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  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 9/29/03  Sands Regent                      10-K        6/30/03    5:101                                    RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                       HTML    720K 
 2: EX-21       Subsidiaries                                        HTML      7K 
 3: EX-23       Independent Auditors' Consent                       HTML      6K 
 4: EX-31       Certifications of Principal Executive Officer       HTML     24K 
                          Pursuant to Section 302                                
 5: EX-32       Certification of Principal Executive Officer -      HTML     12K 
                          Section 906                                            

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended June 30, 2003

OR

For the transition period from:

Commission file number: 0-14050

THE SANDS REGENT

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code:  (775) 348-2200

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.10 par value

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   x

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

The aggregate market value of the Registrant’s $.10 par value Common Stock held by non-affiliates of the Registrant on December 31, 2002 was $9,256,840. The aggregate market value is computed with reference to the average bid asked price per share on such date.

Registrant’s Common Stock outstanding at September 24, 2003 was 5,044,055 shares.

Portions of Registrant’s definitive Proxy Statement for its November 3, 2003 Annual Meeting of Shareholders are incorporated into Part III of this report as set forth herein.

Table of Contents

THE SANDS REGENT

 INDEX TO FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2003

Table of Contents

PART I

General

The Sands Regent and subsidiaries (the “Company”, “we” and “our”) operate casino/tourist-based facilities through its wholly-owned subsidiaries, Zante, Inc., which owns and operates the Sands Regency Casino Hotel (the “Sands”) in downtown Reno, Nevada, and Last Chance, Inc., which operates the Gold Ranch Casino and RV Resort (the “Gold Ranch”) located in Verdi, Nevada.

The Sands has approximately 29,000 square feet of gaming space and a full selection of gaming alternatives including 587 slot machines, 19 table games, keno, bingo, and a sportsbook operated by Leroy’s Sportsbooks. Additionally, the Sands resort complex has 836 hotel rooms, including 29 suites, a health spa, and a large outdoor swimming pool. Dining options at the Sands includes a Tony Roma’s, Famous for Rib’s, restaurant; Cabana Café, a coffee house/deli-style restaurant; and Antonia’s, Very Italian Buffet. The property also has a Mels the Original, diner style restaurant, and an Arby’s convenience style restaurant, which are operated by third parties. The facility also includes an entertainment cabaret, three cocktail lounges, and approximately 12,000 square feet of convention and meeting space. Third parties lease space from the Sands and operate a car rental business, a bicycle and ski rental shop, a beauty shop, and a video arcade. The Sands resort complex contains multiple parking areas, including a parking garage, with a total combined capacity for approximately 1,000 vehicles.

Gold Ranch offers approximately 256 slot machines in an 8,000 square foot casino, two restaurants, two bars, a 105-space RV park, a California lottery station, an ARCO gas station, a convenience store, and a Jack-in-the-Box restaurant which is leased to a third party. Gold Ranch’s guests include both tourists and local residents with local residents generating approximately 60% of the property’s casino patronage. Gold Ranch attempts to attract local residents through mid-week promotions geared toward enhancing local play mainly through lottery, casino, and restaurant programs. Tourist programs emphasize the RV park, casino and food cross-promotions.

Both of the Company’s operations are conducted 24 hours a day, every day of the year. The primary source of revenue and income to the Company is its gaming activities, although the hotel, RV park, bars, shops, restaurants, convenience store, gas station and other services are important in supplementing its gaming activities revenue. The Company’s operating and marketing philosophy emphasizes high volume business, offering large, attractive hotel rooms at reasonable prices to group, air wholesale and motor coach business primarily from Western Canada, the Pacific Northwest and Northern California. Although the Company offers, on a very limited basis, complimentary hotel accommodations to select customers, no third party group arrangements known as “junkets” are conducted, and in general, the Company does not extended credit to its gaming clientele.

Marketing

SANDS REGENCY.    The marketing function at the Sands continues to evolve as competition intensifies both locally and regionally for gaming customers. The flat Reno gaming market and more recently, the tremendous growth of Indian gaming in key feeder markets (Northern California and the Pacific Northwest, including British Columbia) has dictated that the Sands develop a more comprehensive marketing strategy.

For many years the Sands’ marketing strategy was to rely on the utilization of travel wholesalers to attract group business to the Sands. Central to this strategy was a value-based philosophy that focused on offering attractive, well furnished hotel accommodations and quality food and beverages at prices slightly lower than those of most major hotel casinos in the market.

While this philosophy remains a cornerstone of the marketing strategy at the Sands, we have significantly expanded our marketing efforts in recent years. More resources are being allocated to marketing at the Sands and a comprehensive program has been developed.

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Media advertising (television, radio, newspaper, and the Internet), database marketing, casino promotions, and special events are now key components in the evolution and execution of this strategy.

Advertising and promotional programs are being utilized to attract business segments that had previously been largely untapped at the Sands, such as Reno area residents (locals) and individual travelers from Northern California, particularly the Sacramento metropolitan area. In addition, a greater emphasis is being placed on retaining guests on the property during their visit.

The local component of the Sands’ business has become a key element contributing to our success and now represents more than 30% of the Sands gaming revenues. We intend to continue to cultivate and grow our local market share with aggressive local marketing, promotional, and advertising efforts. This segment became even more important with the recent opening of Station Casinos’ Thunder Valley operation in the Sacramento metropolitan area. While it is uncertain how much this casino will impact overall business in the Reno market, we do not expect it to have a significant impact on our local clientele.

Reno citywide events such as the Annual Great Reno Balloon Races, and Sands created events like our Mardi Gras celebration, and direct mail offers are used aggressively to drive incremental business from individual travelers. Currently, there are over 20 of these special events scheduled at the Sands on an annual basis.

Wholesalers who market a product emphasizing value continue to be very important to the Sands’ marketing strategy. The Company maximizes hotel occupancy levels through the use of a flexible pricing strategy for its rooms. Hotel rooms are offered at discount prices to travel wholesalers for block sales of rooms used in travel packages. This is particularly important to the Company because of the impact of hotel occupancy on gaming revenues. Historically, the Company has been dependent upon group business from November through February because of the seasonal decline in other sources of business (especially drive traffic). Significant group, air wholesale and motor coach market segments continue to include Western Canada, the Pacific Northwest, Texas, and Northern California. The Company has also been successful in obtaining wholesale business in the Midwest, Southwest, and Southern California and continues to explore opportunities to expand by adding additional wholesalers.

The Sands is the lead casino/hotel in the Reno area for several major travel wholesalers who serve major cities in the West, Midwest, and Southwest. Group, air wholesale, and motor coach business accounted for approximately 47% of the Sands’ occupancy in fiscal 2003.

The Internet has become our primary method of marketing the Sands to individual customers. The Company has successfully utilized its website, www.sandsregency.com to promote the property and offer hotel room rate specials. Further, the Company has developed several Internet partners to market hotel rooms during non-peak periods. The Sands expects continued growth of its business in the future as a result of the marketing strategy, as more people become used to using this resource to make travel arrangements.

GOLD RANCH.    Our primary goals at Gold Ranch for fiscal 2003 focused on accomplishing four objectives: 1) generate visits into the casino from the thousands of customers who visit the ARCO Gas Station or California Lottery Station on a daily basis, 2) grow our internal database significantly for future marketing efforts, 3) increase our advertising presence on the property, and 4) increase occupancy at the RV park to 70% during the peak season.

The ARCO station at Gold Ranch is among the busiest in the country, while the California Lottery station at Gold Ranch is the third highest volume in the state. Together they generate, on average, over 2,600 vehicle visits per day. This represents a significant and challenging opportunity for Gold Ranch to expand its clientele. Over the past year, we have developed several promotions, drawings, and coupon offers to generate business into the casino.

In addition, we have utilized the ARCO station patronage to more than triple the size of our local database (from 2,000 to more than 6,000 names and addresses). These names and addresses have been used effectively to drive visitation into the casino via time sensitive direct mail offers, and invitations to special events.

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We have increased the advertising presence at Gold Ranch primarily through the use of signage. Backlit signs have been installed throughout the property and are used to promote various products at Gold Ranch (Sierra Café, California Lottery, RV Resort, Leroy’s Race and Sportsbook, etc.). This signage has been further supported by messages on banners in high traffic areas and pump-top advertising at the gas pumps.

In order to increase awareness and occupancy for the RV park, a new website was developed for Gold Ranch (www.goldranchrvcasino.com), direct mail postcards were sent to past customers of the RV Park, and representatives from the Sands attended RV Trade Shows. In addition, the RV resort was promoted via advertisements in some of the higher profile RV lifestyle magazines, such as Good Sam Club’s Trailer Life. This support, as well as word-of-mouth support from customers who had previously utilized the facility, allowed us to reach our objective, as occupancy levels have risen to nearly 80% for the current summer season.

A secondary objective at Gold Ranch (and the Sands) has been to explore cross marketing opportunities between the two properties. While this has been an ongoing effort, we have seen strong indications that our efforts have been successful. We have successfully used names and addresses collected from Northern California residents at the ARCO station to augment direct mail programs for the Sands hotel. We have also been able to increase attendance for special events and promotions at Gold Ranch by cross promoting them in the monthly calendar sent to loyal Sands’ customers. We have consistently seen 30-40% of the attendance at these activities generated from these sources. In the future, we will continue to pursue this strategy for both properties.

Competition

Competition for customers in the Reno market is more intense than ever. Not only are the eighteen major casinos and hotel/casinos competing for out-of-market customers, but the decrease in visitation over the last several years in the number of visits by these customers, has led to more competition for the local customer. More and more casinos are realizing the importance of attracting locals to their casinos to offset the loss of out-of-market customers.

The Company’s properties also compete, to a lesser degree, with gaming operations in other parts of the state of Nevada, particularly Lake Tahoe, Las Vegas, and Laughlin. California currently sponsors a state lottery and allows other non-casino style gaming, including pari-mutuel wagering, card parlors, bingo and off-track betting. The Company does not believe that such non-casino style gaming has a significant impact on the Company’s operations.

The expansion of Native American gaming in Northern California, the Pacific Northwest, and British Columbia will have a long-term impact on casino revenues in Reno and Northern Nevada. Over the last two years, existing Native American casinos in Northern California have undergone significant expansions. In addition, Station Casino’s Thunder Valley recently opened in June of 2003, just outside of Sacramento. More casinos are planned in Northern California in the future. Many of these casinos have greater financial resources than the Company to promote their facilities.

Employees

At June 30, 2003, the Company employed 707 people at the Sands, including 81 salaried employees and 626 hourly employees, and 108 people at Gold Ranch, including 13 salaried employees and 95 hourly employees. None of the Company’s employees are represented by a union. The Company has not experienced any work stoppages or other significant labor problems and management considers its labor relations to be good.

Regulation and Licensing—Nevada Gaming

The ownership and operation of casino gaming facilities in Nevada are subject to (i) The Nevada Gaming Control Act and the regulations promulgated thereunder (collectively, “Nevada Act”); and (ii) various local regulation. The Company’s gaming operations are subject to the licensing and regulatory control of the Nevada Gaming Commission (“Nevada Commission”), the Nevada State Gaming Control Board (“Nevada Board”) and the City of Reno, for the Sands, and Washoe County, for Gold Ranch, (together, the “Nevada Gaming Authorities”).

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The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy which are concerned with, among other things:

Change in such laws, regulations and procedures could have an adverse effect on the Company’s gaming operations.

The Sands Regent subsidiaries Zante, Inc. and Last Chance, Inc. are required to be licensed by the Nevada Gaming Authorities. The gaming licenses require a periodic payment of fees and taxes and are not transferable. The Company is registered by the Nevada Commission as a publicly traded corporation (“Registered Corporation”) and as such, it is required periodically to submit detailed financial and operating reports to the Nevada Commission and furnish any other information which the Nevada Commission may require. No person may become a major stockholder of, or receive any percentage of profits from the Company without first obtaining licenses and approvals from the Nevada Gaming Authorities. The Company has obtained from the Nevada Gaming Authorities the various registrations, approvals, permits and licenses required in order to engage in gaming activities in Nevada.

The Nevada Gaming Authorities may investigate any individual who has a material relationship to, or material involvement with, the Company or its subsidiaries, in order to determine whether such individual is suitable or should be licensed as a business associate of a gaming licensee. Officers, directors and certain key employees of the Company or its subsidiaries must file applications with the Nevada Gaming Authorities and may be required to be licensed or found suitable by the Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an application for licensing for any cause, which they deem reasonable. A finding of suitability is comparable to licensing, and both require submission of detailed personal and financial information followed by a thorough investigation. The applicant for licensing or a finding of suitability must pay all the costs of the investigation. Changes in licensed positions must be reported to the Nevada Gaming Authorities and in addition to their authority to deny an application for a finding of suitability or licensure, the Nevada Gaming Authorities have jurisdiction to disapprove a change in a corporate position.

If the Nevada Gaming Authorities were to find an officer, director or key employee unsuitable for licensing or unsuitable to continue having a relationship with the Company or its subsidiaries, the Company would have to sever all relationships with such person. In addition, the Nevada Commission may require the Company and its subsidiaries to terminate the employment of any person who refuses to file appropriate applications. Determinations of suitability or of questions pertaining to licensing are not subject to judicial review in Nevada.

The Company and its subsidiaries are required to submit detailed financial and operating reports to the Nevada Commission. Substantially all material loans, leases, sales of securities and similar financing transactions must be reported to, or approved by, the Nevada Commission.

If it were determined that the Nevada Act was violated by the Company or its subsidiaries, the gaming licenses it holds could be limited, conditioned, suspended or revoked, subject to compliance with certain statutory and regulatory procedures. In addition, the Company, its subsidiaries, and the persons involved could be subject to substantial fines for each separate violation of the Nevada Act at the direction of the Nevada Commission. Further, a supervisor could be appointed by the Nevada Commission to operate the Company’s gaming properties and, under

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certain circumstances, earnings generated during the supervisor’s appointment (except for the reasonable rental value of the Company’s gaming properties) could be forfeited to the State of Nevada. Limitation, conditioning or suspension of any gaming license or the appointment of a supervisor could (and revocation of any gaming license would) materially adversely affect the Company’s gaming operations.

Any beneficial holder of the Company’s voting securities, regardless of the number of shares owned, may be required to file an application, be investigated, and have his suitability as a beneficial holder of the Company’s voting securities determined if the Nevada Commission has reason to believe that such ownership would otherwise be inconsistent with the declared policies of the State of Nevada. The applicant must pay all costs of investigation incurred by the Nevada Gaming Authorities in conducting any such investigation.

The Nevada Act requires any person who acquires more than 5% of the Company’s voting securities to report the acquisition to the Nevada Commission. The Nevada Act requires that beneficial owners of more than 10% of the Company’s voting securities apply to the Nevada Commission for a finding of suitability within thirty days after the Chairman of the Nevada Board mails the written notice requiring such filing. Under certain circumstances, an “institutional investor,” as defined in the Nevada Act, which acquires more than 10%, but not more than 15%, of the Company’s voting securities may apply to the Nevada Commission for a waiver of such finding of suitability if such institutional investor holds the voting securities for investment purposes only. An institutional investor shall not be deemed to hold voting securities for investment purposes unless the voting securities were acquired and are held in the ordinary course of business as an institutional investor and not for the purpose of causing, directly or indirectly, the election of a majority of the members of the board of the directors of the Company, any change in the Company’s corporate charter, bylaws, management, policies or operations of the Company, or any of its gaming affiliates, or any other action which the Nevada Commission finds to be inconsistent with holding the Company’s voting securities for investment purposes only. Activities which are not deemed to be inconsistent with holding voting securities for investment purposes only include:

If the beneficial holder of voting securities who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information including a list of beneficial owners. The applicant is required to pay all costs of investigation.

Any person who fails or refuses to apply for a finding of suitability or a license within thirty days after being ordered to do so by the Nevada Commission or the Chairman of the Nevada Board, may be found unsuitable. The same restrictions apply to a record owner if the record owner, after request, fails to identify the beneficial owner. Any stockholder found unsuitable and who holds, directly or indirectly, any beneficial ownership of the common stock of the Company beyond such period of time as may be prescribed by the Nevada Commission may be guilty of a criminal offense. The Company is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a stockholder or to have any other relationship with the Company or its subsidiaries if the Company

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The Nevada Commission may, in its discretion, require the holder of any debt security of the Company to file applications, be investigated and be found suitable to own the debt security of the Company. If the Nevada Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Company can be sanctioned, including the loss of its approvals, if without the prior approval of the Nevada Commission, it:

The Company is required to maintain a current stock ledger in Nevada which may be examined by the Nevada Gaming Authorities at any time. If any securities are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming Authorities. A failure to make such disclosure may be grounds for finding the record holder unsuitable. The Company is also required to render maximum assistance in determining the identity of the beneficial owner. The Nevada Commission has the power to require the Company’s stock certificates to bear a legend indicating that the securities are subject to the Nevada Act. The Company’s stock certificates do bear such a legend.

The Company may not make a public offering of its securities without the prior approval of the Nevada Commission if the securities or the proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or to retire or extend obligations incurred for such purposes. Such approval, if given, does not constitute a finding, recommendation or approval by the Nevada Commission or the Nevada Board as to the accuracy or adequacy of the prospectus or the investment merits of the securities. Any representation to the contrary is unlawful.

Changes in control of the Company through merger, consolidation, stock or asset acquisitions, management or consulting agreements, or any act or conduct by a person whereby he obtains control, may not occur without the prior approval of the Nevada Commission. Entities seeking to acquire control of the Company must satisfy the Nevada Board and Nevada Commission in a variety of stringent standards prior to assuming control of the Company. The Nevada Commission may also require controlling stockholders, officers, directors and other persons having a material relationship or involvement with the entity proposing to acquire control, to be investigated and licensed as part of the approval process relating to the transaction.

The Nevada legislature has declared that some corporate acquisitions opposed by management, repurchases of voting securities and corporate defense tactics affecting Nevada gaming licensees, and registered gaming corporations that are affiliated with those operations, may be injurious to stable and productive corporate gaming. The Nevada Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevada’s gaming industry and to further Nevada’s policy to:

Approvals are, in certain circumstances, required from the Nevada Commission before the Company can make exceptional repurchases of voting securities above the current market price thereof and before a corporate acquisition opposed by management can be consummated. The Nevada Act also requires prior approval of a plan of recapitalization proposed by the Company’s Board of Directors in response to a tender offer made directly to the Company’s shareholders for the purposes of acquiring control of the Company.

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License fees and taxes, computed in various ways depending on the type of gaming or activity involved, are payable to the State of Nevada and to the counties and cities in which the Nevada licensee’s respective operations are conducted. Depending upon the particular fee or tax involved, these fees and taxes are payable either monthly, quarterly or annually and are based upon either a percentage of the gross revenues received or the number of games or gaming devices operated.

A casino entertainment tax is also paid by casino operations where entertainment is furnished in connection with the selling of food or refreshments. Nevada licensees that hold a license as an operator of a slot route, or a manufacturer’s or distributor’s license, also pay certain fees and taxes to the State of Nevada.

Any person who is licensed, required to be licensed, required to be registered, or is under common control with such persons (collectively, “Licensees”), and who has become involved in a gaming venture outside of Nevada is required to deposit with the Nevada Board, and thereafter maintain, a revolving fund in the amount of $10,000 to pay the expenses of investigation of the Nevada Board of their participation in such foreign gaming. The revolving fund is subject to increase or decrease in the discretion of the Nevada Commission. Thereafter, Licensees are required to comply with certain reporting requirements imposed by the Nevada Act. Licensees are also subject to disciplinary action by the Nevada Commission if it knowingly violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fails to conduct the foreign gaming operation in accordance with the standards of honesty and integrity required of Nevada gaming operations, engages in activities that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employs a person in the foreign operation who has been denied a license or finding of suitability in Nevada on the ground of personal unsuitability.

Regulation and Licensing—California Lottery

The Company, through Last Chance, operates a California Lottery outlet at the Gold Ranch facility. As such, the Company is subject to certain regulatory and licensing requirements of the California State Lottery Commission (CSLC).

Given the on-line nature of the California Lottery operating system, the licensing requirements, while prudent, are less rigorous than the Nevada Gaming Commission. CSLC may terminate the Company’s lottery contract upon thirty days’ written notice, or less if deemed appropriate, in CSLC’s sole discretion. Reasons for termination include, but are not limited to, failure to follow CSLC policy, failure to meet financial obligations owed to CSLC, failure to meet CSLC’s established sales requirements, failure to maintain CSLC’s equipment and property in a condition acceptable to CSLC, a change in CSLC’s operation and/or administration of the lottery, and the lottery retailer engages or engaged in or permits or permitted conduct on or off business premises, which may or does affect, undermine or unfavorably reflect upon the security, integrity, honesty and/or fairness of the operation and/or administration of CSLS and/or any lottery game.

Regulation and Licensing—Alcoholic Beverages

The sale of alcoholic beverages by the Company is subject to supervision, control and regulation by the City of Reno (Zante) and Washoe County (Last Chance), which issues licenses deemed to be nontransferable, revocable privileges, and which has full power to limit, condition, suspend or revoke such licenses. The Company is presently licensed to sell alcoholic beverages at both of its properties. Any adverse regulatory act with respect to this license could have an adverse effect upon the operations of the Company.

Other Information

We file with the Securities and Exchange Commission (SEC) our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, proxy statements and registration statements. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an

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internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants, including us, that file electronically. We also maintain a website located at http://www.sandsregency.com, and electronic copies of our periodic and current reports are available, free of charge, under the “Investor Relations” link on our website as soon as practicable after such material is filed with, or furnished to, the SEC.

The Company operates the casino and hotel towers at the Sands on a Company-owned approximately 6.3-acre site in downtown Reno. The casino/hotel site also includes a large outdoor swimming pool, pool house and other buildings and facilities. Garage and surface parking are provided at the casino/hotel site and also on an approximately 2.7-acre site located adjacent to the casino/hotel site. The Sands is subject to aggregate encumbrances of approximately $13.4 million as of June 30, 2003. Management considers the Sands facility to be in good condition and well maintained. A portion of the Sands parking facilities is currently not useful to the Sands due to the ReTRAC project (Reno Train Trench excavation), which is currently underway. For a more complete description of the ReTRAC project and its potential effect on the Sands, refer to “Other Factors Affecting Current and Future Results” in the Management Discussion and Analysis section of this report.

The Company also owns the business assets and leases the real property at Gold Ranch. The real property lease has a twenty-year term with four five-year extension options ending in 2042. The Company possesses the option to purchase the Gold Ranch real property at an agreed upon base price with inflation adjustments based upon the Consumer Price Index. Gold Ranch is located on Interstate-80 in Verdi, Nevada, twelve miles west of Reno. Management considers the Gold Ranch facility to be in good condition and well maintained.

In addition, the Company owns several smaller properties in Reno consisting of a combined area of approximately .7 acres and operates a slot route, which places 77 gaming devices in ten locations in the Reno area.

The Company has incurred legal and settlement costs aggregating $547,000 in connection with the settlement of a personal injury claim against The Sands Regency. The Company reached a settlement through mediation in July 2003 in the case of Debra Grant vs. Zante, Inc. dba The Sands Regency Casino and Hotel, case no. CV 02-02074, in the Second Judicial District Court of the State of Nevada, in and for the County of Washoe. The case was dismissed on August 18, 2003.

Although this claim, subject to a contracted deductible, was insured, the insurance carrier is insolvent and not expected to make any payment to the Company. A loss from this event was realized in the quarter ended June 30, 2003. The Company is seeking recovery of its loss from the Company’s insurance broker; the Company believes that it has meritorious claims for relief.

The Company is a party to various other legal actions, proceedings and pending claims arising in the normal course of its business. Management does not expect the outcome of these claims or suits to have a material adverse effect on the Company’s financial position or results of future operations. However, any proceeding or litigation has an element of uncertainty, and the ultimate outcomes may differ from management’s expectations.

The Company did not submit any matters to a vote of security holders in the fourth quarter of fiscal 2003.

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PART II

Trading under the symbol “SNDS”, the Common Stock of the Company is listed on the NASDAQ Small Cap Market. The following table sets forth the quarterly high and low share price information for the periods indicated:

As of September 24, 2003, the Company had 226 shareholders of record and in excess of 400 beneficial shareholders.

The declaration and payment of dividends in the future, if any, will be determined by our Board of Directors in light of the conditions then existing, including the Company’s earnings, financial condition, capital requirements and other factors. There are no restrictions on the Company prohibiting the payment of dividends and no dividends have been paid in the last two fiscal years. The Company intends to continue to the retain its earnings for use in its business.

The following table presents information about our Common Stock that may be issued upon the exercise of options, warrants and rights under existing equity compensation plans at June 30, 2003:

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