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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-QSB



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(Mark One)

|x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended September 30, 2005



| ̈ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
|- | ---------------------------------------------------------------



For the transition period fromto



Commission File Number: 0-11532



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VENTURE CATALYST INCORPORATED

(Exact name of small business issuer as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Utah                                                           |  | 33-0618806                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



591 Camino De La
Reina, Suite 418, San Diego, California 92108

(Address of principal executive offices)



(619) 330-4000

(Issuers telephone number)



Not Applicable

(Former name, former address and former fiscal year, if changed since last report)



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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 the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



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



State the number of shares outstanding of each of the issuers classes
of common equity, as of the latest practicable date: as of October 31, 2005, 7,206,598 shares of common stock, $.001 par value per share, were outstanding.



Transitional Small Business Disclosure Format (check one):    Yes ̈No  x



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##### Table of Contents

VENTURE CATALYST INCORPORATED

FORM 10-QSB

FOR THE PERIOD ENDED SEPTEMBER 30, 2005



TABLE OF CONTENTS



|                                                                                                    |  |               
|--------------------------------------------------------------------------------------------------- |  | --------------
|                                                                                                    |  | Page    Number
|PART I - FINANCIAL INFORMATION                                                                      |  |               
|                                                                                                    | 
|Item 1. Financial Statements                                                                        |  |               
|Balance Sheets - September 30, 2005 (unaudited) and June 30, 2005                                   |  | 1             
|Statements of Operations (unaudited) - Three months ended September 30, 2005 and September 30, 2004 |  | 2             
|Statements of Cash Flows (unaudited) - Three months ended September 30, 2005 and September 30, 2004 |  | 3             
|Notes to Financial Statements                                                                       |  | 4             
|Item 2. Managements Discussion and Analysis or Plan of Operation                                   |  | 12            
|Item 3. Controls and Procedures                                                                     |  | 22            
|                                                                                                    | 
|PART II - OTHER INFORMATION                                                                         |  |               
|                                                                                                    | 
|Item 1. Legal Proceedings                                                                           |  | 23            
|Item 6. Exhibits                                                                                    |  | 23            
|Signatures                                                                                          |  | 24            



FORWARD-LOOKING
STATEMENTS



This Quarterly Report on Form 10-QSB contains
forward-looking statements reflecting managements current expectations. Examples of such forward-looking statements include our expectations with respect to our strategy. Although we believe that our expectations are based upon reasonable
assumptions, there can be no assurances that our financial goals will be realized. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or
industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Numerous factors may affect our actual results and may cause results to differ materially from
those expressed in forward-looking statements made by or on behalf of us. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing,
the words, believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements. The important factors discussed under the caption Factors That May
Affect Future Results in Part I, Item 2 - Managements Discussion and Analysis or Plan of Operation, herein, among others, would cause actual results to differ materially from those indicated by forward-looking statements made herein and
represent managements current expectations and are inherently uncertain. Investors are warned that actual results may differ from managements expectations. We assume no obligation to update the forward-looking information to reflect
actual results or changes in the factors affecting such forward-looking information.



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##### Table of Contents

PART I - FINANCIAL INFORMATION



Item 1. Financial Statements.



VENTURE CATALYST INCORPORATED

BALANCE SHEETS



|                                                                                         |  |                                |             |   |               |   |             |  
|---------------------------------------------------------------------------------------- |  | ------------------------------ | ----------- | - | ------------- | - | ----------- | -
|                                                                                         |  | September 30, 2005 (unaudited) |             |   | June 30, 2005 |  
|ASSETS                                                                                   |  |                                |             |   |               |   |             |  
|Current Assets:                                                                          |  |                                |             |   |               |   |             |  
|Cash and cash equivalents                                                                |  | $                              | 4,317,085   |   |               | $ | 3,839,310   |  
|Accounts receivable-Barona Tribe                                                         |  |                                | 597,425     |   |               |   | 476,504     |  
|Accounts receivable, net                                                                 |  |                                | 293,329     |   |               |   | 976,680     |  
|Prepaid expenses and other current assets                                                |  |                                | 282,423     |   |               |   | 231,774     |  
|Deferred tax asset, current                                                              |  |                                | 138,000     |   |               |   | 24,000      |  
|                                                                                         |  |                                |             |   |               |   |             |  
|Total current assets                                                                     |  |                                | 5,628,262   |   |               |   | 5,548,268   |  
|                                                                                         |  |                                |             |   |               |   |             |  
|Non-Current Assets:                                                                      |  |                                |             |   |               |   |             |  
|Deferred tax asset, non-current                                                          |  |                                | 436,000     |   |               |   | 436,000     |  
|Property, plant and equipment, net                                                       |  |                                | 297,644     |   |               |   | 273,401     |  
|Restricted cash                                                                          |  |                                | 43,360      |   |               |   | 43,360      |  
|Deposits and other assets                                                                |  |                                | 12,397      |   |               |   | 10,241      |  
|                                                                                         |  |                                |             |   |               |   |             |  
|Total non-current assets                                                                 |  |                                | 789,401     |   |               |   | 763,002     |  
|                                                                                         |  |                                |             |   |               |   |             |  
|Total assets                                                                             |  | $                              | 6,417,663   |   |               | $ | 6,311,270   |  
|                                                                                         |  |                                |             |   |               |   |             |  
|                                                                                         |  |                               
|LIABILITIES AND SHAREHOLDERS EQUITY                                                     |  |                                |             |   |               |   |             |  
|                                                                                         |  |                               
|Current Liabilities:                                                                     |  |                                |             |   |               |   |             |  
|Accounts payable and accrued expenses                                                    |  | $                              | 773,053     |   |               | $ | 633,676     |  
|Accrued wages                                                                            |  |                                | 683,660     |   |               |   | 716,450     |  
|Billings in excess of costs, uncompleted software contracts                              |  |                                | 554,067     |   |               |   | 580,372     |  
|Deferred revenue                                                                         |  |                                | 365,564     |   |               |   | 254,959     |  
|Income taxes payable, net                                                                |  |                                | 852         |   |               |   |            |  
|                                                                                         |  |                                |             |   |               |   |             |  
|Total current liabilities                                                                |  |                                | 2,377,196   |   |               |   | 2,185,457   |  
|                                                                                         |  |                                |             |   |               |   |             |  
|Total liabilities                                                                        |  |                                | 2,377,196   |   |               |   | 2,185,457   |  
|                                                                                         |  |                                |             |   |               |   |             |  
|Commitments and Contingencies                                                            |  |                                |            |   |               |   |            |  
|Shareholders Equity:                                                                    |  |                                |             |   |               |   |             |  
|Common stock, $.001 par value, 100,000,000 shares authorized and 7,206,598 shares issued |  |                                | 7,207       |   |               |   | 7,207       |  
|Additional paid-in-capital                                                               |  |                                | 19,616,699  |   |               |   | 19,616,699  |  
|Accumulated deficit                                                                      |  |                                | (15,583,439 | ) |               |   | (15,498,093 | )
|                                                                                         |  |                                |             |   |               |   |             |  
|Total shareholders equity                                                               |  |                                | 4,040,467   |   |               |   | 4,125,813   |  
|                                                                                         |  |                                |             |   |               |   |             |  
|Total liabilities and shareholders equity                                               |  | $                              | 6,417,663   |   |               | $ | 6,311,270   |  
|                                                                                         |  |                                |             |   |               |   |             |  



The accompanying notes
are an integral part of these statements.



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VENTURE CATALYST INCORPORATED

STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                            |  |                                          |           |   |      |   |           |  
|------------------------------------------- |  | ---------------------------------------- | --------- | - | ---- | - | --------- | -
|                                            |  | For the three months ended September 30, |          
|                                            |  | 2005                                     |           |   | 2004 |  
|Revenues:                                   |  |                                          |           |   |      |   |           |  
|Consulting services                         |  | $                                        | 1,946,461 |   |      | $ | 1,725,000 |  
|Software products and related services      |  |                                          | 124,570   |   |      |   | 19,123    |  
|                                            |  |                                          |           |   |      |   |           |  
|Total revenues                              |  |                                          | 2,071,031 |   |      |   | 1,744,123 |  
|                                            |  |                                          |           |   |      |   |           |  
|Cost of revenues:                           |  |                                          |           |   |      |   |           |  
|Consulting services                         |  |                                          | 714,540   |   |      |   | 613,547   |  
|Software products and related services      |  |                                          | 278,305   |   |      |   | 415,018   |  
|                                            |  |                                          |           |   |      |   |           |  
|Total cost of revenues                      |  |                                          | 992,845   |   |      |   | 1,028,565 |  
|                                            |  |                                          |           |   |      |   |           |  
|Gross profit                                |  |                                          | 1,078,186 |   |      |   | 715,558   |  
|                                            |  |                                          |           |   |      |   |           |  
|Operating expenses:                         |  |                                          |           |   |      |   |           |  
|General and administrative                  |  |                                          | 1,019,315 |   |      |   | 644,963   |  
|Sales and marketing                         |  |                                          | 274,832   |   |      |   | 215,939   |  
|Research and development                    |  |                                          | 62,436    |   |      |   | 12,836    |  
|                                            |  |                                          |           |   |      |   |           |  
|Total operating expenses                    |  |                                          | 1,356,583 |   |      |   | 873,738   |  
|                                            |  |                                          |           |   |      |   |           |  
|Operating loss                              |  |                                          | (278,397  | ) |      |   | (158,180  | )
|                                            |  |                                          |           |   |      |   |           |  
|Other income:                               |  |                                          |           |   |      |   |           |  
|Interest income                             |  |                                          | 32,052    |   |      |   | 13,388    |  
|Other gains                                 |  |                                          | 47,000    |   |      |   | 267       |  
|                                            |  |                                          |           |   |      |   |           |  
|Other income                                |  |                                          | 79,052    |   |      |   | 13,655    |  
|                                            |  |                                          |           |   |      |   |           |  
|Net loss before income tax benefit          |  |                                          | (199,345  | ) |      |   | (144,525  | )
|Income tax benefit                          |  |                                          | 114,000   |   |      |   | 88,000    |  
|                                            |  |                                          |           |   |      |   |           |  
|Net loss                                    |  | $                                        | (85,345   | ) |      | $ | (56,525   | )
|                                            |  |                                          |           |   |      |   |           |  
|Basic and diluted loss per share:           |  |                                          |           |   |      |   |           |  
|Net loss per share - basic                  |  | $                                        | (.01      | ) |      | $ | (.01      | )
|                                            |  |                                          |           |   |      |   |           |  
|Net loss per share - diluted                |  | $                                        | (.01      | ) |      | $ | (.01      | )
|                                            |  |                                          |           |   |      |   |           |  
|Weighted average common shares outstanding: |  |                                          |           |   |      |   |           |  
|Basic                                       |  |                                          | 7,206,598 |   |      |   | 7,206,598 |  
|                                            |  |                                          |           |   |      |   |           |  
|Diluted                                     |  |                                          | 7,206,598 |   |      |   | 7,206,598 |  
|                                            |  |                                          |           |   |      |   |           |  



The accompanying notes
are an integral part of these statements.



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VENTURE CATALYST INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                                                  |  |                                          |           |   |      |   |            |  
|------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | --------- | - | ---- | - | ---------- | -
|                                                                                                  |  | For the Three Months Ended September 30, |          
|                                                                                                  |  | 2005                                     |           |   | 2004 |  
|Increase (decrease) in cash:                                                                      |  |                                          |           |   |      |   |            |  
|Cash flows provided by (used in) operating activities:                                            |  |                                          |           |   |      |   |            |  
|Net loss                                                                                          |  | $                                        | (85,345   | ) |      | $ | (56,525    | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities:         |  |                                          |           |   |      |   |            |  
|Depreciation and amortization                                                                     |  |                                          | 30,262    |   |      |   | 25,217     |  
|Increase to deferred tax assets                                                                   |  |                                          | 114,000   |   |      |   |           |  
|Gain on disposal of asset                                                                         |  |                                          |          |   |      |   | (17        | )
|Changes in operating assets and liabilities                                                       |  |                                          | 473,363   |   |      |   | (68,531    | )
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Net cash provided by (used in) operating activities                                               |  |                                          | 532,280   |   |      |   | (99,856    | )
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Cash flows used in investing activities:                                                          |  |                                          |           |   |      |   |            |  
|Issuance of restricted cash                                                                       |  |                                          |          |   |      |   | (43,360    | )
|Purchase of furniture and equipment                                                               |  |                                          | (54,505   | ) |      |   | (82,992    | )
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Net cash used in investing activities                                                             |  |                                          | (54,505   | ) |      |   | (126,352   | )
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Cash flows used in financing activities:                                                          |  |                                          |           |   |      |   |            |  
|Payments on long-term notes                                                                       |  |                                          |          |   |      |   | (4,300,000 | )
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Net cash used in financing activities                                                             |  |                                          |          |   |      |   | (4,300,000 | )
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Net increase (decrease) in cash                                                                   |  |                                          | 477,775   |   |      |   | (4,526,208 | )
|Cash at beginning of period                                                                       |  |                                          | 3,839,310 |   |      |   | 8,025,144  |  
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Cash at end of period                                                                             |  | $                                        | 4,317,085 |   |      | $ | 3,498,936  |  
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Supplemental disclosures of cash flow information:                                                |  |                                          |           |   |      |   |            |  
|Interest paid                                                                                     |  | $                                        |          |   |      | $ |           |  
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Income taxes paid                                                                                 |  | $                                        | 12,000    |   |      | $ |           |  
|                                                                                                  |  |                                          |           |   |      |   |            |  
|Supplemental schedule of non-cash financing activity:                                             |  |                                          |           |   |      |   |            |  
|Increase to shareholders equity and debt reduction resulting from debt restructure (See Note. 12) |  | $                                        |          |   |      | $ | 7,669,443  |  
|                                                                                                  |  |                                          |           |   |      |   |            |  



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



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005



Note 1. Basis of Presentation and Description of Business



Basis of Presentation



The accompanying unaudited financial statements for Venture Catalyst Incorporated have been prepared by us in conformity with generally accepted
accounting principles for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission. As used in this Report, the terms we, us, our and VCAT refer
to Venture Catalyst Incorporated. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such
regulations.



In the opinion of management, these financial
statements reflect all normal, recurring adjustments and disclosures which are necessary for a fair presentation. The interim unaudited financial statements should be read in conjunction with our Annual Report on Form 10-KSB for the fiscal year
ended June 30, 2005 (fiscal 2005). Amounts related to disclosure of June 30, 2005 balances within these interim statements were derived from the aforementioned 10-KSB. Certain items in the financial statements for fiscal 2005
have been reclassified to conform to the current years presentation. Current and future financial statements may not be directly comparable to our historical financial statements. The results of operations for the interim period are not
necessarily indicative of the results to be expected for the full year.



Description of Business



We are a provider of
consulting services and technology in the gaming and hospitality industry. We operate two business divisions: consulting services and software. Our consulting services division offers comprehensive gaming and hospitality consulting services to
clients in the gaming and hospitality industry. We have two clients in our consulting services division, the Barona Group of Capitan Grande Band of Mission Indians (the Barona Tribe) and the Buena Vista Rancheria of Me-Wuk Indians (the
Buena Vista Tribe), both of which are federally recognized, sovereign Native American tribes. We have provided services to the Barona Tribe since 1991. We currently provide services to the Barona Tribe in connection with their operation
of the Barona Valley Ranch Resort & Casino (the Barona Valley Ranch). The Barona Valley Ranch is located in Lakeside, California, near San Diego. We have provided services to the Buena Vista Tribe since February 2005. We provide
business advisory services to the Buena Vista Tribe in connection with the establishment and operation of a gaming operation on the Buena Vista Tribes reservation located near Ione, in Northern California.



Our software division is dedicated to the ongoing product and business
development of Mariposa, a fully-integrated customer relationship management (CRM), marketing and business intelligence software system for license to businesses in the gaming and hospitality industry. Mariposa consists of a suite of
applications designed to operate in conjunction with existing player tracking and other data systems. The various Mariposa applications provide data warehousing, data mining and modeling, analytical processing, campaign management, customer contact
management and data visualization. The applications can be licensed individually or as a fully-integrated system.



Note 2. Summary of Significant Accounting Policies



Revenue Recognition



Consulting Services. In accordance with the governing revenue recognition guidelines, revenue for consulting services is recognized when the
services are rendered, provided all of the following criteria are met:



| |  |  | persuasive evidence of an arrangement exists;
| | - |  | ---------------------------------------------



| |  |  | services have been rendered;
| | - |  | ----------------------------



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005



| |  |  | the fee is fixed or determinable; and
| | - |  | -------------------------------------



| |  |  | collectibility is reasonably assured.
| | - |  | -------------------------------------



Consulting service revenues from the Barona Tribe are recorded monthly, as earned, pursuant to the above referenced guidelines. Additionally, as an
incentive to the Barona Tribe to enter into the 2004 Consulting Agreement, we granted the Barona Tribe certain Mariposa profit sharing rights, which are incorporated in the 2004 Consulting Agreement. These profit sharing rights may periodically
generate cash obligations from VCAT to the Barona Tribe, and in accordance with EITF 01-09 Accounting for Consideration Given by a Vendor to a Customer, such obligations will be recorded as a reduction of the revenues earned from the
Barona Tribe. We did not generate a profit sharing payment obligation during the three months ended September 30, 2005.



Advisory service revenues from the Buena Vista Tribe are recorded monthly as earned, pursuant to the above referenced guidelines. For a detailed
discussion relating to the terms of the 2004 Consulting Agreement with the Barona Tribe and the terms of the Advisory Agreement with the Buena Vista Tribe see Note 3. Agreements with the Barona Tribe and Buena Vista Tribe.



Software Products and Related Services. We derive a portion of
our revenues from licensing Mariposa and the sale of related services, including integration, installation and training (collectively, professional services) and maintenance and support services (support services). We
recognize revenue from software licensing and related professional services in accordance with Statement of Position (SOP) 97-2, Software Revenue Recognition, as amended by SOP 98-9. If the arrangement between us and the purchaser does
not require significant production, modification or customization of software, we will generally recognize revenue when all of the following criteria are met, as set forth in paragraph 8 of SOP 97-2:



| |  |  | persuasive evidence of an arrangement exists;
| | - |  | ---------------------------------------------



| |  |  | delivery has occurred;
| | - |  | ----------------------



| |  |  | the fee is fixed or determinable; and
| | - |  | -------------------------------------



| |  |  | collectibility is probable.
| | - |  | ---------------------------



Our standard software contracts are multiple element arrangements that include both software products and professional services. The professional services
are essential to the functionality of the software products, which require significant modification to meet the customers purpose; therefore, in accordance with paragraph 69 of SOP 97-2, ARB No. 45 and SOP 81-1, contract accounting is
applied to both the software and service elements of the arrangement. The final determination for revenue recognition and related accounting issues is made based on the specific details for each software contract, which could result in the
application of alternative revenue recognition policies for individual contracts.



Mariposa is a complex fully-integrated software system that, in order to meet the customers functionality, must work in conjunction with the customers player tracking system and a number of other customer
data systems. As a result of the difficulty in making dependable estimates, the inherent risks associated with new technologies and customer acceptance rights, we are using the completed contract method of accounting and will recognize revenue and
cost of revenues for each software contract at the time of completion of all elements of our software contracts. Provisions for contract adjustments and losses are recorded in the period such items are identified.



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005



Support services are provided pursuant to a separate contractual arrangement, or for one software
client, pursuant to an annual term license agreement. Fees for support services are recognized ratably over the term of the support period. Deferred revenues are recorded when billings for support services exceed revenues recognized to date.



Out-of-Pocket Expenses. We recognize revenues
related to certain out-of-pocket expenses in accordance with EITF No. 01-14 Income Statement Characterization of Reimbursements Received for Out-of-Pocket Expenses Incurred (EITF 01-14). EITF 01-14 requires
that certain out-of-pocket expenses rebilled to customers be recorded as revenue versus an offset to the related expense. The out-of-pocket expenses rebilled to customers are included in revenues in the respective division.



Stock Based Compensation



Employee stock options are accounted for using the intrinsic value method under APB No. 25 and related interpretations.
Effective March 31, 2003, we adopted Statement of Financial Accounting Standards (SFAS) 148 Accounting for Stock Based Compensation Transition and Disclosure an amendment of SFAS 123 Accounting for Stock Based
Compensation. SFAS 148 requires pro forma disclosure of net income or loss per share as if the fair value method of accounting for stock-based compensation has been applied for both employee and non-employee stock option grants. It also
requires disclosure of option status on a more frequent basis. The exercise price of each option equals the market price of our common stock on the date of grant; accordingly, under APB No. 25, no compensation costs for employee grants were
recognized for the options. Had compensation cost for the options been determined based on the fair value of the options at the grant dates, our net loss and loss per share would have increased to the pro forma net loss and loss per share amounts
indicated below:



|                                                                                                                                                   |  |                                 |          |   |      |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | -------- | - | ---- | - | --------- | -
|                                                                                                                                                   |  | Three months endedSeptember 30, |         
|                                                                                                                                                   |  | 2005                            |          |   | 2004 |  
|Net loss:                                                                                                                                          |  |                                 |          |   |      |   |           |  
|As reported                                                                                                                                        |  | $                               | (85,345  | ) |      | $ | (56,525   | )
|Add:                                                                                                                                               |  |                                 |         |   |      |   |          |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all option grants, net of related tax
effects |  |                                 | (13,208) |   |      |   | (57,195)  |  
|                                                                                                                                                   |  |                                 |          |   |      |   |           |  
|Pro forma                                                                                                                                          |  | $                               | (98,553) |   |      | $ | (113,720) |  
|                                                                                                                                                   |  |                                 |          |   |      |   |           |  
|Net loss per share:                                                                                                                                |  |                                 |          |   |      |   |           |  
|As reported                                                                                                                                        |  | $                               | (.01)    |   |      | $ | (.01)     |  
|Pro forma                                                                                                                                          |  | $                               | (.01)    |   |      | $ | (.02)     |  



For the above
calculation, the fair value of each option granted was estimated on the date of grant using the Black-Scholes option-pricing model with no expected dividends.



Cost of Revenues  Software Products and Related Services



The cost of revenues in our software division for the three months ended September 30, 2005 consist primarily of compensation and other
personnel-related expenses and other direct costs related to our software products and related services. The cost of revenues in our software division for the three months ended September 30, 2004 consist primarily of costs for services
provided by a third-party software development firm in connection with integration, installation and support services for our software products and compensation and other personnel-related expenses.



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005



We are incurring significant costs to perform enhancements and improvements to the existing Mariposa
applications on an ongoing basis. These costs are being recorded as maintenance and support and are included in the cost of revenues for software products and related services. We expect to continue to incur significant costs for maintenance and
support for the Mariposa applications for the foreseeable future.



Note 3.
Agreements with the Barona Tribe and Buena Vista Tribe



Agreements with
the Barona Tribe



We have provided services to the Barona
Tribe since 1991. From April 1996 to March 2004, consulting services were provided to the Barona Tribe pursuant to an Amended and Restated Consulting Agreement dated April 29, 1996, as amended by Modification No. 1 (Modification
No. 1) on February 17, 1998 (as amended, the 1996 Consulting Agreement). The 1996 Consulting Agreement expired on March 31, 2004. On May 25, 2004 we entered into an amendment and extension
(Modification No. 2) to the 1996 Consulting Agreement which was effective April 1, 2004. The 1996 Consulting Agreement, as amended by Modification No. 2, shall hereinafter be referred to as the 2004 Consulting
Agreement. The 2004 Consulting Agreement expires March 31, 2009 unless renewed or extended.



Under the 2004 Consulting Agreement, we agreed to a fixed monthly fee of $575,000 for consulting services rendered to the Barona Tribe, with an annual
cost of living adjustment not to exceed 5%. In April 2005, our monthly fee increased to $597,000, as a result of the annual cost of living adjustment. Fees under the 2004 Consulting Agreement will continue to be subordinated under the terms of the
subordination agreement, discussed below. The term of the 2004 Consulting Agreement is five years, with the Barona Tribe having the right to negotiate an additional five year extension and a right to terminate after giving nine months notice. The
2004 Consulting Agreement also reaffirmed certain license and profit-sharing rights to our Mariposa software that we had previously granted to the Barona Tribe, which are described in more detail below.



In connection with a $200,000,000 loan obtained by the Barona Tribe relating
to the development of the Barona Valley Ranch (the Development Loan), we entered into a Reaffirmation, Consent and Amendment of Intercreditor and Subordination Agreement (the Subordination Agreement) in July 2001. In October
2004, we reaffirmed the Subordination Agreement in connection with an amendment and restatement to the Development Loan (the Loan Agreement). The Subordination Agreement limits the Barona Tribes ability to make payments to us if
the debt coverage ratios set forth in the Loan Agreement are not met. No payment may be made if there is a default under the terms of the Loan Agreement that has not been cured or waived. As of September 30, 2005, we are not aware of a default
by the Barona Tribe of any of the terms of the Loan Agreement or a failure on the part of the Barona Tribe to meet the debt coverage ratios set forth in the Loan Agreement.



As part of our business relationship with the Barona Tribe and in return for use of the Barona Tribes gaming
operations as a testing and marketing platform for Mariposa, we:



| |  |  | granted to the Barona Tribe a perpetual, royalty-free, non-exclusive and non-transferable license to use Mariposa at the Barona Valley Ranch including all upgrades, maintenance and
support;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | entered into a profit sharing arrangement with the Barona Tribe, whereby, so long as we have a consulting agreement in place with the Barona Tribe, we will share a percentage of any
net profits generated by Mariposa on a quarterly basis, based on the following sliding scale:
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 25% percent of the first $250,000 of the net profits per quarter;
| | - |  | -----------------------------------------------------------------



| |  |  | 30% percent of the second $250,000 of the net profits per quarter;
| | - |  | ------------------------------------------------------------------



7



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##### Table of Contents

VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005



| |  |  | 35% percent of the net profits in excess of $500,000 per quarter; and
| | - |  | ---------------------------------------------------------------------



| |  |  | agreed never to provide Mariposa or future related software products developed by us to any Native American tribe in San Diego County or within sixty-five miles of the Barona Valley
Ranch.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Agreement with the Buena Vista Tribe



On January 31, 2005, we entered into a Business Advisory Agreement
(the Advisory Agreement) with the Buena Vista Tribe. Under the terms of the Advisory Agreement, we will provide business advisory services to the Buena Vista Tribe in connection with the establishment and operation of a gaming operation
on the Buena Vista Tribes reservation located near Ione, in Northern California. Under the Advisory Agreement, the Buena Vista Tribe will pay us a monthly flat fee of (a) $50,000 per month until groundbreaking on the Buena Vista
Tribes casino; (b) $100,000 per month from groundbreaking until six months prior to the planned opening of the casino; and (c) $250,000 per month from six months prior to the planned opening of the casino until six months after the
opening of the casino. The Advisory Agreement will end on the six month anniversary of the opening of the Buena Vista Tribes casino; provided, said term may be extended upon the mutual written agreement of the parties, but in no event will the
term of the Advisory Agreement exceed six years and eleven months. The Buena Vista Tribe may terminate the Advisory Agreement at any time by providing us with sixty days written notice.



Additionally, pursuant to the terms of the Advisory Agreement, we may enter into a Mariposa license agreement with the Buena
Vista Tribe approximately six months prior to the opening of the Buena Vista Tribes casino, which is not expected to occur until the fiscal year ending June 30, 2007 or June 30, 2008.



Gaming Authority Regulations



The operation of any type of gaming casino on Native American land is subject
to extensive Federal, state and tribal regulation. The regulatory environment regarding Native American gaming is evolving rapidly. Changes in Federal, state, or tribal law or regulations may limit or otherwise affect Native American gaming and
could therefore have a material adverse effect on our operations. In March 1999, the NIGC commenced a preliminary review of our relationship with the Barona Tribe, including a review of the 1996 Consulting Agreement. The review is currently pending.
In addition, the National Indian Gaming Commission (the NIGC), and, the Bureau of Indian Affairs (the BIA) if necessary, have not yet approved the 2004 Consulting Agreement. The Advisory Agreement with the Buena Vista Tribe
also may be subject to review by the NIGC and possibly the BIA. We have received a determination of suitability from the California Gambling Control Commission and are authorized to participate in the California tribal gaming market, subject to
licensing requirements of the tribal gaming agencies.



Note 4. Business
Concentration



Historically, a significant portion of our
revenue has been earned from the Barona Tribe. Although we expect to generate revenues from software contracts and from advisory fees earned from the Buena Vista Tribe, we expect the majority of our revenues to be generated from the Barona Tribe for
the foreseeable future. During the three months ended September 30, 2005 and 2004, revenues from the Barona Tribe were $1,792,000 and $1,725,000, respectively, representing 87% and 99% of our total revenues, respectively.



Note 5. Cash and Cash Equivalents



For purposes of the balance sheet and the statement of cash flows, cash
equivalents include time deposits and all highly liquid debt and equity instruments with original maturities of three months or less. We maintain

our cash
in bank deposit and checking accounts that, at times, may exceed federally insured limits. To date, we have not experienced any losses in such accounts.



8



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##### Table of Contents

VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005



Cash equivalents during the three months ended September 30, 2005, consisted of commercial paper
and certificate of deposit (CD) instruments. The commercial paper and CD instruments had maturities ranging from 30-days to 90-days. Interest rates earned on such investments ranged from 2.76% to 3.17%.



Cash equivalents during the three months ended September 30, 2004,
consisted of auction rate preferred securities, commercial paper and certificate of deposit (CD) instruments. The commercial paper and CD instruments had maturities ranging from 15-days to 90-days and the auction rate preferred
securities were reset every seven days in an auction process. Interest rates earned on such investments ranged from .81% to 1.9%.



Note 6. Restricted Cash



We issued an irrevocable letter of credit for $43,000 to satisfy terms of the lease agreement for our new office located in Las Vegas, Nevada. Such letter
of credit will automatically renew on an annual basis until September 30, 2009, unless cancelled by the lessor. Pursuant to the lease terms, if we generate positive cash flow from operations for three consecutive quarters and have a positive
stockholders equity balance, the letter of credit will be cancelled.



Note
7. Uncompleted Software Contracts



Billings and costs
related to our uncompleted software contracts are accumulated on the balance sheet. When accumulated costs exceed related billings to date, they are recorded as an asset called costs in excess of billings, uncompleted software contracts.
When billings to date exceed related costs incurred, a liability is recorded called billings in excess of costs, uncompleted software contracts. Contracts are segregated for purposes of recording related assets and liabilities.



The following table is a summary of billings and costs for our
uncompleted software contracts for the three month period ended September 30, 2005:



|                                                                 |  |   |          
|---------------------------------------------------------------- |  | - | ---------
|Number of uncompleted software contracts                         |  |   | 3        
|Gross contracts amount                                           |  | $ | 1,090,000
|                                                                 | 
|Uncompleted software contracts with billings in excess of costs: |  |   |          
|Billings                                                         |  | $ | 582,540  
|Costs incurred                                                   |  |   | 28,473   
|                                                                 |  |   |          
|Billings in excess of costs, uncompleted software contracts      |  | $ | 554,067  
|                                                                 |  |   |          



Note 8. Stock Options



The following table summarizes stock option activity under
our 1995 Stock Option Plan and 1996 Non-employee Directors Stock Option Plan (collectively the Plans) for the three months ended September 30, 2005:



|                                |  |                    |  |                         |              
|------------------------------- |  | ------------------ |  | ----------------------- | -------------
|                                |  | OptionsOutstanding |  | Options Price Per Share
|Outstanding, July 1, 2005       |  | 5,668,250          |  | $                       | 0.13 - $12.50
|Granted                         |  |                   |  |                         |             
|Exercised                       |  |                   |  |                         |             
|Cancelled                       |  |                   |  |                         |             
|                                |  |                    |  |                         |              
|Outstanding, September 30, 2005 |  | 5,668,250          |  | $                       | 0.13 - $12.50
|                                |  |                    |  |                         |              



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##### Table of Contents

VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005



Note 9. Net Loss Per Share



Basic net loss per share is based on the weighted effect of all common shares issued and outstanding and is calculated by
dividing net loss available to common shareholders by the weighted average shares outstanding during the period. Diluted loss reflects the potential dilution from common stock options.



Below is the calculation of basic and diluted loss per share for the three months ended:



|                                              |  |               |           |   |      |   |           |  
|--------------------------------------------- |  | ------------- | --------- | - | ---- | - | --------- | -
|                                              |  | September 30, |          
|                                              |  | 2005          |           |   | 2004 |  
|Net loss available to common shareholders     |  | $             | (85,345   | ) |      | $ | (56,525   | )
|                                              |  |               |           |   |      |   |           |  
|Weighted average shares outstanding  basic   |  |               | 7,206,598 |   |      |   | 7,206,598 |  
|Effect of dilutive options                    |  |               |          |   |      |   |          |  
|                                              |  |               |           |   |      |   |           |  
|Weighted average shares outstanding  diluted |  |               | 7,206,598 |   |      |   | 7,206,598 |  
|                                              |  |               |           |   |      |   |           |  
|Net loss per common share  basic and diluted |  | $             | (.01      | ) |      | $ | (.01      | )
|                                              |  |               |           |   |      |   |           |  



Options to purchase
5,668,250 shares of our common stock with exercise prices ranging from $0.13 to $12.50 per share were outstanding at September 30, 2005, which expire on various future dates through 2015. During the quarter ending September 30, 2005,
options to purchase 5,668,250 shares of common stock, representing all outstanding options, were not included in the calculation of EPS because the effect would have been anti-dilutive. During the quarter ending September 30, 2004 options to
purchase 5,598,250 shares of common stock, representing all outstanding options, were not included in the computation of diluted EPS because they were anti-dilutive.



Note 10. Segment Reporting



We operate with two business divisions, consulting services and software, which comprise our segments. We have prepared operating segment information in
accordance with SFAS No. 131 Disclosures About Segments of an Enterprise and Related Information to report components that are evaluated regularly by our decision making group in deciding how to allocate assets and resources and in
assessing performance.



The segment results reflect an
allocation of operating expenses consistent with the basis and manner in which we internally disaggregate financial information for the purpose of assisting in making internal operating decisions. We do not evaluate performance based on return on
assets at the segment level and do not identify or allocate our assets by operating segments. As such, segment asset information is not disclosed. Information on segments and a reconciliation to the operating profit (loss) and operating profit
(loss) before other expense for the three months ended September 30, 2005 and 2004 is as follows:



|                                       |  |                     |           |          |   |          |       |  |   |           |  
|-------------------------------------- |  | ------------------- | --------- | -------- | - | -------- | ----- |  | - | --------- | -
|                                       |  | Consulting Services |           | Software |   |          | Total | 
|Three months ended September 30, 2005: |  |                     |           |          |   |          |       |  |   |           |  
|Revenues                               |  | $                   | 1,946,461 |          | $ | 124,570  |       |  | $ | 2,071,031 |  
|Cost of revenues                       |  |                     | 714,540   |          |   | 278,305  |       |  |   | 992,845   |  
|Allocated operating expenses           |  |                     | 601,847   |          |   | 754,736  |       |  |   | 1,356,583 |  
|                                       |  |                     |           |          |   |          |       |  |   |           |  
|Operating profit (loss)                |  | $                   | 630,074   |          | $ | (908,471 | )     |  | $ | (278,397  | )
|                                       |  |                     |           |          |   |          |       |  |   |           |  
|Three months ended September 30, 2004: |  |                     |           |          |   |          |       |  |   |           |  
|Revenues                               |  | $                   | 1,725,000 |          | $ | 19,123   |       |  | $ | 1,744,123 |  
|Cost of revenues                       |  |                     | 613,547   |          |   | 415,018  |       |  |   | 1,028,565 |  
|Allocated operating expenses           |  |                     | 537,564   |          |   | 336,174  |       |  |   | 873,738   |  
|                                       |  |                     |           |          |   |          |       |  |   |           |  
|Operating profit (loss)                |  | $                   | 573,889   |          | $ | (732,069 | )     |  | $ | (158,180  | )
|                                       |  |                     |           |          |   |          |       |  |   |           |  



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2005



Note 11. Income Taxes



During the three months ended September 30, 2005, we recorded an income tax benefit of $114,000 as a result of applying an estimated annual
effective tax rate of 57% to the net loss for the period. The estimated annual effective tax rate is higher than the statutory rate primarily as a result of (a) estimated temporary and permanent differences and (b) an increase in the
valuation allowance associated with alternative minimum tax (AMT) credits for the fiscal year ended June 30, 2006. During the three months ended September 30, 2004, we recorded an income tax benefit of $88,000 as a result of
applying an estimated annual effective tax rate to the net loss for the period.



Note 12. Stock Repurchase/ Long-Term Debt



In
September 1996, we entered into a Stock Purchase and Settlement and Release Agreement (the Stock Purchase Agreement) with two of our shareholders (the Note Holders). In connection with the Stock Purchase Agreement, we
incurred debt in the form of unsecured promissory notes bearing interest at a rate of 10% per annum. As of June 30, 2004, the outstanding principal amount of debt and accrued interest was $11,969,000. In addition, the principal amount of
the notes could have increased by an additional $4,856,000 if certain contingencies were met. All payments pursuant to the Stock Purchase Agreement and the notes were subject to our ability to meet certain financial tests, including tests provided
under applicable law. Because of our financial condition, we were not required to make payments under the notes in September 2003, 2002 and 2001 and, based upon our shareholders deficit balance at June 30, 2004, and our current sources of
revenues, we did not expect that we would be obligated to make a payment of principal or interest for the foreseeable future. Although our failure to make payments under the notes in such circumstances did not constitute an event of default, the
unpaid interest on the notes was added to the outstanding principal, which continued to accrue interest.



On July 19, 2004, we entered into an agreement with the Note Holders to restructure our principal indebtedness (the Restructuring
Agreement). Pursuant to the terms of the Restructuring Agreement, our aggregate outstanding debt was reduced from $11,969,000 to $4,300,000. Under the Restructuring Agreement, the Note Holders exchanged all the outstanding notes for new
promissory notes in the aggregate principal amount of $4,200,000 and $100,000 in additional obligations. The principal due under the new notes was paid in two installments, one in July 2004 and one in September 2004. No further payments are due
under the notes. The new notes did not bear interest.



The
original notes were recorded as additional consideration when issued pursuant to the Stock Purchase Agreement and were recorded as a reduction to shareholders equity at the time of issuance. In July 2004, we reduced the carrying amount of the
debt by $7,669,000, the amount of the aggregate debt reduction under the terms of the Restructuring Agreement, which was recorded as an increase to our shareholders equity through an increase to our additional-paid-in capital account.



11



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##### Table of Contents

Item 2. Managements Discussion and Analysis or Plan of Operation



Overview



We are a
provider of consulting services and technology in the gaming and hospitality industry. We operate two business divisions: consulting services and software. Our consulting services division offers comprehensive gaming and hospitality consulting
services and our software division is dedicated to the ongoing product and business development of Mariposa, a fully-integrated Customer Relationship Management, or CRM, marketing and business intelligence software system for the gaming and
hospitality industry. As used in this Report, the terms we, us, our and VCAT refer to Venture Catalyst Incorporated. This Report should be read in conjunction with Managements Discussion and
Analysis or Plan of Operation set forth in our Annual Report on Form 10-KSB for the year ended June 30, 2005 (fiscal 2005).



Our Consulting Services Division.



As of September 30, 2005, we had two clients in our consulting services division, the Barona Tribe and the Buena Vista Tribe, both of which are
federally recognized, sovereign Native American tribes. We currently provide services to the Barona Tribe pursuant to a consulting agreement in connection with the Barona Tribes operation of the Barona Valley Ranch. We provide business
advisory services to the Buena Vista Tribe in connection with the establishment and operation of a gaming operation on the Buena Vistas reservation located near Ione, in Northern California. Our consulting fees resulting from our consulting
services to the Barona Tribe are VCATs principal source of revenues and liquidity.



We have provided services to the Barona Tribe since 1991. From April 1996 to March 2004, consulting services were provided to the Barona Tribe pursuant to an Amended and Restated Consulting Agreement dated
April 29, 1996, as amended by Modification No. 1 on February 17, 1998 (as amended, the 1996 Consulting Agreement). The 1996 Consulting Agreement expired on March 31, 2004. On May 25, 2004, we entered into an
amendment and extension (Modification No. 2) to the 1996 Consulting Agreement which was effective April 1, 2004. The 1996 Consulting Agreement, as amended by Modification No. 2, shall hereinafter be referred to as the
2004 Consulting Agreement. The 2004 Consulting Agreement expires March 31, 2009 unless renewed or extended.



Under the 2004 Consulting Agreement, we agreed to a fixed monthly fee of $575,000 for consulting services rendered to the Barona Tribe, with an annual
cost of living adjustment not to exceed 5%. In April 2005, our monthly fee increased to $597,000, as a result of the annual cost of living adjustment. Fees under the 2004 Consulting Agreement will continue to be subordinated under the terms of the
subordination agreement, as discussed below. The initial term of the 2004 Consulting Agreement is five years. The Barona Tribe has the right under the 2004 Consulting Agreement to negotiate an additional five year extension and a right to terminate
after giving nine months notice. The 2004 Consulting Agreement also reaffirmed certain license and profit-sharing rights to our Mariposa software that we had previously granted to the Barona Tribe, which are described in more detail below.



In connection with a $200,000,000 loan obtained by the Barona
Tribe relating to the Development of the Barona Valley Ranch (the Development Loan), we entered into a Reaffirmation, Consent and Amendment of Subordination Agreement in July 2001 (the Subordination Agreement). In October
2004, we reaffirmed the Subordination Agreement in connection with an amendment and restatement to the Development Loan (the Loan Agreement). The Subordination Agreement limits the Barona Tribes ability to make payments to us if
the debt coverage ratios set forth in the Loan Agreement are not met. No payments may be made if there is a default under the terms of the Loan Agreement that has not been cured or waived. As of September 30, 2005, we are not aware of a default
by the Barona Tribe of any of the terms of the Loan Agreement or a failure on the part of the Barona Tribe to meet the debt coverage ratios set forth in the Loan Agreement. Our consulting fees under the 2004 Consulting Agreement continue to be
subject to the Subordination Agreement.



12



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##### Table of Contents

On January 31, 2005, we entered into a Business Advisory Agreement (the Advisory
Agreement) with the Buena Vista Tribe. Under the terms of the Advisory Agreement, we will provide business advisory services to the Buena Vista Tribe in connection with the establishment and operation of a gaming operation on the Buena Vista
Tribes reservation located near Ione, in Northern California. Under the Advisory Agreement, the Buena Vista Tribe will pay us a monthly flat fee of (a) $50,000 per month until groundbreaking on the Buena Vista Tribes casino;
(b) $100,000 per month from groundbreaking until six months prior to the planned opening of the casino; and (c) $250,000 per month from six months prior to the planned opening of the casino until six months after the opening of the casino.
The Advisory Agreement will end on the six month anniversary of the opening of the Buena Vista Tribes casino, however, said term may be extended upon the mutual written agreement of the parties, but in no event will the term of the Advisory
Agreement exceed six years and eleven months. The Buena Vista Tribe may terminate the Advisory Agreement at any time by providing us with sixty days written notice.



Additionally, pursuant to the terms of the Advisory Agreement, we may enter into a Mariposa license agreement with the Buena
Vista Tribe approximately six months prior to the opening of the Buena Vista Tribes casino, which is not expected to occur until the fiscal year ended June 30, 2007 or the fiscal year ending June 30, 2008.



We have offered to the Barona Tribe an opportunity to assist us in connection
with the Advisory Agreement by allowing us to use some of the Barona Valley Ranch personnel to perform services under the Advisory Agreement. In exchange, we will pay to the Barona Tribe a fee equal to 17.5% of the fees received by us pursuant to
the Advisory Agreement. If the Barona Tribe accepts this proposal, we believe that we will be in a better position to provide a wider scope of services to the Buena Vista Tribe without adding a number of added resources and costs.



Our Software Division.



Our software division is dedicated to the ongoing product and business
development of Mariposa, a fully-integrated CRM, marketing and business intelligence software system for the gaming and hospitality industry. Mariposa consists of a suite of functionally distinct applications, each designed to address a specific set
of requirements within the gaming and hospitality industry. The applications may be licensed and deployed as an integrated solution or individually, depending upon the customers needs and financial resources. We have made, and may continue to
make, material organizational changes, including adding staff, to cultivate qualified sales leads and to install, support and continue development of Mariposa and/or related software products. This may involve material increases to our expenses and
additional capital. At this time, we are uncertain whether we will be able to generate enough revenue to absorb the additional expenses.



As of September 30, 2005, we had three uncompleted software contracts that we had entered into that, if completed, will result in aggregate revenues
of $1,090,000, exclusive of any potential support fees which could be generated subsequent to their completion. There can be no assurance that we will complete all of the contracts or, that if all of the contracts are completed, that they will be
completed pursuant to existing terms. We expect to incur significant costs to complete each of the software contracts but the amount of costs cannot be reasonably estimated at this time as a result of the varying third-party software systems used at
gaming properties which integrate with our system. However, we believe that the costs will be less than the revenues to be recognized under each of the software contracts.



Historically, the majority of our software development, support, installation and integration services (software
services) were performed by a third-party service firm. As of December 31, 2004, we completed the process of transitioning all software services from a third-party service firm to internal engineering resources. In connection with the
transition, in August 2004, we reached an agreement with our third-party service firm which enabled us to hire four of its engineers for a fee of $117,000. We also mutually agreed to allow our agreement for software services to expire on
December 31, 2004.



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##### Table of Contents

As part of our business relationship with the Barona Tribe and in return for use of the Barona
Tribes gaming operations as a testing and marketing platform for Mariposa, we have:



| |  |  | granted to the Barona Tribe a perpetual, royalty-free, non-exclusive and non-transferable license to use Mariposa at the Barona Valley Ranch including all upgrades, maintenance and
support;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | entered into a profit sharing arrangement with the Barona Tribe, whereby, so long as we have a consulting agreement in place with the Barona Tribe, we will share a percentage of any
net profits generated by Mariposa on a quarterly basis, based on the following sliding scale:
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 25% percent of the first $250,000 of the net profits per quarter;
| | - |  | -----------------------------------------------------------------



| |  |  | 30% percent of the second $250,000 of the net profits per quarter;
| | - |  | ------------------------------------------------------------------



| |  |  | 35% percent of the net profits in excess of $500,000 per quarter; and
| | - |  | ---------------------------------------------------------------------



| |  |  | agreed never to provide Mariposa or future related software products developed by us to any Native American tribe in San Diego County or within sixty-five miles of the Barona Valley
Ranch.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



During the three months ended
September 30, 2005 and 2004, the above-referenced profit sharing arrangement did not result in a profit sharing payment obligation to the Barona Tribe.



Debt Restructuring



On July 19, 2004, we entered into an agreement to restructure our principal indebtedness (the Restructuring Agreement). Pursuant to the
terms of the Restructuring Agreement, our aggregate outstanding debt was reduced from $11,969,000 to $4,300,000. The principal due under the new notes was paid in two installments, one in July 2004 and one in September 2004. No further payments are
due under the notes and our long-term debt balance was zero as of September 30, 2005.



Critical Accounting Policies and Estimates



Our
discussion and analysis of our financial condition and results of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of
revenues and expenses for each period. Critical accounting policies are defined as policies that management believes are (a) the most important to the portrayal of our financial condition and results of operations; and (b) that require our
most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.



We believe that revenue recognition and accounting for deferred income taxes are the most critical accounting policies that impact our financial
statements.



Revenue Recognition-Consulting Services
Division.



In accordance with the governing revenue
recognition guidelines, revenue for consulting and advisory services is recognized when the services are rendered, provided all of the following criteria are met:



| |  |  | persuasive evidence of an arrangement exists;
| | - |  | ---------------------------------------------



| |  |  | services have been rendered;
| | - |  | ----------------------------



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##### Table of Contents

| |  |  | the fee is fixed or determinable; and
| | - |  | -------------------------------------



| |  |  | collectibility is reasonably assured.
| | - |  | -------------------------------------



Consulting service revenues from the Barona Tribe are recorded monthly, as earned, pursuant to the above referenced guidelines. Additionally, as an
incentive to the Barona Tribe to enter into the 2004 Consulting Agreement, we granted the Barona Tribe certain Mariposa profit sharing rights, which are incorporated in the 2004 Consulting Agreement. These profit sharing rights may periodically
generate cash obligations from VCAT to the Barona Tribe, and in accordance with applicable accounting guidelines such obligations will be recorded as a reduction of the revenues earned from the Barona Tribe.



Advisory service revenues from the Buena Vista Tribe are recorded monthly as
earned, pursuant to the above referenced guidelines.



Revenue Recognition-Software Products and Related Services.



We expect to derive a portion of our revenues from licensing Mariposa and the sale of related professional services, including integration, installation and training (collectively, professional services)
and maintenance and support services (support services). Inherent in the software revenue recognition process are significant estimates and judgments which influence the timing and amount of revenues recognized.



In accordance with the governing revenue recognition guidelines, if the
arrangement between vendor and purchaser does not require significant production, modification or customization of software, revenue should be recognized when all of the following criteria are met:



| |  |  | persuasive evidence of an arrangement exists;
| | - |  | ---------------------------------------------



| |  |  | delivery has occurred;
| | - |  | ----------------------



| |  |  | the vendors fee is fixed or determinable; and
| | - |  | ----------------------------------------------



| |  |  | collectibility is probable.
| | - |  | ---------------------------



Our standard software contracts are multiple element arrangements that include both software products and professional services. The professional services
are essential to the functionality of the software products, which require significant modification to meet the customers purpose; therefore contract accounting is applied to both the software and professional service elements of the
arrangement. The final determination for revenue recognition policies and related accounting issues will be made based on the specific details of each software contract, which could result in the application of alternative revenue recognition
policies in the future.



Mariposa is a complex software system
that, in order to meet the customers functionality, must work in conjunction with the customers player tracking system and a number of other customer data systems. As a result of the difficulty in making dependable estimates, the
inherent risks associated with new technologies and customer acceptance rights, we are using the completed contract method and will recognize revenue and cost of revenues for each software contract at the time of completion of all elements of a
multiple element arrangement. Provisions for contract adjustments and losses are recorded in the period such items are identified.



Billings and costs related to our uncompleted software contracts are accumulated on the balance sheet. When accumulated costs exceed related billings to
date, they are recorded as an asset called costs in excess of billings, uncompleted software contracts. If billings to date exceed related costs incurred, a liability is recorded called billings in excess of costs, uncompleted
software contracts. Contracts are segregated for purposes of recording related assets and liabilities.



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Support services are provided pursuant to a separate contractual arrangement, or for one software client,
pursuant to an annual term license agreement. Fees for support services are recognized ratably over the term of the support period. Deferred revenues are recorded when billings for support services exceed revenues recognized to date.



Deferred Income Taxes.



We record a valuation allowance to reduce our deferred tax assets to the
amount that we believe is more likely than not to be realized pursuant to SFAS No. 109, Accounting for Income Taxes. In evaluating our ability to recover our deferred tax assets, we consider all available positive and
negative evidence which is, in part, based upon our estimate of current and future taxable income. In estimating future taxable income, we use assumptions that require significant judgment.



Litigation and other contingencies.



We regularly evaluate our exposure to threatened or pending litigation and
other business contingencies. Because of the uncertainties related to the amount of loss from litigation and other business contingencies, the recording of losses relating to such exposures requires significant judgment about the potential range of
outcomes. In January 2005, we filed suit against multiple parties for breach of contract, trade secret misappropriation, unfair business practices, copyright infringement and other related claims, each relating to Mariposa. Such action has led to
counterclaims being filed against us by certain of the defendants. The total cost of this litigation is not determinable at this time. To date, other than the above-referenced litigation, we have not been affected by any litigation or other
contingencies that have had, or are currently anticipated to have, a material impact on our results of operations, cash flows or financial position. As additional information about current or future litigation or other contingencies becomes
available, we will assess whether such information warrants the recording of additional expense relating to the contingencies. Such additional expense could potentially have a material impact on our results of operations, cash flows and financial
position.



Results of Operations



Three Months Ended September 30, 2005 Compared with the Three Months Ended
September 30, 2004.



Revenues



Revenues for the three months ended September 30,
2005 were $2,071,000, compared to $1,744,000 during the same period last year.



During the three months ended September 30, 2005, we earned $1,946,000 in revenues in our consulting services division consisting of (a) $1,792,000 in fees for consulting services provided to the Barona
Tribe; (b) $150,000 in revenues from advisory services provided to the Buena Vista Tribe; and (c) $4,000 in other revenues primarily resulting from out-of-pocket expenses rebilled to customers. During the three months ended
September 30, 2004, we earned $1,725,000 in fees for consulting services provided to the Barona Tribe during the period.



During the three months ended September 30, 2005, we earned $125,000 in revenues from our software products and related services compared to $19,000
earned in the prior year period. The revenues in the current year period resulted from (a) $119,000 in support fees and (b) $5,000 revenues from additional license fees earned on completed software contracts and out-of-pocket expenses
rebilled to customers. In the prior year period, revenues consisted of (a) $13,000 for software support services and (b) $6,000 from out-of-pocket expenses rebilled to customers.



Cost of Revenues



Cost of revenues for the three months ended September 30, 2005 was
$993,000, compared to $1,029,000 during the three months ended September 30, 2004.



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Cost of revenues in our consulting services division consists primarily of compensation and other
personnel-related expenses, costs of services provided by third-party consultants, client relations expenses and other direct costs, related to providing consulting services to the Barona Tribe and Buena Vista Tribe. The cost of revenues during the
three months ended September 30, 2005 in the consulting services division was $714,000, an increase of 16% compared to $614,000 recorded during the same period last year. The increase was primarily the result of an increase in (a) client
relations expenses of $84,000; (b) compensation and other personnel-related expenses of $52,000; and (c) other direct costs of $20,000. The increase was partially offset by a reduction in (a) third-party consultant costs of $41,000
and (b) costs incurred in connection with providing software support services to the Barona Tribe of $14,000.



The cost of revenues in our software division in the current year period consist primarily of compensation and other personnel-related expenses and other
direct costs related to our software products and related services. The cost of revenues in our software division in the prior year period consist primarily of costs for services provided by a third-party software development firm engaged by us in
connection with installation and maintenance and support services for our software products and compensation and other personnel-related expenses. The cost of revenues in the software division during the three months ended September 30, 2005
decreased 33% to $278,000 from $415,000 during the three months ended September 30, 2004. Expenses during the current year period related to our software products and related services decreased primarily as a result of (a) a one-time fee
of $117,000 paid to our third-party services firm in connection with the employment of four of their employees in the prior year period; (b) a decrease in professional services of $42,000; and (c) a decrease of $9,000 in other direct
costs. The decrease was partially offset by an increase in costs related to providing maintenance and support services of $28,000 and $7,000 for compensation and other personnel-related expenses.



General Operating and Administrative Expenses



General and administrative expenses include costs
associated with our finance, human resources, legal and other administrative functions. These costs consist primarily of compensation and other personnel-related expenses, professional fees, facilities, depreciation, insurance costs and other
general overhead and administrative costs. General operating and administrative expenses increased 58% to $1,019,000 for the three months ended September 30, 2005, from $645,000 during the same period last year. The increase was primarily
attributable to increases in (a) professional services of $253,000, primarily comprised of legal fees incurred in connection with the software related litigation; (b) compensation and other personnel-related expenses of $57,000;
(c) facility and other related costs of $48,000 incurred primarily in connection with the opening of our new office in Las Vegas, Nevada in September 2004; (d) professional services of $19,000; and (d) other general and administrative
costs of $16,000. The increase was partially offset by a decrease in fees incurred in connection with outside accounting and tax compliance services of $20,000.



Sales and Marketing



Sales and marketing expenses consist primarily of compensation and other personnel-related expenses, costs of marketing programs, including trade shows
and advertising, and travel and lodging expenses in connection with sales efforts. Sales and marketing expenses during the three months ended September 30, 2005 increased 27% to $275,000 from $216,000 during the same period last year. The
increase was primarily a result of an increase in (a) tradeshow costs and related expenses of $59,000 and (b) compensation and other personnel-related expenses of $22,000 related to sales efforts. The increase was partially offset by a
decrease in professional services of $24,000, primarily related to website development and advertising in the prior year period.



Research and Development



Research and development expenses consist primarily of compensation and other personnel-related expenses for internal engineering personnel and equipment
and software used in the development of our software products.



During the three months ended September 30, 2005, research and development expenses increased to $62,000, from $13,000 during the same period last year. The increase was a result of the increase compensation



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and other personnel-related expenses and equipment and software used in connection with our research and development efforts. Expenses related to ongoing
product improvements and enhancements of existing Mariposa applications are being recorded as maintenance and support and are included in cost of revenues.



Other Income and Expense



For the three months ended September 30, 2005, interest income increased to $33,000 compared to $13,000 for the same period last year primarily as a
result of higher interest rates during the current year period as compared to the prior year period. Other income of $47,000 was a result of cash consideration received in connection with settlement of litigation.



Income Tax Benefit



We recorded an income tax benefit of $114,000 during the three months ended
September 30, 2005, as a result of applying our estimated annual effective tax rate to the loss recorded in the period. We recorded an income tax benefit of $88,000 during the three months ended September 30, 2004, as a result of applying
our estimated annual effective tax rate to the loss recorded in the period.



Liquidity and Capital Resources



Our principal
sources of liquidity at September 30, 2005 to fund ongoing operations are cash provided from operations and unrestricted cash and cash equivalents of $4,317,000. During the three months ended September 30, 2005, our cash position increased
by $478,000 from the June 30, 2005 balance of $3,839,000. The increase was a result of cash provided by operating activities of $532,000 partially offset by cash used in investing activities of $55,000.



The cash provided by operating activities of $532,000 resulted primarily from
revenue received from the Barona Tribe and Buena Vista Tribe and payments from clients pursuant to software contracts during the period less cash expenditures in the period. Cash used in investing activities of $55,000 resulted from the purchase of
fixed assets.



In January 2005, we filed suit against multiple
parties for breach of contract, trade secret misappropriation, unfair business practices, copyright infringement and other related claims, each relating to Mariposa. Although the total amount of costs and expenses related to this litigation is not
determinable at this time, such litigation has resulted in substantial costs and a diversion of management resources. We expect to incur additional substantial cost and expect that the litigation will continue to divert management resources. Over
time, such expenses of time and/or money could have a material adverse effect on our business, operating results and financial condition.



As of September 30, 2005, our cash and cash equivalents were approximately $4,317,000. We believe our cash and cash equivalents, together with cash
provided from operations, will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months; however, there can be no assurance that we will not be required to seek other financing sooner or that
such financing, if required, will be available on terms satisfactory to us.



Factors That May Affect Future Results



Risks Related to our Financial Condition



We have limited resources to grow our business.



As of September 30, 2005, our cash and cash equivalents were $4,317,000. Our limited cash and cash equivalent reserves may limit our ability to pursue other business opportunities unless we obtain additional funds from operations or
from other sources. If we are unable to pursue or exploit future business opportunities, it could have an adverse effect on the growth of our business.



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Risks Related to our Consulting Agreement and Business Concentration with the Barona Tribe



Our revenues are currently substantially dependent
upon one client, the Barona Tribe.



We have historically
derived substantially all of our revenue from providing consulting services to the Barona Tribe. Loss of the Barona Tribe as a client, or a material reduction in the fees we earn from the Barona Tribe, would have a material adverse effect on our
business and may result in our inability to continue to operate the business.



We have entered into subordination agreements that, under certain circumstances, may preclude the Barona Tribe from making payments to us for consulting services.



Our right to receive fees from the Barona Tribe is subordinated to certain
senior debt of the Barona Tribe. In connection with two of the Barona Tribes financings, we entered into agreements pursuant to which the Barona Tribe under the applicable financing documents shall pay no fees to us if there is a default. In
addition, one of those agreements also limits the Barona Tribes ability to make payments to us if the debt coverage ratios set forth in the loan agreement are not met. Moderate or severe economic downturns or adverse conditions, nationally and
especially in Southern California, may negatively affect the Barona Valley Ranchs operations which may result in the Barona Tribe being precluded from making payments to us. If, as a result of negative economic or other adverse conditions, the
Barona Tribe is precluded from making payments to us, we will still be obligated to provide services to the Barona Tribe under the agreement and, in connection with providing such services, it is possible that we will deplete our cash and cash
equivalents. If that should occur, and we are not able to generate alternative sources of revenues to finance our operations, we may not be able to continue to operate our business.



Approval of the Consulting Agreement by appropriate regulatory authorities is still pending.



In March 1999, the National Indian Gaming Commission (the NIGC)
commenced a preliminary review of our relationship with the Barona Tribe, including a review of the 1996 Consulting Agreement. Such review is still pending. In addition, the NIGC, and the Bureau of Indian Affairs (the BIA), if necessary,
have not yet approved the 2004 Consulting Agreement. If the 2004 Consulting Agreement is not approved or is significantly modified by regulatory authorities to our detriment, or if the review by the NIGC of our relationship with the Barona Tribe is
adverse to us, such action(s) could have a material adverse effect on our business and financial condition. In addition, the regulatory review could result in our being required to pay fines or incur additional expenses, all of which could have a
material adverse effect on our business and financial condition.



There has been an increase in competition in the Southern California market.



The recent expansion of gaming activities in California has resulted in experienced gaming companies negotiating or entering into contracts with Native American tribes in California. There has been an increase in the
number of Native American casinos open and operating in the Southern California marketplace and there are additional casinos that will be opening, or that are attempting to open, in this area, all of which may be competing for the same customers.
This increased competition could reduce the profit levels achieved at the Barona Valley Ranch. In addition, changes in California law (including by ballot initiatives) which would have the effect of expanding gaming operations by persons other than
Native American tribes could result in even more competition. Under the terms of the 2004 Consulting Agreement, if unforeseen circumstances or factors beyond the control of the Barona Tribe or us result in a significant reduction in the financial
viability or profitability of the Barona Valley Ranch, we may be required to renegotiate our arrangement with the Barona Tribe or, if such adverse circumstances persist over time, the Barona Tribe would have the right to terminate our engagement
with nine months notice or on terms to be mutually agreed upon in good faith by us and the Barona Tribe.



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Risks Related to Mariposa and our Software Business



We may not be able to compete in the CRM software market.



We compete in the highly competitive CRM software market. A principal
source of competition is the internal information technology departments at potential customers, which may develop systems that provide for some or all of the functionality of our applications. Our products compete with products or solutions offered
by numerous competitors. Compared to us, many of these competitors have a longer operating history, greater name recognition, larger customer bases and significantly greater financial resources. This may place us at a disadvantage in responding to
our competitors pricing strategies, technological advances, advertising campaigns, strategic partnerships and other initiatives. Competitive pressures and our perceived viability in this market may make it difficult for us to acquire and
retain customers.



If we fail to keep pace with
technological innovation, improve our existing products, or develop new products, Mariposa could become obsolete.



The market for CRM software products is marked by rapid technological change, frequent new product introductions, uncertain product life cycles, changes
in client demands and evolving industry standards. If we are unable to market Mariposa on a timely and cost-effective basis, we may not generate significant revenues from the sale or license of our software products and services. In marketing
Mariposa, we may:



| |  |  | fail to respond to technological changes in a timely or cost-effective manner;
| | - |  | ------------------------------------------------------------------------------



| |  |  | encounter software products, capabilities or technologies developed by others that render Mariposa obsolete or noncompetitive or that shorten the life cycle of Mariposa;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | experience difficulties that could delay or prevent the successful development, marketing and deployment of Mariposa; or
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | fail to achieve broad market acceptance of Mariposa.
| | - |  | ----------------------------------------------------



If our product does not operate with the wide variety of hardware, software and operating systems used by our current and potential customers, our
revenues would be harmed.



We currently market Mariposa to
a customer base that uses a wide variety of constantly changing hardware, software applications, operating and other systems. Mariposa will gain broad market acceptance only if it can support a wide variety of hardware, software applications,
systems and standards, including those developed in the future.



Mariposa could contain undetected errors or failures.



Mariposa may contain undetected errors or failures. This may result in the loss of, or delay in, the market acceptance of Mariposa and could cause us to incur significant costs to correct errors or failures or to pay damages suffered by
customers as a result of such errors or failures.



Errors in
Mariposa also may be caused by defects in third-party software incorporated into our software. If so, we may not be able to fix the defects without the cooperation of the software providers. Since these defects may not be as significant to the
software provider as they are to us, we may not receive the rapid cooperation that it requires. We may not have the contractual right to access the source code of third-party software and, even if we have the right to access the source code, we may
not be able to fix the defect. Our customers could seek significant compensation from us for their losses resulting from defects in our products. Even if unsuccessful, a product liability claim brought against us could be time consuming and costly.



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If we are unable to protect our intellectual property or become subject to intellectual property
infringement claims, we may lose a valuable asset or incur costly and time-consuming litigation.



Our success depends in part on the development and protection of the proprietary aspects of our technology as well as our ability to operate without
infringing the proprietary rights of others. To protect our proprietary technology, we rely primarily upon the protections afforded under the trade secret, copyright, trademark, and patent laws, as well as upon confidentiality procedures and
contractual restrictions. Despite our efforts to protect our proprietary rights and technology, unauthorized parties may attempt to copy aspects of our products, obtain the source code to our software, or use other information that we regard as
proprietary. Such parties may also attempt to develop software competitive to ours. Our means of protecting our proprietary rights may not be adequate, and our competitors may independently develop similar technology or duplicate our products or
software. Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or
invalidity. Any such litigation, including our pending litigation discussed above, could result in substantial costs and diversion of resources that could have a material adverse effect on our business, operating results and financial condition.



We have filed seven U.S. patent applications, six of which
remain pending in the Patent Office. We have also filed two corresponding international patent applications. In addition, we may file additional patent applications in the future. It is possible that these patent applications will not issue as
patents and that, even if issued, the validity or enforceability of such patents may be successfully challenged. It is also possible that we may not develop additional proprietary products or technologies that are patentable; that any patents issued
to us may fail to provide us with competitive advantage and that the patents of others may materially harm our ability to do business. In the future, a third party may bring suit claiming that our products or software infringe its patents, trade
secrets or copyrights. Any claims, with or without merit, could be costly and time-consuming to defend, divert our managements attention, or cause product delays. If our products or software were found to infringe a third partys
proprietary rights, we could be required to enter into royalty or licensing agreements to be able to license or sell our products or software. Royalty and licensing agreements, if required, may not be available on terms that are acceptable to us (or
at all), which could materially harm our business.



Other
Risks



Our business is subject to strict regulation
by gaming authorities.



We operate in a highly regulated
industry and our ability to operate in certain jurisdictions could be subject to extensive federal, state, local and foreign regulation by various gaming authorities. Although the laws and regulations of the various jurisdictions in which we may
operate vary in their technical requirements, and are subject to amendment from time to time, virtually all these jurisdictions could require licenses, permits, documentation of the qualification, including evidence of integrity and financial
stability, and other forms of approval for us, as well as for our officers, directors, major shareholders and key personnel. We will attempt to obtain all licenses, permits, registrations, findings of suitability and approvals necessary; however,
there can be no assurance those licenses, permits, registrations, findings of suitability or approvals will be granted. Additionally, there can be no assurance that any regulatory agency will not enact new rules or change regulations that would
negatively impact our ability to operate within such jurisdictions.



Approval of the Advisory Agreement with the Buena Vista Tribe may be subject to review by the NIGC and the BIA.



The Advisory Agreement with the Buena Vista Tribe may be subject to review by the NIGC and the BIA. If the Advisory Agreement is subject to review and is
not approved or is significantly modified by regulatory authorities to our detriment, such action could have a material adverse effect on our business and financial condition. In addition, the regulatory review could result in our being required to
pay fines or incur additional expenses, all of which could have a material adverse effect on our business and financial condition.



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We are dependent upon our Chairman of the Board and other key personnel.



Our success largely depends upon the continued contributions of L. Donald
Speer, II, VCATs Chairman of the Board. The loss of Mr. Speers services, for any reason, would have a material adverse effect on our success and prospects. We have not entered into an employment agreement with Mr. Speer. If
Mr. Speer were to leave VCAT or his services to us became unavailable, there can be no assurance that we will be able to find a suitable replacement, particularly in connection with our ability to perform consulting services to the Barona
Tribe.



Our future performance in our software division also
depends in significant part upon the continued service of our key technical and senior management personnel. We have a small number of employees and our dependence on maintaining our relationships with key employees is particularly significant.



Our common stock is subject to wide fluctuations.



The trading price of our common stock has been, and will
likely continue to be, subject to wide fluctuations because of regulatory developments, quarterly variations in our operating results, the market where our common stock trades, announcements of new services or business activities by us or our
competitors, general market fluctuations and other events and factors. These factors, coupled with the small public float, have in the past, and could in the future, result in wide fluctuations in the market-trading price. Our common stock currently
trades on the Over-The-Counter (OTC) Bulletin Board. This generally is considered to be a less efficient trading market and our stock price as well as liquidity in our common stock may be adversely affected. Low-priced stocks are subject
to additional risks, including additional state regulatory requirements and the potential loss of effective trading markets.



Item 3. Controls and Procedures



Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and
procedures (as defined in Rules 13(a)-15(e) under the Securities Act of 1934, as amended) are effective to ensure that all information required to be disclosed by us in the reports filed or submitted by us under the Securities and Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated
and communicated to the our management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate and allow timely decisions regarding required disclosure.



Changes in Internal Controls.In connection with the above-referenced evaluation, no change in our internal control
over financial reporting occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART IIOTHER INFORMATION



Item 1. Legal Proceedings



Reference is made to our Annual Report on Form 10-KSB for the period ended June 30, 2005 (the 2005 Form 10-KSB) for a summary of our previously reported legal proceedings regarding the lawsuit we filed in January 2005
against Tech Results, Inc., TRMP LLC, Cohn Technologies, Inc., E&P Associates, Inc., E&P Associates Holding, Inc., Jeff Cohn, Lars Klander, and Ardyth Klander for breach of contract, trade secret misappropriation, unfair business practices,
copyright infringement and other related claims, each relating to Mariposa. The defendants were hired by us to provide software development, support, installation and integration services for VCAT pursuant to development and services agreements.
Since the date of the 2005 Form 10-KSB, there have been no material developments, except as set forth below.



In August 2005, we filed a Second Amended Complaint clarifying both the claim for declaratory relief and the fraud claim against Cohn Technologies, Inc.
and Jeff Cohn and we also filed a third amended complaint that adds Mindset LLC as a defendant. Defendants subsequently filed a motion to transfer venue to Las Vegas, Nevada, a motion to dismiss Mindset LLC for lack of personal jurisdiction, and a
motion for preliminary injunction. In October 2005, the Court denied defendants motion to transfer venue and defendants motion for a preliminary injunction. On October 28, 2005, TRMP and Cohn filed an amended counterclaim that
withdrew all allegations that counter-claim defendants allegedly made disparaging statements about the counter-claim plaintiffs. An answer or further motion challenging the counter-claim will be filed in the near term. In November 2005, the Court
denied defendants motion to dismiss Mindset LLC for lack of personal jurisdiction.



From time to time, we may be involved in various disputes and litigation matters arising in the normal course of business. While we cannot predict the ultimate outcome of our pending matters or how they will affect
our results of operations or financial position, we currently do not expect any of the legal proceedings to which we are currently a party, including the legal proceedings described above, individually or in the aggregate, to have a material adverse
effect on our results or financial position.



Item 6. Exhibits



(a)
Exhibits.



The Exhibits listed below are hereby filed with
the U.S. Securities and Exchange Commission (the Commission) as part of this Quarterly Report on Form 10-QSB.



|            |  |                                                                                                                                                                                     
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                         
|            | 
|10.1        |  | Third Amendment to Office Lease, dated September 28, 2005 between The Hearn Company, as agent for THC Valley Corporate Center LLC, and Venture Catalyst Incorporated.               
|            | 
|31.1        |  | Certification of Chief Executive Officer of Venture Catalyst Incorporated, pursuant to Rule 13a-14 of the Securities Exchange Act.                                                  
|            | 
|31.2        |  | Certification of Chief Financial Officer of Venture Catalyst Incorporated, pursuant to Rule 13a-14 of the Securities Exchange Act.                                                  
|            | 
|32.1        |  | Certification of Chief Executive Officer of Venture Catalyst Incorporated, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|            | 
|32.2        |  | Certification of Chief Financial Officer of Venture Catalyst Incorporated, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



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SIGNATURES



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



|                        |  |                                                   |  |                                                                                                                                                          
|----------------------- |  | ------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|                        |  | VENTURE CATALYST INCORPORATED, a Utah Corporation
|                        |  |                                                  
|Date: November 10, 2005 |  | By:                                               |  | /s/ GREG SHAY                                                                                                                                            
|                        |  |                                                   |  | Greg Shay Chief Executive Officer, President and Chief Operating Officer (Authorized Signatory, Principal Executive Officer)                             
|                        | 
|                        |  |                                                  
|Date: November 10, 2005 |  | By:                                               |  | /s/ KEVIN MCINTOSH                                                                                                                                       
|                        |  |                                                   |  | Kevin McIntosh Senior Vice President, Chief Financial Officer, Secretary and Treasurer (Authorized Signatory, Principal Financial and Accounting Officer)
|                        | 



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Exhibit Index



|            |  |                                                                                                                                                                                     
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                         
|            | 
|10.1        |  | Third Amendment to Office Lease, dated September 28, 2005 between The Hearn Company, as agent for THC Valley Corporate Center LLC, and Venture Catalyst Incorporated.               
|            | 
|31.1        |  | Certification of Chief Executive Officer of Venture Catalyst Incorporated, pursuant to Rule 13a-14 of the Securities Exchange Act.                                                  
|            | 
|31.2        |  | Certification of Chief Financial Officer of Venture Catalyst Incorporated, pursuant to Rule 13a-14 of the Securities Exchange Act.                                                  
|            | 
|32.1        |  | Certification of Chief Executive Officer of Venture Catalyst Incorporated, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|            | 
|32.2        |  | Certification of Chief Financial Officer of Venture Catalyst Incorporated, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



25