 2007, pursuant to the
Joint Alliance Agreement, the trustees of the Catskill Litigation Trust received
an assignment of certain claims of members of the St. Regis Mohawk Tribe against
Park  Place  Entertainment  and Clive  Cummis.  The  assignment  was  previously
approved by the St. Regis Mohawk Tribal Court.

      On June 22, 2007,  Dennis C. Vacco and Joseph  Bernstein,  acting in their
capacities as Litigation Trustees of the Litigation Trust, filed a new complaint
in the Judgment  Enforcement  Case in the United States  District  Court for the
Northern District of New York. The enforcement action was filed against Harrah's
Operating  Company,  Inc. (a wholly owned subsidiary of Harrah's  Entertainment,
Inc. (HET)), as successor to Park Place Entertainment, Inc., and Clive Cummis to
enforce an order of default  judgment  issued by the St.  Regis  Mohawk Court on
March 20, 2001.  The order of default  judgment  ordered the  defendants  to pay
$1.782 billion of actual damages and $5 million of punitive  damages On July 12,
2007,  pursuant to a duly noticed  motion,  the St.  Regis  Mohawk  Tribal Court
issued an order that  clarified  that under Tribal law sections 5003 and 5004 of
the New York Civil  Practice  Law and Rules apply an annual rate of nine percent
for the purpose of calculating  interest on any unsatisfied amount of the Tribal
Court judgment that the Trust is seeking to enforce in the Judgment  Enforcement
Case. No portion of the judgment has currently been  satisfied.  A previous suit
to  enforce  the  default  judgment  was  dismissed,  without  prejudice  to the
recommencement  of the suit,  after the  Judge  had not heard  further  from the


                                       19


parties concerning efforts to settle the case. Harrah's Entertainment, Inc., the
parent of Harrah's operating  company,  has indicated in its public filings that
it believed that the case had been settled and intends to vigorously  defend any
attempt to enforce the judgment.

      On August  13,  2007,  Harrah's  filed a motion to  dismiss  the  Judgment
Enforcement  Case on the grounds that the  Litigation  Trustees  were not proper
parties to maintain the suit and that the case had been  previously  settled.  A
hearing  on the  motion  to  dismiss  the  Judgment  Enforcement  Case  has been
scheduled for September 28, 2007


ITEM 6.  EXHIBITS

a:  Exhibits

      *31.1 Certification of Acting Chief Executive  Officer pursuant to Section
            302 of the Sarbanes-Oxley Act of 2002.

      *31.2 Certification of Acting Chief Financial  Officer pursuant to Section
            302 of the Sarbanes-Oxley Act of 2002.

      *32.1 Certification  of the Acting Chief Executive  Officer pursuant to 18
            U.S.C.   Section  1350  adopted  pursuant  to  Section  906  of  the
            Sarbanes-Oxley Act of 2002.

      *32.2 Certification  of the Acting Chief Financial  Officer pursuant to 18
            U.S.C.   Section  1350  adopted  pursuant  to  Section  906  of  the
            Sarbanes-Oxley Act of 2002.

      *Filed herewith



                                   SIGNATURES

      In  accordance  with  the  requirements  of  the  Exchange  Act,  Catskill
Litigation  Trust  caused  this  report  to be  signed  on  its  behalf  by  the
undersigned, thereunto duly authorized.

                                    CATSKILL LITIGATION TRUST
                                    (Registrant)



DATE:  August 20, 2007              By: /s/ Joseph E. Bernstein
                                        ----------------------------------------
                                        Joseph E. Bernstein
                                        Litigation Trustee



DATE:  August 20, 2007              By: /s/ Dennis C. Vacco
                                        ----------------------------------------
                                        Dennis C. Vacco
                                        Litigation Trustee


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