NEVADA GOLD & CASINOS INC - 10-K Annual Report

	Net Ownership
	Interest				Capitalized Development Costs
Development Projects:	2005		2004		2005		2004
	(Percent)

Dry Creek Casino, L.L.C.		69.0		69.0	$	1,156,318	$	1,264,164
Gold Mountain Development, L.L.C.		100.0		100.0		3,357,795		3,342,206
Goldfield Resources, Inc.		100.0		100.0		480,812		480,812
Nevada Gold (Tulsa), Inc.		100.0		100.0		1,326,536		744,617
Other						480,176		84,312
Total capitalized development costs					$	6,801,637	$	5,916,111

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for each of the years in the three year period ended March 31, 2005:

	Year Ended March 31,
	2005			2004			2003
Revenues:
Credit enhancement fees	$	5,660,909		$	3,643,037		$	--
Interest income		1,683,063			4,803,981			2,892,638
Royalty income		67,610			62,439			50,000
Gain on land sale		--			--			589,916
Miscellaneous income		--			34,975			52,326
Total		7,411,582			8,544,432			3,584,880
Expenses:
General and administrative		1,258,122			822,444			503,845
Interest expense		1,722,979			3,095,077			2,436,117
Salaries and wages		2,105,425			1,078,008			920,175
Legal and professional fees		1,646,962			1,480,227			682,391
Amortization of deferred loan issuance costs		327,544			1,031,786			554,375
Write-off of capitalized development costs		180,850			245,356			238,437
Other		139,595			135,377			110,997
Total		7,381,477			7,888,275			5,446,337
Operating income (loss)		30,105			656,157			(1,861,457	)
Minority interest		(837,849	)		(561,697	)		(53,323	)
Earnings from unconsolidated affiliates		7,648,802			11,243,466			9,538,081
Income before income tax expense		6,841,058			11,337,926			7,623,301
Income tax expense		(2,682,794	)		(3,813,870	)		(2,298,373	)
Net income	$	4,158,264		$	7,524,056		$	5,324,928

Per share Information:
Net income per common share - basic net income	$	0.33		$	0.65		$	0.49
Net income per common share - diluted net income	$	0.29		$	0.51		$	0.37
Basic weighted average number of shares outstanding		12,788,269			11,534,889			10,969,287
Diluted weighted average number of shares outstanding		14,672,777			15,425,427			15,555,956

COMPARISON OF THE FISCAL YEARS ENDED MARCH 31, 2005 AND MARCH 31, 2004

Revenues. Revenues decreased 13%, or $1.1 million, for fiscal year 2005 compared to fiscal year 2004. In fiscal year 2005, credit enhancement fees increased 55%, or $2.0 million, compared to fiscal year 2004 as a result of River Rock Casino’s higher revenues and improved operating margins during fiscal year 2005. Interest income decreased 65%, or $3.1 million, for fiscal year 2005 compared to fiscal year 2004. The decrease is primarily attributable to River Rock Casino’s payment of a $22.6 million note receivable to us in November 2003 which significantly reduced the weighted average outstanding balance of our notes receivable during fiscal year 2005 compared to fiscal year 2004.

Total expenses. Total expenses decreased 6%, or $507,000, for fiscal year 2005 compared to fiscal year 2004. Salary expenses increased 95%, or $1.0 million, and general and administrative expenses increased 53%, or $436,000. Both increases are primarily due to increased investment in corporate infrastructure to handle projected growth, including the addition of new personnel and the costs associated with those additional employees. We also incurred increased compliance costs related to requirements of the Sarbanes - Oxley Act of 2002. Interest expense in fiscal year 2005 decreased 44%, or $1.4 million, and amortization of deferred loan issue costs decreased $704,000, both attributable to our repayment of $23 million of our debt in fiscal year 2004. We wrote-off $181,000 of capitalized development costs that were incurred for a gaming project we evaluated for acquisition that was subsequently taken off the market. We also wrote-off a note receivable of $120,000 for a gaming project, based upon our decision to no longer pursue the project.

Earnings from unconsolidated affiliates. Earnings from unconsolidated affiliates decreased 32%, or $3.6 million, for fiscal year 2005 compared to fiscal year 2004. Earnings of IC-BH decreased 42% to $5.9 million due to a decrease in revenue caused by construction disruption at its Black Hawk properties. IC-BH’s $94.0 million expansion project at its Black Hawk properties resulted in traffic disruption and the closing of the front entrance of the casinos. The first phase of the expansion was completed by the end of fiscal year 2005, thereby ending the major construction. Earnings from IC-BH also decreased by $1.7 million related to an impairment charge resulting from our purchase of the Colorado Grande Casino from IC-BH for a purchase price of $6.5 million, which was less than the book value of the casino. Earnings from Route 66 Casinos increased 70%, or $743,000, as a result of a full year of operations of the permanent casino which opened in September 2003 with 1,250 slot machines. Prior to the opening of the permanent facility, there was a temporary casino with only 100 leased slot machines and another facility with 45 leased slot machines.

Net income. Net income decreased 45%, or $3.4 million, to $4.2 million for fiscal year 2005 compared to fiscal year 2004. The decrease is primarily related to decreased revenue from interest income and decreased earnings from IC-BH, and the increase in salaries and general and administrative expenses. The effective tax rate for the fiscal years 2005 and 2004 was 39% and 34%, respectively.

COMPARISON OF THE FISCAL YEARS ENDED MARCH 31, 2004 AND MARCH 31, 2003

Revenues. Revenues increased 138%, or $5.0 million, for fiscal year 2004, compared to fiscal year 2003. In June 2003, DCC began earning credit enhancement fees from River Rock Casino and credit enhancement fees of $3.6 million were earned in fiscal year 2004. Interest income increased 66%, or $1.9 million, because of the increase in the amount of notes receivable from the River Rock Casino project over the prior fiscal year and the recognition of $1.3 million of an unamortized finance fee related to River Rock Casino’s early prepayment of principal in the amount of $22.6 million during fiscal year 2004.

Total expenses. Total expenses increased 45%, or $2.4 million, for fiscal year 2004 compared to fiscal year 2003. Salaries increased 17%, or $158,000, general and administrative expenses increased 63%, or $319,000. Both increases are primarily due to increased investment in corporate infrastructure to handle projected growth, including the addition of new personnel and the costs associated with those additional employees. Interest expense increased 27%, or $659,000, because of a higher weighted average debt balance. Our overall debt was significantly reduced in November 2003 due to our early repayment of our $23.0 million credit facility. Legal and professional fees increased 117%, or $798,000. The increase is mainly due to increased legal fees related to the Route 66 Casinos dispute discussed in Part I, Item 3. Amortization of deferred loan issuance cost increased $477,000, to $1.0 million. The increase is primarily attributable to the recognition of $770,000 of deferred loan issuance cost related to our early repayment of our $23.0 million credit facility in November 2003, offset by $270,000 of amortization reversal during fiscal year 2004 attributable to the forfeiture of certain warrants. We wrote off $245,000 of capitalized development costs in fiscal year 2004 due to our decision to no longer pursue development of certain gaming projects.

Earnings from unconsolidated affiliates. Earnings from IC-BH increased 8%, or $724,000, due to an increase in gaming revenues related to the acquisition of the Colorado Central Station Casino and the Colorado Grande Casino in April 2003. Earnings from Route 66 Casinos increased 1,124% to $1,068,000. The Route 66 permanent casino opened in September 2003 with 1,250 slot machines. Prior to the opening of the permanent facility, there was a temporary casino with only 100 leased slot machines and another facility with 45 leased slot machines.

Net income. Net income increased 41%, or $2.2 million, for fiscal year 2004 compared to fiscal year 2003. This increase is primarily the result of increased earnings from IC-BH, increased interest income, and the commencement of credit enhancement fees from River Rock Casino. The effective tax rates for fiscal years 2004 and 2003 were 34% and 30%, respectively.

Liquidity and Capital Resources

Historical Cash Flows

The following table sets forth our consolidated net cash provided by (used in) operating, investing and financing activities for each of the years in the three year period ended March 31, 2005:

	2005			2004			2003
Cash provided by (used in):
Operating activities	$	6,862,022		$	2,318,707		$	2,249,544
Investing activities		3,447,692			20,778,535			(21,659,411	)
Financing activities		(9,992,150	)		(23,536,757	)		22,356,100

Operating activities. Net cash provided by operating activities during fiscal year 2005 increased $4.5 million compared to fiscal year 2004 mainly due to higher credit enhancement fees from River Rock and an income tax refund. During fiscal year 2005, we received $5.3 million of credit enhancement fees from River Rock Casino, a $2.4 million income tax refund and $4.3 million in tax distributions from IC-BH. All of our future tax distributions from IC-BH will go towards the repayment of the $5.9 million note payable to IC-BH related to the purchase of the Colorado Grande Casino until it is repaid which we anticipate will occur in fiscal year 2007. In fiscal year 2005 we also had non-cash write-offs of a $120,000 note receivable and $181,000 of capitalized development costs related to projects which we are no longer pursuing, because they are no longer economically feasible.

Investing activities. Net cash provided by investing activities during the fiscal year end March 31, 2005 decreased by $17.3 million compared to fiscal year 2004. $16.0 million of the decrease was due to the decreased balance of our notes receivable. River Rock Casino had repaid $23.0 million in notes payable to us in fiscal year 2004 and $10.0 million in 2005. In addition to notes receivable collected from River Rock we collected $1.2 million in notes receivable from affiliates. Also, we made $6.1 million of advances on notes receivable in connection with development projects and spent $1.4 million in capitalized development costs.

Financing activities. Net cash used in financing activities during fiscal year 2005 decreased by $13.5 million from fiscal year 2004, mainly due to our repayment of $4.8 million on our debt in fiscal year 2005 compared to $23.6 million in debt repayments in fiscal year 2005. During fiscal year 2005, we repurchased 604,900 shares of our common stock in the open market, at a total purchase price of $6.6 million, and we received $2.6 million from the exercise of stock options and warrants.

Future Sources and Uses of Cash

We expect that our future liquidity and capital requirements will be affected by:

capital requirements related to existing and future development projects and acquisitions;

debt service requirements; and

working capital requirements.

At March 31, 2005, outstanding indebtedness under our credit facilities totaled $13.0 million. In addition, we have lease guarantees of approximately $213,115 relating to the River Rock Casino project and we have guaranteed debt of approximately $100,000 of an affiliated company. To date, tax distributions from IC-BH, distributions from DCC of our portion of the credit enhancement fees from River Rock Casino and loan repayments from affiliates have been sufficient to satisfy our current debt obligations and working capital needs. However, on April 25, 2005 we executed a three year $5.9 million promissory note payable to IC-BH in connection with the purchase of the Colorado Grande Casino, and we will apply our future quarterly tax distributions from IC-BH to the repayment of interest and principal due on this note until it is repaid. Until this note is repaid, which we expect will occur in fiscal year 2007, we will be relying solely on credit enhancement fees from the River Rock Casino and affiliate loan repayments to satisfy our current debt obligations and working capital needs. We will need to borrow funds under the revolving credit facility if we have insufficient cash flow to satisfy our obligations and working capital needs (see Indebtedness below).

On March 31, 2005, we had cash and cash equivalents of $3.8 million.

We currently expect funds generated from our operating activities, together with existing cash and cash equivalents, and availability of borrowings under our credit facility, will be adequate to fund our ongoing operating and debt service requirements.

Indebtedness

In June 2004, we amended the financing documents relating to our existing $13.0 million credit facility (“Convertible Note”) maturing December 31, 2005. The interest rate on the Convertible Note was amended from 11.0% to 7.5% per annum. Also in June 2004, we entered into a $40.0 million revolving credit facility ("Credit Facility") with the same lender. Principal advances under the Credit Facility bear interest at 8.5% per annum and the Credit Facility has a maturity date of June 30, 2008. During fiscal year 2005, we paid down the amount of indebtedness outstanding under the Convertible Note to approximately $3.3 million by utilizing proceeds received from draws of approximately $7.9 million under the Credit Facility. The reduction of the Convertible Note to $3.3 million had the effect of reducing the shares into which the principal amount of debt is convertible from 1,739,166 shares to 1,105,833 shares. In May 2005, the holder of our $3.3 million convertible note converted $1.8 million of principal into 600,000 shares of our common stock at a conversion price of $3.00 per share.

The Credit Facility allows us to draw up to $40.0 million (less outstanding indebtedness under the Convertible Note) at any time prior to June 30, 2008, which is the maturity date for the Credit Facility. The Convertible Note and Credit Facility are secured by our interest in IC-BH. As of March 31, 2005, we had approximately $9.7 million in outstanding debt under the Credit Facility, with approximately $30.3 million in availability. At June 1, 2005, we had approximately $33.6 million in outstanding indebtedness, with approximately $15.6 million in availability under the Credit Facility.

We acquired the Colorado Grande Casino (through the purchase of 100% of the stock of Colorado Grande Enterprises, Inc. from IC-BH) on April 25, 2005 for the purchase price of $6.5 million - $600,000 was paid in cash and a promissory note was issued to IC-BH for the remaining $5.9 million. Simple interest will accrue on the outstanding principal on the note at a rate equal to IC-BH's cost

of funds plus one percent (1%) per annum. IC-BH's cost of funds is variable, with the rate dependent on the rate under IC-BH's credit facility, which is currently LIBOR plus 350 basis points. The note will mature on April 25, 2008. Our future quarterly tax distributions from IC-BH will be applied to the repayment of the interest and principal due on our $5.9 million note until it is repaid. The note is secured by 100% of the stock in Colorado Grande Enterprises, Inc.

During fiscal year 2005, we resolved a dispute with a financial advisor who facilitated the procurement of the Convertible Note by allowing his cashless exercise of a warrant for 1,041,533 shares of our common stock with an exercise price of $3.00 per share. The implied cash value of the exercise of all of the warrants was $3,124,599. The implied cash value was exchanged for 239,616 shares of common stock at a fair market value of $13.04 per share, leaving a net issuance of 801,907 shares of common stock. We repurchased 501,917 of these shares at $13.04 per share, which was the quoted closing market price on the date of the transaction. We paid the purchase price by issuing a $6.5 million note, with interest at the rate of 7.5% per annum. Principal payments of $3.25 million are due on each of April 1, 2005 and April 1, 2006. The 501,917 shares of common stock repurchased were subsequently retired by us since there was no immediate plan to reissue these shares in the near term. The repurchase of the shares of common stock was at fair market value on the measurement date, which was June 10, 2004; thus no expense was recorded. In the fourth quarter of fiscal year 2005, we prepaid the $3.25 million principal payment which was originally due on April 1, 2005.

Off-Balance Sheet Arrangements

As of March 31, 2005, we have certain off-balance sheet arrangements that may affect our financial condition, liquidity and results of operations, including a guarantee of $100,000 of indebtedness of a related party, Service Interactive, Inc. (“SI”), and a guarantee of operating lease payments for River Rock Casino in the amount of $213,000 ($128,000 at June 1, 2005).

In the event of nonperformance by SI and River Rock Casino under the terms of the obligations, our maximum potential future payment under these guarantees will be equal to the carrying amount of the liabilities. As of March 31, 2005, our maximum potential future payment under these guarantees was $313,000 ($228,000 as of June 1, 2005).

Contractual Obligations

The following table sets forth estimates of our contractual obligations as of March 31, 2005 to make future payments in fiscal year 2006 through fiscal year 2010 and thereafter:

Estimated Contractual Obligations:	Total		2006		2007		2008		2009		2010		Thereafter
Long-term debt, including fixed-rate interest (1)	$	13,005,670	$	3,317,499	$	3,272,500	$	--	$	6,415,671	$	--	$	--
Estimated interest payments (2)		2,204,376		977,379		545,332		545,332		136,333		--		--
Operating lease commitments (3)		1,473,109		184,312		211,837		213,318		217,762		223,688		422,192
Other Commitments(3)	$	4,024,845	$	3,044,845	$	780,000	$	200,000	$	--	$	--	$	--
Total	$	20,708,000	$	7,524,035	$	4,809,669	$	958,650	$	6,769,766	$	223,688	$	422,192

(1)	See Note 5 to our Consolidated Financial Statements in this Annual Report.

(2)	Estimated interest payments are based on the outstanding balance of our debt as of March 31, 2005, which is $13.0 million. Additional borrowings have been made subsequent to March 31, 2005 and the outstanding balance of our debt as of June 1, 2005 is $33.6 million.

(3)	See Note 12 to our Consolidated Financial Statement in this Annual Report.

Recent Accounting Pronouncements

Accounting for Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123R, "Share-Based Payment". This standard requires that companies measure and record the fair value of their stock based compensation awards at fair value on the date they are granted to employees. This fair value is determined based on a variety of assumptions, including volatility rates, forfeiture rates and the option pricing model used (e.g. binomial or Black Scholes). These assumptions could significantly differ from those we currently utilize in determining the pro forma compensation expense included in our disclosures required under SFAS No. 123. This standard will also impact the manner in which we recognize the income tax impacts of our stock compensation programs in our financial statements. This standard is effective for the first interim period of fiscal years beginning after June 15, 2005 (the Company's fiscal year beginning May 1, 2006), at which time companies can select whether they will apply the standard retroactively by restating their historical financial statements or prospectively for new stock-based compensation arrangements and the unvested portion of existing arrangements. We are currently evaluating its impact on our consolidated financial statements.

Accounting Changes and Error Corrections

In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error Corrections - a Replacement of APB Opinion No. 20 and FASB Statement No. 3". SFAS 154 requires retrospective application to prior period financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also redefines "restatement" as the revising of previously issued financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, including interest rates, foreign currency exchange rates, credit risk, commodity price and equity prices. Our primary exposure to market risk is credit risk concentrations. We do not believe we are subject to material interest risk or foreign currency risk.

Our credit facilities are fixed interest rate instruments and an interest rate change would not have any impact on our operations.

Item 8.

Financial Statements and Supplementary Data

The information required under Item 310(a) of Regulation S-K is included in this report as set forth in the “Index to Consolidated Financial Statements.” See F-1 for Index to Consolidated Financial Statements.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. While our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving the stated goals under all potential future conditions regardless of how remote. However, based on the evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in timely alerting them to material information required to be included in our periodic SEC filings at the reasonable assurance level.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we include a report of management’s assessment of the design and effectiveness of our internal controls as part of this Annual Report on Form 10-K for the fiscal year ended March 31, 2005. Our independent registered public accounting firm also attested to, and reported on, management’s assessment of the effectiveness of internal control over financial reporting. Management’s report and the independent registered public accounting firm’s attestation report are located below. There has been no change in our internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting as of the end of the most recent fiscal year, March 31, 2005, based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment under the framework in Internal Control - Integrated Framework, our management concluded that our internal control over financial reporting was effective as of the end of our most recent fiscal year, March 31, 2005.

Our management's assessment of the effectiveness of our internal control over financial reporting as of March 31, 2005 has been audited by Pannell Kerr Forster of Texas, P.C., an independent registered public accounting firm, as stated in its report which is included below.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Nevada Gold & Casinos, Inc. and Subsidiaries:

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control Over Financial Reporting, that Nevada Gold & Casinos, Inc. and Subsidiaries (the “Company”) maintained effective internal control over financial reporting as of March 31, 2005, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparing of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that the Company maintained effective internal control over financial reporting as of March 31, 2005, is fairly stated, in all material respects, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2005, based on the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets as of March 31, 2005 and March 31, 2004, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2005, of the Company and our report dated June 14, 2005 expressed an unqualified opinion of those financial matters.

/s/ Pannell Kerr Forster of Texas, P.C.

Houston, Texas

June 14, 2005

Item 9B.

Other Information

None.

Part III

Item 10.

Directors and Executive Officers of Registrant

We have adopted a Code of Ethics that applies to directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Our Code of Ethics is posted on our website at http://www.nevadagold.com, under Investor Relations - Investor Info. Changes to and waivers granted with respect to this Code of Ethics related to officers identified above, and other executive officers and directors of the Company that it is required to be disclosed pursuant to applicable rules and regulations of the Securities and Exchange Commission will also be posted on the our website and a Current Report on Form 8-K will be filed within 4 business days of the change or waiver.

The other information required by this item is incorporated by reference to our definitive proxy statement for our 2005 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to regulation 14A within 120 days after the end of the fiscal year covered by this report.

Item 11.

Executive Compensation

The information required by this item is incorporated by reference to our definitive proxy statement for our 2005 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to regulation 14A within 120 days after the end of the fiscal year covered by this report.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.

Certain Relationships and Related Party Transactions

Item 14.

Principal Accountant Fees and Services

Part IV

Item 15.

Exhibits, Financial Statement Schedules

(a) 1. Financial Statements.

Included in Part II of this Report:

Consolidated Financial Statements of Nevada Gold & Casinos, Inc.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of March 31, 2005 and 2004

Consolidated Statements of Operations for the fiscal years ended March 31, 2005, 2004 and 2003

Consolidated Statements of Stockholders’ Equity for the fiscal years ended March 31, 2005, 2004 and 2003

Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2005, 2004 and 2003

Notes to Consolidated Financial Statements

Consolidated Financial Statements of Isle of Capri Black Hawk, L.L.C.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of April 24, 2005 and April 25, 2004

Consolidated Statements of Income for the fiscal years ended April 24, 2005, April 25, 2004 and April 27, 2003

Consolidated Statements of Members' Equity for the fiscal years ended April 24, 2005, April 25, 2004 and April 27, 2003

Consolidated Statements of Cash Flows for the fiscal years ended April 24, 2005, April 25, 2004 and April 27, 2003

Notes to Consolidated Financial Statements

(a) 2. Financial Statement Schedules.

We have omitted all schedules because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.

(a) 3. Exhibits.

EXHIBIT
NUMBER	DESCRIPTION
2.1	Stock Purchase Agreement dated as of April 25, 2005 among Isle of Capri Black Hawk, L.L.C., IC Holdings Colorado, Inc., Colorado Grande Enterprise, Inc., and CGC Holdings, L.L.C.(filed previously as Exhibit 2.1 of to the Company’s Form 8-K, filed April 29, 2005)
3.2	Amended and Restated Bylaws of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.2 to the company’s From 10-QSB filed August 14, 2002)
3.3	Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 4.2 to Form S-8 filed October 11, 2002.
3.4	Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.3 to Form 10-Q filed November 9, 2004)
4.1	Common Stock Certificate of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 4.1 to the company’s Form S-8/A, file no. 333-79867)
4.5	Nevada Gold & Casinos, Inc. 1999 Stock Option Plan (filed previously as Exhibit 4.5 to the company’s Form S-8, file no. 333-100517)
10.1	Second Amended and Restated Operating Agreement of Isle of Capri Blackhawk L.L.C. (filed previously as Exhibit 10.1 to Form 10-K filed July 14, 2004)
10.2	First Amended and Restated Members Agreement dated April 22, 2003 by and between Casino America of Colorado, Inc., Casino America, Inc., Blackhawk Gold, Ltd., and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.2 to Form 10-K filed July 14, 2004)
10.3	License Agreement dated July 29, 1997 by and between Casino America, Inc. and Isle of Capri Black Hawk L.L.C. (filed previously as Exhibit 10.5 to the company’s Form 10-QSB, filed November 14, 1997)
10.4	Form of Indemnification Agreement between Nevada Gold & Casinos, Inc. and each officer and director (filed previously as Exhibit 10.5 to the company’s form 10-QSB, filed February 14, 2002)
10.5	Amended and Restated Nevada Gold & Casinos, Inc. 1999 Stock Option Plan (filed previously as Exhibit 4.5 to Form S-8 filed October 11, 2002)
10.6	Credit Facility dated June 28, 2004 by and between Nevada Gold & Casinos, Inc. and the Lender (portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act.) (filed previously as Exhibit 10.6 to the company’s form 10-Q, filed February 10, 2005)
10.7	Amended and Restated Security Agreement dated June 28, 2004 by and among Nevada Gold & Casinos, Inc., Blackhawk Gold, Ltd. and the Lender (portions of this exhibit have been omitted pursuant to a request for confidential treatment and file separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24-b-2 under the Exchange Act.) (filed previously as Exhibit 10.7 to the company’s form 10-Q, filed February 10, 2005)
10.8	Amended and Restated Secured Promissory Note dated June 28, 2004 by and among Nevada Gold & Casinos, Inc. and the Lender (portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act.) (filed previously as Exhibit 10.8 to the company’s form 10-Q, filed February 10, 2005)
10.9	Investment Agreement dated April 21, 2005 by and among Casino Development & Management Company, LLC, Thomas C. Wilmot, Buena Vista Development Company, LLC and Nevada Gold BVR, L.L.C
10.10	Amended and Restated Operating Agreement dated April 21, 2005, by and between Casino Development & Management Company, LLC and Nevada Gold BVR, L.L.C.
10.11	Promissory Note dated May 4, 2005, in the amount of $14,810,200 executed by Buena Vista Development Company, LC as maker and payable to Nevada Gold BVR, L.L.C.
14	Code of Ethics (filed previously as Exhibit 14 to Form 10-K filed July 14, 2004)
21	List of Subsidiaries (filed previously as Exhibit 21 to Form 10-K filed July 14, 2004)
23.1	Consent of Pannell Kerr Forster of Texas, P.C.
23.2	Consent of Ernst & Young LLP
31.1	Chief Executive Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act.
31.2	Chief Financial Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act.

32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)

Refer to 15(a) (3) above

(c)

None.

SIGNATURES

Pursuant to Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Nevada Gold & Casinos, Inc.

	By:	/s/ H. Thomas Winn
	H. Thomas Winn, Chairman of the Board,
	President, and Chief Executive Officer

	Date: June 21, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ H. THOMAS WINN H. Thomas Winn	Chairman, President and CEO	June 21, 2005
/s/ PAUL J. BURKETT Paul J. Burkett	Director	June 21, 2005
/s/ WILLIAM G. JAYROE William G. Jayroe	Director	June 21, 2005
/s/ JOSEPH A. JULIANO Joseph A. Juliano	Director	June 21, 2005
/s/ FRANCIS M. RICCI Francis M. Ricci	Director	June 21, 2005
/s/ WAYNE H. WHITE Wayne H. White	Director	June 21, 2005
/s/ CHRISTOPHER C. DOMIJAN Christopher C. Domijan	Chief Financial Officer and Chief Accounting Officer	June 21, 2005

Index to Consolidated Financial Statements

Consolidated Financial Statements of Nevada Gold & Casinos, Inc.

	Page

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of March 31, 2005 and 2004	F-3
Consolidated Statements of Operations for the fiscal years ended March 31, 2005, 2004 and 2003	F-4
Consolidated Statements of Stockholders’ Equity for the fiscal years ended March 31, 2005, 2004 and 2003	F-5
Consolidated Statements of Cash Flows for the fiscal years ended March 31, 2005, 2004 and 2003	F-6
Notes to Consolidated Financial Statements	F-7

Consolidated Financial Statements of Isle of Capri Black Hawk, L.L.C.

Report of Independent Auditors	F-28
Consolidated Balance Sheets as of April 24, 2005 and April 25, 2004	F-29
Consolidated Statements of Income for the fiscal years ended April 24, 2005, April 25, 2004 and April 27, 2003	F-30
Consolidated Statements of Members' Equity for the fiscal years ended April 24, 2005, April 25, 2004 and April 27, 2003	F-31
Consolidated Statements of Cash Flows for the fiscal years ended April 24, 2005, April 25, 2004 and April 27, 2003	F-32
Notes to Consolidated Financial Statements	F-33

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Nevada Gold & Casinos, Inc.

We have audited the accompanying consolidated balance sheets of Nevada Gold & Casinos, Inc. and Subsidiaries as of March 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the years in the three year period ended March 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nevada Gold & Casinos, Inc. and Subsidiaries as of March 31, 2005 and 2004 and the results of their operations and their cash flows for each of the years in the three year period ended March 31, 2005 in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Nevada Gold & Casinos, Inc.’s internal control over financial reporting as of March 31, 2005, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated June 14, 2005 expressed an unqualified opinion thereon.

/s/ Pannell Kerr Forster of Texas, P.C.

June 14, 2005
Houston, Texas

F-2

Nevada Gold & Casinos, Inc.

Consolidated Balance Sheets

	March 31,
	2005		2004
ASSETS
Current assets:
Cash and cash equivalents	$	3,846,195	$	3,528,631
Accounts receivable		794,435		216,322
Notes receivable - affiliates, current portion		1,200,000		1,200,000
Income tax receivable		113,288		2,522,000
Other		227,303		79,272
Total current assets		6,181,221		7,546,225

Investments in unconsolidated affiliates		21,647,329		17,932,901
Investments in development projects		6,801,637		5,916,111
Notes receivable from Dry Creek Rancheria		--		10,000,000
Notes receivable - affiliates, net of current portion		2,777,136		3,839,586
Notes receivable - development projects		6,562,323		295,174
Furniture, fixtures and equipment, net of accumulated depreciation of $73,048 in 2005 and $124,609 in 2004		110,549		80,753
Deferred tax asset		618,282		--
Other		632,037		340,307
Total assets	$	45,330,514	$	45,951,057

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued liabilities	$	1,029,877	$	1,205,241
Accrued interest payable		20,453		--
Long-term debt, current portion		3,317,499		--
Deferred tax liability		--		2,517,678
Total current liabilities		4,367,829		3,722,919

Long-term debt, net of current portion and discount		9,632,773		11,029,266
Deferred income		178,835		145,833
Total liabilities		14,179,437		14,898,018

Commitments and Contingencies		--		--

Minority interest		299,884		253,719

Stockholders' equity:
Common stock, $0.12 par value per share; 25,000,000 and 20,000,000 shares authorized at March 31, 2005 and 2004 respectively; 12,755,203 and 12,279,352 shares issued and outstanding at March 31, 2005 and 2004, respectively		1,530,624		1,473,522
Additional paid-in capital		14,817,101		19,256,200
Retained earnings		14,419,719		10,261,455
Accumulated other comprehensive income (loss)		83,749		(191,857	)
Total stockholders' equity		30,851,193		30,799,320
Total liabilities and stockholders' equity	$	45,330,514	$	45,951,057

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

F-3

Nevada Gold & Casinos, Inc.

Consolidated Statements of Operations

	Year Ended March 31,
	2005			2004			2003
Revenues:
Credit enhancement fees	$	5,660,909		$	3,643,037		$	--
Interest income		1,683,063			4,803,981			2,892,638
Royalty income		67,610			62,439			50,000
Gain on land sale		--			--			589,916
Miscellaneous income		--			34,975			52,326
Total		7,411,582			8,544,432			3,584,880
Expenses:
General and administrative		1,258,122			822,444			503,845
Interest expense		1,722,979			3,095,077			2,436,117
Salaries and wages		2,105,425			1,078,008			920,175
Legal and professional fees		1,646,962			1,480,227			682,391
Amortization of deferred loan issuance costs		327,544			1,031,786			554,375
Write-off of capitalized development costs		180,850			245,356			238,437
Other		139,595			135,377			110,997
Total		7,381,477			7,888,275			5,446,337
Operating income (loss)		30,105			656,157			(1,861,457	)
Minority interest expense		(837,849	)		(561,697	)		(53,323	)
Earnings from unconsolidated affiliates		7,648,802			11,243,466			9,538,081
Income before income tax expense		6,841,058			11,337,926			7,623,301
Income tax expense		(2,682,794	)		(3,813,870	)		(2,298,373	)
Net income	$	4,158,264		$	7,524,056		$	5,324,928

Per share Information:
Net income per common share - basic	$	0.33		$	0.65		$	0.49
Net income per common share - diluted	$	0.29		$	0.51		$	0.37
Basic weighted average number of shares outstanding		12,788,269			11,534,889			10,969,287
Diluted weighted average number of shares outstanding		14,672,777			15,425,427			15,555,956

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

F-4

Nevada Gold & Casinos, Inc.

Consolidated Statements of Stockholders' Equity

										Retained			Accumulated
							Additional			Earnings			Other						Total
	Common Stock						Paid-in			(Accumulated			Comprehensive			Treasury			Stockholders'
	Shares			Amount			Capital			Deficit)			Income (Loss)			Stock			Equity

Balance at March 31, 2002		10,664,184		$	1,279,702		$	14,076,500		$	(2,587,529	)	$	(102,106	)	$	-		$	12,666,567
Purchase of treasury stock (97,000 shares), at cost		--			--			--			--			--			(582,369	)		(582,369	)
Retirement of treasury stock		(97,000	)		(11,640	)		(570,729	)		--			--			582,369			--
Stock issued for cashless option exercises		318,088			38,171			(38,171	)		--			--			--			--
Exercise of stock options and warrants		264,500			31,740			614,437			--			--			--			646,177
Tax benefit of option and warrant exercises		--			--			1,057,757			--			--			--			1,057,757
Consultant option expense		--			--			62,000			--			--			--			62,000
Comprehensive income:
Net income		--			--			--			5,324,928			--			--			5,324,928
Other comprehensive loss on interest rate swap, net of tax		--			--			--			--			(467,472	)		--			(467,472	)
Comprehensive income		--			--			--			--			--			--			4,857,456
Balance at March 31, 2003		11,149,772			1,337,973			15,201,794			2,737,399			(569,578	)		--			18,707,588
Forfeiture of stock options		--			--			(525,260	)		--			--			--			(525,260	)
Purchase of treasury stock (4,000 shares), at cost		--			--			--			--			--			(36,433	)		(36,433	)
Retirement of treasury stock		(4,000	)		(480	)		(35,953	)		--			--			36,433			--
Stock issued for note conversion		594,167			71,300			1,711,201			--			--			--			1,782,501
Stock issued for cashless option and warrant exercises		132,413			15,889			(15,889	)		--			--			--			--
Exercise of stock options		407,000			48,840			963,918			--			--			--			1,012,758
Tax benefit of option and warrant exercises		--			--			1,878,889			--			--			--			1,878,889
Consultant option expense		--			--			77,500			--			--			--			77,500
Comprehensive income:
Net income		--			--			--			7,524,056			--			--			7,524,056
Other comprehensive income on interest rate swap, net of tax		--			--			--			--			377,721			--			377,721
Comprehensive income		--			--			--			--			--			--			7,901,777
Balance at March 31, 2004		12,279,352			1,473,522			19,256,200			10,261,455			(191,857	)		--			30,799,320
Purchase of treasury stock (1,106,817 shares), at cost		--			--			--			--			--			(13,153,955	)		(13,153,955	)
Retirement of treasury stock		(1,106,817	)		(132,818	)		(13,021,137	)		--			--			13,153,955			--
Stock issued for cashless option and warrant exercises		801,917			96,230			(96,230	)		--			--			--			--
Exercise of stock options and warrants		780,751			93,690			2,504,772			--			--			--			2,598,462
Tax benefit of option and warrant exercises		--			--			5,972,094			--			--			--			5,972,094
Consultant option expense		--			--			201,402			--			--			--			201,402
Comprehensive income:
Net income		--			--			--			4,158,264			--			--			4,158,264
Other comprehensive income on interest rate swap, net of tax		--			--			--			--			275,606			--			275,606
Comprehensive income		--			--			--			--			--			--			4,433,870
Balance at March 31, 2005		12,755,203		$	1,530,624		$	14,817,101		$	14,419,719		$	83,749		$	--		$	30,851,193

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

F-5

Nevada Gold & Casinos, Inc.

Consolidated Statements of Cash Flows

			Year Ended March 31,
	2005			2004			2003

Cash flows from operating activities:
Net income	$	4,158,264		$	7,524,056		$	5,324,928
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		41,969			23,672			31,605
Amortization of capitalized development costs		127,166			80,672			--
Write-off of note receivable		120,000			--			12,647
Write-off of project development costs		180,850			245,356			238,437
Amortization of deferred income		(145,833	)		(1,287,994	)		(118,529	)
Gain on sale of land		--			--			(589,916	)
Warrants and options issued, beneficial conversion and amortization of deferred loan issuance costs		677,452			1,381,771			850,807
Unearned finance fees		--			419,098			--
Minority interest expense		837,849			561,697			53,323
Distributions from unconsolidated affiliates		4,344,000			3,673,000			5,555,000
Earnings from unconsolidated affiliates		(7,648,802	)		(11,243,466	)		(9,538,081	)
Deferred income tax expense		2,682,794			3,813,870			2,298,373
Changes in operating assets and liabilities:
Receivables and other assets		(934,324	)		(2,827,574	)		(2,722,766	)
Accounts payable and accrued liabilities		23,925			(45,451	)		853,716
Income tax refund		2,396,712			--			--
Net cash provided by operating activities		6,862,022			2,318,707			2,249,544
Cash flows from investing activities:
Proceeds from land sale		--			--			3,611,200
Purchases of real estate and assets held for development		(1,442,283	)		(1,944,911	)		(1,032,118	)
Purchase of furniture, fixtures, and equipment		(71,765	)		(61,017	)		(17,889	)
Advances on notes receivable		(6,100,710	)		(4,227,436	)		(25,959,661	)
Collections of notes receivable		10,000,000			25,900,933			405,877
Advances on notes receivable - affiliates		(137,550	)		(88,820	)		(4,689,357	)
Collections of notes receivable - affiliates		1,200,000			1,199,786			6,022,537
Net cash provided by (used in) investing activities		3,447,692			20,778,535			(21,659,411	)
Cash flows from financing activities:
Repayment on term loan		(3,272,500	)		--			(26,626	)
Repayments on credit facilities, net		(1,500,000	)		(23,600,066	)		23,000,000
Deferred loan issuance costs		(417,472	)		(244,587	)		(686,332	)
Acquisition of common stock		(6,608,955	)		(36,433	)		(582,369	)
Cash proceeds from exercise of stock options and warrants		2,598,462			1,012,758			646,177
Minority interest owners' capital contribution		--			75,000			5,250
Cash distribution to minority interest owners		(791,685	)		(743,429	)		--
Net cash provided by (used in) financing activities		(9,992,150	)		(23,536,757	)		22,356,100
Net increase (decrease) in cash and cash equivalents		317,564			(439,515	)		2,946,233
Cash and cash equivalents at beginning of period		3,528,631			3,968,146			1,021,913
Cash and cash equivalents at end of period	$	3,846,195		$	3,528,631		$	3,968,146
Supplemental cash flow information:
Interest paid, net of amounts capitalized	$	1,552,283		$	3,199,255		$	2,408,598
Income tax payments	$	--		$	2,522,000		$	--

Non-cash Financing Activities:
Treasury Stock purchased by the issuance of a note payable	$	6,545,000		$	--		$	--
Retirement of common stock	$	13,153,955		$	36,433		$	582,369
Advance from $40.0 million revolving credit facility for repayment of convertible note	$	7,915,671		$	--		$	--

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

F-6

Nevada Gold & Casinos, Inc.

Notes to Consolidated Financial Statements

Note 1.

Background and Basis of Presentation

Background

Nevada Gold & Casinos, Inc. (the “Company”), a Nevada corporation, was formed in 1977 and since 1994, has primarily been a gaming company involved in both commercial gaming projects and Native American owned gaming projects. Our gaming facility operations are located in the United States of America (“U.S.”), specifically in the states of Colorado, California, Oklahoma and New Mexico. Our business strategy will continue to focus on gaming projects.

Basis of Presentation

Our consolidated financial statements include the accounts of all majority-owned and controlled subsidiaries after the elimination of all significant intercompany accounts and transactions. Additionally, our financial statements for prior periods include reclassifications that were made to conform to the current year presentation. Those reclassifications did not impact working capital, total assets, total liabilities, our reported net income or stockholders’ equity.

Note 2.

Summary of Significant Accounting Policies

Principles of Consolidation

We consolidate entities when we have the ability to control the operating and financial decisions and policies of that entity. We also consolidate entities in which our ownership interest may be variable and we are the primary beneficiary of the risks and rewards of the entities' activities. For consolidated entities, we record minority interest for the portions we do not own. The determination of our ability to control or exert significant influence over an entity involves the use of judgment. We apply the equity method of accounting where we can exert significant influence over, but do not control, the policies and decisions of an entity. We use the cost method of accounting where we are unable to exert significant influence over the entity. All significant intercompany transactions and balances have been eliminated in the consolidated financial statements. See Note 3 for our investments in unconsolidated affiliates.

Equity Method of Accounting

Our investments in IC-BH, RCI, Route 66 Casinos and Sunrise are accounted for using the equity method of accounting because the investment gives us the ability to exercise significant influence, but not control, over the investees. Significant influence is generally deemed to exist where we have an ownership interest in the investee of between 20% and 50%, although other factors such as the degree of ultimate control, representation on the investee's Board of Directors or similar oversight body are considered in determining whether the equity method of accounting is appropriate. We record our equity in the income or losses of our investees using the same reporting periods as presented, except we report our equity in income or losses three months in arrears for RCI (which has a calendar fiscal year) and one month in advance for IC-BH (which has a fiscal year ending on the last Sunday in April). Deferred tax assets or liabilities are recorded for allocated earnings or losses of our equity investments that are not currently reportable or deductible for federal income tax purposes.

We utilize the equity method of accounting for our interest of 51% in Route 66 Casinos because the operating activities of the joint venture are currently controlled by the minority venturer. As disclosed in Note 13 to our Consolidated Financial Statements, we are involved in pending legal proceedings with the minority venturer in Route 66 Casinos in which the minority venturer has asserted that the operating agreement governing the venture is void and unenforceable. We have assessed whether this circumstance indicates utilization of the cost method of accounting for this investment and have concluded that the equity method best reflects the underlying nature of our investment. The operating agreement provides that all material decisions of the joint venture are made by the members, including us, on a unanimous basis. We believe the operating agreement to be binding and enforceable on the venture and our joint venture partner and, therefore, conclude that we have significant influence over the affairs of the venture. We also believe that we are able to reasonably estimate the revenues and expenses of the venture to the extent necessary to apply the equity method of accounting, as described in more detail below under the heading "Use of Estimates".

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenues and expenses during the reporting period. Actual results can, and often do, differ from those estimates.

Cash and Cash Equivalents

We consider short-term investments with an original maturity of less than three months to be cash equivalents.

We maintain cash accounts in major U.S. financial institutions. The terms of these deposits are on demand to minimize risk. The balances of these accounts occasionally exceed the Federally insured limits, although no losses have been incurred in connection with such cash balances.

Allowance for Doubtful Accounts

We establish provisions for losses on accounts and notes receivable if we determine that we will not collect all or part of the outstanding balance. We regularly review collectibility and establish or adjust our allowance as necessary using the specific identification method. We make advances to Indian tribes and other third parties under executed promissory notes for project costs related to the development of gaming/entertainment properties. Due diligence is conducted by our management with the assistance of legal counsel prior to entering into arrangements with Indian tribes and other third parties to provide financing in connection with their efforts to secure and develop gaming/entertainment operations. Repayment terms are largely dependent upon the operating performance of each gaming/entertainment project for which the funds have been loaned. Interest income is not accrued until it is reasonably assured that the project will be completed and that there will be sufficient profits from the project to cover the interest to be earned under the respective note. If projected cash flows are not sufficient to recover amounts due, the note is evaluated in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 114, “Accounting by Creditors for Impairment of a Loan,” to determine the appropriate discount to be recorded on the note for it to be considered a performing loan. If the note is performing, interest is recorded using the effective interest method based on the value of the discounted note balance ( See Note 4).

F-7

On a quarterly basis, we review each of our notes receivable to evaluate whether collection is still probable. In our analysis, we review the economic feasibility and the current financial, legislative and development status of the project. If our analysis indicates that the project is still economically feasible, we will continue recording the note receivable as an asset. If our analysis indicates that the project is no longer economically feasible, then the note receivable would be written down to its estimated fair value.

Capitalized Development Cost

We capitalize certain third party legal, professional, and other miscellaneous fees directly related to the procurement, evaluation and establishment of gaming/entertainment projects and real estate projects. Development costs are recorded on the cost basis and are amortized over the estimated economic term of the contract. We review each project on a quarterly basis to assess whether any changes to our estimates are appropriate. If accumulated costs of a specific project exceed the net realizable value of such project or the project is abandoned, the costs are charged to earnings.

Mining Properties and Claims

We capitalize costs of acquiring and developing mineral claims until the properties are placed into production. These costs include the costs to acquire and improve the claims, including land-related improvements, such as roads. We carry these costs on our books at the lower of our basis in the claims, or the net realizable value of the mineral reserves contained in the claims. Mining properties are recorded at their acquisition price. Upon commencement of production, costs are amortized on a units-of-production basis. At March 31, 2005, management believes the net realizable value of the mineral reserves is in excess of our costs.

Real Estate Held for Development

Real estate held for development consists of undeveloped land located in and around Black Hawk, Colorado, and Nevada County, California and related development costs and capitalized interest. Property held for development is carried at the lower of cost or net realizable value.

Furniture, fixtures, and equipment

Expenditures for furniture, fixtures, and equipment are capitalized at cost. We depreciate furniture, fixtures, and equipment over their respective estimated useful lives, ranging from two to seven years, using the straight-line method. When items are retired or otherwise disposed of, a gain or loss is recorded for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to earnings, and replacements and betterments are capitalized.

Deferred Loan Issuance Costs

Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the expected terms of the related debt agreements and are included in other assets on our consolidated balance sheets.

Asset and Investment Impairments

We apply the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," and Accounting Principles Board Opinion (“APB”) No. 18, "The Equity Method of Accounting for Investments in Common Stock," to account for asset and investment impairments. Under these standards, we evaluate an asset or investment for impairment when events or circumstances indicate that its carrying value may not be recovered. These events include market declines that are believed to be other than temporary, changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset or investment and adverse changes in the legal or business environment such as adverse actions by regulators. When an event occurs, we evaluate the recoverability of our carrying value based on either (i) the long-lived asset’s ability to generate future cash flows on an undiscounted basis or (ii) the fair value of our investment in unconsolidated affiliates. If an impairment is indicated or if we decide to exit or sell a long-lived asset or group of assets, we adjust the carrying value of these assets downward, if necessary, to their estimated fair value, less costs to sell. Our fair value estimates are generally based on market data obtained through the sales process or an analysis of expected discounted cash flows. The magnitude of any impairments are impacted by a number of factors, including the nature of the assets to be sold and our established time frame for completing the sales, among other factors. We also reclassify the asset or assets as either held-for-sale or as discontinued operations, depending on, among other criteria, whether we will have any continuing involvement in the cash flows of those assets after they are sold.

F-8

Revenue Recognition

We record revenues from credit enhancement fees, interest on notes receivable and royalties on the accrual basis as earned. The date on which payments are collected may vary dependent upon the term of the contracts or note receivable agreements. For certain notes receivable related to Indian gaming projects, interest income is not accrued until it is reasonably assured that the project will be completed and that there will be sufficient profits from the project to cover the interest to be earned under the respective notes. If the note is performing, interest is recorded using the effective interest method based on the value of the discounted note balance.

Income Taxes

Income taxes are accounted for in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires the use of an asset and liability approach for financial accounting and reporting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We record current income taxes based on our current taxable income, and we provide for deferred income taxes to reflect estimated future tax payments and receipts. We account for tax credits under the flow-through method, which reduces the provision for income taxes in the year the tax credits first become available. We reduce deferred tax assets by a valuation allowance when, based on our estimates, it is more likely than not that a portion of those assets will not be realized in a future period. The estimates utilized in recognition of deferred tax assets are subject to revision, either up or down, in future periods based on new facts or circumstances.

We maintain a tax accrual policy to record both regular and alternative minimum taxes for companies included in our consolidated federal and state income tax returns. The policy provides, among other things, that (i) each company in a taxable income position will accrue a current expense equivalent to its federal and state income taxes, and (ii) each company in a tax loss position will accrue a benefit to the extent its deductions, including general business credits, can be utilized in the consolidated returns. We pay all consolidated U.S. federal and state income taxes directly to the appropriate taxing jurisdictions and, under a separate tax billing agreement, we may bill or refund our subsidiaries for their portion of these income tax payments.

Lease guarantees

Lease guarantees are accounted for in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Interpretation No. (“FIN”) 45,“Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 establishes disclosure and liability-recognition requirements for direct and indirect debt guarantees with specified characteristics.

Comprehensive income

We follow the provisions of SFAS No. 130, “Reporting Comprehensive Income.” SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components. SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. In accordance with the provisions of SFAS No. 130, we have presented the components of comprehensive income below net income on the face of the consolidated statements of stockholders’ equity. For the fiscal years ended March 31, 2005, 2004 and 2003, we had unrealized gains (losses) from interest rate swaps, net of taxes, of $275,606, $377,721 and $(467,472), respectively, allocated from IC-BH.

Stock-Based Compensation

We have adopted SFAS No. 123, “Accounting for Stock Based Compensation.” Under SFAS No. 123, we are permitted to either record expenses for stock options and other employee compensation plans based on their fair value at the date of grant or to continue to apply our current accounting policy under APB No. 25 “Accounting for Stock Issued to Employees,” and recognize compensation expense, if any, based on the intrinsic value of the equity instrument at the measurement date. In December of 2002, the FASB issued SFAS No. 148, “Accounting for Stock- Based Compensation - Transition and Disclosure - An Amendment to FASB Statement No. 123” (“SFAS No. 148”) to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. The Company elected not to change to the fair value based method of accounting for stock based compensation. Additionally, the SFAS No. 148 amended disclosure requirements of SFAS No. 123 to require more prominent disclosure in both annual and interim financial statements. We elected to continue following APB No. 25 and when required, provide the pro forma provisions of SFAS No. 123.

F-9

If compensation costs for our stock option plan had been determined based on the fair value at the grant date in 2005, 2004, and 2003, consistent with the provisions of SFAS No. 123, our net income and net income per share would have decreased to the pro forma amounts indicated below:

	Fiscal Year Ended March 31,
	2005			2004			2003
Net income - as reported	$	4,158,264		$	7,524,056		$	5,324,928
Less: total stock-based employee compensation expense determined under fair value based method for all awards granted to employees, net of tax		(386,078	)		(1,222,865	)	$	(404,085	)
Net income - pro forma	$	3,772,186		$	6,301,191		$	4,920,843
Net income per share - as reported:
Basic	$	0.33		$	0.65		$	0.49
Diluted		0.29		$	0.51		$	0.37
Net income per share - pro forma:
Basic	$	0.29		$	0.55		$	0.45
Diluted	$	0.27		$	0.43		$	0.35

The weighted average fair value at date of grant for options granted during the fiscal years ended March 31, 2005, 2004 and 2003 was $3.70, $5.22, and $1.55 per option, respectively. The fair value of options at date of grant was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	Fiscal Year Ended March 31,
	2005		2004		2003
Expected life (years)		2 years		2 years		2 years
Interest rate		3.75%		3.75%		3.0%
Dividend yield		-		-		-
Volatility		56%		76%		40%

The pro forma impact only considers options granted since April 1, 1999. Because all options granted subsequent to April 1, 1999 vested immediately except for 40,000 options granted in fiscal year 2005 which will vest 10,000 options each year for the next four years, the full impact of computing compensation costs, net of tax, for stock options under SFAS No. 123 is reflected in the pro forma net income and pro forma net income per share (basic and diluted) amounts presented above.

In December 2004, new accounting literature was introduced relating to the accounting for stock based employee compensation plans. See New Accounting Pronouncements Issued But Not Yet Adopted below.

Treasury Stock

We account for treasury stock using the cost method and report it in our consolidated balance sheet as a reduction to stockholders’ equity.

Earnings Per Share

Earnings per share are accounted for in accordance with the provisions of SFAS No. 128, “Earnings Per Share,” which requires the presentation of basic and diluted earnings per share on the consolidated statement of operations. Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding during each period. Diluted earnings per share assumes the exercise of all stock options having exercise prices less than the average market price of the common stock using the “treasury stock method” and for convertible debt securities using the “if converted method.” (See Note 7).

F-10

New Accounting Pronouncements Issued But Not Yet Adopted

As of March 31, 2005, there were several accounting standards and interpretations that had not yet been adopted by us. Below is a discussion of significant standards that may impact us.

Accounting for Stock-Based Compensation

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment". This standard requires that companies measure and record the fair value of their stock based compensation awards at fair value on the date they are granted to employees. This fair value is determined based on a variety of assumptions, including volatility rates, forfeiture rates and the option pricing model used (e.g. binomial or Black Scholes). These assumptions could significantly differ from those we currently utilize in determining the pro forma compensation expense included in our disclosures required under SFAS No. 123. This standard will also impact the manner in which we recognize the income tax impacts of our stock compensation programs in our consolidated financial statements. This standard is effective for the first interim period of fiscal years beginning after June 15, 2005 (the Company's fiscal year beginning May 1, 2006), at which time companies can select whether they will apply the standard retroactively by restating their historical financial statements or prospectively for new stock-based compensation arrangements and the unvested portion of existing arrangements.

Accounting Changes and Error Corrections

In May 2005, the FASB issued SFAS 154, "Accounting Changes and Error Corrections - a Replacement of APB Opinion No. 20 and FASB Statement No. 3". SFAS 154 requires retrospective application to prior period financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS 154 also redefines "restatement" as the revising of previously issued financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

Note 3.

Investments in Unconsolidated Affiliates and Investments in Development Projects

We hold investments in various unconsolidated affiliates which are accounted for using the equity method of accounting under APB No.18. Our principal equity method investees are gaming facilities. Additionally, we have one equity method investee engaged in land development and one equity investee engaged in the operation of a restaurant franchise. As of March 31, 2005, the amount of consolidated retained earnings which represent undistributed earnings from our unconsolidated affiliates, is $19,077,386. Our net ownership interest, investments in and earnings from our unconsolidated affiliates are as follows:

	Net Ownership Interest				Investment				Earnings (loss)
Unconsolidated Affiliates:	2005		2004		2005		2004		2005			2004		2003
	(Percent)
Isle of Capri - Black Hawk, L.L.C. (1)		43.0		43.0	$	17,681,299	$	15,708,324	$	5,888,031		$	10,175,236	$	9,450,807
Route 66 Casinos, L.L.C. (2)		51.0		51.0		3,645,423		1,852,827		1,811,914			1,068,230		87,274
Sunrise Land and Mineral Corporation (3)		50.0		50.0		320,607		371,750		(51,143	)		--		--
Restaurant Connections International, Inc. (4)		30.0		30.0		--		--		--			--		--
Total investments in unconsolidated affiliates					$	21,647,329	$	17,932,901

Total earnings from unconsolidated affiliates									$	7,648,802		$	11,243,466	$	9,538,081

(1)	Separate financial statements for this entity are attached at the end of these consolidated financial statements.

(2)	Equity method of accounting is utilized. See discussion below.

(3)	Represents our equity investment in a land development project. See discussion below.

(4)	Investment in RCI was reduced to zero in fiscal year 2000. See discussion below.

F-11

We also hold investments in various development projects that we consolidate. Our investments in development projects include real estate, gold mining and gaming facilities. Our net ownership interest and capitalized development costs in development projects are as follows:

	Net Ownership Interest				Capitalized Development Costs
Development Projects:	2005		2004		2005		2004
	(Percent)
Dry Creek Casino, L.L.C. (1)		69.0		69.0	$	1,156,318	$	1,264,164
Gold Mountain Development, L.L.C. (2)		100.0		100.0		3,357,795		3,342,206
Goldfield Resources, Inc. (3)		100.0		100.0		480,812		480,812
Nevada Gold (Tulsa), Inc. (4)		100.0		100.0		1,326,536		744,617
Other (5)						480,176		84,312
Total capitalized development costs					$	6,801,637	$	5,916,111

(1)	The remaining 31% that we do not own is recorded as minority interest. See discussion below.

(2)	Acquisition and development costs incurred for 240 acres of real property in the vicinity of Black Hawk, Colorado. See discussion below.

(3)	Acquisition cost incurred for 9,000 acres of mining claim in fiscal year 1999. See discussion below.

(4)	Development cost incurred for Muscogee (Creek) Nation gaming project.

(5)	Development cost incurred for other development projects.

Investments in Unconsolidated Affiliates

Isle of Capri - Black Hawk, L.L.C.

We are a 43% non-operating owner of Isle of Capri-Black Hawk, L.L.C. (“IC-BH”). Isle of Capri Casinos, Inc. (“Isle”) is the 57% operating owner. We use the equity method of accounting to account for our investment in IC-BH. Our investment is stated at cost, adjusted for our equity in the undistributed earnings or losses of the project and for distributions we receive. Our earnings from IC-BH totaled $5,888,031, $10,175,236 and $9,450,807 for fiscal years 2005, 2004, 2003, respectively. In the fourth quarter of fiscal year 2005, IC-BH recorded a $3,959,734 impairment charge related to the sale of the Colorado Grande Casino. Our share of impairment charge was $1,702,686. During fiscal years 2005, 2004 and 2003, we received tax distributions of $4,344,000, $3,673,000 and $5,555,000, respectively. Our investment in IC-BH is $17,681,299 and $15,708,324 as of March 31, 2005 and 2004, respectively. Our share of equity of IC-BH is approximately $23.1 million which is approximately $5.4 million in excess of our cost reflected on our Financial Statements. This excess is caused by the basis difference in the land we contributed to this joint venture when it was originally formed.

As of March 31, 2005, IC-BH owned and operated three casinos in the state of Colorado. Isle operates the casinos pursuant to a management agreement with IC-BH for a management fee based upon a percentage of the revenues and operating profits of the casinos. As of March 31, 2005, IC-BH's casino properties are:

Isle of Capri-Black Hawk

The Isle of Capri - Black Hawk Casino commenced operations in December 1998. In December 2001, IC-BH refinanced its indebtedness with a new $90.0 million credit facility. The average interest on this credit facility was estimated to be 6% to 7%. In the fourth quarter of fiscal 2002, IC-BH entered into three interest rate swap agreements that converted $40.0 million of its floating rate to a fixed rate basis for the following three years. IC-BH uses interest rate swap agreements to hedge interest rate volatility associated with its indebtedness. For fiscal years 2005, 2004 and 2003, we have included $275,606, $377,721 and ($467,472), respectively, as accumulated other comprehensive income (loss) in our statement of stockholders’ equity for these interest rate swap agreements.

Colorado Central Station -Black Hawk and Colorado Grande - Cripple Creek

In fiscal 2004, IC-BH completed the acquisition of the Colorado Central Station -Black Hawk and Colorado Grande - Cripple Creek casinos from International Game Technology, Inc. for $84.0 million. IC-BH entered into a $210.6 million Senior Secured Credit Facility (which replaced its prior credit facility) to provide financing for the acquisition of the new casinos and for expansion of the casinos’ facilities. In February 2004, the Senior Secured Credit Facility was amended to provide for a $40.0 million Revolving Credit Facility and a $165.0 million Term Loan.

F-12

Route 66 Casinos, L.L.C.

We are a 51% non-operating owner of Route 66 Casinos, L.L.C. (“Route 66 Casinos”). American Heritage, Inc., d/b/a The Gillmann Group (“The Gillmann Group”) is the 49% operating owner. We use the equity method of accounting to account for our investment in Route 66 Casinos. Our investment is stated at cost, adjusted for our undistributed earnings or losses of the project. Our earnings from Route 66 Casinos totaled $1,811,914, $1,068,230 and $87,274 for fiscal years 2005, 2004 and 2003, respectively. During fiscal years 2005, 2004 and 2003, we did not receive any cash distributions from Route 66 Casinos. Our investment in Route 66 Casinos was $3,645,423 and $1,852,827 as of March 31, 2005 and 2004, respectively.

We utilize the equity method of accounting for our 51% interest in Route 66 Casinos because the operating activities of the joint venture are currently controlled by the minority venture partner, The Gillmann Group. As disclosed in Note 13, we are involved in pending legal proceedings with The Gillmann Group. The Gillmann Group has asserted that the operating agreement governing the venture is void and unenforceable. We have assessed whether this circumstance indicates utilization of the cost method of accounting for this investment and have concluded that the equity method best reflects the underlying nature of our investment. The operating agreement provides that all material decisions of the joint venture are made by the members, including us, on a unanimous basis. We believe the operating agreement to be binding and enforceable on the venture and our joint venture partner and, therefore, conclude that we have significant influence over the affairs of the venture. We also believe that we are able to reasonably estimate the revenues and expenses of the venture to the extent necessary to apply the equity method of accounting, as described in more detail below.

We have estimated our share of operational activities of Route 66 Casinos and have recorded such amounts using the equity method of accounting because we do not receive current revenue and expense information from Route 66 Casinos as a result of ongoing litigation (see Note 13). The estimated revenues are based on published net win numbers provided by the Route 66 Casino, the primary casino property owned and operated by Route 66 Casinos, to the State of New Mexico Gaming Control Board for the 1,250 gaming devices leased to Route 66 Casino by Route 66 Casinos. Estimated expenses are comprised of previously negotiated debt service payments on the 1,250 gaming devices supplied to Route 66 Casino, the supply of parts for the repair of these gaming devices and a monthly overhead fee to The Gillmann Group. The direct expenses related to the debt service of the gaming devices and The Gillmann Group monthly overhead fee are stable costs with little variable activity. We believe the net profits determined from the estimated revenues and expenses are reasonable; however, actual financial results may vary from our estimates.

The Gillmann Group had three gaming equipment leases with the Laguna Development Corporation (“LDC”), a federally chartered corporation wholly-owned by the Pueblo of Laguna, the second largest pueblo in New Mexico. Effective May 23, 2002, also the effective date of the joint venture agreement, The Gillmann Group agreed to assign these three gaming equipment leases to Route 66 Casinos which in turn leased the gaming equipment devices under the leases to Route 66 Casino, the primary casino property owned and operated by LDC. Route 66 Casinos expects to receive on average approximately 16% of gross revenue from the gaming devices subject to the leases over the five-year period commencing in fiscal year 2004.

The Route 66 Casino commenced operations on September 4, 2003. The property has 1,250 slot machines, and multiple food, beverage and retail outlets and paved parking for trucks and automobiles.

Sunrise Land and Mineral Corporation

We own a 50% interest in Sunrise Land and Mineral Corporation (“Sunrise”). Sunrise owns approximately 300 acres of land in Nevada County, California (including all surface, mineral, water, air, and timber rights), two mining leases consisting of approximately 8,600 acres in White Pine County, Nevada, one mining lease of approximately 6,700 acres in White Pine County, Nevada, and one mining lease of approximately 1,000 acres in Churchill County, Nevada. Sunrise holds investment real estate for long-term appreciation. Our investment is stated at cost, adjusted for our equity in the undistributed earnings or losses of Sunrise. Our loss from Sunrise totaled $51,143 for the fiscal year ended March 31, 2005. Sunrise had no earnings or losses prior to the fiscal year ended March 31, 2005. Our investment in Sunrise is accounted for using the equity method of accounting under APB No. 18. Our investment in Sunrise was $320,607 and $371,750 as of March 31, 2005 and 2004, respectively.

F-13

Restaurant Connections International, Inc.

We are a founding shareholder of RCI, and currently own a 30% interest in RCI. RCI owns the sole Pizza Hut franchise in Sao Paulo, Brazil, giving RCI ownership and operation of 16 Pizza Hut restaurants in Sao Paulo, Brazil. We are discussing a possible sale or other disposition of RCI.

Our 30% ownership of RCI is being accounted for using the equity method of accounting. Our investment in RCI is stated at cost, adjusted for our undistributed earnings or losses of RCI. RCI's earnings allocable to us through March 31, 2005 totaled $6,439 which has not been included in our statement of operations for the fiscal year ended March 31, 2005. In accordance with the equity method of accounting, our investment account balance was reduced to zero in the fiscal year ending March 31, 2000 and the remaining allocated loss of $990,199 incurred since April 1, 2000 has not been reflected in our financial statements, since we have no further funding obligations with respect to RCI, nor do we guarantee any of their obligations. Our investment in RCI will remain zero until such time that our allocated losses have been recovered at which time we will resume accounting for this investment using the equity method.

Investments in Development Projects

Dry Creek Casino, L.L.C.

We own 69% of Dry Creek Casino, L.L.C. (“DCC”), formed in 2001 to assist the Dry Creek Rancheria Band of Pomo Indians with the development and financing of its River Rock Casino located north of the San Francisco Bay area, in Sonoma County, California. We consolidate DCC, and the remaining 31% interest in DCC that we do not own is reported as minority interest. The River Rock Entertainment Authority (the “RREA”) was formed as an unincorporated instrumentality of the tribe to own and operate the River Rock Casino. The River Rock Casino features 1,600 slot machines, 24 table games and two restaurants.

As of March 31, 2005 and 2004, we have notes receivable of $0 and $10.0 million, respectively, from DCC. The notes receivable represent loans made by DCC to the River Rock Casino (see Note 4). Pursuant to the terms of the development and loan agreement, DCC earns an annual credit enhancement fee equal to 20% of River Rock Casino's earnings before taxes, depreciation and amortization. The credit enhancement fee is payable for a period of five years, commencing June 1, 2003, and ending on May 31, 2008. The RREA has the right to terminate the Development Agreement by exercising a buy-out option on or after June 1, 2006. If exercised, the RREA is obligated to pay an amount determined by multiplying the number of months remaining in the 5-year term by 100% of the average monthly credit enhancement fee earned during the 12-month period immediately preceding the month the buy-out option is exercised (the “Base Period”), plus any percentage (not exceeding 20%) by which gross revenues for the Base Period increased over the prior 12-month period. The buy-out fee must be paid in equal monthly installments of principal plus interest at the rate of 12% per annum, on the 15^th day of each month over a period equal to the remaining term of the Development Agreement. We record credit enhancement fee income from River Rock Casino on the accrual basis as earned. The date on which credit enhancement fee income is actually collected is on the 15^th day of each following month. The payment may vary dependent upon the cash flow from River Rock Casino's operations. Any shortfall in the payment in any month will be paid when cash flow is sufficient to satisfy senior obligations. As of March 31, 2005, there was no delinquency in payments to us of credit enhancement fee income. Credit enhancement fee income was $5,660,909 and $3,643,037 for fiscal years 2005 and 2004, respectively.

We amortize capitalized development costs of DCC, included in the investment column in the table at the beginning of this note, over the five-year term of the credit enhancement fee under development and loan agreement. Each quarter, we recognize as expense a percentage of our capitalized development costs determined by dividing actual credit enhancement fees received for the quarter by estimated credit enhancement fees to be received over the five-year term of the contract. We believe this method is appropriate because it matches income and expenses over the term of the contract. We also review estimated credit enhancement fees to be received over the remaining term of the contract on a quarterly basis to assess whether any changes to our estimates are appropriate. As of June 14, 2005, we have not found it necessary to change the estimated amount of credit enhancement fees over the remaining term of the contract. Our capitalized development costs were $1,156,318 and $1,264,164 as of March 31, 2005 and 2004, respectively. Amortization of capitalized development costs was $107,846 and $69,403 for fiscal years 2005 and 2004, respectively.

Gold Mountain Development, L.L.C.

Through our wholly-owned subsidiary, Gold Mountain Development, L.L.C. (“Gold Mountain”), we own approximately 240 acres of real property in the vicinity of Black Hawk, Colorado which is located in an Environmental Protection Agency National Priorities list area. We are currently having discussions with parties to joint venture with us on the development of the property. Our capitalized development costs were $3,357,795 and $3,342,206 as of March 31, 2005 and 2004, respectively. Our capitalized interest costs were $268,874 and $264,874, as of March 31, 2004 and 2003, respectively. No interest was capitalized in fiscal year 2005.

Goldfield Resources, Inc.

In June 1998, Goldfield Resources, Inc. (“Goldfield”), was organized as our wholly-owned subsidiary. We approved the transfer of our land and Bureau of Land Management mining claims in the State of Nevada, totaling approximately 9,000 acres, to Goldfield in exchange for all of the shares of common stock of Goldfield. Goldfield is not directly involved in mining operations. In August 1998, Goldfield secured a mining lease for its properties with Metallic Goldfield, Inc. (“Metallic”), and retains a royalty interest under the lease. This lease permits Goldfield to benefit financially from successful mining operations without incurring the significant labor and machinery costs of operating mining projects.

F-14

Prior to August 1, 2003, under the terms of our lease with Metallic, Metallic has been making an advance royalty payment of $4,500 per month. Effective August 1, 2003, the monthly payment is subject to adjustments based on changes in the Consumer Price Index using the August 1, 1998, effective date as the base year. All advance royalty payments are to be credited to the production royalty payable under the lease.

Metallic has agreed to pay a production royalty of 5% of all “Ore” and “Product” as defined by the lease, with all credits and offsets as provided by the lease, and Metallic may repurchase up to one percentage point of the royalty for $2,500,000. Metallic has the right to terminate the lease agreement at any time by giving us written notice. If Metallic terminates the lease, we retain as liquidated damages all advance royalty and other payments made by Metallic. Royalty income was $67,610, $62,439 and $50,000 for fiscal years 2005, 2004 and 2003, respectively. Our capitalized development costs were $480,812 and $480,812 as of March 31, 2005 and 2004, respectively.

Nevada Gold (Tulsa), Inc.

On December 23, 2003, through our wholly owned subsidiary, Nevada Gold Tulsa, Inc. (“Tulsa”), entered into Development and Management Agreements with the Muscogee (Creek) Nation (the “Nation”), a federally recognized Indian tribe, pursuant to which we will assist the Nation in developing and operating a multi-phase gaming and entertainment project to be located in southern Tulsa, Oklahoma. The project will be developed on and around the site of the existing Creek Nation Casino located on the Mackey Sand Bar in South Tulsa. The first phase will include the construction of a state-of-the-art gaming center featuring approximately 3,300 gaming machines, table games, multiple food venues and a multi-level parking facility with approximately 950 spaces, as well as 1,050 spaces of surface parking. Retail stores, restaurants, hotel, conference facility and other entertainment venues are planned for subsequent phases. The total investment by the tribe is expected to be approximately $110.0 million. Our capitalized development costs were $1,326,536 and $744,617 as of March 31, 2005 and 2004, respectively.

Note 4.

Notes Receivable

Note Receivable from Dry Creek Rancheria

During the fourth quarter of fiscal year 2005, River Rock Casino repaid in full the $10.0 million advance owed to DCC. In turn, DCC repaid in full the $10.0 million advance owed to us.

Notes Receivable - Related Parties

Clay County Holdings, Inc.

At March 31, 2005 and March 31, 2004, we had a note receivable of $1,857,424 and $2,457,424, respectively, from Clay County Holdings, Inc. (“CCH”). The note bears interest of 12% per annum, and is payable by CCH in a minimum amount of $150,000 plus accrued interest per quarter until paid in full. The principal balance of the note was reduced by $600,000 during each of the fiscal years 2005 and 2004. Interest income on the CCH note was $269,228, $340,445 and $458,787 for fiscal years 2005, 2004 and 2003, respectively. The note is secured by a pledge of shares of common stock of the Company which is owned by CCH. The market equity value of such common stock as of March 31, 2005 is approximately $7.8 million. CCH is our largest shareholder, beneficially owning 19% of our total outstanding common stock as of March 31, 2005.

Service Interactive, Inc.

At March 31, 2005 and March 31, 2004, we had a note receivable of $1,893,342 and $2,493,342, respectively, from Service Interactive, Inc. (“SI”). The note bears interest of 12% per annum, and is payable by SI in a minimum amount of $150,000 plus accrued interest per quarter until paid in full. The note is secured by a pledge of shares of common stock of the Company which is owned by CCH. The market equity value of such common stock as of March 31, 2005 is approximately $6.0 million. The principal balance of the note was reduced by $600,000 during each of the fiscal years ended March 31, 2005 and 2004. Interest income on the SI note was $273,543, $345,143 and $440,644 for the fiscal years ended March 31, 2005, 2004 and 2003, respectively. At the time of the extension of credit by the Company to SI, SI was a related party because we had the option to acquire common stock of SI and a former director of the Company was involved in SI.

F-15

Sunrise Land and Mineral Corporation

At March 31, 2005 and 2004, we had a note receivable of $226,370 and $88,820, respectively, from Sunrise. The note bears interest of 12% per annum. Interest income on this note was $19,792 and $4,272 for fiscal years 2005 and 2004, respectively. The note receivable is secured by a deed of trust lien on 300 acres of land in Nevada County, California owned by Sunrise.

See Note 11 for related party transactions.

Notes Receivable - development projects

From time to time, we make advances to third parties related to the development of gaming/entertainment projects. We make these advances after undertaking extensive due diligence. In our due diligence for tribal loans we determine whether a tribe is federally recognized, has land in trust, and has a compact with the state. If the tribe meets all three of these criteria, the economic analysis supports the investment, and we have a binding agreement with the tribe, we make the advances. In certain cases the tribe might not be federally recognized, or have land in trust and we then evaluate with our Native American regulatory consultants the merits and likelihood that federal recognition will be achieved by the tribe or that land could be placed in trust, and how long each process would take. In our due diligence for Non-Native American projects, we review the economic feasibility of the project and the resulting risks associated with completing the project.

On a quarterly basis, we review each of our notes receivable to evaluate whether the collection of our note receivable is still probable. In our analysis, we review the economic feasibility and the current financial, legislative and development status of the project. If the analysis of our review indicates that the project is still economically feasible, we will continue recording the notes receivable as an asset. If the analysis of our review indicates that the project is no longer economically feasible, then the note receivable would be written down to its estimated fair value.

At March 31, 2005, we had notes receivable of $6,562,323 related to the development of gaming/entertainment projects. Of this amount, $2,805,466 is represented by a note to a third party which bears interest at a rate of 10% and is payable on or before ten years from the date of the note, with earlier repayment required out of cash flow from operation of such gaming/entertainment project.

Additionally, $1,917,446 of the notes receivable is related to a Native-American gaming development project. A development agreement has been entered into with an Indian tribe and we are making advances to fund the tribe's federal recognition efforts and administrative expenses. This note bears interest at 10% per annum. The note is payable from the first proceeds of the development loan or future revenues from the tribe's economic enterprises, including any gaming facility.

In addition to these two notes we made other loans to Indian tribes and third parties totaling approximately $1.8 million. These notes bear an average interest rate of 9% per annum with maturity dates based on the availability of project financing and/or cash flow from operations. The repayment of such loans and accrued interest will be largely dependent upon the ability to obtain financing at each development project and/or the performance of each development project.

F-16

Note 5.

Long-Term Debt

Long-Term Financing Obligations

Our long-term financing obligations are as follows:

	March 31,
	2005			2004

$13.0 million Credit Facility, 7.5% interest, maturing December 2005	$	3,317,499		$	11,233,170
$40.0 million Revolving Credit Facility, 8.5%, maturing June 2008		6,415,671			-
$6.5 million Note Payable, 7.5% interest, maturing April 2006		3,272,500			-
Total		13,005,670			11,233,170
Less: current maturities		(3,317,499	)		-
Long-term financing obligations, less current maturities		9,688,171			11,233,170
Less: unamortized debt discount		(55,398	)		(203,904	)
Total long-term financing obligations, less unamortized debt discount	$	9,632,773		$	11,029,266

Aggregate maturities of the principal amounts of long-term financing obligations for the next five years and in total thereafter are as follows:

	Fiscal Year Ended
	March 31,
		2006	$	3,317,499
		2007		3,272,500
		2008		--
		2009		6,415,671
		2010		--
Total financing obligations			$	13,005,670

In June 2004, we amended the financing documents relating to our existing $13.0 million credit facility (“Convertible Note”). The interest rate on the Convertible Note was reduced from 11.0% to 7.5% per annum. The maturity date of the Convertible Note is December 31, 2005. Up to 54% of the Convertible Note is convertible into shares of our restricted common stock at the rate of $3.00 per share or 85% of the closing market price at the date of conversion, whichever is less. This conversion is limited at any one time during a 12 month period to an amount not to exceed 4.99% of our then total issued and outstanding stock. Because the Convertible Note can be converted into the Company's common stock at the lower of an exchange rate of $3.00 per share or 85% of the closing market price of the Company's common stock at conversion, there existed a beneficial conversion to holder of the credit facility when the Convertible Note was originally executed. In fiscal 2004, a beneficial conversion amount totaling $1,392,157 was recorded to additional paid-in-capital and a corresponding amount recorded as a debt discount. For fiscal years 2005, 2004 and 2003, amortization of the debt discount was $148,506, $173,232 and $234,432, respectively. Also in fiscal year 2004, approximately $1.8 million of the Convertible Note was converted into 594,167 shares of common stock at the conversion rate of $3.00 per share. This conversion was prior to its maturity date resulting in $99,253 of the remaining unamortized debt discount being charged to interest expense. The total of the unamortized debt discount at March 31, 2005 and 2004 was $55,398 and $203,904, respectively.

Also in June 2004, we entered into a $40.0 million revolving credit facility (“Credit Facility’”) with the holder of our Convertible Note. Principal advances under the Credit Facility bear interest at 8.5% per annum. The Credit Facility matures on June 30, 2008. During fiscal year 2005, we paid down the amount of indebtedness outstanding under the Convertible Note to approximately $3.3 million by utilizing proceeds received from draws of approximately $7.9 million under the Credit Facility. The remaining $3.3 million principal amount of the Convertible Note is convertible into 1,105,833 shares of our common stock. The reduction of the Convertible Note to $3.3 million had the effect of reducing the shares into which the debt is convertible from 1,739,166 shares to 1,105,833 shares.

The Credit Facility allows us to draw up to $40.0 million (less any outstanding indebtedness under the Convertible Note) at any time prior to June 30, 2008. The current availability under the Credit Facility is approximately $30.3 million as of March 31, 2005. The Convertible Note and Credit Facility are secured by our interest in IC-BH. (See Note 14).

F-17

During fiscal year 2005, we resolved a dispute with a financial advisor who facilitated the procurement of the Convertible Note by allowing his cashless exercise of a warrant for 1,041,533 shares of our common stock with an exercise price of $3.00 per share. The implied cash value of the exercise of all of the warrants was $3,124,599. The implied cash value was exchanged for 239,616 shares of common stock at a fair market value of $13.04 per share, leaving a net issuance of 801,907 shares of common stock. We repurchased 501,917 of these shares at $13.04 per share which was the quoted closing market price on the date of the transaction. We paid the purchase price by issuing a $6.5 million note, with interest at the rate of 7.5% per annum. Principal payments in the amount of $3.25 million of principal are due on each of April 1, 2005 and April 1, 2006. The 501,917 shares of common stock repurchased were subsequently retired by us since there was no immediate plan to reissue these shares in the near term. The repurchase of the shares of common stock was at fair market value on the measurement date, which was June 10, 2004; thus no expense was recorded. In the fourth quarter of fiscal year 2005, we prepaid the $3.25 million principal amount which was originally due on April 1, 2005.

We pay to our lender a commitment fee of 0.25% per annum on any unused portion under the $40.0 million Credit Facility. Also, we pay a financial advisor a finder’s fee equal to 3% of the principal advanced to us pursuant to the revolving Credit Facility up to an aggregate principal advanced of $40.0 million.

Note 6.

Income Taxes

We have adopted SFAS No. 109,“Accounting for Income Taxes.” Under SFAS No. 109, deferred tax assets and liabilities are determined based on the difference between financial statement and tax basis of all assets and liabilities, measured by using the enacted statutory tax rates.

SFAS No. 109 also provides for the recording of a deferred tax asset for net operating loss carryforwards (“NOLs”). For the fiscal year ended March 31, 2005, we had NOLs amounting to $13,161,792. The NOLs expire as follows:

Fiscal Year Ended March 31,

2006	$	272,190
2008		12,130
2009		111,926
2020		3,722,131
2021		21,124
2022		23,637
2023		811,843
2024		25,565
2025		8,161,246
	$	13,161,792

The NOLs are subject to certain limitations under the Internal Revenue Code. We have a deferred tax asset as a result of the future tax benefit attributable to NOLs, determined by applying the enacted statutory rate of 35.8%. We have recorded a deferred tax asset in connection with tax credit carryforwards and for compensation expense in connection with the issuance of stock options, and we have recorded a deferred tax liability for allocated earnings of our equity investments that are not currently taxable for federal income tax purposes. We believe that all net operating losses will be utilized prior to expiration.

F-18

Deferred tax assets and liabilities at March 31, 2005 and 2004 are comprised of the following:

	March 31,
	2005			Activity			2004
Deferred tax assets:
Net operating loss carryforwards	$	4,549,040		$	3,497,507		$	1,051,533
Tax credit carryforwards		162,239			--			162,239
Stock options		80,522			(354,798	)		435,320
Other		2,804			2,804			--
Total deferred tax assets		4,794,605			3,145,513			1,649,092
Deferred tax liabilities:
Equity in allocated earnings of equity investments		(4,066,257	)		100,513			(4,166,770	)
Other		(110,066	)		(110,066	)		--
Total deferred tax liabilities		(4,176,323	)		(9,553	)		--
Total deferred tax assets (liabilities), net	$	618,282		$	3,135,961		$	(2,517,678	)

Reconciliations between the statutory federal income tax expense rate of 34% and our effective income tax rate as a percentage of income before income tax (expense) benefit is as follows:

	Year Ended March 31,
	2005				2004						2003
	Percent		Dollars		Percent			Dollars			Percent			Dollars

Income tax expense at statutory federal rate		34.0	$	2,325,960		34.0		$	3,854,986			34.0		$	2,591,854
State taxes		1.7		119,572		--			--			--			--

Permanent differences:
Amortization of beneficial conversion feature of note payable		0.8		53,088		1.0			92,645			1.0			79,707
Adjustment to prior year’s taxes		2.2		149,772		--						--			--
Tax credit carryforwards		--		--		(1.0	)		(162,239	)		--			--
Recaptured net operating loss carryforwards		--		--		--			--			(5.0	)		(401,861	)
Other		0.5		34,402		--			28,478			--			28,673
Effective income tax rate		39.2	$	2,682,794		34.0		$	3,813,870			30.0		$	2,298,373

Note 7.

Equity Transactions, Stock Option Plan and Warrants

Our 1999 Stock Option Plan, as amended (the “Stock Option Plan”), is discretionary and provides for the granting of awards, including options for the purchase of our common stock and for the issuance of stock appreciation rights, restricted and/or unrestricted common stock and performance stock awards to our directors, officers, employees and independent contractors. The number of shares of common stock reserved for issuance under the Stock Option Plan is 3,250,000 shares, and at March 31, 2005, 685,549 shares were available for grant.

During fiscal year 2005, we granted options to purchase 201,000 shares of our common stock for director and employee compensation. Options granted to consultants totaled 70,000 and we have recorded $201,402 in consulting expenses based on the options' estimated fair value on the date of grant using the Black Scholes option pricing model. All options granted during fiscal year 2005 vest immediately, except for 40,000 options which will vest 10,000 options each year for the next four years. During fiscal year 2005, holders of 780,751 options and warrants, with an average exercise price of $3.33 per share, elected to exercise and received a like amount of restricted and unrestricted common stock of the Company in exchange for cash proceeds of $2,598,462. In addition, the Company provided for a cashless exercise of a warrant for 1,041,533 shares of our common stock with the exercise price of $3.00 per share, resulting in the issuance of 801,917 shares of common stock. (see note 5).

F-19

During fiscal year 2004, we granted options to purchase 355,000 shares of our common stock for director and employee compensation. Options granted to consultants totaled 50,000 and we have recorded $77,500 in consulting expenses based on the options' estimated fair value on the date of grant using the Black Scholes option pricing model. All options granted during fiscal year 2004 vest immediately. During fiscal year 2004, holders of 407,000 options, with an average exercise price of $2.49 per share, elected to exercise and received a like amount of restricted and unrestricted common stock of the Company in exchange for cash proceeds of $1,012,758. In addition, the Company provided for a cashless exercise of 166,785 warrants and issued 132,413 shares of common stock.

During fiscal year 2003, we granted options to purchase 395,000 shares of our common stock for director and employee compensation. Options granted to consultants totaled 40,000 during fiscal year 2003 and we have recorded $62,000 based on the options' estimated fair value on the date of grant using the Black Scholes option pricing model. All options granted during fiscal year 2003 vest immediately. During fiscal year 2003, holders of 264,500 options and warrants, with an average exercise price of $2.44 per share, elected to exercise and received a like amount of restricted and unrestricted common stock of the Company in exchange for cash proceeds of $646,177. In addition, the Company provided for a cashless exercise of 451,667 warrants and options and issued 318,088 shares of common stock.

Information regarding options and warrants and their respective changes as of and for fiscal years ended March 31, 2005, 2004 and 2003 are as follows:

	Fiscal Year Ended March 31,
	Options									Warrants
	2005			2004			2003			2005			2004			2003

Outstanding, beginning of fiscal year		1,595,951			1,597,951			1,309,951			1,207,834			2,223,944			2,893,111
Granted		271,000			405,000			435,000			-			-			-
Exercised		(728,751	)		(407,000	)		(147,000	)		(1,093,533	)		(166,785	)		(569,167	)
Expired or cancelled		-			-			-			(104,301	)		(849,325	)		(100,000	)
Outstanding, end of fiscal year		1,138,200			1,595,951			1,597,951			10,000			1,207,834			2,223,944
Exercisable, end of fiscal year		1,098,200			1,595,951			1,597,951			10,000			656,167			782,812
Available for grant, end of fiscal year		685,549			206,549			611,549			-			-			-

The weighted average option and warrant exercise price information as of and for the fiscal years ended March 31, 2005, March 31, 2004 and March 31, 2003 is as follows:

	Fiscal Year Ended March 31,
	Options						Warrants
	2005		2004		2003		2005		2004		2003

Outstanding, beginning of fiscal year	$	5.64	$	2.30	$	2.18	$	3.01	$	2.96	$	2.77
Granted during the fiscal year	$	11.79	$	11.35	$	6.30		-	$	-	$	-
Exercised during the fiscal year	$	3.33	$	2.49	$	2.71	$	3.01	$	2.40	$	2.10
Expired or cancelled during the fiscal year	$	-	$	-	$	-	$	3.00	$	2.99	$	2.75
Outstanding at end of fiscal year	$	8.57	$	5.64	$	2.30	$	3.25	$	3.01	$	2.96
Exercisable at end of fiscal year	$	8.49	$	5.64	$	2.30	$	3.25	$	3.02	$	2.88

F-20

Significant option and warrant groups outstanding at March 31, 2005, and related weighted average exercise price and weighted average remaining contractual life information is as follows:

Grant Date	Options Outstanding		Warrants Outstanding		Options/ Warrants Exercisable		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)

September 2000		--		10,000		10,000	$	3.25		1.0
October 2000		7,500		--		75,000	$	2.06		0.5
December 2001		186,700		--		186,700	$	2.75		1.9
March 2003		355,000		--		355,000	$	6.30		3.0
September 2003		198,000		--		198,000	$	10.59		3.5
February 2004		120,000		--		120,000	$	14.19		3.9
September 2004		143,000		--		143,000	$	11.40		4.5
October 2004		128,000		--		142,300	$	12.24		4.6

Computation of Earnings Per Share

The following is presented as a reconciliation of the numerators and denominators of basic and diluted earnings per share computations, in accordance with SFAS No. 128:

	Fiscal Year Ended March 31,
	2005		2004		2003
Numerator:
Basic:
Net income available to common stockholders	$	4,158,264	$	7,524,056	$	5,324,928
Diluted:
Net income available to common stockholders	$	4,158,264	$	7,524,056	$	5,324,928
Add: interest on convertible debt		157,760		341,911	$	499,472
Net income available to common stockholders	$	4,316,024	$	7,865,967	$	5,824,400
Denominator:
Basic weighted average number of common shares outstanding		12,788,269		11,534,889		10,969,287
Dilutive effect of common stock options and warrants		749,501		2,296,545		2,293,408
Dilutive effect of convertible debt		1,135,007		1,593,993		2,293,261
Diluted weighted average number of common shares outstanding		14,672,777		15,425,427		15,555,956
Earnings per share:
Net income per common share - basic	$	0.33	$	0.65	$	0.49
Net income per common share - diluted	$	0.29	$	0.51	$	0.37

As discussed in Note 5, we have a convertible debt agreement of which the holder has the option to convert all or a portion of principal and accrued interest into our common stock. In accordance with SFAS No. 128, the effects of applying the if-converted method for fiscal years 2005, 2004 and 2003 results in this convertible debt security being dilutive. Additionally, for the fiscal years 2005, 2004 and 2003, potential dilutive common shares issuable under options and warrants of 170,000, 142,300 and 0 were not included in the calculation of diluted earnings per share as they were anti-dilutive.

Treasury Stock

We previously approved the repurchase of up to 200,000 shares of our common stock in the open market in September 2002 and June 2003. In fiscal year 2005, we announced an increase of 600,000 shares to our stock buyback program. Under this program, we repurchased 604,900, 4,000 and 97,000 shares of our common stock for an average price of $10.93, $9.11 and $6.00 per share during the fiscal years ended March 31, 2005, 2004 and 2003, respectively. These shares were subsequently retired. Furthermore, as referred to in Note 5, we purchased 501,817 shares upon the exercise of warrants which were subsequently retired.

F-21

Note 8.

Deferred Income

For fiscal years 2005 and 2004, we recorded $178,835 and $443,778, respectively, of deferred income related to finance fees and interest income from loans made to development projects. Deferred income is amortized over the terms of the loans and is reported in the consolidated statements of operations as interest income. During fiscal years March 31, 2005, 2004 and 2003, we recognized $145,833, $1,234,157 and $109,793, respectively, as interest income. At March 31, 2005 and 2004, $178,835 and $145,833, respectively, of deferred income had not been recognized and is included on the consolidated balance sheet.

Note 9.

Segment Reporting

We operate in two major business segments (i) gaming and (ii) other. The gaming segment consists of IC-BH, DCC and Route 66 Casinos. For fiscal year 2003, we reported “Real Estate” as an operating segment and included gain on land sale as a component of revenue in our consolidated statement of operations for fiscal year 2003. Effective during fiscal year 2004, we no longer consider “Real Estate” an operating segment. We have retained $589,916 associated with gain on land sale within operating revenue in our consolidated statement of operations for fiscal year 2003 to conform amounts to those reported historically. The segment table for fiscal year 2003, below, reclassifies gain on land sale of $589,916 as “Other Revenue” due to the removal of real estate as a segment.

Summarized financial information for our reportable segments is shown in the following table. The “Other” column includes corporate-related items, results of insignificant operations, and segment profit (loss) and income and expenses not allocated to reportable segments.

	As of and for the Year Ended March 31, 2005
	Gaming		Other			Totals

Revenue	$	5,660,909	$	67,610		$	5,728,519
Segment profit (loss)		7,203,873		(362,815	)		6,841,058
Segment assets		32,122,882		4,542,182			36,665,064
Investment in Isle of Capri Black - Hawk, L.L.C.		17,681,299		-			17,681,299
Investment in Route 66 Casinos, L.L.C.		3,645,423		-			3,645,423
Investment in Sunrise Land and Mineral Corporation		-		320,607			320,607
Interest expense		1,722,979		-			1,722,979
Interest income		1,120,500		562,563			1,683,063
Earnings from Isle of Capri-Black Hawk, L.L.C.		5,888,031		-			5,888,031
Earnings from Route 66 Casinos, L.L.C.		1,811,914		-			1,811,914
Loss from Sunrise Land and Mineral Corporation		-		(51,143	)		(51,143	)

	As of and for the Year Ended March 31, 2004
	Gaming		Other			Totals

Revenue	$	3,643,037	$	97,414		$	3,740,451
Segment profit (loss)		11,687,744		(349,818	)		11,337,926
Segment assets		30,368,997		4,411,090			34,780,087
Investment in Isle of Capri Black - Hawk, L.L.C.		15,708,324		-			15,708,324
Investment in Route 66 Casinos, L.L.C.		1,852,828		-			1,852,828
Investment in Sunrise Land and Mineral Corporation		-		371,750			371,750
Interest expense		3,095,077		-			3,095,077
Interest income		4,018,308		785,673			4,803,981
Equity in earnings of Isle of Capri-Black Hawk, L.L.C.		10,175,236		-			10,175,236
Equity in earnings of Route 66 Casinos, L.L.C.		1,068,230		-			1,068,230

F-22

	As of and for the Year Ended March 31, 2003
	Gaming		Other		Totals

Revenue	$	-	$	692,242	$	692,242
Segment profit (loss)		7,377,160		246,141		7,623,301
Segment assets		40,200,565		4,105,723		44,306,288
Investment in Isle of Capri Black - Hawk, L.L.C.		8,633,782		-		8,633,782
Investment in Route 66 Casinos, L.L.C.		789,473		-		789,473
Interest expense		2,436,117		-		2,436,117
Interest income		1,912,194		980,444		2,892,638
Equity in earnings of Isle of Capri-Black Hawk, L.L.C.		9,450,807		-		9,450,807
Equity in earnings of Route 66 Casinos, L.L.C.		87,274		-		87,724

Reconciliation of reportable segment assets to our consolidated totals is as follows:

	March 31,
	2005		2004		2003

Total assets for reportable segments	$	36,665,064	$	34,780,087	$	44,306,288
Cash not allocated to segments		3,846,195		3,528,631		3,968,146
Notes receivable not allocated to segments		3,977,135		5,039,586		9,489,612
Income tax receivable		113,288		2,522,000		-
Deferred tax asset		618,283		-		-
Furniture, fixtures and equipment		110,549		80,753		43,399
Total assets	$	45,330,514	$	45,951,057	$	57,807,445

Reconciliation of reportable segment revenues to our consolidated totals is as follows:

	Year Ended March 31,
	2005		2004		2003

Total revenue for reportable segments	$	5,728,519	$	3,740,451	$	692,242
Interest income allocated to reportable segments		1,683,063		4,803,981	$	2,892,638
Total revenue	$	7,411,582	$	8,544,432	$	3,584,880

Note 10.

401(k) Plan

We have a 401(k) plan with Administaff under which employees 21 years of age or older qualify for participation. Participants are permitted to make contributions to the plan on a pre-tax salary reduction basis in accordance with the provisions of Section 401(k) of the Internal Revenue Code. All such contributions are immediately vested and nonforfeitable. Under the provisions of the plan, we may make discretionary matching contributions of 100% of employee contributions up to 3% of employees' compensation and 50% of up to the next 2% of employees' compensation. Employees vest in Company contributions immediately. Our discretionary contributions for fiscal years 2005, 2004 and 2003, were $33,535, $14,788 and $12,805, respectively.

Note 11.

Related Party Transactions

The Company has outstanding notes receivable from each of CCH and SI. (See Note 4 for a detailed description of these notes receivable.) CCH is our largest shareholder, beneficially owning 19% of our total outstanding common stock as of March 31, 2005. We also guaranteed $100,000 of loans payable by SI to third parties. At the time of the original extension of credit to SI and the guarantee of its debt, SI was a related party because of the involvement of a former director of the Company in SI. At March 31, 2005, we had a note receivable of $226,370 from Sunrise, of which we own 50%.

The Company's Board of Directors has previously approved these related party transactions. Effective June 16, 2004, the Company is required to obtain pre-approval from the Audit Committee (comprised of independent directors) of the Company's Board of Directors for any related party transactions.

F-23

Note 12.

Commitments and Contingencies

We have office space in Houston, Texas, under a five year non cancelable operating lease ending December 31, 2006. In December, 2004, we expanded our office space and extended our office lease to August 2011. The expected remaining future annual minimum lease payments as of March 31, 2005 are as follows:

Fiscal Year Ended March 31,

2006	$	184,312
2007		211,837
2008		213,318
2009		217,762
2010		223,688
2011		229,613
2012		192,579
	$	1,473,109

Rent expense for the fiscal years ended March 31, 2005, and 2003 was $63,606, $68,711 and $62,241, respectively.

We have guaranteed River Rock Casino’s operating lease for approximately $213,000.

As discussed in Note 11, we have guaranteed debt of $100,000 to third parties on behalf of SI for the performance of the repayment obligations. In the event of SI's nonperformance under the terms of the obligations, our maximum potential future payments under these guarantees will be equal to the carrying amount of the liabilities.

We continue to pursue additional development opportunities that may require, individually and in the aggregate, significant commitments of capital, extensions of credit, up-front payments to third parties and guarantees by the Company of third-party debt. At March 31, 2005, we have outstanding commitments to extend credit related to development opportunities in the aggregate amount of $3.5 million.

We may guarantee all or part of the debt incurred by Indian tribes, with which we have entered into a management contract, to fund development of casinos on the Indian lands. The La Jolla Development Agreement requires us to use commercially reasonable efforts to assist the La Jolla Band in obtaining one or more sources of additional financing for its casino project. If necessary to obtain third party financing, we have agreed to act as guarantor of up to 100% of the financing. Currently, it appears that third-party financing will be available for this project, with a limited guarantee by us. However, there can be no assurance that third-party financing will be available for this project. The Development Agreement provides that to the extent the La Jolla Band is unable to obtain financing from third parties, we will be required to provide financing of the project, up to $25.0 million.

We indemnified our officers and directors for certain events or occurrences while the director or officer is or was serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have a Directors and Officers Liability Insurance policy that limits our exposure and enables us to recover a portion of any future amounts paid, provided that such insurance policy provides coverage.

Note 13.

Legal Proceedings

We and our subsidiaries are, from time to time, defendants in various lawsuits relating to routine matters incidental to our business. As with all litigation, no assurance can be provided as to the outcome of the following matters and litigation inherently involves significant costs. Following is a summary of key litigation impacting us and our subsidiaries.

Route 66 Casinos. On September 27, 2002, we filed a claim for arbitration, seeking damages, specific performance and other relief against American Heritage, Inc. (d/b/a The Gillmann Group), the other member in Route 66 Casinos. Route 66 Casinos was jointly formed by us and The Gillmann Group to assist the Pueblo of Laguna in the development and financing of gaming facilities on land located 11 miles west of Albuquerque, New Mexico. We and The Gillmann Group entered into several contracts arising from The Gillmann Group’s agreement to assist in the development and equipping of the Route 66 Casino. One such agreement, the Route 66 Casinos Operating Agreement, governed the relationship of the parties relating to the Route 66 Casinos gaming operation. Pursuant to this agreement, we are to receive 51% of the net revenue received by Route 66 Casinos from the gaming operation. This agreement, which was signed by both us and The Gillmann Group, contains an arbitration clause. We also loaned The Gillmann Group the amount of $250,000, which has been repaid to us.

F-24

In addition to the operating agreement, the parties also entered into a right of first refusal agreement, whereby The Gillmann Group agreed to offer us the right to partner on future gaming projects. We believe that The Gillmann Group and Mr. Gillmann have breached each of these agreements.

We initiated arbitration proceedings pursuant to the Route 66 Casinos Operating Agreement; however, The Gillmann Group and Mr. Gillmann refused to participate on the ground that they believed the operating agreement is invalid. We then filed a lawsuit in state district court on October 3, 2002, in Harris County, Texas (Nevada Gold & Casinos, Inc. v. American Heritage, Inc., et al. (No. 2002-51378)), initially seeking to recover payment pursuant to the promissory note. We have since amended our claims to include breach of contract, breach of fiduciary duty, fraud and other claims related to The Gillmann Group’s repudiation of the Route 66 Casinos Operating Agreement and right of first refusal agreement.

The Gillmann Group then filed a lawsuit in state district court on October 4, 2002, in Clark County, Nevada (American Heritage, Inc., et al. v. Nevada Gold & Casinos, Inc., et al. (No. A457315)). In its lawsuit, The Gillmann Group seeks judicial dissolution of Route 66 Casinos and seeks a declaratory judgment that the operating agreement is void based upon fraudulent misrepresentation. We immediately moved to compel arbitration, which was denied by the Nevada district court. We appealed this ruling to the Nevada Supreme Court, and the related lawsuit in Texas was stayed pending the outcome of the Nevada appeal. On April 28, 2005 the Nevada Supreme Court ruled that the dispute was not subject to arbitration. In response, the Texas court lifted the stay of proceedings and scheduled the case for trial in September 2005.

Rinaldo Corporation. On October 18, 2004, Rinaldo Corporation filed an action captioned Rinaldo Corporation vs. Nevada Gold & Casinos, Inc., Sierra Research and Consulting, LLC, Sheila L. Torkelson, Michael R. Derry (d/b/a Waste Not Tribal Services), and Does 1 Through 100, against the Company in the Superior Court of the State of California (No. S-1500-CV 253969 AEW). According to the Complaint, Rinaldo Corporation (“Rinaldo”) and the Timbisha Shoshone Tribe of the Western Shoshone Nation entered into a Development Contract and Personal Property Lease on or about November 2, 2002, which obligates Rinaldo to (a) finance and provide technical assistance to the tribe in acquiring suitable real property and causing such land to be taken into trust by the United States; (b) design, construct and otherwise develop at its own expense the structure and related equipment to be used as the gaming facility; and (c) advance certain operating funds to the tribe while the gaming facility is being developed, constructed and brought into operation. In the Complaint, Rinaldo claims that the Company and the other named defendants wrongfully interfered with the agreement between Rinaldo and the tribe. Rinaldo alleges tortious interference with contract and prospective economic advantage, unfair competition and conspiracy and seeks up to $50 million in damages and unspecified punitive damages. Rinaldo also seeks a preliminary and permanent injunction barring the Company and the other defendants from engaging in further acts of alleged interference. On October 29, 2004, Rinaldo filed its First Amended Complaint. The Company demurred to Rinaldo’s First Amended Complaint, and, at a hearing on January 5, 2005, the Court orally sustained Nevada Gold’s demurrer with respect to one cause of action (with leave for Rinaldo to amend), and denied it with respect to the others. After Rinaldo amended, Nevada Gold answered, generally denying Rinaldo's allegations. Meanwhile, defendants Torkelson and Derry filed separate demurrers, asserting that they were protected by the doctrine of sovereign immunity. On May 11, 2005, the trial court sustained their demurrer, giving Rinaldo leave to amend. In response, Rinaldo filed a Third Amended Complaint on June 1, 2005, the sufficiency of which has not yet been tested by demurrer. Trial in this case is currently scheduled for December 2005. We believe the claims against us to be without merit and we intend to vigorously and appropriately defend the claims asserted in this matter.

Note 14.

Subsequent Events

On April 25, 2005, our wholly owned subsidiary, CGC Holdings L.L.C., acquired 100% of the common stock of Colorado Grande Enterprises, Inc., which owns the Colorado Grande Casino located in Cripple Creek, Colorado from IC-BH for $6.5 million. We paid $600,000 of the purchase price in cash and issued a promissory note payable to IC-BH for the remaining $5.9 million, which will mature on April 25, 2008. Simple interest will accrue on the outstanding principal of the note at a rate equal to IC-BH's cost of funds plus one percent (1%) per annum. IC-BH's cost of funds is variable, with the rate dependent on the rate under IC-BH's credit facility, which is currently LIBOR plus 350 basis points. The note will mature on April 25, 2008. Our future quarterly tax distributions from IC-BH will be applied to repay the interest and principal due on our $5.9 million note until it is repaid. The note is secured by 100% of the stock in Colorado Grande Enterprises, Inc. IC-BH will record a loss of approximately $4.0 million related to the sale of its Colorado Grande Casino in its fourth quarter of fiscal 2005, which ended April 24, 2005. Our share of the loss was recorded in the fourth quarter of fiscal 2005 (see Note 3).

F-25

On May 4, 2005, we, through our wholly owned subsidiary, Nevada Gold BVR, L.L.C., acquired a 20% interest in Buena Vista Development Company, LLC ("Buena Vista Development") in exchange for an approximately $14.8 million loan and an approximately $200,000 equity investment. Casino Development & Management Company is the manager and the only other owner of Buena Vista Development. We financed the acquisition by drawing $15.0 million on our revolving credit facility. We have no obligation to make any further equity contributions or loans to Buena Vista Development.

In December 2004 Buena Vista Development entered into a Development Agreement with the Buena Vista Rancheria of Me-Wuk Indians for the development of a casino on the tribal lands located near the city of Ione in Amador County, California. Ione is approximately 40 miles southeast of Sacramento and approximately 40 miles northeast of Stockton. The multi-level casino is expected to accommodate approximately 2,000 slot machines, 80 gaming tables, restaurant and dining facilities, a retail shop and an approximately 3,600 space multi-level parking garage. Under the Development Agreement, Buena Vista Development is entitled to receive a development fee equal to approximately 25% of the net income from the casino for a term of seven years after the casino opens.

The terms of our loan to Buena Vista Development provide for interest at the rate of prime plus 1%, with payments to be made from any third party permanent financing for the casino project or the first revenues received by Buena Vista Development under the Development Agreement. The loan is prepayable at any time without a penalty. Our initial 20% ownership interest in Buena Vista Development will increase by five percentage points at the end of every 6-month period that the loan remains outstanding, up to a maximum of an additional 20%, for a total of 40%.

Buena Vista Development will use the proceeds from the capital contribution and loan from Nevada Gold BVR to repay certain loans made by Casino Development and Management Company to Buena Vista Development for development costs of the project. The development of the project is subject to the receipt of regulatory approvals.

In May 2005, the holder of our $3.3 million convertible note converted $1.8 million of principal into 600,000 shares of our common stock at a conversion price of $3.00 per share.

Note 15.

Quarterly Financial Information (Unaudited)

		Revenues		Earnings from unconsolidated affiliates		Income before income tax expense		Net income applicable to common stockholders		Diluted earnings per common share(c)
		(in thousands, except per share amounts)
Fiscal Year ended March 31, 2005
First quarter (a)	$	1,834	$	2,820	$	2,660	$	1,724	$	0.11
Second quarter (a)		1,544		2,065		1,785		1,106		0.08
Third quarter (a)		1,699		1,879		1,335		828		0.06
Fourth quarter (a)		2,335		885		1,061		500		0.04
Fiscal Year ended March 31, 2004
First quarter (b)	$	1,637	$	2,859	$	2,514	$	1,674	$	0.12
Second quarter (b)		2,688		2,849		3,331		2,184		0.15
Third quarter (b)		2,681		2,876		2,795		1,808		0.12
Fourth quarter (b)		1,538		2,659		2,698		1,858		0.12

(a)

During fiscal year 2005, the credit enhancement fee increased from $3.6 million to $5.7 million. The increase was mainly related to the completion of River Rock Casino’s parking structure. Earnings from IC-BH decreased from $10.2 million to $5.9 million. The decrease was mainly caused by the construction disruption for IC-BH’s expansion and our share of $1.7 million impairment charge for the Colorado Grande Casino property. We continued expand our development resources and operation in response to our growth.

(b)

During fiscal year 2004, we began earning a credit enhancement fee from the River Rock Casino project, starting June 2003. The credit enhancement fee income was $3.6 million during fiscal year 2004. Also, interest income increased by $1.9 million mainly related to the loans made in conjunction with the River Rock Casino project. In September 2003, with the opening of Route 66 Casino, equity in earnings increased related to an increase in gaming machines placed in Route 66 Casino. We increased our development resources and corporate support structure in an effort to identify potential gaming opportunities. Additional costs related to loan issuance costs were also incurred.

(c)

The sum of individual quarterly diluted earnings per share amounts may not agree with year-to-date diluted earnings per share amounts as a result of each period's computation being based on the weighted average number of common shares outstanding during the period.

F-26

Isle of Capri Black Hawk, L.L.C.

Consolidated Financial Statements

Contents

Report of Independent Auditors	F-28

Audited Consolidated Financial Statements

Consolidated Balance Sheets, April 24, 2005 and April 25, 2004	F-29
Consolidated Statements of Income, Fiscal Years Ended April 24, 2005,
April 25, 2004 and April 27, 2003	F-30
Consolidated Statements of Members’ Equity, Fiscal Years Ended April 24, 2005,
April 25, 2004 and April 27, 2003	F-31
Consolidated Statements of Cash Flows, Fiscal Years Ended April 24, 2005,
April 25, 2004 and April 27, 2003	F-32
Notes to Consolidated Financial Statements	F-33

F-27

Report of Independent Registered Public Accounting Firm

The Members of Isle of Capri Black Hawk, L.L.C.

We have audited the accompanying consolidated balance sheets of the Isle of Capri Black Hawk, L.L.C. (the Company) as of April 24, 2005 and April 25, 2004, and the related consolidated statements of income, members’ equity, and cash flows for the years ended April 24, 2005, April 25, 2004 and April 27, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Isle of Capri Black Hawk, L.L.C. at April 24, 2005 and April 25, 2004 and the consolidated results of their operations and their cash flows for the years ended April 24, 2005, April 25, 2004 and April 27, 2003, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

June 13, 2005

F-28

Isle of Capri Black Hawk, L.L.C.

Consolidated Balance Sheets

(Dollars in thousands)

	April 24, 2005		April 25, 2004
Assets
Current assets:
Cash and cash equivalents	$	14,680	$	28,438
Accounts receivable - trade		856		750
Accounts receivable - related parties		28		11
Deferred income taxes		334		333
Prepaid expenses and other		1,463		1,753
Assets of discontinued operations		7,413		2,044
Total current assets		24,774		33,329
Property and equipment, net		218,174		157,912
Other assets:
Deferred financing costs, net of accumulated
amortization of $2,594 and $1,620, respectively		2,597		3,571
Restricted cash		-		43
Goodwill		14,665		14,665
Other intangible assets		12,200		12,200
Prepaid deposits and other		332		575
Deferred income taxes		2,685		-
Assets of discontinued operations		-		10,020
Total assets	$	275,427	$	232,315
Liabilities and members' equity
Current liabilities:
Current maturities of long-term debt	$	1,767	$	1,853
Accounts payable - trade		10,242		1,410
Accounts payable - related parties		2,343		2,051
Accrued liabilities:
Interest		1,640		1,075
Payroll and related expenses		4,276		5,091
Property, gaming and other taxes		5,455		2,830
Progressive jackpot and slot club awards		3,534		3,264
Other		5,011		1,679
Liabilities of discontinued operations		746		1,020
Total current liabilities		35,014		20,273

Long-term debt, less current maturities		188,173		163,940
Deferred income taxes		-		242
Liabilities of discontinued operations		-		209

Members' equity:
Casino America of Colorado, Inc.		28,833		26,786
Blackhawk Gold, Ltd.		23,085		21,541
Accumulated other comprehensive income (loss)		322		(676	)
Total members' equity		52,240		47,651

Total liabilities and members' equity	$	275,427	$	232,315

See accompanying notes.

F-29

Isle of Capri Black Hawk, L.L.C.

Consolidated Statements of Income

(Dollars in thousands)

	Fiscal Year Ended
	April 24, 2005			April 25, 2004			April 27, 2003
Revenues:
Casino	$	152,674		$	164,089		$	108,623
Rooms		5,665			5,602			5,702
Food, beverage and other		18,328			18,189			13,507
Gross revenues		176,667			187,880			127,832
Less promotional allowances		38,079			38,965			23,120
Net revenues		138,588			148,915			104,712

Operating expenses:
Casino		23,188			22,306			15,565
Gaming taxes		29,125			31,466			20,911
Rooms		1,546			1,432			1,414
Food, beverage and other		3,730			3,391			3,300
Facilities		7,438			6,899			4,323
Marketing and administrative		33,864			35,044			20,404
Management fees		6,374			7,173			5,197
Depreciation		9,936			8,424			5,855
Total operating expenses		115,201			116,135			76,969

Operating income		23,387			32,780			27,743

Interest expense		(9,461	)		(10,772	)		(5,629	)
Interest income		71			126			14

Income from continuing operations
before income tax		13,997			22,134			22,128
Income tax (benefit) provision		(2,642	)		(111	)		138
Income from continuing operations		16,639			22,245			21,990
Gain (loss) from discontinued
operations (including goodwill
impairment of $3,960), net of income tax
(benefit) provision of $(186), $211 and $72
for 2005, 2004 and 2003, respectively		(2,946	)		1,418			(11	)
Net income	$	13,693		$	23,663		$	21,979

See accompanying notes.

F-30

Isle of Capri Black Hawk, L.L.C.

Consolidated Statements of Members' Equity

(Dollars in thousands)

							Accumulated
							Other			Total
	Casino America			Blackhawk			Comprehensive			Members'
	of Colorado, Inc.			Gold, Ltd.			Loss (Income)			Equity

Balance, April 28, 2002	$	12,927		$	11,143		$	(360	)	$	23,710
Net income		12,528			9,451			-			21,979
Unrealized loss on interest
rate swap contract		-			-			(1,647	)		(1,647	)
Comprehensive income											20,332
Members' distributions		(7,286	)		(5,555	)		-			(12,841	)
Balance, April 27, 2003		18,169			15,039			(2,007	)		31,201
Net income		13,488			10,175			-			23,663
Unrealized gain on interest
rate swap contract		-			-			1,331			1,331
Comprehensive income											24,994
Members' distributions		(4,871	)		(3,673	)		-			(8,544	)
Balance, April 25, 2004		26,786			21,541			(676	)		47,651
Net income		7,805			5,888			-			13,693
Unrealized gain on interest
rate swap contract		-			-			998			998
Comprehensive income											14,691
Members' distributions		(5,758	)		(4,344	)		-			(10,102	)
Balance, April 24, 2005	$	28,833		$	23,085		$	322		$	52,240

See accompanying notes.

F-31

Isle of Capri Black Hawk, L.L.C.

Consolidated Statements of Cash Flows

(Dollars in thousands)

	Fiscal Year Ended
	April 24, 2005			April 25, 2004			April 27, 2003
Operating activities
Net income	$	13,693		$	23,663		$	21,979
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation		10,340			8,715			5,855
Amortization of deferred financing costs		974			1,035			417
Deferred income taxes		(3,116	)		40			57
Goodwill impairment charge		3,958			-			-
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable		195			76			(184	)
Income tax receivable (payable)		397			(154	)		-
Prepaid expenses and other assets		133			964			(128	)
Intercompany receivables		(44	)		(8	)		-
Accounts payable and accrued liabilities		1,672			(2,465	)		670
Net cash provided by operating activities		28,202			31,866			28,666

Investing activities
Purchases of property and equipment, net		(56,600	)		(14,093	)		(6,943	)
Net cash paid for acquisitions		-			(948	)		(80,313	)
Sale (purchase) of short-term investments		-			13,987			(13,987	)
Decrease (increase) in restricted cash		43			14			(44	)
Net cash used in investing activities		(56,557	)		(1,040	)		(101,287	)

Financing activities
Proceeds from debt		-			165,000			105,000
Net increase in line of credit		26,000			-			-
Principal payments on debt and cash paid to retire debt		(1,853	)		(171,324	)		(12,801	)
Deferred financing costs		-			(1,123	)		(2,274	)
Distributions to members		(10,102	)		(8,544	)		(12,841	)
Net cash provided by (used in) financing activities		14,045			(15,991	)		77,084

Net increase (decrease) in cash and cash equivalents		(14,310	)		14,835			4,463
Cash and cash equivalents at beginning of year		30,343			15,508			11,045
Cash and cash equivalents at end of year	$	16,033		$	30,343		$	15,508
Supplemental disclosure of cash flow information:
Cash payments for interest	$	9,323		$	9,822		$	5,128
Cash payments for income taxes, net of refunds	$	(160	)	$	-		$	-
Supplemental schedule of noncash investing and financing activities:
Construction costs funded through accounts payable	$	12,390		$	-		$	-

See accompanying notes.

F-32

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

1. Summary of Significant Accounting Policies

Basis of Presentation

Isle of Capri Black Hawk, L.L.C. (“the Company” or the “Isle-Black Hawk”), a Colorado limited liability company, operates two casino entertainment facilities in Black Hawk, Colorado, and discontinued operations at its third casino entertainment facility in Cripple Creek, Colorado, as more fully described in Note 13. The Company is owned by Casino America of Colorado, Inc., a wholly owned subsidiary of Isle of Capri Casinos, Inc., and Blackhawk Gold, Ltd., a wholly owned subsidiary of Nevada Gold & Casinos, Inc.

The rights and obligations of Casino America of Colorado, Inc. and Blackhawk Gold, Ltd. are governed in part by the Amended and Restated Operating Agreement of the Company (the “Agreement”) dated as of April 22, 2003. The Agreement provides that the Company will continue until December 31, 2096, or until such date that dissolution may occur. Pursuant to the Agreement, Casino America of Colorado, Inc. contributed cash, land purchase rights and development costs to the Company and Blackhawk Gold, Ltd. contributed land to the Company.

On July 29, 1997, Casino America of Colorado, Inc., Isle of Capri Casinos, Inc., Blackhawk Gold, Ltd., and Nevada Gold & Casinos, Inc. also entered into a members agreement which addressed the development of the Isle-Black Hawk, management of the Company, additional capital contributions, and other matters. Casino America of Colorado, Inc. has an ownership interest in the Company of 57% and Blackhawk Gold, Ltd. has an ownership interest in the Company of 43%. Profits and losses of the Company are allocated in proportion to ownership interests. The Isle-Black Hawk’s original casino commenced operation in December 1998. The property currently consists of a land-based casino with 1,328 slot machines and 21 table games, a 237-room hotel, and 1,100 parking spaces in an attached parking garage. The Isle-Black Hawk also offers customers a wide variety of non-gaming amenities, including a 92-seat Farraddays' restaurant, a 244-seat Calypso's buffet, a 32-seat Tradewinds Marketplace and a 4,000 square foot event center that can be used for meetings and entertainment.

On April 22, 2003, the Company acquired CCSC/Blackhawk, Inc. (the “Colorado Central Station”) and Colorado Grande Enterprises, Inc. (the “Colorado Grande”) through its wholly owned subsidiary, IC Holdings Colorado, Inc. The Colorado Central Station operation consists of a land-based casino in Black Hawk, Colorado, with 697 slot machines and 20 table games. The Colorado Grande operation consists of a land-based casino in Cripple Creek, Colorado, with 214 slot machines.

F-33

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

1. Summary of Significant Accounting Policies (continued)

Fiscal Year-End

The Company’s fiscal year ends on the last Sunday of April. This fiscal year creates more comparability of the Company’s quarterly operations, by generally having an equal number of weeks (13) and weekend days (26) in each quarter. Periodically, this system necessitates a 53-week year.

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of Isle of Capri Black Hawk, L.L.C. and its subsidiaries, Isle of Capri Black Hawk Capital Corp., IOC - Black Hawk Distribution Company, L.L.C. and IC Holdings Colorado, Inc. IC Holdings Colorado, Inc. has two subsidiaries - CCSC/Blackhawk, Inc. and Colorado Grande Enterprises, Inc. All intercompany balances and transactions have been eliminated in consolidation.

Reclassifications

Certain reclassifications have been made to fiscal 2004 financial statements to conform to the fiscal 2005 presentation.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant estimates include assessing the recoverability of goodwill, other intangible assets, and deferred tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

F-34

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

1. Summary of Significant Accounting Policies (continued)

Property and Equipment

Property and equipment are stated at cost, except for land contributed by Blackhawk Gold, Ltd., which was recorded at appraised value. The Company capitalizes the cost of purchases of property and equipment and capitalizes the cost of improvements to property and equipment that increases the value or extends the useful lives of the assets. Costs of normal repairs and maintenance are charged to expense as incurred. Gains or losses on dispositions of property and equipment are included in the determination of income. Depreciation is computed using the straight-line method over the following estimated useful lives of the assets:

	Years

Slot machines, software and computers	3
Furniture, fixtures and equipment	5-10
Leasehold improvements	25
Buildings and improvements	39.5

Deferred Financing Costs

The costs of issuing long-term debt have been capitalized and are being amortized over the term of the related debt.

Goodwill and Other Intangible Assets

Goodwill, representing the excess of the cost over the net identifiable tangible and intangible assets of acquired businesses, is stated at cost. Other intangible assets represent the value of trademarks acquired. Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” (“SFAS 142”) requires that these assets be reviewed for impairment at least annually. Based on its review, the Company believes that, as of April 24, 2005, there were no impairments of its goodwill and other intangible assets, except as described in Note 4. Additionally, the Company intends to continue to evaluate intangible assets that are not being amortized, at least annually, to determine whether events and circumstances continue to support an indefinite useful life. If these assets are subsequently determined to have a finite useful life, they will be tested for impairment, and then amortized prospectively over the estimated remaining useful lives and accounted for in the same manner as other intangible assets that are subject to amortization.

F-35

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

1. Summary of Significant Accounting Policies (continued)

Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”). SFAS 144 requires impairment losses be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of April 24, 2005, there were no impairments of its long-lived assets.

Derivative Instruments and Hedging Activities

Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”) requires companies to recognize all of its derivative instruments as either assets or liabilities in the statement of financial position at fair value. The Company utilizes derivative financial instruments to manage interest rate risk associated with variable rate borrowings. Derivative financial instruments are intended to reduce the Company’s exposure to interest rate risk. The Company accounts for changes in the fair value of a derivative instrument depending on the intended use of the derivative and the resulting designation, which is established at the inception of a derivative. SFAS 133 requires that a company formally document, at the inception of a hedge, the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge, including identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged, the method used to assess effectiveness, and the method that will be used to measure hedge ineffectiveness of derivative instruments that receive hedge accounting treatment. For derivative instruments designated as cash flow hedges, changes in fair value, to the extent the hedge is effective, are recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge effectiveness is assessed quarterly based on the total change in the derivative’s fair value.

F-36

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

1. Summary of Significant Accounting Policies (continued)

Revenue Recognition

In accordance with gaming industry practice, the Company recognizes casino revenues as the net win from gaming activities, which is the difference between gaming wins and losses. Casino revenues are net of accruals for anticipated payouts of progressive slot jackpots and certain table games. Such anticipated jackpot payments are reflected as current liabilities in the accompanying consolidated balance sheets. Revenues from the hotel, food, beverage, entertainment, and the gift shop are recognized at the time the related service or sale is performed or made.

Promotional Allowances and Slot Patrons Incentive Estimates

Net revenues do not include the retail amount of food, beverage, and other items provided gratuitously to customers. These amounts, which are included in promotional allowances, were as follows:

	Fiscal Year Ended
	April 24, 2005		April 25, 2004		April 27, 2003

Rooms	$	2,603	$	2,750	$	2,694
Food and beverage		11,418		11,446		7,762
Other		1,035		984		793
Customer loyalty programs		23,023		23,785		11,871
Total promotional allowances	$	38,079	$	38,965	$	23,120

The Company records the redemption of coupons and points for cash as a reduction of revenues. The Company provides slot patrons with incentives based on the dollar amount of play on slot machines. An accrual has been established based on an estimate of the outstanding value of these incentives, utilizing the age and prior history of redemptions. This amount is reflected as a current liability in the accompanying consolidated balance sheets.

The estimated cost of providing promotional allowances included in casino expense is as follows:

	Fiscal Year Ended
	April 24, 2005		April 25, 2004		April 27, 2003

Rooms	$	1,232	$	1,459	$	1,246
Food and beverage		10,100		9,908		6,143
Other		298		291		225
Total cost of complimentary services	$	11,630	$	11,658	$	7,614

F-37

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

Advertising

Advertising costs are expensed the first time such advertisement appears. Total advertising costs (including direct mail marketing) were $3,355, $3,208 and $1,690 for fiscal 2005, fiscal 2004 and fiscal 2003, respectively, with $3,099, $3,047 and $1,690 of those amounts included in income from continuing operations in fiscal 2005, fiscal 2004 and in fiscal 2003, respectively.

Income Taxes

The Company records an income tax provision for federal and state income taxes of Colorado Central Station and Colorado Grande, C Corporations, which were acquired on April 22, 2003. No provision for federal or state income taxes is recorded for the Company, as the Company is taxed as a partnership and the income taxes are the responsibility of the individual members.

Income tax expense is determined under the provisions of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between the financial statement and income tax basis of accounting using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company records a provision for current and deferred income taxes on a separate return basis.

Self Insurance

The Company is self-insured for various levels of employee medical and life insurance coverage. Self-insurance reserves are estimated based on the Company’s claims experience and are included in current accrued liabilities on the consolidated balance sheets.

Certain Risks and Uncertainties

The Company’s operations are dependent on the continued licensing or qualification of the Company. Such licensing and qualification are reviewed periodically by the gaming authorities in the state of Colorado.

The Company receives a significant amount of its revenue from patrons within 50 miles of the properties. If economic conditions in these areas were to decline materially or additional casino licenses were awarded in these locations, the Company’s results of operations could be materially affected.

F-38

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

2. Cash and Cash Equivalents

Cash and cash equivalents, is summarized as follows:

	April 24, 2005		April 25, 2004

Cash and cash equivalents, as reported in the
consolidated balance sheets	$	14,680	$	28,438
Cash and cash equivalents, included in current
assets of discontinued operations, as reported
in the consolidated balance sheets		1,353		1,905

Cash and cash equivalents, as reported in the
consolidated statements of cash flows	$	16,033	$	30,343

3. Property and Equipment

Property and equipment, excluding items held for sale, consists of the following:

	April 24, 2005		April 25, 2004

Land and land improvements	$	45,044	$	45,011
Buildings and improvements		121,939		103,398
Furniture, fixtures and equipment		36,867		24,961
Construction in progress		48,535		8,992
Total property and equipment		252,385		182,362
Less accumulated depreciation		34,211		24,450
Property and equipment, net	$	218,174	$	157,912

Capitalized interest for the fiscal year ended April 24, 2005 was $1,402 and for the fiscal year ended April 25, 2004 was $207. There was no interest capitalized during fiscal year 2003.

4. Goodwill

The Company recorded an impairment charge related to goodwill for the Colorado Grande-Cripple Creek property, representing the difference between the Colorado Grande-Cripple Creek carrying values of $9,842 and their estimated fair values of $5,882. The estimated fair value is based on the estimated sales price, as further detailed in Note 14. The impairment charge is included in loss from discontinued operations on the consolidated statements of income.

F-39

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

The changes in the carrying amount of goodwill are as follows:

Balance at April 25, 2004	$	21,523
Impairment of Colorado Grande - Cripple Creek		(3,960	)
Balance at April 24, 2005	$	17,563

Goodwill is included in the consolidated balance sheets as follows:

	April 24, 2005		April 25, 2004
Reported as other assets, discontinued operations
in the consolidated balance sheets for
Colorado Grande - Cripple Creek	$	2,898	$	6,858
Reported as goodwill in the consolidated balance
sheets for Colorado Central Station/Blackhawk		14,665		14,665
	$	17,563	$	21,523

5. Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the value:

Cash and cash equivalents - The carrying amounts approximate fair value because of the short maturity of these instruments.

Restricted cash - The carrying amounts approximate fair value because of the short maturity of these instruments.

Derivatives - The fair value of the interest rate swap agreements represents the estimated amount the Company would have to pay the counter party if the Company were to terminate the interest rate swap agreements.

Long-term debt - The fair value of the Company’s long-term debt is estimated based on either the quoted market price of the underlying debt issue or, when a quoted market price is not available, the discounted cash flow of future payments utilizing current rates available to the Company for debt of similar remaining maturities. Debt obligations with a short remaining maturity are valued at the carrying amount.

F-40

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

The estimated carrying amounts and fair values of the Company’s financial instruments are as follows:

	April 24, 2005				April 25, 2004
	Carrying				Carrying
	Amount		Fair Value		Amount		Fair Value

Financial assets:
Cash and cash equivalents	$	14,680	$	14,680	$	28,438	$	28,438
Interest rate swap agreements		322		322		-		-
Restricted cash		-		-		43		43

Financial liabilities:
Senior secured credit facility	$	189,350	$	189,350	$	165,000	$	165,000
Interest rate swap agreements		-		-		676		676
BID Bonds		590		590		700		700
Other long-term debt		-		-		93		93

6. Self Insurance Liabilities

In fiscal 2005, Isle of Capri Casinos, Inc. and its subsidiaries, including the Company, established a captive insurance company, Capri Insurance Company (“the Captive”). Prior to the establishment of the Captive, the Company was self insured for workers’ compensation and general liability insurance up to $300 and $1,000 per claim, and the Company had insurance coverage in place for claims made in excess of these stop loss limits. During 2005, the Company transferred open reserved claims to the Captive, in the amount of $1,686, and paid a transfer premium to the Captive for this amount. The Company is assessed an annual premium by the Captive for first layer claims exposure up to the $300 and $1,000 stop loss amounts, respectively for workers’ compensation and general liability. During 2005, the Company paid the Captive $1,330 related to premiums for the year ended April 24, 2005.

The Company’s employee-related healthcare benefits program continues to be self-funded up to a maximum amount per claim. Claims in excess of this maximum amount are fully insured through a stop-loss insurance policy. The Company’s estimate of liabilities for unpaid claims and incurred but not reported claims totaled $1,200 at April 24, 2005 and $724 at April 25, 2004 and are included in accrued liabilities-payroll related expenses for healthcare benefits in the accompanying consolidated balance sheets. The Company bases accruals on claims filed and estimates of claims incurred but not reported. While the total cost of claims incurred depends on future developments, in management’s opinion, recorded reserves are adequate to cover payments on future claims.

F-41

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

7. Long-Term Debt

Long-term debt consists of the following:

	April 24,		April 25,
	2005		2004

Senior Secured Credit Facility,
non-recourse to Isle of Capri Casinos, Inc. (described below):
Variable rate term loan Tranche C	$	163,350	$	165,000
Revolver		26,000		-
Notes payable, interest at 90 day LIBOR + 3.00%
issued by the Company, due July 2004;
non-recourse to Isle of Capri Casinos, Inc		-		93
Black Hawk Business Improvement Special Assessment Bonds
District (BID Bonds) (described below)		590		700
		189,940		165,793
Less current maturities		1,767		1,853
Long-term debt	$	188,173	$	163,940

Senior Secured Credit Facility

The Senior Secured Credit Facility provided for a $40,000 revolving credit facility maturing on November 16, 2005, a $27,922 Tranche A term loan maturing on November 16, 2005, and a $142,732 Tranche B term loan maturing on November 16, 2006. Proceeds from the Tranche B term loan were used to provide financing for the acquisitions of CCSC/Blackhawk, Inc. and Colorado Grande Enterprises, Inc.

On February 6, 2004, the Company amended the Senior Secured Credit Facility to provide for a $40,000 revolving credit facility maturing on December 31, 2006 or such date as the Tranche C term loans are repaid in full, whichever comes first. The Company converted the Tranche A and Tranche B term loans into a $165,000 Tranche C term loan maturing on December 31, 2007. The Company is required to make quarterly principal payments of $412.5 on the term loan portions of the Senior Secured Credit Facility that will commence in June 2004 with a balloon payment of $159,225 due upon maturity.

On January 11, 2005, the Company executed a $5.0 million letter of credit related to the bond facility on the construction of public road improvements to and from the property. This letter of credit was issued against the revolving credit facility (See Note 8).

At the Company’s option, the revolving credit facility loan may bear interest at (1) the highest of 0.05% in excess of the federal funds effective rate or the rate that the bank group announces from time to time as its prime lending rate plus an applicable margin of up to 2.50% or (2) a rate tied to a LIBOR rate plus an applicable margin of up to 3.50%. The Tranche C term loan may bear interest at (1) the highest of 0.05% in excess of the federal funds effective rate or the rate that the bank group announces from time to time as its prime lending rate plus an applicable margin of up to 2.00% or (2) a rate tied to a LIBOR rate plus an applicable margin of up to 3.00%.

F-42

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

The Senior Secured Credit Facility provides for certain covenants, including those of a financial nature. The Company was in compliance with these covenants as of April 24, 2005. The Senior Secured Credit Facility is secured by liens on the Company’s assets.

The weighted average effective interest rate of total debt outstanding under the Senior Secured Credit Facility at April 24, 2005 was 5.89%.

Interest Rate Swap Agreements

The Company has interest rate swap agreements with an aggregate notional value of $80.0 million or 42.2% of its variable rate term debt outstanding under the Company’s Senior Secured Credit Facility as of April 24, 2005. The swap agreements effectively convert portions of its variable rate debt to a fixed-rate basis until the fourth fiscal quarter of 2008, thus reducing the impact of interest rate changes on future interest expense. The interest rate swap agreements terminate as follows: $40.0 million in fiscal 2006 and $40.0 million in fiscal 2008. We evaluate the effectiveness of these hedged transactions on a quarterly basis. We found no portion of the hedging instruments to be ineffective during the fiscal year ended April 24, 2005. Accordingly, no gains or losses have been recognized on these cash flow hedges.

As of April 22, 2005, the three-month LIBOR rate, the variable interest rate, was 1.17%. The Swap Agreements effectively converted $10,000 notional value to 4.145% fixed rate, $10,000 notional value to 4.195% fixed rate, $10,000 notional value to 4.065% fixed rate, $10,000 notional value to 1.39% fixed rate, $10,000 notional value to 1.45% fixed rate, $10,000 notional value to 1.40% fixed rate and $10,000 notional value to 1.65% fixed rate. Each of the rates is before the addition of the applicable spread currently 3.00%. With the addition of the applicable spread, the total interest rate for the debt related to each of the $10,000 notional value Swap Agreements is 7.145%, 7.195%, 7.065%, 4.39%, 4.45%, 4.40% and 4.65%, respectively.

For the fiscal year ended April 24, 2005, comprehensive income was $15,334 as compared to $24,994 for the fiscal year ended April 25, 2004. The accumulated other comprehensive loss balance consists entirely of changes in the fair value of derivative instruments for cash flow hedges. The fair value of the estimated interest differential between the applicable future variable rates and the interest rate swap contracts, expressed in present value terms, totaled $322. Based on the maturity dates of the contracts, $322 is classified as short-term receivables, included in “short-term prepaid expenses and other assets” in the accompanying consolidated balance sheets. There was no effect on income related to hedge ineffectiveness.

F-43

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

At April 24, 2005, the Company does not expect to reclassify any net gains (losses) on derivative instruments from accumulated other comprehensive loss to earnings during the next 12 months due to the payment of variable interest associated with the floating rate debt.

Other

In July 1998, the Black Hawk Business Improvement District (the “BID”), issued $2,940 in 6.00% bonds due on December 1, 2009. The proceeds from the sale of the Bid Bonds were used to fund road and utility improvements in the Special Improvement District 1997-1 of which the Company is a member. The total costs of the improvements totaled $2,240 with the excess proceeds being returned to the bondholders by the BID. The Company is responsible for 50% of this amount plus interest and in April 2000, made the first of 20 semi-annual payments of $76 in the form of special property tax assessments levied on the improvement project. This amount is calculated by amortizing $1,120 or 50% of the net bond proceeds, over 20 periods at an interest rate of 6.25%. The difference between the bond rate of 6.00% and the 6.25% that was assessed is to cover administrative costs of the BID related to the issuance.

Future maturities of long-term debt as of April 24, 2005 are as follows:

For the Fiscal Year Ending
2006		1,767
2007		27,775
2008		160,183
2009		141
2010		74
Total	$	189,940

F-44

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

8. Commitments

Future minimum payments under noncancelable operating leases with initial terms of one year or more consisted of the following at April 24, 2005:

For the Fiscal Year Ending
2006		2,299
2007		2,336
2008		2,385
2009		2,439
2010		2,495
Thereafter		829,069
Total minimum lease payments	$	841,023

All future operating minimum lease payments include long-term land lease payments that have various renewal options varying between 10 to 15 years. The Company expects that the Company’s properties will continue in operation and these leases will be renewed for the next 90 years. Total rent expense was $4,761, including contingent rentals of $165, in fiscal 2005; $4,461, including contingent rentals of $243, in fiscal 2004; and $2,248, including contingent rentals of $2, in fiscal 2003. Of these amounts, $4,238, $3,878 and $2,240 were included in income from continuing operations for fiscal 2005, fiscal 2004 and fiscal 2003, respectively.

The Company is investing approximately $94 million to increase covered parking for both properties; expand the Isle-Black Hawk, add hotel rooms and a restaurant; connect the properties by means of a skywalk and construct public road improvements to and from the property. Completion of the casino expansion, skywalks, and restaurant and partial completion of the parking garage is expected by early summer of 2005. Substantial completion of the public improvements is planned for summer 2005. The Company was required to obtain a $5.0 million letter of credit related to the bonding facility on the project (See Note 7). Completion of the hotel and the remainder of the parking garage is scheduled for spring of 2006. Through the end of fiscal year 2005, the Company has expended $70.5 million of the planned $94 million for this project.

9. Income Taxes

The income tax (benefit) provision for Colorado Central Station is comprised of the following:

	Fiscal Year Ended
	April 24, 2005			April 25, 2004			April 27, 2003

Current	$	286		$	90		$	249
Deferred		(2,928	)		(201	)		(111	)
	$	(2,642	)	$	(111	)	$	138

F-45

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

A reconciliation of the income tax (benefit) provision for Colorado Central Station to the statutory corporate federal tax rate of 35% is as follows:

	Fiscal Year Ended
	April 24, 2005			April 25, 2004			April 27, 2003

Statutory tax (benefit) provision	$	(2,404	)	$	(180	)	$	31
Effect of:
State taxes		(264	)		(9	)		11
Other:
Political contributions		-			75			-
Fines		26			1			-
Other		-			2			96
Income tax (benefit) provision
from continuing operations	$	(2,642	)	$	(111	)	$	138

The table above does not include income related to Isle Black Hawk, L.L.C., whose income is subject to tax at its stockholder level. See Note 13 for the income tax (benefit) provision from discontinued operation related to the Colorado Grande.

Significant components of the Colorado Central Station’s net deferred state and federal income tax assets are as follows:

	Fiscal Year Ended
	April 24,		April 25,
	2005		2004
	(In thousands)
Deferred tax assets:
Accrued expenses	$	357	$	379
Net operating losses		4,652		929
Other		91		1
Total deferred tax assets		5,100		1,309
Deferred tax liabilities:
Property and equipment		2,072		1,186
Other		9		32
Total deferred tax liabilities		2,081		1,218
Net deferred tax asset	$	3,019	$	91

Net current deferred tax asset	$	334	$	333
Net non-current deferred tax asset (liability)		2,685		(242	)
Net deferred tax asset	$	3,019	$	91

F-46

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

Colorado Central Station has federal net operating losses of approximately $11,739. These carryforwards expire in 2024 and 2025, and can be utilized only to offset losses of Colorado Central Station and no other members of the Company. No valuation allowance has been established for these assets as the Company believes that it is more likely than not that the losses will be utilized before their applicable expiration, based on the Company's evaluation of available sources of taxable income. The Company has established a valuation allowance of $1,511 on deferred tax assets related to losses attributable to the Colorado Grande. The valuation allowance was recorded in the income statement in discontinued results of Colorado Grande.

10. Litigation

The Company is subject to certain claims and lawsuits that have been filed in the normal course of business. Management does not believe these pending claims and litigation will have a material effect on the consolidated cash flows, financial position, or operations of the Company.

11. Employee Benefit Plans

401(k) Plan

The Company has a defined-contribution, profit sharing plan, including 401(k) plan provisions, covering substantially all of its employees. The Company’s contribution expense related to this plan totaled $265, $222 and $142 in fiscal 2005, fiscal 2004 and fiscal 2003, respectively. Of those amounts, $258, $215 and $142 were included in income from continuing operations in fiscal 2005, fiscal 2004 and fiscal 2003, respectively. The Company’s contribution is based on a percentage of employee contributions and may include an additional discretionary amount.

Health Insurance Plan

The Company has a qualified employee health insurance plan covering all employees who work an average of 32 hours or more per week on a regular basis. The plan, which is self-funded by the Company with respect to claims below a certain maximum amount, requires contributions from eligible employees and their dependents. The Company’s contribution expense for the plan totaled $4,902, $4,282 and $2,382 in fiscal 2005, fiscal 2004 and fiscal 2003, respectively. Of those amounts, the amount included in income from continuing operations was approximately $4,694, $4,105 and $2,323 in fiscal 2005, fiscal 2004 and fiscal 2003, respectively.

F-47

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

12. Related Party Transactions

Management Agreement Isle of Capri Black Hawk, L.L.C.

On April 25, 1997, the Company entered into a management agreement with Isle of Capri Casinos, Inc., as amended on April 22, 2003, in consideration of the acquisition of CCSC/Blackhawk, Inc. and Colorado Grande Enterprises, Inc., and December 22, 2003, pursuant to the refinancing of the Company’s Senior Secured Credit Facility. (the “Isle-Black Hawk Management Agreement”). Under the Isle-Black Hawk Management Agreement, Isle of Capri Casinos, Inc. manages the casinos of the Company in exchange for a fee. The management fee is equal to 2% of revenues, as defined, plus 10% of operating income, but not to exceed 4% of revenues, as defined. The Company expensed management fees of $6,374 in fiscal 2005, $7,173 in fiscal 2004 and $5,197 in fiscal 2003.

In February 2004, the Company agreed to pay $250 over 12 monthly installments to Isle of Capri Casinos, Inc. for services provided in connection with the establishment of the Tranche C term loan as further discussed in Note 7.

13. Discontinued Operations

On April 25, 2005, the Company and Colorado Grande executed a Stock Purchase Agreement with a subsidiary of Nevada Gold & Casinos, Inc. to sell all outstanding shares of the common stock of Colorado Grande to a subsidiary of Nevada Gold & Casinos, Inc. The aggregate estimated sales price agreed to is $6.5 million payable:

(a.)

$600,000 in cash upon closing and

(b.)

a $5.9 million promissory note secured by the stock of Colorado Grande and Nevada Gold’s future membership distributions from the Company until the note has been fully repaid.

The estimated sales price is to be adjusted by the difference between actual working capital and a target working capital (as defined by the Sales Agreement) on the closing date. The actual working capital is to be determined by Nevada Gold within 45 days of the closing date and reviewed by independent auditors for both parties. The post closing adjustment will be paid in cash to the other party, as necessary to cause the actual working capital to be equal to the target working capital.

Discontinued operations relate to those of the Colorado Grande casino, located in Cripple Creek, Colorado. Results of operations of the Colorado Grande casino are included in the consolidated statements of income as discontinued operations and are shown net of tax effects. The results of operations for the Colorado Grande for prior fiscal years presented were also reclassified and presented as discontinued operations in accordance with SFAS 144.

F-48

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

Major classes of assets and liabilities, after intercompany eliminations, are included in the consolidated balance sheets as follows:

	April 24, 2005		April 25, 2004
Assets:
Cash and cash equivalents	$	1,353	$	1,905
Accounts receivable - trade		27		24
Deferred income tax expense		-		21
Prepaid expenses and other		139		94
Property and equipment, net		1,696		1,862
Goodwill		2,898		6,858
Other intangible assets		1,300		1,300
Total assets from discontinued operations	$	7,413	$	12,064

Liabilities:
Accounts payable - trade	$	55	$	85
Accounts payable - related parties		110		103
Accrued liabilities		581		832
Other liabilities		-		209
Total liabilities from discontinued operations	$	746	$	1,229

For the year ended April 24, 2005, assets and liabilities of the Colorado Grande are included on the consolidated balance sheet as current due to the consummation of the sale of the Colorado Grande property on April 25, 2005. 2004 assets and liabilities of the Colorado Grande are classified as discontinued operations, current and long-term, in accordance with their respective existing classifications in the consolidated balance sheet.

F-49

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

Revenue, expense, and net income (loss) from discontinued operations are summarized as follows:

	Fiscal Year Ended
	April 24, 2005			April 25, 2004			April 23, 2003
Gross revenues	$	8,996		$	9,940		$	199
Less promotional allowances		1,980			2,239			32
Net revenues		7,016			7,701			167

Total operating expenses		10,156			6,074			106

Operating income (loss)		(3,140	)		1,627			61

Interest income		(8	)		(2	)		-
Income (loss) before income taxes		(3,132	)		1,629			61
Income tax (benefit) provision		(186	)		211			72
Income (loss) from discontinued
operations	$	(2,946	)	$	1,418		$	(11	)

F-50

INDEX TO EXHIBITS

EXHIBIT
NUMBER	DESCRIPTION
2.1	Stock Purchase Agreement dated as of April 25, 2005 among Isle of Capri Black Hawk, L.L.C., IC Holdings Colorado, Inc., Colorado Grande Enterprise, Inc., and CGC Holdings, L.L.C.(filed previously as Exhibit 2.1 of to the Company’s Form 8-K, filed April 29, 2005)
3.2	Amended and Restated Bylaws of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.2 to the company’s From 10-QSB filed August 14, 2002)
3.3	Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 4.2 to Form S-8 filed October 11, 2002.
3.4	Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.3 to Form 10-Q filed November 9, 2004)
4.1	Common Stock Certificate of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 4.1 to the company’s Form S-8/A, file no. 333-79867)
4.5	Nevada Gold & Casinos, Inc. 1999 Stock Option Plan (filed previously as Exhibit 4.5 to the company’s Form S-8, file no. 333-100517)
10.1	Second Amended and Restated Operating Agreement of Isle of Capri Blackhawk L.L.C. (filed previously as Exhibit 10.1 to Form 10-K filed July 14, 2004)
10.2	First Amended and Restated Members Agreement dated April 22, 2003 by and between Casino America of Colorado, Inc., Casino America, Inc., Blackhawk Gold, Ltd., and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.2 to Form 10-K filed July 14, 2004)
10.3	License Agreement dated July 29, 1997 by and between Casino America, Inc. and Isle of Capri Black Hawk L.L.C. (filed previously as Exhibit 10.5 to the company’s Form 10-QSB, filed November 14, 1997)
10.4	Form of Indemnification Agreement between Nevada Gold & Casinos, Inc. and each officer and director (filed previously as Exhibit 10.5 to the company’s form 10-QSB, filed February 14, 2002)
10.5	Amended and Restated Nevada Gold & Casinos, Inc. 1999 Stock Option Plan (filed previously as Exhibit 4.5 to Form S-8 filed October 11, 2002)
10.6(**)	Credit Facility dated June 28, 2004 by and between Nevada Gold & Casinos, Inc. and the Lender (portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act.) (filed previously as Exhibit 10.6 to the company’s form 10-Q, filed February 10, 2005)
10.7(**)	Amended and Restated Security Agreement dated June 28, 2004 by and among Nevada Gold & Casinos, Inc., Blackhawk Gold, Ltd. and the Lender (portions of this exhibit have been omitted pursuant to a request for confidential treatment and file separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24-b-2 under the Exchange Act.) (filed previously as Exhibit 10.7 to the company’s form 10-Q, filed February 10, 2005)
10.8(**)	Amended and Restated Secured Promissory Note dated June 28, 2004 by and among Nevada Gold & Casinos, Inc. and the Lender (portions of this exhibit have been omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act.) (filed previously as Exhibit 10.8 to the company’s form 10-Q, filed February 10, 2005)
10.9(*)	Investment Agreement dated April 21, 2005 by and among Casino Development & Management Company, LLC, Thomas C. Wilmot, Buena Vista Development Company, LLC and Nevada Gold BVR, L.L.C
10.10(*)	Amended and Restated Operating Agreement dated April 21, 2005, by and between Casino Development & Management Company, LLC and Nevada Gold BVR, L.L.C.
10.11(*)	Promissory Note dated May 4, 2005, in the amount of $14,810,200 executed by Buena Vista Development Company, LC as maker and payable to Nevada Gold BVR, L.L.C.

EXHIBIT
14	Code of Ethics (filed previously as Exhibit 14 to Form 10-K filed July 14, 2004)
21	List of Subsidiaries (filed previously as Exhibit 21 to Form 10-K filed July 14, 2004)
23.1 (*)	Consent of Pannell Kerr Forster of Texas, P.C.
23.2(*)	Consent of Ernst & Young LLP
31.1(*)	Chief Executive Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act.
31.2(*)	Chief Financial Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act.
32.1(*)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2(*)	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(*)

filed herewith

(**)

portions of this exhibit have been omitted pursuant to a request for confidential treatment

Nevada	88-0142032
(State or other jurisdiction of	(IRS Employer Identification No.)
Incorporation or organization)

3040 Post Oak Blvd., Suite 675, Houston, Texas	77056
(Address of principal executive offices)	(Zip Code)

Title of each class	Name of each exchange on which registered

Common stock, $0.12 par value	American Stock Exchange

		Page

PART I

ITEM 1.	DESCRIPTION OF BUSINESS	3
ITEM 2.	DESCRIPTION OF PROPERTIES	15
ITEM 3.	LEGAL PROCEEDINGS	16
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	17

PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	17
ITEM 6.	SELECTED FINANCIAL DATA	18
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	27
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	27
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	27
ITEM 9A.	CONTROLS AND PROCEDURES	27
ITEM 9B.	OTHER INFORMATION	29

PART III

ITEM 10.	DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT	29
ITEM 11.	EXECUTIVE COMPENSATION	29
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	29
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	30
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	30

PART IV

ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	30

	Fiscal Years Ended
	March 31, 2005				March 31, 2004
	High		Low		High		Low

First Quarter	$	21.45	$	12.10	$	8.88	$	6.08
Second Quarter		13.85		9.55		11.45		8.15
Third Quarter		12.85		10.05		13.09		9.75
Fourth Quarter		15.24		11.71		19.20		10.36

Plan Category	Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights (A)		Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (B)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column A) (C)

Equity Compensation Plans Approved by Security Holders		1,138,200	$	8.58		685,549
Equity Compensation Plans Not Approved by Security Holders		10,000 (1)	$	3.25		-0-
Total		1,148,200	$	8.53		685,549