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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 December 31, 2005



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



For the transition period from
 to



Commission File Number: 000-11532



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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 January 31, 2006, 7,221,598 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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VENTURE CATALYST INCORPORATED

FORM 10-QSB

FOR THE PERIOD ENDED DECEMBER 31, 2005



TABLE OF CONTENTS



|                                                                                                 |  |           
|------------------------------------------------------------------------------------------------ |  | ----------
|                                                                                                 |  | PageNumber
|PART I - FINANCIAL INFORMATION                                                                   |  |           
|                                                                                                 | 
|Item 1. Financial Statements                                                                     |  |           
|Balance Sheets - December 31, 2005 (unaudited) and June 30, 2005                                 |  | 1         
|Statements of Operations (unaudited) - Three months ended December 31, 2005 andDecember 31, 2004 |  | 2         
|Statements of Operations (unaudited) - Six months ended December 31, 2005 andDecember 31, 2004   |  | 3         
|Statements of Cash Flows (unaudited) - Six months ended December 31, 2005 andDecember 31, 2004   |  | 4         
|Notes to Consolidated Financial Statements                                                       |  | 5         
|Item 2. Managements Discussion and Analysis or Plan of Operation                                |  | 15        
|Item 3. Controls and Procedures                                                                  |  | 26        
|                                                                                                 | 
|PART II - OTHER INFORMATION                                                                      |  |           
|                                                                                                 | 
|Item 1. Legal Proceedings                                                                        |  | 27        
|Item 5. Other Information                                                                        |  | 27        
|Item 6. Exhibits                                                                                 |  | 28        
|Signatures                                                                                       |  | 29        



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 and financial goals. Although we believe that our expectations are based
upon reasonable assumptions, there can be no assurances that we will be able to implement our strategy or 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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PART I - FINANCIAL INFORMATION



Item 1. Financial Statements.



VENTURE CATALYST INCORPORATED

BALANCE SHEETS

(UNAUDITED)



|                                                                                         |  |                   |             |   |               |   |             |  
|---------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ------------- | - | ----------- | -
|                                                                                         |  | December 31, 2005 |             |   | June 30, 2005 |  
|ASSETS                                                                                   |  |                   |             |   |               |   |             |  
|Current Assets:                                                                          |  |                   |             |   |               |   |             |  
|Cash and cash equivalents                                                                |  | $                 | 4,136,721   |   |               | $ | 3,839,310   |  
|Accounts receivable-Barona Tribe, net                                                    |  |                   | 597,425     |   |               |   | 476,504     |  
|Accounts receivable, net                                                                 |  |                   | 353,317     |   |               |   | 976,680     |  
|Prepaid expenses and other current assets                                                |  |                   | 227,213     |   |               |   | 223,252     |  
|Deferred tax asset, current                                                              |  |                   | 138,000     |   |               |   | 24,000      |  
|                                                                                         |  |                   |             |   |               |   |             |  
|Total current assets                                                                     |  |                   | 5,452,676   |   |               |   | 5,539,746   |  
|                                                                                         |  |                   |             |   |               |   |             |  
|Non-Current Assets:                                                                      |  |                   |             |   |               |   |             |  
|Deferred tax asset, non-current                                                          |  |                   | 436,000     |   |               |   | 436,000     |  
|Property, plant and equipment, net                                                       |  |                   | 319,112     |   |               |   | 273,401     |  
|Restricted cash                                                                          |  |                   | 43,360      |   |               |   | 43,360      |  
|Deposits and other assets                                                                |  |                   | 12,576      |   |               |   | 10,241      |  
|                                                                                         |  |                   |             |   |               |   |             |  
|Total non-current assets                                                                 |  |                   | 810,048     |   |               |   | 763,002     |  
|                                                                                         |  |                   |             |   |               |   |             |  
|Total assets                                                                             |  | $                 | 6,263,724   |   |               | $ | 6,302,748   |  
|                                                                                         |  |                   |             |   |               |   |             |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                     |  |                   |             |   |               |   |             |  
|                                                                                         |  |                  
|Current Liabilities:                                                                     |  |                   |             |   |               |   |             |  
|Billings in excess of costs, uncompleted software contracts                              |  | $                 | 1,028,065   |   |               | $ | 580,372     |  
|Accrued wages                                                                            |  |                   | 482,725     |   |               |   | 716,450     |  
|Accounts payable and accrued expenses                                                    |  |                   | 464,164     |   |               |   | 624,302     |  
|Deferred revenue                                                                         |  |                   | 246,270     |   |               |   | 254,959     |  
|Income taxes payable, net                                                                |  |                   | 1,981       |   |               |   | 852         |  
|                                                                                         |  |                   |             |   |               |   |             |  
|Total current liabilities                                                                |  |                   | 2,223,205   |   |               |   | 2,176,935   |  
|                                                                                         |  |                   |             |   |               |   |             |  
|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                                                                      |  |                   | (15,583,387 | ) |               |   | (15,498,093 | )
|                                                                                         |  |                   |             |   |               |   |             |  
|Total shareholders equity                                                               |  |                   | 4,040,519   |   |               |   | 4,125,813   |  
|                                                                                         |  |                   |             |   |               |   |             |  
|Total liabilities and shareholders equity                                               |  | $                 | 6,263,724   |   |               | $ | 6,302,748   |  
|                                                                                         |  |                   |             |   |               |   |             |  



The accompanying notes
are an integral part of these statements.



1



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VENTURE CATALYST INCORPORATED

STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                            |  |                                         |           |   |      |   |           |  
|------------------------------------------- |  | --------------------------------------- | --------- | - | ---- | - | --------- | -
|                                            |  | For the three months ended December 31, |          
|                                            |  | 2005                                    |           |   | 2004 |  
|Revenues:                                   |  |                                         |           |   |      |   |           |  
|Consulting services                         |  | $                                       | 1,942,275 |   |      | $ | 1,725,000 |  
|Software products and related services      |  |                                         | 123,184   |   |      |   | 19,848    |  
|                                            |  |                                         |           |   |      |   |           |  
|Total revenues                              |  |                                         | 2,065,459 |   |      |   | 1,744,848 |  
|                                            |  |                                         |           |   |      |   |           |  
|Cost of revenues:                           |  |                                         |           |   |      |   |           |  
|Consulting services                         |  |                                         | 856,669   |   |      |   | 630,115   |  
|Software products and related services      |  |                                         | 221,162   |   |      |   | 254,163   |  
|                                            |  |                                         |           |   |      |   |           |  
|Total cost of revenues                      |  |                                         | 1,077,831 |   |      |   | 884,278   |  
|                                            |  |                                         |           |   |      |   |           |  
|Gross profit                                |  |                                         | 987,628   |   |      |   | 860,570   |  
|                                            |  |                                         |           |   |      |   |           |  
|Operating expenses:                         |  |                                         |           |   |      |   |           |  
|General and administrative                  |  |                                         | 1,073,631 |   |      |   | 755,052   |  
|Sales and marketing                         |  |                                         | 185,279   |   |      |   | 156,520   |  
|Research and development                    |  |                                         | 61,359    |   |      |   | 12,139    |  
|                                            |  |                                         |           |   |      |   |           |  
|Total operating expenses                    |  |                                         | 1,320,269 |   |      |   | 923,711   |  
|                                            |  |                                         |           |   |      |   |           |  
|Operating loss                              |  |                                         | (332,641  | ) |      |   | (63,141   | )
|                                            |  |                                         |           |   |      |   |           |  
|Other income:                               |  |                                         |           |   |      |   |           |  
|Interest income                             |  |                                         | 32,693    |   |      |   | 12,631    |  
|Litigation settlement                       |  |                                         | 300,000   |   |      |   |          |  
|Other gains                                 |  |                                         |          |   |      |   | 16,339    |  
|                                            |  |                                         |           |   |      |   |           |  
|Other income                                |  |                                         | 332,693   |   |      |   | 28,970    |  
|                                            |  |                                         |           |   |      |   |           |  
|Net income (loss) before income tax benefit |  |                                         | 52        |   |      |   | (34,171   | )
|Income tax benefit                          |  |                                         |          |   |      |   | 21,000    |  
|                                            |  |                                         |           |   |      |   |           |  
|Net income (loss)                           |  | $                                       | 52        |   |      | $ | (13,171   | )
|                                            |  |                                         |           |   |      |   |           |  
|Basic and diluted loss per share:           |  |                                         |           |   |      |   |           |  
|Net income (loss) per share - basic         |  | $                                       | .00       |   |      | $ | (.00      | )
|                                            |  |                                         |           |   |      |   |           |  
|Net income (loss) per share - diluted       |  | $                                       | .00       |   |      | $ | (.00      | )
|                                            |  |                                         |           |   |      |   |           |  
|Weighted average common shares outstanding: |  |                                         |           |   |      |   |           |  
|Basic                                       |  |                                         | 7,206,598 |   |      |   | 7,206,598 |  
|                                            |  |                                         |           |   |      |   |           |  
|Diluted                                     |  |                                         | 7,732,857 |   |      |   | 7,206,598 |  
|                                            |  |                                         |           |   |      |   |           |  



The accompanying notes
are an integral part of these statements.



2



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VENTURE CATALYST INCORPORATED

STATEMENTS OF OPERATIONS

(UNAUDITED)



|                                            |  |                                       |           |   |      |   |           |  
|------------------------------------------- |  | ------------------------------------- | --------- | - | ---- | - | --------- | -
|                                            |  | For the six months ended December 31, |          
|                                            |  | 2005                                  |           |   | 2004 |  
|Revenues:                                   |  |                                       |           |   |      |   |           |  
|Consulting services                         |  | $                                     | 3,888,736 |   |      | $ | 3,450,000 |  
|Software products and related services      |  |                                       | 247,754   |   |      |   | 38,971    |  
|                                            |  |                                       |           |   |      |   |           |  
|Total revenues                              |  |                                       | 4,136,490 |   |      |   | 3,488,971 |  
|                                            |  |                                       |           |   |      |   |           |  
|Cost of revenues:                           |  |                                       |           |   |      |   |           |  
|Consulting services                         |  |                                       | 1,571,209 |   |      |   | 1,243,662 |  
|Software products and related services      |  |                                       | 499,466   |   |      |   | 669,181   |  
|                                            |  |                                       |           |   |      |   |           |  
|Total cost of revenues                      |  |                                       | 2,070,675 |   |      |   | 1,912,843 |  
|                                            |  |                                       |           |   |      |   |           |  
|Gross profit                                |  |                                       | 2,065,815 |   |      |   | 1,576,128 |  
|                                            |  |                                       |           |   |      |   |           |  
|Operating expenses:                         |  |                                       |           |   |      |   |           |  
|General and administrative                  |  |                                       | 2,092,946 |   |      |   | 1,400,015 |  
|Sales and marketing                         |  |                                       | 460,112   |   |      |   | 372,459   |  
|Research and development                    |  |                                       | 123,796   |   |      |   | 24,975    |  
|                                            |  |                                       |           |   |      |   |           |  
|Total operating expenses                    |  |                                       | 2,676,854 |   |      |   | 1,797,449 |  
|                                            |  |                                       |           |   |      |   |           |  
|Operating loss                              |  |                                       | (611,039  | ) |      |   | (221,321  | )
|                                            |  |                                       |           |   |      |   |           |  
|Other income:                               |  |                                       |           |   |      |   |           |  
|Interest income                             |  |                                       | 64,745    |   |      |   | 26,018    |  
|Litigation settlement                       |  |                                       | 347,000   |   |      |   |          |  
|Other gains                                 |  |                                       |          |   |      |   | 16,606    |  
|                                            |  |                                       |           |   |      |   |           |  
|Other income                                |  |                                       | 411,745   |   |      |   | 42,624    |  
|                                            |  |                                       |           |   |      |   |           |  
|Net loss before income tax benefit          |  |                                       | (199,294  | ) |      |   | (178,697  | )
|Income tax benefit                          |  |                                       | 114,000   |   |      |   | 109,000   |  
|                                            |  |                                       |           |   |      |   |           |  
|Net loss                                    |  | $                                     | (85,294   | ) |      | $ | (69,697   | )
|                                            |  |                                       |           |   |      |   |           |  
|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.



3



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VENTURE CATALYST INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



|                                                                                                  |  |                                       |           |   |      |   |            |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------------- | --------- | - | ---- | - | ---------- | -
|                                                                                                  |  | For the Six Months Ended December 31, |          
|                                                                                                  |  | 2005                                  |           |   | 2004 |  
|Increase (decrease) in cash:                                                                      |  |                                       |           |   |      |   |            |  
|Cash flows provided by (used in) operating activities:                                            |  |                                       |           |   |      |   |            |  
|Net loss                                                                                          |  | $                                     | (85,294   | ) |      | $ | (69,697    | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities:         |  |                                       |           |   |      |   |            |  
|Depreciation and amortization                                                                     |  |                                       | 51,813    |   |      |   | 52,297     |  
|Increase to deferred tax assets                                                                   |  |                                       | 114,000   |   |      |   | 109,000    |  
|Gain on disposal of asset                                                                         |  |                                       |          |   |      |   | 16,572     |  
|Changes in operating assets and liabilities                                                       |  |                                       | 314,416   |   |      |   | (408,376   | )
|                                                                                                  |  |                                       |           |   |      |   |            |  
|Net cash provided by (used in) operating activities                                               |  |                                       | 394,935   |   |      |   | (300,204   | )
|                                                                                                  |  |                                       |           |   |      |   |            |  
|Cash flows used in investing activities:                                                          |  |                                       |           |   |      |   |            |  
|Issuance of restricted cash                                                                       |  |                                       |          |   |      |   | (43,360    | )
|Purchase of furniture and equipment                                                               |  |                                       | (97,524   | ) |      |   | (145,951   | )
|                                                                                                  |  |                                       |           |   |      |   |            |  
|Net cash used in investing activities                                                             |  |                                       | (97,524   | ) |      |   | (189,311   | )
|                                                                                                  |  |                                       |           |   |      |   |            |  
|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                                                                   |  |                                       | 297,411   |   |      |   | (4,789,515 | )
|Cash at beginning of period                                                                       |  |                                       | 3,839,310 |   |      |   | 8,025,144  |  
|                                                                                                  |  |                                       |           |   |      |   |            |  
|Cash at end of period                                                                             |  | $                                     | 4,136,721 |   |      | $ | 3,235,629  |  
|                                                                                                  |  |                                       |           |   |      |   |            |  
|Supplemental disclosures of cash flow information:                                                |  |                                       |           |   |      |   |            |  
|Interest paid                                                                                     |  | $                                     |          |   |      | $ |           |  
|                                                                                                  |  |                                       |           |   |      |   |            |  
|Income taxes paid                                                                                 |  | $                                     | 12,000    |   |      | $ | 26,000     |  
|                                                                                                  |  |                                       |           |   |      |   |            |  
|Supplemental schedule of non-cash financing activity:                                             |  |                                       |           |   |      |   |            |  
|Increase to shareholders equity and debt reduction resulting from debt restructure (See Note. 13) |  | $                                     |          |   |      | $ | 7,669,443  |  
|                                                                                                  |  |                                       |           |   |      |   |            |  



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



4



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



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 primary 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), which 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;
| | - |  | ---------------------------------------------



5



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



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



| |  |  | 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 or six month period ended December 31, 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. As set forth in paragraph 8 of SOP 97-2, revenue recognition may
occur when all of the following criteria are met:



| |  |  | 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.



6



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



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 re-billed to customers be recorded as revenue versus an offset to the related expense. The out-of-pocket expenses re-billed 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 had 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 income (loss) and income (loss) per share would have increased to the pro forma net loss and loss
per share amounts.



Below is the calculation of pro forma net
loss and loss per share for the three months ended:



|                                                                                                                                                   |  |                                |        |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | ---- | - | ------- | -
|                                                                                                                                                   |  | Three months endedDecember 31, |       
|                                                                                                                                                   |  | 2005                           |        |   | 2004 |  
|Net income (loss):                                                                                                                                 |  |                                |        |   |      |   |         |  
|As reported                                                                                                                                        |  | $                              | 52     |   |      | $ | (13,171 | )
|Add: Stock-based employee compensation expense included in reported net income, net of related tax effects                                         |  |                                |       |   |      |   |        |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all option grants, net of related tax
effects |  |                                | (7,925 | ) |      |   | (48,911 | )
|                                                                                                                                                   |  |                                |        |   |      |   |         |  
|Pro forma                                                                                                                                          |  | $                              | (7,873 | ) |      | $ | (62,082 | )
|                                                                                                                                                   |  |                                |        |   |      |   |         |  
|Net income (loss) per share - basic and diluted:                                                                                                   |  |                                |        |   |      |   |         |  
|As reported                                                                                                                                        |  | $                              | .00    |   |      | $ | (.00    | )
|Pro forma                                                                                                                                          |  | $                              | (.00   | ) |      | $ | (.01    | )



7



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



Below is the calculation of pro forma net loss and loss per share for the six months ended:



|                                                                                                                                                   |  |                              |          |   |      |   |          |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                                                                                   |  | Six months endedDecember 31, |         
|                                                                                                                                                   |  | 2005                         |          |   | 2004 |  
|Net loss:                                                                                                                                          |  |                              |          |   |      |   |          |  
|As reported                                                                                                                                        |  | $                            | (85,294  | ) |      | $ | (69,697  | )
|Add: Stock-based employee compensation expense included in reported net income, net of related tax effects                                         |  |                              |         |   |      |   |         |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all option grants, net of related tax
effects |  |                              | (26,416  | ) |      |   | (106,106 | )
|                                                                                                                                                   |  |                              |          |   |      |   |          |  
|Pro forma                                                                                                                                          |  | $                            | (111,710 | ) |      | $ | (175,803 | )
|                                                                                                                                                   |  |                              |          |   |      |   |          |  
|Net loss per share - basic and diluted:                                                                                                            |  |                              |          |   |      |   |          |  
|As reported                                                                                                                                        |  | $                            | (.01     | ) |      | $ | (.01     | )
|Pro forma                                                                                                                                          |  | $                            | (.02     | ) |      | $ | (.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 six months ended December 31, 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 six months ended December 31, 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.



We are incurring costs to perform minor 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 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, is referred to as the 2004 Consulting
Agreement. The 2004 Consulting Agreement expires March 31, 2009 unless renewed or extended. The Barona Tribe has the right to negotiate an additional five year extension and the right to terminate after giving nine months notice.



8



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



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 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 December 31, 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 pay them 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.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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, the 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.



9



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VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



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, 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 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. The review is currently pending. In addition, the NIGC has not yet approved the 2004 Consulting Agreement. The Advisory Agreement with the Buena Vista Tribe also may be subject to review by the NIGC. The Bureau of Indian
Affairs (the BIA) determines if a particular consulting agreement must be reviewed and approved by it. The BIA has not yet made a determination whether either the 2004 Consulting Agreement or the Advisory Agreement must be reviewed and
approved by it. 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 and six months ended December 31, 2005, revenues from the Barona Tribe were $1,792,000 and $3,585,000, respectively, representing 87% of our total revenues in each period. During the three and six months ended December 31, 2004,
revenues from the Barona Tribe were $1,725,000 and $3,450,000, respectively, representing 99% of our total revenues in each period.



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.



Cash equivalents during the six months ended December 31, 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 4.11%. Cash
equivalents during the six months ended December 31, 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 during the six months ended December 31, 2004, 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 office located in Las
Vegas, Nevada. Such letter of credit was going to automatically renew on an annual basis until



10



---

VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



September 30, 2009, unless cancelled by the lessor. Pursuant to the lease terms, in January 2006, the letter of credit was cancelled as a result of VCAT
meeting certain financial milestones.



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 as of:



|                                                                 |  |                  |           |              |   |          
|---------------------------------------------------------------- |  | ---------------- | --------- | ------------ | - | ---------
|                                                                 |  | December 31,2005 |           | June 30,2005
|Number of uncompleted software contracts                         |  |                  | 6         |              |   | 3        
|Gross contracts amount                                           |  | $                | 3,938,425 |              | $ | 1,090,300
|Uncompleted software contracts with billings in excess of costs: |  |                  |           |              |   |          
|Billings                                                         |  | $                | 1,160,665 |              | $ | 582,540  
|Costs incurred                                                   |  |                  | 132,600   |              |   | 2,168    
|                                                                 |  |                  |           |              |   |          
|Billings in excess of costs, uncompleted software contracts      |  | $                | 1,028,065 |              | $ | 580,372  
|                                                                 |  |                  |           |              |   |          



Note 8. Other Income - Litigation
Settlement Income



We filed a lawsuit in January 2005
against multiple parties (the Defendants) 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. During the course of the lawsuit counterclaims were filed against VCAT and three of its officers.



In July 2005, we reached a comprehensive settlement of our suit against
certain Defendants and related third parties, whereas the Defendants paid us $47,000. In December 2005, we reached a comprehensive settlement of our suit against the remaining Defendants. Pursuant to the settlement, the remaining Defendants and
related third parties (a) paid $300,000 in monetary damages to us; (b) consented to a stipulated injunction and dismissal with prejudice under which they are enjoined from participating in certain prohibited activities related to our
business and products until September 1, 2007; and (c) stipulated to the dismissal of all of their claims, counterclaims and cross claims in the action that they had against VCAT and its officers.



11



---

VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



Note 9. 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 six months ended December 31, 2005:



|                               |  |                    |  |                         |             
|------------------------------ |  | ------------------ |  | ----------------------- | ------------
|                               |  | OptionsOutstanding |  | Options Price Per Share
|Outstanding, July 1, 2005      |  | 5,668,250          |  | $                       | 0.13 -$12.50
|Granted                        |  |                   |  |                         |            
|Exercised                      |  |                   |  |                         |            
|Cancelled                      |  |                   |  |                         |            
|                               |  |                    |  |                         |             
|Outstanding, December 31, 2005 |  | 5,668,250          |  | $                       | 0.13 -$12.50
|                               |  |                    |  |                         |             



Note 10. Net Income (Loss) Per
Share



Basic net income (loss) per share is based on the
weighted effect of all common shares issued and outstanding and is calculated by dividing net income (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 income (loss) per share for the three months ended:



|                                                       |  |              |           |      |   |           |  
|------------------------------------------------------ |  | ------------ | --------- | ---- | - | --------- | -
|                                                       |  | December 31, |          
|                                                       |  | 2005         |           | 2004 |  
|Net income (loss) available to common shareholders     |  | $            | 52        |      | $ | (13,171   | )
|                                                       |  |              |           |      |   |           |  
|Weighted average shares outstanding - basic            |  |              | 7,206,598 |      |   | 7,206,598 |  
|Effect of dilutive options                             |  |              | 526,259   |      |   |          |  
|                                                       |  |              |           |      |   |           |  
|Weighted average shares outstanding - diluted          |  |              | 7,732,857 |      |   | 7,206,598 |  
|                                                       |  |              |           |      |   |           |  
|Net income (loss) per common share - basic and diluted |  | $            | .00       |      | $ | (.00      | )
|                                                       |  |              |           |      |   |           |  



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



|                                              |  |              |           |   |      |   |           |  
|--------------------------------------------- |  | ------------ | --------- | - | ---- | - | --------- | -
|                                              |  | December 31, |          
|                                              |  | 2005         |           |   | 2004 |  
|Net loss available to common shareholders     |  | $            | (85,294   | ) |      | $ | (69,697   | )
|                                              |  |              |           |   |      |   |           |  
|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 December 31, 2005, which expire on various future dates through 2015. During the three months ending December 31, 2005,
options to purchase 4,548,250 shares of common stock with exercise prices greater than the average fair market value of our stock of $.73 were not included in the calculation



12



---

VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



of EPS because the effect would have been anti-dilutive. During the six months ending December 31, 2005, options to purchase 5,668,250 shares of common
stock, representing all outstanding options, were not included in the computation of diluted EPS because they were anti-dilutive.



During the three and six months ending December 31, 2004, options to purchase 5,608,250 shares of common stock, representing all outstanding options,
were not included in the computation of diluted EPS because they were anti-dilutive.



Note 11. Segment Reporting



We operate with two
business divisions, consulting services and software products and related services, 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 income for the three and six months ended December 31, 2005 and 2004 is as
follows:



|                                      |  |                     |           |                                      |   |            |       |  |   |           |  
|------------------------------------- |  | ------------------- | --------- | ------------------------------------ | - | ---------- | ----- |  | - | --------- | -
|                                      |  | Consulting Services |           | Software Productsand RelatedServices |   |            | Total | 
|Three months ended December 31, 2005: |  |                     |           |                                      |   |            |       |  |   |           |  
|Revenues                              |  | $                   | 1,942,275 |                                      | $ | 123,184    |       |  | $ | 2,065,459 |  
|Cost of revenues                      |  |                     | 856,669   |                                      |   | 221,162    |       |  |   | 1,077,831 |  
|Allocated operating expenses          |  |                     | 618,289   |                                      |   | 701,980    |       |  |   | 1,320,269 |  
|                                      |  |                     |           |                                      |   |            |       |  |   |           |  
|Operating profit (loss)               |  | $                   | 467,317   |                                      | $ | (799,958   | )     |  | $ | (332,641  | )
|                                      |  |                     |           |                                      |   |            |       |  |   |           |  
|Three months ended December 31, 2004: |  |                     |           |                                      |   |            |       |  |   |           |  
|Revenues                              |  | $                   | 1,725,000 |                                      | $ | 19,848     |       |  | $ | 1,744,848 |  
|Cost of revenues                      |  |                     | 630,115   |                                      |   | 254,163    |       |  |   | 884,278   |  
|Allocated operating expenses          |  |                     | 619,695   |                                      |   | 304,016    |       |  |   | 923,711   |  
|                                      |  |                     |           |                                      |   |            |       |  |   |           |  
|Operating profit (loss)               |  | $                   | 475,190   |                                      | $ | (538,331   | )     |  | $ | (63,141   | )
|                                      |  |                     |           |                                      |   |            |       |  |   |           |  
|                                      |  |                     |          
|                                      |  | Consulting Services |           | Software Productsand RelatedServices |   |            | Total | 
|Six months ended December 31, 2005:   |  |                     |           |                                      |   |            |       |  |   |           |  
|Revenues                              |  | $                   | 3,888,736 |                                      | $ | 247,754    |       |  | $ | 4,136,490 |  
|Cost of revenues                      |  |                     | 1,571,209 |                                      |   | 499,466    |       |  |   | 2,070,675 |  
|Allocated operating expenses          |  |                     | 1,220,137 |                                      |   | 1,456,717  |       |  |   | 2,676,854 |  
|                                      |  |                     |           |                                      |   |            |       |  |   |           |  
|Operating profit (loss)               |  | $                   | 1,097,390 |                                      | $ | (1,708,429 | )     |  | $ | (611,039  | )
|                                      |  |                     |           |                                      |   |            |       |  |   |           |  
|Six months ended December 31, 2004:   |  |                     |           |                                      |   |            |       |  |   |           |  
|Revenues                              |  | $                   | 3,450,000 |                                      | $ | 38,971     |       |  | $ | 3,488,971 |  
|Cost of revenues                      |  |                     | 1,243,662 |                                      |   | 669,181    |       |  |   | 1,912,843 |  
|Allocated operating expenses          |  |                     | 1,157,259 |                                      |   | 640,190    |       |  |   | 1,797,449 |  
|                                      |  |                     |           |                                      |   |            |       |  |   |           |  
|Operating profit (loss)               |  | $                   | 1,049,079 |                                      | $ | (1,270,400 | )     |  | $ | (221,321  | )
|                                      |  |                     |           |                                      |   |            |       |  |   |           |  



13



---

VENTURE CATALYST INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2005 (Unaudited)



Note 12. Income Taxes



During the three and six months ended December 31, 2005, we recorded an income tax benefit of $0 and $114,000. The estimated annual effective tax
rate of 57% was applied to the net loss for the six month 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 and six months ended December 31, 2004, we recorded an income tax benefit of $21,000 and $109,000, respectively, as a result of
applying an estimated annual effective tax rate of 61% to the net loss for each period. The estimated annual effective tax rate was higher than the statutory rate primarily as a result of (a) estimated permanent differences and (b) an
increase in the valuation allowance associated with alternative minimum tax (AMT) credits for fiscal 2005.



Note 13. 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 issued unsecured promissory notes, bearing interest at a rate of 10% per annum, to the Note Holders. 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 indebtedness to them (the Restructuring Agreement). Pursuant to the terms of the Restructuring Agreement, our aggregate outstanding debt under the notes 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, in
July 2004 and 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.



14



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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 (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 December 31, 2005, our consulting services division had two primary clients, 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 located in Lakeside,
California, near San Diego. 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. 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.



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 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 December 31, 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.



15



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In 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, the 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, 2008.



We have offered to pay the Barona Tribe a fee equal to 17.5% of the fees received by us pursuant to the Advisory Agreement,
if they provide us with opportunity to use some of the Barona Valley Ranch personnel to perform services under 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 the need for us to add a number of 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 December 31, 2005, we had six uncompleted software contracts that we had entered into that, if completed, will result in additional aggregate revenues of $3,938,000 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, however, we believe that the costs will be less than the revenues to be recognized under each of the software contracts.



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 pay them 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;
| | - |  | -----------------------------------------------------------------



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| |  |  | 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 and six month periods
ended December 31, 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 $11,969,000 of debt owed to two former shareholders (the Restructuring
Agreement). Pursuant to the terms of the Restructuring Agreement, our aggregate outstanding debt owed to them was reduced from $11,969,000 to $4,300,000. The principal due under the new notes was paid in two installments, in July 2004 and in
September 2004. No further payments are due under the notes and our long-term debt balance was zero as of December 31, 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;
| | - |  | ----------------------------



| |  |  | 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.



17



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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.



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.



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Results of Operations



Three Months Ended December 31, 2005 Compared with the Three Months Ended December 31, 2004.



Revenues



Revenues for the three months ended December 31, 2005 increased 18% to
$2,065,000, compared to $1,745,000 during the same period last year.



During the three months ended December 31, 2005, we earned $1,942,000 in revenues in our consulting services division consisting of (a) $1,792,000 in fees for consulting services provided to the Barona Tribe, and (b) $150,000
in revenues from advisory services provided to the Buena Vista Tribe. During the three months ended December 31, 2004, we earned $1,725,000 in fees for consulting services provided to the Barona Tribe.



Revenues from our software products and related services for three months
ended December 31, 2005 increased 515% to $123,000 compared to $20,000 earned in the prior year period. The revenues in the current year period resulted from (a) $119,000 in support fees and (b) $4,000 revenues from out-of-pocket
expenses re-billed to customers. In the prior year period, revenues consisted of (a) $13,000 for software support services and (b) $7,000 from out-of-pocket expenses re-billed to customers.



Cost of Revenues



The cost of revenues for the three months ended December 31, 2005
increased 22% to $1,078,000, compared to $884,000 during the same period last year.



The cost of revenues in our consulting services division consisted 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 December 31, 2005 in the consulting services division increased 37% to $856,000, compared
to $630,000 recorded during the same period last year. The increase was primarily the result of an increase in (a) compensation and other personnel-related expenses of $144,000, primarily due to the hiring of additional personnel;
(b) client relations expenses of $103,000; and (c) other direct costs of $53,000. The increase was partially offset by a reduction in (a) third-party consultant costs of $54,000 and (b) costs incurred in connection with providing
software support services to the Barona Tribe of $19,000.



The
cost of revenues in our software division in the current year period consisted 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 December 31, 2005 decreased 13% to $221,000, compared to $254,000 during the same period last year. Expenses during
the current year period in our software division decreased primarily as a result of a decrease in (a) professional services of $24,000, primarily as a result of transitioning all software engineering related services to internal resources as of
December 31, 2004; (b) costs related to maintenance and support of $18,000; and (c) a decrease of $14,000 in other direct costs and pass thru expenses re-billed to customers. The decrease was partially offset by an increase in
compensation and other personnel-related expenses incurred in connection with providing software related analysis services of $24,000.



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



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expenses, professional fees, facilities, depreciation, insurance costs and other general overhead and administrative costs. General operating and
administrative expenses for the three months ended December 31, 2005 increased 42% to $1,074,000, compared to $755,000 during the same period last year. The increase was primarily attributable to increases in (a) professional services of
$268,000, primarily as a result of legal fees incurred in connection with the software related litigation; (b) compensation and other personnel-related expenses of $36,000; (c) facility and other related costs of $32,000; and
(d) other general and administrative costs of $6,000. The increase was partially offset by a decrease in (a) outside accounting and tax compliance services of $18,000 and (b) fees incurred in connection with shareholder communication
costs of $6,000.



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
December 31, 2005 increased 18% to $185,000, compared to $157,000 during the same period last year. The increase was primarily a result of an increase in compensation and other personnel-related expenses of $66,000, primarily the result of
hiring additional business development personnel, partially offset by a decrease in tradeshow costs and related expenses of $36,000.



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 December 31, 2005, research and development expenses increased 406% to $61,000, compared to $12,000 during the same period last year. The increase was primarily the result of the increase compensation and
other personnel-related expenses, which resulted from an increase in the time internal software engineers allocated to research and development efforts.



Other Income and Expense



For the three months ended December 31, 2005, interest income increased 159% to $33,000, from $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. For the three months ended December 31, 2005 other income included $300,000 of cash consideration received in connection with settlement of
litigation. Other gains in the prior year period of $16,000 was the result of asset sales.



Income Tax Benefit



We did not record an income tax provision or benefit during the three months ended December 31, 2005. We recorded an income tax benefit of $21,000
during the three months ended December 31, 2004, as a result of applying our estimated annual effective tax rate to the loss recorded in the period.



Six Months Ended December 31, 2005 Compared with the Six Months Ended December 31, 2004.



Revenues



Revenues for the six months ended December 31, 2005 increased 19% to $4,136,000, compared to $3,489,000 during the same period last year.



During the six months ended December 31, 2005, we earned $3,889,000
in revenues in our consulting services division consisting of (a) $3,585,000 in fees for consulting services provided to the Barona Tribe;



20



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(b) $300,000 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 re-billed to customers. During the six months ended December 31, 2004, we earned $3,450,000 in fees for consulting services provided to the Barona Tribe during the period.



Revenues from our software products and related services during the six
months ended December 31, 2005 increased 536% to $248,000 compared to $39,000 earned in the same period last year. The revenues in the current year period resulted from (a) $239,000 in support fees and (b) $9,000 revenues from
additional license fees earned on completed software contracts and out-of-pocket expenses re-billed to customers. In the prior year period, revenues consisted of (a) $25,000 for software support services and (b) $14,000 from out-of-pocket
expenses re-billed to customers.



Cost of
Revenues



Cost of revenues for the six months ended
December 31, 2005 increased 9% to $2,070,000, compared to $1,913,000 during the same period last year.



Cost of revenues in our consulting services division consisted 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 six months ended December 31, 2005 in the
consulting services division increased 26% to $1,571,000, compared to $1,244,000 recorded during the same period last year. The increase was primarily the result of an increase in (a) compensation and other personnel-related expenses of
$196,000, primarily due to the hiring of additional personnel; (b) client relations expenses of $187,000; and (c) other direct costs of $73,000, primarily resulting from an increase in contributions and travel and lodging expenses. The
increase was partially offset by a reduction in (a) professional services of $95,000, and (b) costs incurred in connection with providing software support services to the Barona Tribe of $33,000.



The cost of revenues in our software division in the current year period
consisted 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 six months ended December 31, 2005 decreased 25% to $499,000, compared to $669,000 during the same period last year. Expenses during the current year period 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; and (b) a decrease of $99,000 for expenses incurred in connection with maintenance and support
services. The decrease was partially offset by an increase in compensation and other personnel-related expenses incurred in connection with providing software related analysis services of $48,000.



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 for the six months ended December 31, 2005 increased 49% to $2,093,000, compared to $1,400,000 during the same period last year. The increase was primarily
attributable to increases in (a) professional services of $541,000, primarily the result of legal fees and forensic expert services incurred in connection with the software related litigation; (b) compensation and other personnel-related
expenses of $93,000; (c) facility and other related costs of $74,000, primarily the result of the opening of our new Las Vegas office in September 2004; and (d) other general and administrative costs of



21



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$30,000. The increase was partially offset by a decrease in (a) fees for outside accounting and tax compliance services of $25,000, and (b) costs
incurred in connection with shareholder communications 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 six months ended December 31, 2005 increased 24% to $460,000, compared to $372,000 during the same period last year. The increase was primarily a result of an increase in (a) compensation and other
personnel-related expenses, of $88,000, primarily the result of hiring additional business development personnel, and (b) advertising and marketing expenses, including tradeshows and related expenses of $25,000. The increase was partially
offset by a decrease in professional services of $26,000, primarily the result of website development services incurred 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 six months ended December 31, 2005, research and development expenses increased 396% to $124,000, compared to $25,000 during the same period last year. The increase was a result of the increase in (a) compensation and
other personnel-related expenses, which resulted from an increase in the time internal software engineers allocated to research and development efforts, and (b) equipment and software used in connection with our research and development
efforts.



Other Income and Expense



For the six months ended December 31, 2005, interest
income increased 149% to $65,000 from $26,000 for the same period last year, primarily as a result of an increase in our average cash balances and higher interest rates during the current year period as compared to the prior year period. For the six
months ended December 31, 2005, other income included $347,000 of cash consideration received in connection with settlement of litigation. Other gains in the prior year period included $17,000 resulting from the sale of assets.



Income Tax Benefit



We recorded an income tax benefit of $114,000 during the six months ended
December 31, 2005, as a result of applying our estimated annual effective tax rate of 57% to the loss recorded in the period. We recorded an income tax benefit of $109,000 during the six months ended December 31, 2004, as a result of
applying our estimated annual effective tax rate of 61% to the loss recorded in the period.



Liquidity and Capital Resources



Our principal sources of liquidity at December 31, 2005 to fund ongoing operations are cash provided from operations and unrestricted cash and cash equivalents of $4,137,000. During the six months ended December 31, 2005, our cash
position increased by $297,000 from the June 30, 2005 balance of $3,839,000. The increase was a result of cash provided by operating activities of $395,000 partially offset by cash used in investing activities of $98,000.



The cash provided by operating activities of $395,000 in the six months ended
December 31, 2005, resulted primarily from revenue received from the Barona Tribe and Buena Vista Tribe, payments from clients pursuant to software contracts, and payments received in connection with the settlement of litigation, less cash
expenditures in the period. Cash used in investing activities of $98,000 resulted from the purchase of fixed assets.



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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 December 31, 2005, our unrestricted cash and
cash equivalents were $4,137,000. 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.



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 the majority of
our revenue from providing consulting services to the Barona Tribe. The loss of the Barona Tribe as a client, or a material reduction in the fees that 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, may not pay us any fees if there is a default under the applicable financing documents. In addition, one of those financing agreements
also limits the Barona Tribes ability to make payments to us if its debt coverage ratios, which are 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 the BIA
believes such review to be 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.



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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) that 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.



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 our potential customers internal information technology departments, 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.



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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.



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 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 six U.S. patent applications, all 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



25



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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.



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.



26



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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 in
the U.S. District Court for the Southern District of California (Case No. 05 - CV-0063 W (AJB)) 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. Reference also is made to our current report on Form 10-Q for the period ended September 30, 2005, which summarized more recent material
developments relating to the action. Since that time, the parties have reached a settlement of the lawsuit which is described below.



We entered into a comprehensive Settlement Agreement and Mutual General Release Agreement by and among Venture Catalyst Incorporated, Greg Shay, Kevin
McIntosh, and Javier Saenz and Jeff Cohn, TRMP, LLC, Mindset LLC, and Cohn Technologies, Inc., and related third parties, Kimberly Cohn, Garden Light LLP and United States Liability Insurance Group (the Settlement Agreement), dated
December 19, 2005, ending the lawsuit which we filed in January 2005 which is referenced in the immediately preceding paragraph. Pursuant to the Settlement Agreement, the defendants and related third parties (a) paid $300,000 in monetary
damages to us; (b) consented to a stipulated injunction and dismissal with prejudice under which they are enjoined from participating in certain prohibited activities related to our business and products until September 1, 2007; and
(c) stipulated to the dismissal of all of their claims, counterclaims and cross claims in the action that they had against VCAT and its officers. In addition, under the terms of the settlement, both parties agreed to a mutual release of actual
or potential claims related to the action, and agreed upon a procedure to be in place until September 1, 2007 addressing future claims by us against the defendants and certain related parties for patent infringement on any currently pending
VCAT patent application. Prior to the December 2005 settlement, in July 2005, we reached a comprehensive settlement of our suit against Tech Results, Inc., E&P Associates, Inc., E&P Associates Holding, Inc., Lars Klander and Ardyth Klander
and filed a notice of voluntary dismissal with prejudice, as to those defendants in August 2005. Pursuant to the settlement, the defendants and related third parties paid us $47,000.



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 5. Other Information



We
entered into a comprehensive Settlement Agreement and Mutual General Release Agreement by and among Venture Catalyst Incorporated, Greg Shay, Kevin McIntosh, and Javier Saenz and Jeff Cohn, TRMP, LLC, Mindset LLC, and Cohn Technologies, Inc. and
related third parties, Kimberly Cohn, Garden Light LLP and United States Liability Insurance Group (the Settlement Agreement), dated December 19, 2005. The Settlement Agreement ended the lawsuit we filed in January 2005 in the U.S.
District Court for the Southern District of California (Case No. 05 - CV-0063 W (AJB)) 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.



27



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Pursuant to the Settlement Agreement, the defendants and related third parties (a) paid $300,000 in
monetary damages to us; (b) consented to a stipulated injunction and dismissal with prejudice under which they are enjoined from participating in certain prohibited activities related to our business and products until September 1, 2007;
and (c) stipulated to the dismissal of all of their claims, counterclaims and cross claims in the action that they had against VCAT and its officers. In addition, under the terms of the settlement, both parties agreed to a mutual release of
actual or potential claims related to the action, and agreed upon a procedure to be in place until September 1, 2007 addressing future claims by us against the defendants and certain related parties for patent infringement on any currently
pending VCAT patent application.



The description of the terms
of the Settlement Agreement in this Item 5 is qualified in its entirety by reference to the full text of the Settlement Agreement which is attached to this Quarterly Report on Form 10-QSB as Exhibit 10.1 and is incorporated herein by reference.



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                                                                                                                                                                                                                                                                                                                                                          
|            | 
|3.1         |  | Articles of Amendment of Articles of Incorporation of VCAT, filed with the Secretary of State of Utah on December 10, 1999, previously filed as Exhibit 3.1 to VCATs Quarterly
Report on Form 10-QSB for the Quarterly Period Ended December 31, 1999, filed with the Commission on February 14, 2000 (File No. 0-11532), which is incorporated herein by reference.
|            | 
|3.2         |  | Amended and Restated Articles of Incorporation of VCAT (formerly known as Twin Creek Exploration Co., Inc.), previously filed as Exhibit 3.1 to VCATs Annual Report on form 10-KSB for
the Fiscal Year Ended June 30, 1995, filed with the Commission on October 12, 1995 (File No. 0-11532), which is incorporated herein by reference.                            
|            | 
|3.3         |  | Amended and Restated Bylaws of VCAT, as amended, previously filed as Exhibit 3.1 to VCATs Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2003, filed with
the Commission on May 13, 2003 (File No. 0-11532), which is incorporated herein by reference.                                                                                   
|            | 
|10.1        |  | Settlement Agreement and Mutual General Release Agreement between Venture Catalyst Incorporated, Greg Shay, Kevin McIntosh, and Javier Saenz and Jeff Cohn, TRMP, LLC, Mindset LLC, and Cohn
Technologies, Inc., and related third parties, Kimberly Cohn, Garden Light LLP and United States Liability Insurance Group dated December 19, 2005.                     
|            | 
|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.                                                                                                                                                                                 



28



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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: February 13, 2006 |  | By:                                               |  | /s/ GREG SHAY
|                        |  |                                                   |  |               |  | Greg Shay Chief Executive Officer, President and Chief Operating Officer (Authorized Signatory, Principal Executive Officer)



|                        |  |     |  |                    |  |                                                                                                                                                           |  | 
|----------------------- |  | --- |  | ------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|                        |  |    
|Date: February 13, 2006 |  | By: |  | /s/ KEVIN MCINTOSH
|                        |  |     |  |                    |  | Kevin McIntosh Senior Vice President, Chief Financial Officer, Secretary and Treasurer (Authorized Signatory, Principal Financial and Accounting Officer)



29



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Exhibit Index



|            |  |                                                                                                                                                                                                                                                                                                                                                                      
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                          
|            | 
|3.1         |  | Articles of Amendment of Articles of Incorporation of VCAT, filed with the Secretary of State of Utah on December 10, 1999, previously filed as Exhibit 3.1 to VCATs Quarterly
Report on Form 10-QSB for the Quarterly Period Ended December 31, 1999, filed with the Commission on February 14, 2000 (File No. 0-11532), which is incorporated herein by reference.
|            | 
|3.2         |  | Amended and Restated Articles of Incorporation of VCAT (formerly known as Twin Creek Exploration Co., Inc.), previously filed as Exhibit 3.1 to VCATs Annual Report on form 10-KSB for
the Fiscal Year Ended June 30, 1995, filed with the Commission on October 12, 1995 (File No. 0-11532), which is incorporated herein by reference.                            
|            | 
|3.3         |  | Amended and Restated Bylaws of VCAT, as amended, previously filed as Exhibit 3.1 to VCATs Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 2003, filed with
the Commission on May 13, 2003 (File No. 0-11532), which is incorporated herein by reference.                                                                                   
|            | 
|10.1        |  | Settlement Agreement and Mutual General Release Agreement between Venture Catalyst Incorporated, Greg Shay, Kevin McIntosh, and Javier Saenz and Jeff Cohn, TRMP, LLC, Mindset LLC, and Cohn
Technologies, Inc., and related third parties, Kimberly Cohn, Garden Light LLP and United States Liability Insurance Group dated December 19, 2005.                     
|            | 
|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.                                                                                                                                                                                 



30