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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended June 30, 2004

OR

For the transition period from:

Commission file number: 0-14050

THE SANDS REGENT

(Exact name of registrant as specified in its charter)

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

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

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

Common Stock, $.10 par value

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

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

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

The aggregate market value of the Registrant’s $.10 par value Common Stock held by non-affiliates of the Registrant on December 31, 2003 was $21,417,966. The aggregate market value is computed with reference to the closing price per share on that date.

Registrant’s Common Stock outstanding at September 24, 2004 was 5,646,555 shares.

Portions of Registrant’s definitive Proxy Statement for its November 1, 2004 Annual Meeting of Shareholders are incorporated into Part III of this report as set forth herein.

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THE SANDS REGENT

INDEX TO FORM 10-K

FOR THE YEAR ENDED JUNE 30, 2004

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PART I

General

The Sands Regent and subsidiaries (the “Company”, “we” and “our”) operate casinos and tourist-based facilities through our wholly-owned subsidiaries: Zante, Inc., which owns and operates the Sands Regency Casino Hotel (“Sands”) in downtown Reno, Nevada; Last Chance, Inc., which operates the Gold Ranch Casino and RV Resort (“Gold Ranch”) in Verdi, Nevada; and Plantation Investments, Inc., which owns and operates Rail City Casino (“Rail City”) in Sparks, Nevada. The Company was incorporated in Nevada in 1965.

The Sands has approximately 29,000 square feet of gaming space and a full selection of gaming alternatives, including 600 slot machines, 19 table games, keno, bingo, and a sportsbook operated by Leroy’s Sportsbooks. Additionally, the Sands resort complex has 832 hotel rooms, including 29 suites, a health spa, and a large outdoor swimming pool. Dining options at the Sands include Tony Roma’s, Famous for Rib’s, restaurant; Cabana Café, a coffee house/deli-style restaurant; and Antonia’s, Very Italian Buffet. The property also has a Mels the Original, diner style restaurant, and an Arby’s restaurant, both which are franchises operated by third parties. The facility also includes an entertainment cabaret, three cocktail lounges, a comedy club and approximately 12,000 square feet of convention and meeting space. Third parties lease space from the Sands and operate a car rental business, a bicycle and ski rental shop, a beauty shop, and a video arcade. The Sands resort complex contains multiple parking areas, including a parking garage, with a total combined capacity for approximately 1,100 vehicles. The Sands offers large, attractive hotel rooms at reasonable prices to travel groups, air wholesalers, and motor coaches primarily from Western Canada, the Pacific Northwest and Northern California. Due to the city-sponsored ReTRAC project (Reno Transportation Railroad Access Corridor), the Sands has temporarily lost utility in varying degrees of up to 30% of its parking (see “Risks Related to our Business” in the Management Discussion and Analysis section of this report).

Gold Ranch offers approximately 252 slot machines in an 8,000 square foot casino, two restaurants, two bars, a 105-space RV park, a California lottery station, an ARCO gas station, a convenience store, and a Jack-in-the-Box restaurant, which is leased to a third party. Gold Ranch’s guests include both tourists and local residents with local residents generating approximately 60% of the property’s casino patronage. Gold Ranch attempts to attract local residents through mid-week promotions geared toward enhancing local play mainly through lottery, casino, and restaurant programs. Tourist programs emphasize the RV park, casino and restaurant cross-promotions. Gold Ranch tries to attract as much traffic as possible off Interstate 80, the major Nevada/California thoroughfare.

On May 1, 2004, the Company acquired Rail City in Sparks, Nevada. Rail City has approximately 16,600 square feet of gaming space housing 634 slots, 6 table games, keno, a sportsbook operated by Cal Neva, a 24-hour family-style restaurant and a bar. Substantially all of Rail City’s customer base comes from northern Nevada and a majority of its customers reside in close proximity to the casino.

The Company’s operations are conducted 24 hours per day, every day of the year. The primary source of revenue and income to the Company is its gaming activities, although the hotel, RV park, bars, shops, restaurants, convenience store, gas station and other services are important in supplementing its gaming activities revenue. The Company’s overall operating and marketing philosophy emphasizes in-house and citywide special events, generous promotions, highly competitive pricing, and liberal gaming odds. A great deal of emphasis is placed on marketing to local patrons, especially at Rail City, however, the majority of the total revenue of the Company’s downtown Reno property is attributable to tourism. The Company offers, on a very limited basis, complimentary hotel accommodations to select customers, no third party group arrangements known as “junkets” are conducted, and in general, the Company does not extend credit to its gaming clientele.

Marketing

SANDS REGENCY.    At the Sands we have continued to successfully address the challenges presented by the proliferation of casino gambling in our key feeder markets, and the inability of the Reno market as a whole to

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effectively market itself as a destination for travelers. This has been accomplished through aggressive marketing plans that play to the strengths that we have developed over the past several years – those being the locals market, out-of-market visitors seeking value for their entertainment dollar, and special interest groups.

We have continued to successfully grow our locals market share at the Sands by offering compelling promotions, player’s club benefits that are competitive with any club in the market, and special events geared specifically for this group. In addition, we have added new events and promotions to our existing schedule, which has helped us increase out of market visitation by creating new reasons to visit the Sands.

Our advertising strategy in the local market has also evolved over the past year, and we have begun to focus more effort on direct mail programs that target locals who are not currently customers of the Sands. The strategy behind this approach is to focus on zip codes where our most loyal customers reside. This allows us to create a more targeted strategy while using a medium (direct mail and database marketing) in which the results are more measurable than traditional mediums like television, radio, and newspaper advertising.

At the Sands we continue to appeal to the budget conscious traveler by offering large, remodeled hotel rooms at reasonable prices. We feel our hotel rooms are superior to other value-oriented properties, and have been further improved over the past year, as we have added new furnishings to them. Furthermore, our food outlets (Tony Roma’s, Mel’s Diner) offer large portions at competitive prices. Our gaming product also meets and often exceeds the expectations of this market segment. We offer a large variety of games with some of the best odds in the Reno market. We are also one of only three casinos in the market to offer bingo.

Special interest groups such as bowlers, cribbage players, shuffleboard players, and pool players continue to be a staple for the Sands. A complete schedule of tournaments throughout the year allows us to cater to each of these groups.

GOLD RANCH.    At Gold Ranch the key to success is our ability to continue to capture market share from two distinct customer segments – locals and tourists traveling on Interstate 80 between Reno and the Bay Area. In the coming year we will focus our marketing efforts on these two groups while applying the knowledge we have gained through our experiences since acquiring Gold Ranch. In addition, current plans are to install a slot tracking system, player’s club, and cashless “ticket-in ticket-out” slot technology in Spring 2005 to more effectively compete with other casinos in the Reno market. These additions are significant and will allow us to effectively capture more business from these customer segments by executing a marketing plan that will include the following components:

We will use promotions and special events to generate mid-week local business. These promotions, in conjunction with the direct mail programs mentioned earlier, will continue to be a key component to our marketing efforts. We have established a series of successful special events at Gold Ranch since the purchase, and will augment these events with more promotional activities in the coming year. The key is to continue to build the database so that we are able to reach significantly more potential customers in our key locals market (Truckee, Verdi, and Northwest Reno). This will continue to be a challenge for us at Gold Ranch until a player’s club is established, making it easier to drive visitation and qualify the gaming worth of these visitors.

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RAIL CITY CASINO.    At Rail City Casino strength of marketing and brand identity have been the major focus of our advertising campaigns, as well as, putting the FUN back into gaming. Customer loyalty and retention has also been an area of major focus; subsequent to the events of September 11, 2001 and, with the increasing presence of gaming in California, many of the hotel casinos in the area are now heavily campaigning for local customers. Sensing the trend, Rail City Casino significantly increased our promotions and customer loyalty programs. We will continue to strive to be “Your friendly neighborhood casino”. This is accomplished through the following programs:

Rail City will continue to show its appreciation for its customers through birthday comps and personal attention by the City Express Ambassadors. The Ambassadors continue to provide a family-type atmosphere for our guests. They know many of our customers by name and even their card numbers! They provide personalized service and attention to each guest.

Rail City promotions will continue to focus on rewarding our loyal player’s club members, as well as those players who prefer to remain untracked.

Rail City Casino will continue to utilize television, newspaper, radio and print to attract new customers. We have added a new television and radio advertising aimed at the Spanish-speaking population. Additionally, we utilize casino signage to inform our guests about current promotions.

Competition

Competition among casinos in the Reno market is intense. The expansion of Native American gaming in northern California, the Pacific Northwest, and British Columbia has had and will continue to have impact on total gaming revenues of the greater Reno area. Over the last three years, existing Native American casinos in northern California have undergone significant expansions. In addition, Station Casino’s Thunder Valley opened in June of 2003, just off I-80, the main link between Reno and northern California. More Native American casinos are planned in northern California and many are partnering with existing gaming companies that have greater financial resources than the Company to promote their facilities.

With our purchase of Rail City in May 2004, we have tried to lessen our dependence on tourism. Now over 70% of its company-wide gaming revenues are from local patrons. However, many of the 17 major casinos and hotel/casinos in the Reno area are attempting to compete for the local customer due primarily to the decrease in tourism caused by Native American casinos. Many of our direct competitors in the Reno market have greater financial and other resources than we do.

Employees

At June 30, 2004, the Company employed 711 people at the Sands, including 83 salaried employees and 628 hourly employees; 113 people at Gold Ranch, including 13 salaried employees and 100 hourly employees; and 329 people at Rail City, including 45 salaried and 284 hourly employees. None of the Company’s employees is represented by a union. The Company has not experienced any work stoppages or other significant labor problems and management considers its labor relations to be good.

Regulation and Licensing—Nevada Gaming

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

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

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

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

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

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

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

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

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

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

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

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

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

The Nevada Commission may, in its discretion, require the holder of any debt security of the Company to file applications, be investigated and be found suitable to own the debt security of the Company. If the Nevada

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Commission determines that a person is unsuitable to own such security, then pursuant to the Nevada Act, the Company can be sanctioned, including the loss of its approvals, if without the prior approval of the Nevada Commission, it:

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

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

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

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

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

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

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

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

Regulation and Licensing—California Lottery

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

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

Regulation and Licensing—Alcoholic Beverages

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

Other Information

We file with the Securities and Exchange Commission (SEC) our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, proxy statements and registration statements. The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may also obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants, including us, that file electronically. We also maintain a website located at http://www.sandsregency.com, and electronic copies of our periodic and current reports are available, free of charge, under the “Investor Relations” link on our website as soon as practicable after such material is filed with, or furnished to, the SEC. Additionally the Company maintains a Code of Conduct, and a copy is available by written request submitted to:

THE SANDS REGENT

CORPORATE OFFICES

345 NORTH ARLINGTON AVENUE

RENO, NEVADA 89501

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The Company owns and operates the casino and hotel towers at the Sands on an approximately 6.3 acre site in downtown Reno. The casino/hotel site also includes a large outdoor swimming pool, pool house, and other buildings and facilities. Garage and surface parking are provided at the casino/hotel site and an approximately 2.7 acre site located adjacent to the casino/hotel site. Management considers the Sands facility to be in good condition and well maintained. Approximately 30% of the Sands’ parking facilities has lost some utility due to the ReTRAC project (Reno train trench excavation), which is currently underway. For a more complete description of the ReTRAC project and its potential effect on the Sands, refer to “Risks Related to our Business” in the Management Discussion and Analysis section of this report.

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

On May 1, 2004, the Company acquired Rail City Casino in Sparks, Nevada. The Company owns the building and 3 of the 4 parcels of the 6.7 acre site. The parcel not owned by Rail City is owned by the State of Nevada. This 2.6 acre parcel is subject to a ground lease and is currently used for surface parking. The ground lease has terms determined to be below market (see Note 3- Intangible Assets). Management considers the Rail City facility to be in good condition and well maintained.

In addition, the Company owns several smaller properties in Reno consisting of a combined area of approximately .7 acres and operates a slot route, which places 89 gaming devices in 15 locations in the greater Reno area.

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

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

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

The Company did not submit any matters to a vote of security holders in the fourth quarter of fiscal 2004.

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PART II

Our common stock is listed on the NASDAQ Small Cap Market and traded under the symbol “SNDS”. The following table sets forth the quarterly high and low closing share price information for the periods indicated:

As of September 24, 2004, the Company had approximately 220 shareholders of record and in excess of 400 beneficial shareholders.

The declaration and payment of dividends in the future, if any, will be determined by our Board of Directors in light of the conditions then existing, including the Company’s earnings, financial condition, capital requirements and other factors. During the last two fiscal years, we have not paid cash dividends and we intend to continue to retain earnings for use in our business. Our agreement with our lenders allows for the payment of cash dividends, however there are certain restrictions.

The following table presents information regarding outstanding options and shares reserved for issuance under existing equity compensation plans at June 30, 2004:

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