**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

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**FORM 10-Q**

 

**(Mark One)**

 

| **ý** | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**  |
|------------|------------|----------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                               |
| ** ** | ** ** | **For the quarterly period ended  March 31, 2006**                                                  |
| ** ** | ** ** | ** **                                                                                               |
| ** ** | ** ** | **OR**                                                                                                   |
|       | ** ** | ** **                                                                                               |
| o          | ** ** | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |

** **

**For the transition period from                            to                           **

 

**Commission File Number 333-123179**

 

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**Virgin River Casino Corporation**

**RBG, LLC**

**B & B B, Inc.**

(Exact Name of Registrant as Specified in itsCharter)

 
| **NEVADA**                                |       | **88-0238611**         |
|-------------------------------------------|------------|------------------------|
| **NEVADA**                                |       | **86-0860535**         |
| **NEVADA**                                | ** ** | **88-0254007**         |
| (State or Other  Jurisdiction             | ** ** | (I.R.S. Employer       |
| of Incorporation or  Organization)        |       | Identification Number) |
|                                      |       | ** **             |
| **897 West Mesquite Boulevard**           | ** ** | ** **             |
| **Mesquite, Nevada**                      | ** ** | **89027**              |
| (Address of Principal  Executive Offices) |       | (Zip Code)             |

 

**(702)  346-4000**

(Registrant’s Telephone Number, IncludingArea Code)

 

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**Indicate by check markwhether the Registrant (1) has filed all reports required by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the Registrant was required to filesuch reports) and (2) has been subject to such filing requirements for thepast 90 days.    Yes **ý No o

** **

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2of the Exchange Act (Check one):  Largeaccelerated filer o Accelerated filer o Non-acceleratedfiler ý

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).  Yes oNo ý

 

 

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**TABLE OFADDITIONAL REGISTRANTS**

 

Each of the following direct and indirectsubsidiaries of RBG, LLC and each other subsidiary that is or becomes aguarantor of registrant’s registered securities, is also deemed to be aregistrant.  

 
| **Exact name  of registrant as  specified in its charter** | ** ** | **State or other  jurisdiction of  incorporation or  organization** | ** ** | **I.R.S. Employer  Identification No.** | ** ** | **Address, including zip code, and  telephone number, of principal  executive offices** |
|------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------------------------------------------------------|
| Casablanca Resorts, LLC                                    |       | Nevada                                                              |       | 88-0492081                              |       | 897 West Mesquite BlvdMesquite, NV 89027  (702) 346-4000                                |
| Oasis Interval Ownership, LLC                              |       | Nevada                                                              |       | 88-0500066                              |       | 897 West Mesquite BlvdMesquite, NV 89027(702) 346-4000                                  |
| Oasis Interval Management, LLC                             |       | Nevada                                                              |       | 88-0500065                              |       | 897 West Mesquite BlvdMesquite, NV 89027(702) 346-4000                                  |
| Oasis Recreational Properties, Inc.                   |       | Nevada                                                              |       | 88-0499167                              |       | 897 West Mesquite BlvdMesquite, NV 89027(702) 346-4000                                  |

 

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| PART I –  FINANCIAL INFORMATION                                                                                    | 1      |
|------------------------------------------------------------------------------------------------------------------------------|--------|
| Item 1. Financial Statements                                                                                                 | 1      |
|                                                                                                                         |   |
| ***Virgin  River Casino Corporation Condensed Consolidated Financial Statements***                                           | 1      |
| Condensed Consolidated  Balance Sheets – March 31, 2006 (unaudited) and December 31, 2005                     | 1      |
| Condensed  Consolidated Statements of Operations (unaudited) for the Three Months Ended  March 31, 2006 and 2005        | 2      |
| Condensed  Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended  March  31, 2006 and 2005       | 3      |
| Notes  to Condensed Consolidated Financial Statements (unaudited)                                                            | 5      |
| ***RBG, LLC  Condensed Consolidated Financial Statements***                                                                  | 11     |
| Condensed  Consolidated Balance Sheets - March 31, 2006 (unaudited) and  December 31, 2005                         | 11     |
| Condensed  Consolidated Statements of Operations (unaudited) for the Three Months Ended  March 31, 2006 and 2005        | 12     |
| Condensed  Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended  March 31, 2006 and 2005        | 13     |
| Notes  to Condensed Consolidated Financial Statements (unaudited)                                                            | 15     |
| ***B & B B, Inc. (doing business as Virgin  River Casino Hotel/Casino/Bingo) Condensed Financial Statements*** | 24     |
| Condensed  Balance Sheets – March 31, 2006 (unaudited) and December 31, 2005                                  | 24     |
| Condensed Statements of Operations (unaudited) for the  Three Months Ended March 31, 2006 and 2005                      | 25     |
| Condensed Statements of Cash Flows (unaudited) for the  Three Months Ended March 31, 2006 and 2005                      | 26     |
| Notes to Condensed Financial Statements (unaudited)                                                                          | 28     |
|                                                                                                                         |   |
| Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations                          | 33     |
| Item 3. Quantitative and Qualitative Disclosures About  Market Risk                                                          | 44     |
| Item 4. Controls and Procedures                                                                                              | 45     |
|                                                                                                                         |   |
| **PART II – OTHER INFORMATION**                                                                                    | **46** |
|                                                                                                                         |   |
| Item 1. Legal Proceedings                                                                                                    | 46     |
| Item 1A. Risk Factors                                                                                                        | 46     |
| Item 2. Unregistered Sales of Equity Securities and  Use of Proceeds                                                         | 46     |
| Item 3. Defaults Upon Senior Securities                                                                                      | 46     |
| Item 4. Submission of Matters to A Vote of Security  Holders                                                                 | 46     |
| Item 5. Other Information                                                                                                    | 46     |
| Item 6. Exhibits                                                                                                             | 46     |
|                                                                                                                         |   |
| **SIGNATURES**                                                                                                               | **47** |

 

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# **PART I– FINANCIAL INFORMATION**

 

## **Item 1. Financial Statements.**

 

**VirginRiver Casino Corporation**

 

### **Condensed ConsolidatedBalance Sheets(in thousands)**

 
| ** **                                                                                                  | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                                                                  | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| **Assets**                                                                                                  |       |                     |       |                        |       |
| Current  assets:                                                                                            |       |                     |       |                        |       |
| Cash and cash equivalents                                                                                   |       | $                        | 13,034     |                        | $          | 9,421 |   |
| Accounts receivable, net                                                                                    |       | 1,670                    |       | 1,241                       |       |
| Related party receivables                                                                                   |       | 149                      |       | 95                          |       |
| Related company receivables                                                                                 |       | 2,682                    |       | 395                         |       |
| Inventories                                                                                                 |       | 1,493                    |       | 1,652                       |       |
| Property held for vacation interval sales                                                                   |       | 366                      |       | 392                         |       |
| Prepaid expenses                                                                                            |       | 3,161                    |       | 3,194                       |       |
| Current portion of notes receivable                                                                         |       | 476                      |       | 303                         |       |
| Total  current assets                                                                                       |       | 23,031                   |       | 16,693                      |       |
| Property and  equipment, net                                                                                |       | 121,728                  |       | 123,092                     |       |
| Notes  receivable, less current portion                                                                     |       | 1,302                    |       | 1,821                       |       |
| Other assets                                                                                                |       | 306                      |       | 217                         |       |
| Deferred  financing fees                                                                                    |       | 7,983                    |       | 8,337                       |       |
| Goodwill and  other intangible assets, net                                                                  |       | 30,653                   |       | 31,193                      |       |
| Total assets                                                                                                |       | $                        | 185,003    |                        | $          | 181,353 |   |
|                                                                                                        |       |                     |       |                        |       |
| **Liabilities  and Stockholder’s Deficit**                                                             |       |                     |       |                        |       |
| Current  liabilities:                                                                                       |       |                     |       |                        |       |
| Bank overdraft                                                                                              |       | $                        | —     |                        | $          | 548 |   |
| Current portion of gaming equipment  financing                                                              |       | 2,833                    |       | 2,528                       |       |
| Current portion of long-term debt                                                                           |       | 378                      |       | 614                         |       |
| Accounts payable                                                                                            |       | 3,694                    |       | 2,784                       |       |
| Accrued liabilities                                                                                         |       | 14,847                   |       | 15,041                      |       |
| Related company payable                                                                                     |       | 2,443                    |       | 99                          |       |
| Total  current liabilities                                                                                  |       | 24,195                   |       | 21,614                      |       |
| Gaming  equipment financing, less current portion                                                           |       | 2,685                    |       | 3,306                       |       |
| Long-term  debt, less current portion                                                                       |       | 174,756                  |       | 172,333                     |       |
| Fair value  of interest rate swaps                                                                          |       | 71                       |       | 195                         |       |
| Minority  interest                                                                                          |       | 16,622                   |       | 16,414                      |       |
| Commitments  and contingencies                                                                              |       |                     |       |                        |       |
| Stockholder’s  deficit:                                                                                |       |                     |       |                        |       |
| Common stock, no par value; authorized  2,500 shares, 100 shares issued and 88 shares outstanding |       | —                   |       | —                      |       |
| Additional paid-in capital                                                                                  |       | 3,168                    |       | 3,168                       |       |
| Deemed distribution                                                                                         |       | (20,997                  | )          | (21,472                     | )          |
| Accumulated deficit                                                                                         |       | (15,497                  | )          | (14,205                     | )          |
| Total  stockholder’s deficit                                                                           |       | (33,326                  | )          | (32,509                     | )          |
| Total  liabilities and stockholder’s deficit                                                           |       | $                        | 185,003    |                        | $          | 181,353 |   |

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

1

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**VirginRiver Casino Corporation**

 

### **Condensed ConsolidatedStatements of Operations (unaudited)**

**(inthousands)**

 
| ** **                                                                                       | ** ** | **Three Months ended**   | ** ** |
|--------------------------------------------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                                                       | ** ** | **March 31,  2006** | ** ** | **March 31,  2005** | ** ** |
|                                                                                             |       |                     |       |   |   |
| Revenues                                                                                         |       |                     |       |   |   |
| Casino                                                                                           |       | $                        | 17,319     |   | $ | 15,996 |   |
| Food and beverage                                                                                |       | 7,984                    |       | 7,895 |   |
| Hotel                                                                                            |       | 6,627                    |       | 5,341 |   |
| Related company rental income                                                                    |       | 1,575                    |       | 1,575 |   |
| Other                                                                                            |       | 5,259                    |       | 5,263 |   |
| Total revenues                                                                                   |       | 38,764                   |       | 36,070 |   |
| Less—promotional allowances                                                                 |       | (6,573                   | )          | (4,867 | ) |
| Net revenues                                                                                     |       | 32,191                   |       | 31,203 |   |
| Operating expenses:                                                                              |       |                     |       |   |   |
| Casino                                                                                           |       | 8,061                    |       | 7,712 |   |
| Food and beverage                                                                                |       | 4,601                    |       | 4,693 |   |
| Hotel                                                                                            |       | 1,389                    |       | 1,584 |   |
| Other                                                                                            |       | 3,091                    |       | 3,679 |   |
| General and administrative                                                                       |       | 8,170                    |       | 6,993 |   |
| Depreciation and amortization                                                                    |       | 3,402                    |       | 2,239 |   |
| Loss on sale and disposal of assets                                                              |       | 92                       |       | 17 |   |
| Total operating expenses                                                                         |       | 28,806                   |       | 26,917 |   |
| Operating income                                                                                 |       | 3,385                    |       | 4,286 |   |
| Other income (expense):                                                                          |       |                     |       |   |   |
| Interest expense                                                                                 |       | (4,397                   | )          | (4,264 | ) |
| Change in fair value of interest rate swaps                                                      |       | 124                      |       | 567 |   |
| Other                                                                                            |       | —                   |       | (32 | ) |
| (Loss)  income before cumulative effect of change in accounting principle and  minority interest |       | (888                     | )          | 557 |   |
| Cumulative  effect of change in accounting principle                                             |       | (196                     | )          | — |   |
| (Loss) income before minority interest                                                           |       | (1,084                   | )          | 557 |   |
| Minority interest in income from RBG, LLC  and Casablanca Resorts, LLC                           |       | (208                     | )          | (337 | ) |
| Net (loss) income                                                                                |       | $                        | (1,292     | ) | $ | 220 |   |

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

2

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**VirginRiver Casino Corporation**

 

### **Condensed ConsolidatedStatements of Cash Flows (unaudited)**

**(in thousands)**

 
| ** **                                                                                | ** ** | **Three months ended**   | ** ** |
|-------------------------------------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                                                | ** ** | **March 31,  2006** | ** ** | **March 31,  2005** | ** ** |
| Cash flows from operating activities:                                                     |       |                     |       |   |   |
| Net (loss) income                                                                         |       | $                        | (1,292     | ) | $ | 220 |   |
| Adjustments to reconcile net (loss) income  to net cash provided by operating activities: |       |                     |       |   |   |
| Depreciation and amortization                                                             |       | 3,402                    |       | 2,239 |   |
| Minority interest in income from RBG, LLC  and Casablanca Resorts, LLC                    |       | 208                      |       | 337 |   |
| Change in fair value of interest rate swaps                                               |       | (124                     | )          | (567 | ) |
| Loss on sale and disposal of assets                                                       |       | 92                       |       | 17 |   |
| Cumulative effect of change in accounting principle                                       |       | 196                      |       | — |   |
| Amortization of deferred financing fees                                                   |       | 353                      |       | 355 |   |
| Accretion of senior subordinated notes                                                    |       | 1,423                    |       | 1,096 |   |
| Interest expense on gaming equipment  financing                                           |       | 49                       |       | 48 |   |
| Cost of vacation intervals sales                                                          |       | 26                       |       | 56 |   |
| Change in operating assets and liabilities:                                               |       |                     |       |   |   |
|  Accounts, related company and related party  receivables, net                       |       | (2,770                   | )          | (100 | ) |
| Inventories                                                                               |       | 159                      |       | 166 |   |
| Prepaid expenses                                                                          |       | 33                       |       | 120 |   |
| Notes receivables, net                                                                    |       | 150                      |       | 172 |   |
| Accounts payable, accrued liabilities and  related company payables                       |       | 3,528                    |       | 4,751 |   |
| Net cash  provided by operating activities                                                |       | 5,433                    |       | 8,910 |   |
|                                                                                      |       |                     |       |   |   |
| Cash flows  from investing activities:                                                    |       |                     |       |   |   |
| Proceeds received from sale of assets                                                     |       | 13                       |       | 105 |   |
| Capital expenditures                                                                      |       | (1,551                   | )          | (3,280 | ) |
| Net cash  used in investing activities                                                    |       | (1,538                   | )          | (3,175 | ) |
|                                                                                      |       |                     |       |   |   |
| Cash flows from financing activities:                                                     |       |                     |       |   |   |
| Proceeds from issuance of long-term debt                                                  |       | 3,000                    |       | 350 |   |
| Decrease in bank overdraft                                                                |       | (548                     | )          | (1,480 | ) |
| Payment of long-term debt                                                                 |       | (2,235                   | )          | (390 | ) |
| Payment on gaming equipment financing                                                     |       | (409                     | )          | (127 | ) |
| Payment of obligations under capital lease                                                |       | —                   |       | (4 | ) |
| Payment of financing fees                                                                 |       | —                   |       | (113 | ) |
| Change in other assets                                                                    |       | (90                      | )          | (120 | ) |
| Net cash used in financing activities                                                     |       | (282                     | )          | (1,884 | ) |
| Net increase in cash and cash equivalents                                                 |       | 3,613                    |       | 3,851 |   |
| Cash and cash equivalents at beginning of  year                                           |       | 9,421                    |       | 11,114 |   |
| Cash and cash equivalents at end of period                                                |       | $                        | 13,034     |   | $ | 14,965 |   |

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

3

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**VirginRiver Casino Corporation**

 

**CondensedConsolidated Statements of Cash Flows (unaudited) (continued)**

**(inthousands)**

 
| ** **                                             | ** ** | **Three months ended**   | ** ** |
|--------------------------------------------------------|------------|--------------------------|------------|
| ** **                                             | ** ** | **March 31,  2006** | ** ** | **March 31,  2005** | ** ** |
|                                                   |       |                     |       |   |   |
| Supplemental  cash flow disclosure:                    |       |                     |       |   |   |
| Cash paid for interest                                 |       | $                        | 4,987      |   | $ | 436 |   |
|                                                   |       |                     |       |   |   |
| Acquisition of assets with gaming equipment  financing |       | $                        | 62         |   | $ | 5,202 |   |

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

4

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**VirginRiver Casino Corporation**

 

### **Notes to CondensedConsolidated Financial Statements (unaudited)**

**March 31, 2006**

** **

**1.**                                      Basis of Presentation and Background

** **

The accompanying are thecondensed consolidated financial statements of Virgin River Casino Corporation,which includes the accounts of RBG, LLC (doing business as CasaBlancaResort/Casino/Golf/Spa) and its wholly owned subsidiary Casablanca Resorts, LLC(doing business as Oasis Resort & Casino) (collectively the “Company”).Virgin River Casino Corporation (“VRCC”) owns 80.8% of RBG, LLC (“RBG”) andCasablanca Resorts, LLC (“Resorts LLC”). Robert R. Black, Sr. (“Mr. Black”)is the sole shareholder of VRCC and owns 17.3% of RBG individually and throughanother entity.  Mr. Black also isthe sole shareholder of B & B B, Inc. (doing business as VirginRiver Hotel/Casino/Bingo) (“B & B B”). The Company and B&BB arecollectively referred to as the "Companies." The Companies areoperated under common management. Significant intercompany items and transactions of the Company have beeneliminated.

 

***InterimFinancial Statements***– The accompanying unaudited condensed consolidated financialstatements for the three-month periods ended March 31, 2006 and 2005 areunaudited.  In the opinion of management,all adjustments (which include normal recurring adjustments) necessary for afair presentation of the Company’s financial position and results of operationsfor such periods, have been included. The accompanying unaudited condensed consolidated financial statementsshould be read in conjunction with the Company’s audited consolidated financialstatements filed on Form 10-K for the year ended December 31,2005.  The results for the three-monthperiod ended March 31, 2006 are not necessarily indicative of the resultsthat may be expected for the year ending December 31, 2006, or for anyother period.

 

***Reclassifications***– Certainpreviously reported amounts in the condensed consolidated financial statementshave been reclassified to conform to the current period’s presentation.

 

**2.**                                      Property and Equipment

** **

Property and equipmentconsists of the following (in thousands):

 
| ** **                                           | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                           | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                           | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Land                                                 |       | $                  | 35,838     |                  | $          | 35,838 |   |
| Buildings                                            |       | 71,774             |       | 71,774                |       |
| Land and  leasehold improvements                     |       | 18,400             |       | 18,400                |       |
| Furniture,  fixtures and equipment                   |       | 38,517             |       | 38,623                |       |
| Construction  in progress                            |       | 2,401              |       | 1,043                 |       |
|                                                 |       | 166,930            |       | 165,678               |       |
| Less—accumulated  depreciation and amortization |       | (45,202            | )          | (42,586               | )          |
| Property and  equipment, net                         |       | $                  | 121,728    |                  | $          | 123,092 |   |

 

As a result of the third partybusiness valuation that was conducted in the fourth quarter of 2005, theCompany has re-evaluated the useful lives of their slot machines and effectiveJanuary 1, 2006, has changed that estimate from seven years to five years.

 

5

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**VirginRiver Casino Corporation**

 

**Notes to CondensedConsolidated Financial Statements (unaudited) (continued)**

 

**3.**                                      NotesReceivable

 

Notes receivable consistof the following (in thousands):

 

| ** **                            | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|---------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                            | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                            | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Vacation  interval notes receivable   |       | $                  | 1,650      |                  | $          | 1,722 |   |
| Holdbacks by  financing institutions  |       | 719                |       | 797                   |       |
| Allowance  for possible credit losses |       | (591               | )          | (395                  | )          |
| Total notes  receivable               |       | 1,778              |       | 2,124                 |       |
| Less:  current portion                |       | (476               | )          | (303                  | )          |
| Non-current  notes receivable         |       | $                  | 1,302      |                  | $          | 1,821 |   |

 

Notesgenerated from the sale of vacation intervals generally bear interest at annualrates ranging from 12.75% to 14.75% and have terms of 5 to 7 years. Thevacation interval notes receivable are collateralized by the right to use anddeeds of trust on the vacation interval sold.

 

In January of 2006,the Company adopted the provisions of SFAS 152, “*Accountingfor Real Estate Time-Sharing Transactions*.” SFAS 152 amendsexisting accounting guidance to reference the financial accounting andreporting guidance for real estate time-sharing transactions provided in AICPAStatement of Position 04-02, “*Accounting for Real EstateTime-Sharing Transactions*.” In determining the allowance forpossible credit losses, the Company, in accordance with SFAS 152, uses atechnique referred to as static pool analysis, which tracks uncollectible notereceivables based on each year’s sales over the entire life of thosenotes.  The Company considers whether thehistorical economic conditions are comparable to current economic conditions,with particular reference to unemployment rates.  If current unemployment rates differ from therates in effect when the historical experience was generated, the Companyadjusts the allowance for possible credit losses to reflect the expectedeffects of current unemployment rates on uncollectibility.  The Company groups all notes receivables inone pool for analytical purposes based on historical collectibility andcustomer demographics.  As a result ofthe change in accounting for the allowance for possible credit losses, theCompany has recorded in the accompanying statement of operations for thethree-months ended March 31, 2006, a cumulative effect of a change inaccounting principle of $196,000 to increase the allowance for possible creditlosses.

 

6

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**VirginRiver Casino Corporation**

 

**Notes to CondensedConsolidated Financial Statements (unaudited) (continued)**

 

**4.**                                      Long-term Debt

** **

Long-term debt consistsof the following (in thousands): 

 
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Revolving credit facility totaling $15  million with Wells Fargo Foothill, at a margin above prime or LIBOR, as  defined; collateralized by substantially all real and personal property,  leases, intangibles and other interests of the Companies as defined.                                                 |       | $                  | 3,000      |                  | $          | 2,000 |   |
| 9% senior secured notes, interest payable  semiannually, principal due January 15, 2012, callable January 15,  2009                                                                                                                                                                                   |       |               | 125,000    |                  |       | 125,000 |   |
| 12 3⁄4% senior subordinated notes, non-cash  interest will accrue at an annual rate of 12 3⁄4% in the form of increase  accreted value until January 15, 2009. Beginning January 15, 2009,  interest payable semiannually, principal due January 15, 2013, callable  January 15, 2009 |       | 46,756             |       | 45,333                |       |
| Promissory note payable to Wells Fargo  Equipment Finance, Inc. payable in monthly installments of $37 at an  interest rate of 6.97%, due June 2006                                                                                                                                                   |       | 260                |       | 363                   |       |
| Hypothecation Note at prime plus 3.0%  (10.75% at March 31, 2006), collateralized by certain notes receivable  as defined; guaranteed by one of the initial members, due April 2004                                                                                                                   |       | —             |       | 94                    |       |
| Promissory note payable to Wells Fargo  Equipment Finance, Inc. payable in monthly installments of $14 at an  interest rate of 6.21%, due December 2006                                                                                                                                               |       | 118                |       | 157                   |       |
|                                                                                                                                                                                                                                                                                                            |       | 175,134            |       | 172,947               |       |
| Less—current portion                                                                                                                                                                                                                                                                                       |       | (378               | )          | (614                  | )          |
| Total long-term debt                                                                                                                                                                                                                                                                                            |       | $                  | 174,756    |                  | $          | 172,333 |   |

 

***FoothillFacility***

** **

The Wells Fargo Foothillcredit facility (“Foothill Facility”) is secured by substantially all theassets of the Companies. During the life of the Foothill Facility, theCompanies may borrow up to the lesser of (1) $15.0 million less theLetter of Credit Usage, as defined, less the Bank Product Reserve, as defined,or (2) the Borrowing Base, as defined, less the Letter of CreditUsage.  At March 31, 2006, the BankProduct Reserve was approximately $102,000 and is based on the fair marketvalue at March 31, 2006 of the interest rate swap owed to Wells FargoFoothill, Inc.  Accordingly, theavailability under the Foothill Facility at March 31, 2006 was limited to$11.9 million.

 

Under the terms of theFoothill Facility, interest accrues on the outstanding principal balance atLIBOR plus the LIBOR Rate Margin, which is 3.5%, or the Base Rate, as defined,plus the Base Rate Margin, which is 2%. LIBOR was approximately 5.3% at March 31, 2006.  The Foothill Facility also contains certainfinancial and other covenants.  Theseinclude a minimum trailing twelve-month Earnings before Interest, Taxes,Depreciation and Amortization (“EBITDA”) of $15,000,000 for the Companies andlimitations on other indebtedness and capital expenditures, as defined.  The Companies were in compliance with thesecovenants at March 31, 2006 and December 31, 2005.  The outstanding balance on the FoothillFacility is a joint and several obligation of the Companies. The condensedconsolidated balance sheet of the Company reflects the full obligation of theFoothill Facility at March 31, 2006.

 

7

----

 

**VirginRiver Casino Corporation**

 

**Notes to CondensedConsolidated Financial Statements (unaudited) (continued)**

 

**4.**                                      Long-term Debt (cont’d)

 

***Senior Secured and Senior Subordinated Notes***

 

In December 2004, aspart of a ownership buyout (the “Buyout”), VRCC, RBG and B&BB (the “Issuers”)issued $125.0 million of 9% senior secured notes (“Senior Notes”) due on January 15,2012 and $39.9 million in gross proceeds of 123⁄4% senior subordinated notes(“Senior Sub Notes”) due January 15, 2013 (collectively the “Notes”).  The Notes are joint and several obligationsof the Issuers and all current and future subsidiaries of the Issuers.  Although the Notes are joint and severalobligations of the Issuers, the allocation of the balance of the Notes to theindividual balance sheets of B&BB, VRCC and RBG was according to the flowof funds at the date of the Buyout with the proceeds of the Senior Notesnecessary to purchase the interests of B&BB recorded on the balance sheetof B&BB and the remaining proceeds of the Senior Notes and Senior Sub Notesrecorded on the consolidated balance sheet of VRCC.  The condensed consolidated balance sheet ofthe Company reflects the full obligation of the Notes at March 31, 2006,with the amount recorded on the balance sheet of B&BB recognized as adeemed distribution to reflect the net obligation of the Notes recorded on thecondensed consolidated balance sheet of the Company at March 31, 2006. At March 31,2006, the net amount of the Notes recorded on the Company’s condensedconsolidated balance sheet is $151.1 million. The Senior Notes pay interestsemiannually while the Senior Sub Notes accrue interest in the form ofincreased accreted value until January 15, 2009, when the carrying bookvalue of the Senior Sub Notes will be $66.0 million.  At that point the Senior Sub Notes will payinterest semiannually on the same dates as the Senior Notes.

 

The indentures (the “Indentures”)governing the Issuers’ Notes contain certain customary financial and othercovenants, which limit the Issuers’ ability to incur additional debt.  The Indentures provide that the Issuers maynot incur additional indebtedness, other than specified types of indebtedness,unless the Consolidated Coverage Ratio, on a pro-forma basis after theincurrence of the additional indebtedness is at least 2.00 to 1.00. As of March 31,2006, the Isuers have incurred $0 of additional indebtedness as defined.

 

TheIndentures also contain other covenants which limit the ability of the Issuersand guarantors under the Indentures (the “Guarantors”), as defined, to paydividends, redeem stock, or make other distributions, make investments, createcertain liens, enter into certain transactions with affiliates, utilizeproceeds from asset sales, transfer or sell assets, issue or sell equityinterests of subsidiaries and enter into certain mergers and consolidations, asdefined in the Indentures.  There are norestrictions related to the transfer of funds between the Issuers, Guarantorsand their respective subsidiaries.  TheIssuers were in compliance with these covenants at March 31, 2006 and December 31,2005.

 

8

----

 

**VirginRiver Casino Corporation**

 

**Notes to CondensedConsolidated Financial Statements (unaudited) (continued)**

 

**4.**                                      Long-term Debt (cont’d)

** **

The Senior Notes aresecured by substantially all existing and future assets of the Issuers and theGuarantors, as defined, as well as the equity interest of the Guarantors, theequity interests of the Mr. Black and his affiliate in the Issuers.  The Guarantors are all the wholly ownedsubsidiaries of the Issuers.

 

The Senior Notes aresubordinated to the security interests of the Foothill Facility.  The Senior Sub Notes are subordinate to theSenior Notes and all other indebtedness of the Companies.

 

**5.****                                     ****GamingEquipment Financing**

 

The Company from time totime enters into agreements with gaming manufacturers to finance the purchaseof gaming equipment.  Contractual termsof the agreements with the gaming manufactures consist of payment terms of lessthan one year to up to three years without interest.  In the event that an agreement with a gamingmanufacturer extends past a year, the Company will impute interest at a rate of8%.

 

Gaming equipmentfinancing consists of the following (in thousands): 

 
| ** **                                                                                                                                           | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                           | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                                                                                                                           | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Gaming equipment financing to purchase 205  games, no payments for one year and monthly payments of $106 for 24 months  beginning February 2006 |       | $                  | 2,177      |                  | $          | 2,320 |   |
| Gaming equipment financing to purchase 68  games, no payments for one year and monthly payments of $43 for 24 months  beginning January 2006    |       | 878                |       | 945                   |       |
| Gaming equipment financing to purchase 70  games, no payments for one year and monthly payments of $39 for 24 months  beginning March 2006      |       | 856                |       | 838                   |       |
| Gaming equipment financing to purchase 60  games, monthly payments of $20 for 36 months beginning April 2005                                    |       | 460                |       | 513                   |       |
| Gaming equipment financing to purchase 64  games, no payments for one year and monthly payments of $26 for 24 months  beginning February 2006   |       | 536                |       | 577                   |       |
| Gaming equipment financing to purchase 38  games, monthly payments of $13 for 36 months beginning April 2005                                    |       | 278                |       | 312                   |       |
| Gaming equipment financing to purchase 20  games, no payments for one year and monthly payments of $8 for 24 months  beginning January 2006     |       | 154                |       | 174                   |       |
| Gaming equipment financing, monthly  payments of $3 for 36 months beginning January 2005                                                        |       | 50                 |       | 59                    |       |
| Gaming equipment  financing to purchase 6 games, no payments for one year and monthly payments  of $6 for 24 months beginning February 2007     |       | 63                 |       | —                |       |
| Gaming equipment financing with terms of  less than 12 months                                                                                        |       | 66                 |       | 96                    |       |
|                                                                                                                                                 |       | 5,518              |       | 5,834                 |       |
|  Less  current portion                                                                                                                          |       | (2,833             | )          | (2,528                | )          |
| Gaming equipment financing, long-term  portion                                                                                                       |       | $                  | 2,685      |                  | $          | 3,306 |   |

 

9

----

 

**VirginRiver Casino Corporation**

 

**Notes to CondensedConsolidated Financial Statements (unaudited) (continued)**

 

**6.****                                     ****Related Party Transactions**

 

MJB Development is a realestate construction company owned by a former shareholder of the Companieswhich provide storage services associated with hotel facilities of theCompany.  Total charges for leasing ofstorage containers totaled $0 and $2,000 during the three-months ended March 31,2006 and 2005, respectively, and are included in the accompanying consolidatedstatements of operations.  In addition,during the three months ended March 31, 2005, the Company paid MJBDevelopment $68,000 to purchase previously leased storage containers.

 

Virgin River Foodmart, Inc.,a Nevada corporation, (“Foodmart”) is owned by Mr. Black and formershareholders of VRCC.  Participants inthe Company’s slot club program are able to redeem their points for gasoline atthe Foodmart.  Foodmart charges theCompany the retail amount of gas purchased with player points.  Chargesassociated with the point redemption for gasoline at the Foodmart were $1,000and $27,000 for the three-months ended March 31, 2006 and 2005,respectively.

 

Black,LoBello & Pitegoff is a law firm managed by the daughter of Mr. Black. The Company retains Black, LoBello &Pitegoff as outside legal counsel, and has paid legal fees for legal servicesin the amount of $68,000 and $10,000 for the three-months ended March 31,2006 and 2005, respectively.

 

Pursuant to theIndenture, Mr. Black is entitled to a management fee for his management ofthe Company business of up to 5% of EBITDA, as defined.  The Company expensed $220,000 and $192,000during the three-months ended March 31, 2006 and 2005, respectively,associated with this management fee.

 

Gaming Research is aconsulting firm retained to perform marketing research for the Company.  The principal of Gaming Research is thefather of the Company’s chief operating officer.  Gaming research received consulting fees of$7,000 and $0 for the three-months ended March 31, 2006 and 2005,respectively.

 

Resorts LLC providedmanagement and other services to two related parties that manage and operatethe home owners associations of the vacation intervals sold at theproperty.  Included in the accompanyingcondensed consolidated balance sheet at March 31, 2006 and December 31,2005, is a receivable for $149,000 and $95,000, respectively, related toamounts owed for those services.

 

**7.****                                     ****Commitments and Contingencies**

 

In January 2006,Oasis Interval Ownership, LLC entered into an agreement with Global ExchangeDevelopment Corp. to sell substantially all of the unsold time share intervalsat the Oasis Hotel and Casino.  The saleis expected to close in three separate closings each involving approximatelyone-third of the unsold time share intervals at the Oasis Hotel and Casino.Each close is expected to occur within 6 months of the preceding close.  Within each close, Global ExchangeDevelopment Corp. will pay 20% of the purchase price in cash and execute a notefor the remaining 80% of the purchase price. Each note will be due one year from issuance and provide an interestrate equivalent to the federal rate for short term notes.  The first closing occurred in January 2006for $280,000.  As part of the close,Global Exchange Development Corp. executed a note payable to Oasis IntervalOwnership, LLC in the amount of $224,000 due January 2007 at an interestrate of 4.38%.  At March 31, 2006,the balance of the note receivable is included within the current portion ofnotes receivable in the accompanying consolidated balance sheet.  The note was fully paid in April of2006.

 

10

----

 

**RBG, LLC**

 

**CondensedConsolidated Balance Sheets**

**(inthousands)**

 
| ** **                                        | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|---------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                        | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                        | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| **Assets**                                        |       |               |       |                  |       |
| Current  assets:                                  |       |               |       |                  |       |
| Cash and cash equivalents                         |       | $                  | 11,449     |                  | $          | 7,815 |   |
| Accounts receivable, net                          |       | 1,670              |       | 1,226                 |       |
| Related party receivables                         |       | 149                |       | 95                    |       |
| Related company receivables                       |       | 2,907              |       | 620                   |       |
| Inventories                                       |       | 1,493              |       | 1,652                 |       |
| Property held for vacation interval sales         |       | 366                |       | 392                   |       |
| Prepaid expenses                                  |       | 3,102              |       | 3,116                 |       |
| Current portion of notes receivable               |       | 476                |       | 303                   |       |
| Total  current assets                             |       | 21,612             |       | 15,219                |       |
| Property and  equipment, net                      |       | 83,368             |       | 84,397                |       |
| Notes  receivable, less current portion           |       | 1,302              |       | 1,821                 |       |
| Other assets                                      |       | 306                |       | 217                   |       |
| Goodwill and  other intangible assets, net        |       | 30,653             |       | 31,193                |       |
| Total assets                                      |       | $                  | 137,241    |                  | $          | 132,847 |   |
| ** **                                        | ** ** | ** **         | ** ** | ** **            | ** ** |
| **Liabilities  and Members’ Deficit**        |       |               |       |                  |       |
| Current  liabilities:                             |       |               |       |                  |       |
| Bank overdraft                                    |       | $                  | —     |                  | $          | 548 |   |
| Current portion of gaming equipment  financing    |       | 2,833              |       | 2,528                 |       |
| Current portion of long-term debt                 |       | 378                |       | 614                   |       |
| Accounts payable                                  |       | 3,655              |       | 2,762                 |       |
| Accrued liabilities                               |       | 14,504             |       | 16,119                |       |
| Related company payable                           |       | 190                |       | 196                   |       |
| Total  current liabilities                        |       | 21,560             |       | 22,767                |       |
| Gaming  equipment financing, less current portion |       | 2,685              |       | 3,306                 |       |
| Long-term  debt, less current portion             |       | 174,756            |       | 172,333               |       |
| Fair value  of interest rate swaps                |       | 71                 |       | 195                   |       |
| Commitments  and contingencies                    |       |               |       |                  |       |
| Members’  deficit:                           |       |               |       |                  |       |
| Members’ contributions                       |       | 122,799            |       | 122,799               |       |
| Deemed distribution                               |       | (176,816           | )          | (178,883              | )          |
| Accumulated deficit                               |       | (7,814             | )          | (9,670                | )          |
| Total  members’ deficit                      |       | (61,831            | )          | (65,754               | )          |
| Total  liabilities and members’ deficit      |       | $                  | 137,241    |                  | $          | 132,847 |   |

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

11

----

 

**RBG, LLC**

 

**Condensed****ConsolidatedStatements of Operations (unaudited)**

**(inthousands)**

 
| ** **                                                         | ** ** | **Three Months ended** | ** ** |
|--------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                         | ** ** | **March 31,**     | ** ** | **March 31,** | ** ** |
| ** **                                                         | ** ** | **2006**               | ** ** | **2005** | ** ** |
|                                                               |       |                   |       |   |   |
| Revenues                                                           |       |                   |       |   |   |
| Casino                                                             |       | $                      | 17,319     |   | $ | 15,996 |   |
| Food and beverage                                                  |       | 7,984                  |       | 7,895 |   |
| Hotel                                                              |       | 6,376                  |       | 5,057 |   |
| Other                                                              |       | 5,183                  |       | 5,185 |   |
| Total  revenues                                                    |       | 36,862                 |       | 34,133 |   |
| Less-promotional allowances                                        |       | (6,519                 | )          | (4,854 | ) |
| Net revenues                                                       |       | 30,343                 |       | 29,279 |   |
| Operating  expenses:                                               |       |                   |       |   |   |
| Casino                                                             |       | 8,061                  |       | 7,712 |   |
| Food and beverage                                                  |       | 4,601                  |       | 4,693 |   |
| Hotel                                                              |       | 1,215                  |       | 1,401 |   |
| Other                                                              |       | 3,091                  |       | 3,679 |   |
| General and administrative                                         |       | 8,126                  |       | 6,933 |   |
| Depreciation and amortization                                      |       | 3,028                  |       | 1,864 |   |
| Loss on sale and disposal of assets                                |       | 92                     |       | 17 |   |
| Total  operating expenses                                          |       | 28,214                 |       | 26,299 |   |
| Operating  income                                                  |       | 2,129                  |       | 2,980 |   |
| Other income  (expense):                                           |       |                   |       |   |   |
| Interest expense                                                   |       | (166                   | )          | (345 | ) |
| Change in fair value of interest rate swaps                        |       | 89                     |       | 406 |   |
| Other                                                              |       | —                 |       | (32 | ) |
| Income  before cumulative effect of change in accounting principle |       | 2,052                  |       | 3,009 |   |
| Cumulative effect of change in accounting principle                |       | (196                   | )          | — |   |
| Net income                                                         |       | $                      | 1,856      |   | $ | 3,009 |   |

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

12

----

 

**RBG, LLC**

 

**CondensedConsolidated Statements of Cash Flows (unaudited)**

**(inthousands)**

 
| ** **                                                                         | ** ** | **Three months ended** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                         | ** ** | **March 31,**     | ** ** | **March 31,** | ** ** |
| ** **                                                                         | ** ** | **2006**               | ** ** | **2005** | ** ** |
|                                                                               |       |                   |       |   |   |
| Cash flows  from operating activities:                                             |       |                   |       |   |   |
| Net income                                                                         |       | $                      | 1,856      |   | $ | 3,009 |   |
| Adjustments to reconcile net income to net  cash provided by operating activities: |       |                   |       |   |   |
| Depreciation and amortization                                                      |       | 3,028                  |       | 1,864 |   |
| Change in fair value of interest rate swaps                                        |       | (89                    | )          | (406 | ) |
| Loss on sale and disposal of assets                                                |       | 92                     |       | 17 |   |
|  Cumulative effect of change in accounting principle                          |       | 196                    |       | — |   |
| Interest expense on gaming equipment  financing                                    |       | 49                     |       | 48 |   |
| Cost of vacation intervals sales                                                   |       | 26                     |       | 56 |   |
| Change in operating assets and liabilities:                                        |       |                   |       |   |   |
| Accounts, related company and related party  receivables, net                      |       | (2,785                 | )          | (29 | ) |
| Notes receivable, net                                                              |       | 150                    |       | 172 |   |
| Inventories                                                                        |       | 159                    |       | 166 |   |
| Prepaid expenses                                                                   |       | 14                     |       | 102 |   |
| Accounts payable, accrued liabilities and  related company payables                |       | 3,720                  |       | 4,137 |   |
| Net cash  provided by operating activities                                         |       | 6,416                  |       | 9,136 |   |
|                                                                               |       |                   |       |   |   |
| Cash flows  from investing activities:                                             |       |                   |       |   |   |
| Proceeds received from sale of assets                                              |       | 13                     |       | 105 |   |
| Capital expenditures                                                               |       | (1,510                 | )          | (3,054 | ) |
| Net cash  used in investing activities                                             |       | (1,497                 | )          | (2,949 | ) |
|                                                                               |       |                   |       |   |   |
| Cash flows  from financing activities:                                             |       |                   |       |   |   |
| Proceeds from issuance of long-term debt                                           |       | —                 |       | 107 |   |
| Decrease in bank overdraft                                                         |       | (548                   | )          | (1,480 | ) |
| Payment of long-term debt                                                          |       | (235                   | )          | (390 | ) |
| Payment on gaming equipment financing                                              |       | (409                   | )          | (127 | ) |
| Payment of obligations under capital lease                                         |       | —                 |       | (4 | ) |
| Change in other assets                                                             |       | (93                    | )          | (120 | ) |
| Net cash  used in financing activities                                             |       | (1,285                 | )          | (2,014 | ) |
| Net increase  in cash and cash equivalents                                         |       | 3,634                  |       | 4,173 |   |
| Cash and  cash equivalents at beginning of year                                    |       | 7,815                  |       | 7,544 |   |
| Cash and  cash equivalents at end of period                                        |       | $                      | 11,449     |   | $ | 11,717 |   |

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

13

----

 

**RBG, LLC**

 

**CondensedConsolidated Statements of Cash Flows (unaudited) (continued)**

**(inthousands)**

 
| ** **                                             | ** ** | **Three months ended** | ** ** |
|--------------------------------------------------------|------------|------------------------|------------|
| ** **                                             | ** ** | **March 31,**     | ** ** | **March 31,** | ** ** |
| ** **                                             | ** ** | **2006**               | ** ** | **2005** | ** ** |
|                                                   |       |                   |       |   |   |
| Supplemental  cash flow disclosure:                    |       |                   |       |   |   |
|                                                   |       |                   |       |   |   |
| Cash paid for interest                                 |       | $                      | 117        |   | $ | 360 |   |
|                                                   |       |                   |       |   |   |
| Acquisition  of assets with gaming equipment financing |       | $                      | 62         |   | $ | 5,202 |   |

 

The accompanying notes are an integral partof these condensed consolidated financial statements.

 

14

----

 

**RBG, LLC**

 

### **Notes to CondensedFinancial Statements (unaudited)**

**March 31, 2006**

 

**1.**                                      Basis of Presentation and Background

 

The accompanyingcondensed consolidated financial statements include the accounts of RBG, LLC(doing business as CasaBlanca Resort/Casino/Golf/Spa) and its wholly ownedsubsidiary Casablanca Resorts, LLC (doing business as Oasis Resort &Casino) (“Resorts LLC”). Virgin River Casino Corporation (“VRCC”) owns 80.8% ofRBG, LLC (“RBG”) and Casablanca Resorts, LLC (“Resorts LLC”). Robert R. Black, Sr.(“Mr. Black”) is the sole shareholder of VRCC and owns 17.3% of RBGindividually and through another entity.  Mr. Black also is the sole shareholder ofB & B B, Inc. (doing business as Virgin River Hotel/Casino/Bingo)(“B&BB”). VRCC, RBG and B&BB (collectively the “Companies”) areoperated under common management. Significant intercompany items andtransactions of RBG have been eliminated.

 

***InterimFinancial Statements***– The accompanying unaudited condensed consolidated financialstatements for the three-month periods ended March 31, 2006 and 2005 areunaudited.  In the opinion of management,all adjustments (which include normal recurring adjustments) necessary for afair presentation of RBG’s financial position and results of operations forsuch periods, have been included.   Theaccompanying unaudited condensed consolidated financial statements should beread in conjunction with RBG’s audited consolidated financial statements filedon Form 10-K for the year ended December 31, 2005.  The results for the three-month period ended March 31,2006 are not necessarily indicative of the results that may be expected for theyear ending December 31, 2006, or for any other period.

 

***Reclassifications***– Certainpreviously reported amounts in the condensed consolidated financial statementshave been reclassified to conform to the current period’s presentation.

 

**2.**                                      RelatedCompany Receivables and Payables

** **

The related companyreceivables at March 31, 2006 and December 31, 2005 consist of thefollowing:

 
| ** **                   | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                   | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                   | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Virgin River  Casino Corp.   |       | $                  | 225        |                  | $          | 225 |   |
| B&BB                     |       | 2,682              |       | 395                   |       |
| Related  company receivables |       | $                  | 2,907      |                  | $          | 620 |   |

 

The related companypayables at March 31, 2006 and December 31, 2005 consist of thefollowing (in thousands):

 
| ** **                 | ** ** | **March 31,  2006** | ** ** | **December 31,  2005** | ** ** |
|----------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                 | ** ** | **(unaudited)**          | ** ** | ** **                  | ** ** |
| Virgin River  Casino Corp. |       | $                        | 190        |                        | $          | 196 |   |
| B&BB                   |       | —                   |       | —                      |       |
| Related  company payables  |       | $                        | 190        |                        | $          | 196 |   |

 

15

----

 

**RBG, LLC**

 

**Notes to Condensed ConsolidatedFinancial Statements (unaudited) (continued)**

 

**2.**                                      Related Company Receivables and Payables(cont’d)

** **

The transactions betweenthe RBG and the entities above are based on informal arrangements.  At March 31, 2006 and December 31,2005, there are no specific payment terms nor do any of the receivables requirethe payment of any interest.

 

**3.**                                      Propertyand Equipment

 

Property and equipmentconsists of the following (in thousands):

 
| ** **                                           | ** ** | **March  31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------|------------|---------------------|------------|-----------------------|------------|
| ** **                                           | ** ** | **2006**            | ** ** | **2005**              | ** ** |
| ** **                                           | ** ** | **(unaudited)**     | ** ** | ** **            | ** ** |
| Land                                                 |       | $                   | 21,147     |                  | $          | 21,147 |   |
| Buildings                                            |       | 41,048              |       | 41,048                |       |
| Land and  leasehold improvements                     |       | 14,272              |       | 14,272                |       |
| Furniture,  fixtures and equipment                   |       | 37,320              |       | 37,454                |       |
| Construction  in progress                            |       | 2,296               |       | 951                   |       |
|                                                 |       | 116,083             |       | 114,872               |       |
| Less—accumulated  depreciation and amortization |       | (32,715             | )          | (30,475               | )          |
| Property and  equipment, net                         |       | $                   | 83,368     |                  | $          | 84,397 |   |

 

As a result of the third partybusiness valuation that was conducted in the fourth quarter of 2005, RBG hasre-evaluated the useful lives of their slot machines and effective January 1,2006, has changed that estimate from seven years to five years.

 

**4.**                                      NotesReceivable

 

Notes receivable consistof the following (in thousands):

 
| ** **                            | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|---------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                            | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                            | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Vacation  interval notes receivable   |       | $                  | 1,650      |                  | $          | 1,722 |   |
| Holdbacks by  financing institutions  |       | 719                |       | 797                   |       |
| Allowance  for possible credit losses |       | (591               | )          | (395                  | )          |
| Total notes  receivable               |       | 1,778              |       | 2,124                 |       |
| Less:  current portion                |       | (476               | )          | (303                  | )          |
| Non-current  notes receivable         |       | $                  | 1,302      |                  | $          | 1,821 |   |

 

Notesgenerated from the sale of vacation intervals generally bear interest at annualrates ranging from 12.75% to 14.75% and have terms of 5 to 7 years. Thevacation interval notes receivable are collateralized by the right to use anddeeds of trust on the vacation interval sold.

 

In January of 2006,RBG adopted the provisions of SFAS 152, “*Accountingfor Real Estate Time-Sharing Transactions*.” SFAS 152 amendsexisting accounting guidance to reference the financial accounting andreporting guidance for real estate time-sharing transactions provided in AICPAStatement of Position 04-02, “*Accounting for Real EstateTime-Sharing Transactions*.” In accordance with SFAS 152, RBG nowuses a technique referred to as static pool analysis, which tracksuncollectible note receivables based on each year’s sales over the entire lifeof those notes.  RBG considers whetherthe historical economic conditions are comparable to current economicconditions, with particular reference to unemployment rates.  If current unemployment rates differ from therates in effect when the historical experience was

 

16

----

 

**RBG, LLC**

 

**Notes to Condensed ConsolidatedFinancial Statements (unaudited) (continued)**

 

**4.**                                      NotesReceivable (cont’d)

** **

generated, RBG adjuststhe allowance for possible credit losses to reflect the expected effects ofcurrent unemployment rates on uncollectibility. RBG groups all notes receivables in one pool for analytical purposesbased on historical collectibility and customer demographics.  As a result of the change in accounting forthe allowance for possible credit losses, RBG has recorded in the accompanyingstatement of operations for the three-months ended March 31, 2006, acumulative effect of a change in accounting principle of $196,000 to increasethe allowance for possible credit losses.

 

**5.**                                      Long-term Debt

** **

Long-term debt consistsof the following (in thousands): 

 
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Revolving credit facility totaling $15  million with Wells Fargo Foothill, at a margin above prime or LIBOR, as  defined; collateralized by substantially all real and personal property,  leases, intangibles and other interests of the Companies as defined.                                                 |       | $                  | 3,000      |                  | $          | 2,000 |   |
| 9% senior secured notes, interest payable  semiannually, principal due January 15, 2012, callable January 15,  2009                                                                                                                                                                                   |       |               | 125,000    |                  |       | 125,000 |   |
| 12 3⁄4% senior subordinated notes, non-cash  interest will accrue at an annual rate of 12 3⁄4% in the form of increase  accreted value until January 15, 2009. Beginning January 15, 2009,  interest payable semiannually, principal due January 15, 2013, callable January 15,  2009 |       | 46,756             |       | 45,333                |       |
| Promissory note payable to Wells Fargo  Equipment Finance, Inc. payable in monthly installments of $37 at an  interest rate of 6.97%, due June 2006                                                                                                                                                   |       | 260                |       | 363                   |       |
| Hypothecation Note at prime plus 3.0%  (10.75% at March 31, 2006), collateralized by certain notes receivable  as defined; guaranteed by one of the initial members, due April 2004                                                                                                                   |       | —             |       | 94                    |       |
| Promissory note payable to Wells Fargo  Equipment Finance, Inc. payable in monthly installments of $14 at an  interest rate of 6.21%, due December 2006                                                                                                                                               |       | 118                |       | 157                   |       |
|                                                                                                                                                                                                                                                                                                            |       | 175,134            |       | 172,947               |       |
| Less—current portion                                                                                                                                                                                                                                                                                       |       | (378               | )          | (614                  | )          |
| Total long-term debt                                                                                                                                                                                                                                                                                            |       | $                  | 174,756    |                  | $          | 172,333 |   |

 

***FoothillFacility***

 

The Wells Fargo Foothillcredit facility (“Foothill Facility”) is secured by substantially all theassets of the Companies. During the life of the Foothill Facility, theCompanies may borrow up to the lesser of (1) $15.0 million less theLetter of Credit Usage, as defined, less the Bank Product Reserve, as defined,or (2) the Borrowing Base, as defined, less the Letter of CreditUsage.  At March 31, 2006, the BankProduct Reserve was approximately $102,000 and is based on the fair marketvalue at March 31, 2006 of the

 

17

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**RBG, LLC**

 

**Notes to Condensed ConsolidatedFinancial Statements (unaudited) (continued)**

 

**5.**                                      Long-termDebt (cont’d)

** **

interest rate swap owedto Wells Fargo Foothill, Inc. Accordingly, the availability under the Foothill Facility at March 31,2006 was limited to $11.9 million.

 

Under the terms of theFoothill Facility, interest accrues on the outstanding principal balance atLIBOR plus the LIBOR Rate Margin, which is 3.5%, or the Base Rate, as defined,plus the Base Rate Margin, which is 2%. LIBOR was approximately 5.3% at March 31, 2006.  The Foothill Facility also contains certainfinancial and other covenants.  Theseinclude a minimum trailing twelve-month Earnings before Interest, Taxes,Depreciation and Amortization (“EBITDA”) of $15,000,000 for the Companies andlimitations on other indebtedness and capital expenditures, as defined.  The Companies were in compliance with thesecovenants at March 31, 2006 and December 31, 2005.

 

The outstanding balanceon the Foothill Facility is a joint and several obligation of the Companies. Thecondensed consolidated balance sheet of RBG reflects the full obligation of theFoothill Facility at March 31, 2006 with the amount recorded on theconsolidated balance sheet of VRCC recognized as a deemed distribution toreflect the net obligation of the Foothill Facility on the consolidated balancesheet of RBG at March 31, 2006. At March 31, 2006, the net amount ofthe Foothill Facility recorded on RBG’s consolidated balance sheet is $0.

 

***SeniorSecured and Senior Subordinated Notes***

 

In December 2004, aspart of an ownership buyout (the “Buyout”), VRCC, RBG and B&BB (the “Issuers”)issued $125.0 million of 9% senior secured notes (“Senior Notes”) due on January 15,2012 and $39.9 million in gross proceeds of 123⁄4% senior subordinated notes(“Senior Sub Notes”) due January 15, 2013 (collectively the “Notes”).  The Notes are joint and several obligationsof the Issuers and all current and future subsidiaries of the Issuers.  Although the Notes are joint and severalobligations of the Issuers, the allocation of the balance of the Notes to theindividual balance sheets of B&BB, VRCC and RBG was according to the flowof funds at the date of the Buyout with the proceeds of the Senior Notesnecessary to purchase the interests of B&BB recorded on the balance sheetof B&BB and the remaining proceeds of the Senior Notes and Senior Sub Notesrecording on the balance sheet of VRCC. The consolidated balance sheet of RBG reflects the full obligation ofthe Notes at March 31, 2006 with an amount recognized as a deemed distributionto reflect the net obligation of the Notes recorded on the consolidated balancesheet of RBG at March 31, 2006. The Senior Notes pay interest semiannuallywhile the Senior Sub Notes accrue interest in the form of increased accretedvalue until January 15, 2009, when the carrying book value of the SeniorSub Notes will be $66.0 million.  Atthat point the Senior Sub Notes will pay interest semiannually on the samedates as the Senior Notes.

 

The indentures (the “Indentures”)governing the Issuers’ Notes contain certain customary financial and othercovenants, which limit the Issuers’ ability to incur additional debt.  The Indentures provide that the Issuers maynot incur additional indebtedness, other than specified types of indebtedness,unless the Consolidated Coverage Ratio, on a pro-forma basis after theincurrence of the additional indebtedness is at least 2.00 to 1.00. As of March 31,2006, the Issuers have incurred $0 of additional indebtedness as defined.

 

TheIndentures also contain other covenants which limit the ability of the Issuersand guarantors under the Indentures (the “Guarantors”), as defined, to paydividends, redeem stock, or make other distributions,

 

18

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**RBG, LLC**

 

**Notes to Condensed ConsolidatedFinancial Statements (unaudited) (continued)**

 

**5.**                                      Long-termDebt (cont’d)

** **

makeinvestments, create certain liens, enter into certain transactions withaffiliates, utilize proceeds from asset sales, transfer or sell assets, issueor sell equity interests of subsidiaries and enter into certain mergers andconsolidations, as defined in the Indentures. There are no restrictions related to the transfer of funds between theIssuers, Guarantors and their respective subsidiaries.  The Issuers were in compliance with thesecovenants at March 31, 2006 and December 31, 2005.

 

The Senior Notes aresecured by substantially all existing and future assets of the Issuers and theGuarantors, as defined, as well as the equity interest of the Guarantors, the equityinterests of the Acquiring Shareholder and his affiliate in the Issuers.  The Guarantors are all the wholly ownedsubsidiaries of the Issuers.  The SeniorNotes are subordinated to the security interests of the Foothill Facility.  The Senior Sub Notes are subordinate to theSenior Notes and all other indebtedness of the Companies.

 

**6.****                                     ****GamingEquipment Financing**

 

RBG from time to timeenters into agreements with gaming manufacturers to finance the purchase ofgaming equipment.  Contractual terms ofthe agreements with the gaming manufactures consist of payment terms of lessthan one year to up to three years without interest.  In the event that an agreement with a gamingmanufacturer extends past a year, RBG will impute interest at a rate of 8%.

 

Gaming equipmentfinancing for RBG consists of the following (in thousands):  

 
| ** **                                                                                                                                           | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                           | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                                                                                                                           | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Gaming equipment financing to purchase 205  games, no payments for one year and monthly payments of $106 for 24 months beginning  February 2006 |       | $                  | 2,177      |                  | $          | 2,320 |   |
| Gaming equipment financing to purchase 68  games, no payments for one year and monthly payments of $43 for 24 months  beginning January 2006    |       | 878                |       | 945                   |       |
| Gaming equipment financing to purchase 70  games, no payments for one year and monthly payments of $39 for 24 months  beginning March 2006      |       | 856                |       | 838                   |       |
| Gaming equipment financing to purchase 60  games, monthly payments of $20 for 36 months beginning April 2005                                    |       | 460                |       | 513                   |       |
| Gaming equipment financing to purchase 64 games,  no payments for one year and monthly payments of $26 for 24 months beginning  February 2006   |       | 536                |       | 577                   |       |
| Gaming equipment financing to purchase 38  games, monthly payments of $13 for 36 months beginning April 2005                                    |       | 278                |       | 312                   |       |
| Gaming equipment financing to purchase 20  games, no payments for one year and monthly payments of $8 for 24 months  beginning January 2006     |       | 154                |       | 174                   |       |
| Gaming equipment financing, monthly  payments of $3 for 36 months beginning January 2005                                                        |       | 50                 |       | 59                    |       |
|                                                                                                                                                      |            |                    |            |                       |            |  |  |

 

19

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**RBG, LLC**

 

**Notes to Condensed ConsolidatedFinancial Statements (unaudited) (continued)**

 

**6.****                                     ****GamingEquipment Financing (cont’d)**

 
| Gaming  equipment financing to purchase 6 games, no payments for one year and monthly  payments of $6 for 24 months beginning February 2007 |   | 63     |   | — |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Gaming  equipment financing with terms of less than 12 months                                                                                    |   | 66     |   | 96     |   |
|                                                                                                                                             |   | 5,518  |   | 5,834  |   |
| Less current  portion                                                                                                                            |   | (2,833 | )      | (2,528 | )      |
| Gaming  equipment financing, long-term portion                                                                                                   |   | $      | 2,685  |   | $      | 3,306 |   |
|                                                                                                                                                  |        |        |        |        |        |  |  |

 

**7.****                                     ****Related Party Transactions**

 

MJB Development is a realestate construction company owned by a former shareholder of the Companieswhich provide storage services associated with hotel facilities of theCompany.  Total charges for leasing ofstorage containers totaled $0 and $2,000 during the three-months ended March 31,2006 and 2005, respectively, and are included in the accompanying consolidatedstatements of operations.  In addition,during the three months ended March 31, 2005, the Company paid MJBDevelopment $68,000 to purchase previously leased storage containers.

 

Virgin River Foodmart, Inc.,a Nevada corporation, (“Foodmart”) is owned by Mr. Black and formershareholders of VRCC.  Participants inthe Company’s slot club program are able to redeem their points for gasoline atthe Foodmart.  Foodmart charges theCompany the retail amount of gas purchased with player points.  Chargesassociated with the point redemption for gasoline at the Foodmart were $1,000and $27,000 for the three-months ended March 31, 2006 and 2005,respectively.

 

Black,LoBello & Pitegoff is a law firm managed by the daughter of Mr. Black. The Company retains Black, LoBello &Pitegoff as outside legal counsel, and has paid legal fees for legal servicesin the amount of $67,000 and $10,000 for the three-months ended March 31,2006 and 2005, respectively.

 

Pursuant to theIndenture, Mr. Black is entitled to a management fee for his management ofthe Company business of up to 5% of EBITDA, as defined.  The Company expensed $220,000 and $192,000during the three-months ended March 31, 2006 and 2005, respectively,associated with this management fee.

 

Gaming Research is aconsulting firm retained to perform marketing research for RBG.  The principal of Gaming Research is thefather of RBG’s chief operating officer. Gaming research received consulting fees of $7,000 and $0 for thethree-months ended March 31, 2006 and 2005, respectively.

 

Resorts LLC providedmanagement and other services to two related parties that manage and operatethe home owners associations of the vacation intervals sold at theproperty.  Included in the accompanyingcondensed consolidated balance sheet at March 31, 2006 and December 31,2005 is a receivable for $149,000 and $95,000, respectively, related to amountsowed for those services.

 

20

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**RBG, LLC**

 

**Notes to Condensed ConsolidatedFinancial Statements (unaudited) (continued)**

 

**8.****                                     ****Commitments and Contingencies**

 

In January 2006,Oasis Interval Ownership, LLC entered into an agreement with Global ExchangeDevelopment Corp. to sell substantially all of the unsold time share intervalsat the Oasis Hotel and Casino.  The saleis expected to close in three separate closings each involving approximatelyone-third of the unsold time share intervals at the Oasis Hotel and Casino.Each close is expected to occur within 6 months of the preceding close.  Within each close, Global ExchangeDevelopment Corp. will pay 20% of the purchase price in cash and execute a notefor the remaining 80% of the purchase price. Each note will be due one year from issuance and provide an interestrate equivalent to the federal rate for short term notes.  The first closing occurred in January 2006for $280,000.  As part of the close,Global Exchange Development Corp. executed a note payable to Oasis IntervalOwnership, LLC in the amount of $224,000 due January 2007 at an interestrate of 4.38%.  At March 31, 2006,the balance of the note receivable is included within the current portion ofnotes receivable in the accompanying consolidated balance sheet.  The note was fully paid in April of2006.

 

**9.**                                      **Consolidating CondensedFinancial Information**

 

CasablancaResorts, LLC, Oasis Recreational Properties, Inc., Oasis IntervalManagement, LLC and Oasis Interval Ownership, LLC (together the “GuarantorSubsidiaries”) have fully and unconditionally guaranteed, on a joint andseveral basis, payment of the Notes. Separate condensed financial statementinformation for RBG and its Guarantor Subsidiaries as of March 31, 2006(unaudited) and December 31, 2005 and for the three months ended March 31,2006 and 2005 (unaudited) is as follows (in thousands):

 
| ** **                                                   | ** ** | **RBG**    | ** ** | **Guarantor  Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total  Consolidated** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|-----------------------------|------------|------------------|------------|-------------------------|------------|
| **As of  March 31, 2006**                               | ** ** | ** ** | ** ** | ** **                  | ** ** | ** **       | ** ** | ** **              | ** ** |
| **BALANCE  SHEET:**                                          | ** ** | ** ** | ** ** | ** **                  | ** ** | ** **       | ** ** | ** **              | ** ** |
| Current Assets, including intercompany  accounts             |       | $          | 21,909     |                        | $          | 10,626           |       | $                       | (10,923    | ) | $ | 21,612 |   |
| Property and Equipment, net                                  |       | 45,399     |       | 37,969                      |       | —           |       | 83,368                  |       |
| Goodwill and Other Intangibles                               |       | 14,815     |       | 15,838                      |       | —           |       | 30,653                  |       |
| Other assets (liabilities), including  intercompany accounts |       | 45,615     |       | 562                         |       | (44,569          | )          | 1,608                   |       |
|                                                         |       | $          | 127,738    |                        | $          | 64,995           |       | $                       | (55,492    | ) | $ | 137,241 |   |
|                                                         |       |       |       |                        |       |             |       |                    |       |
| Current Liabilities                                          |       | $          | 13,085     |                        | $          | 19,398           |       | $                       | (10,923    | ) | $ | 21,560 |   |
| Long-term debt, less current portion                         |       | 174,756    |       | —                      |       | —           |       | 174,756                 |       |
| Gaming equipment financing, less current  portion            |       | 1,693      |       | 992                         |       | —           |       | 2,685                   |       |
| Fair value of interest rate swaps                            |       | 35         |       | 36                          |       | —           |       | 71                      |       |
| Members’ (Deficit) Equity                               |       | (61,831    | )          | 44,569                      |       | (44,569          | )          | (61,831                 | )          |
|                                                         |       | $          | 127,738    |                        | $          | 64,995           |       | $                       | (55,492    | ) | $ | 137,241 |   |

 

21

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**RBG, LLC**

 

**Notes to Condensed ConsolidatedFinancial Statements (unaudited) (continued)**

 

**9.**                                      **Consolidating CondensedFinancial Information (Cont’d)**

 
| ** **                                                   | ** ** | **RBG**    | ** ** | **Guarantor Subsidiaries** | ** ** | **Eliminations** | ** ** | **Total  Consolidated** | ** ** |
|--------------------------------------------------------------|------------|------------|------------|----------------------------|------------|------------------|------------|-------------------------|------------|
| **As of  December 31, 2005**                            |       |       |       |                       |       |             |       |                    |       |
| **BALANCE  SHEET:**                                          |       |       |       |                       |       |             |       |                    |       |
| Current Assets, including intercompany  accounts             |       | $          | 18,415     |                       | $          | 6,911            |       | $                       | (10,107    | ) | $ | 15,219 |   |
| Property and Equipment, net                                  |       | 46,783     |       | 37,614                     |       |             |       | 84,397                  |       |
| Goodwill and Other Intangibles                               |       | 15,047     |       | 16,146                     |       |             |       | 31,193                  |       |
| Other Assets (liabilities), including  intercompany accounts |       | 44,384     |       | 716                        |       | (43,062          | )          | 2,038                   |       |
|                                                         |       | $          | 124,629    |                       | $          | 61,387           |       | $                       | (53,169    | ) | $ | 132,847 |   |
|                                                         |       |       |       |                       |       |             |       |                    |       |
| Current Liabilities                                          |       | $          | 15,854     |                       | $          | 17,020           |       | $                       | (10,107    | ) | $ | 22,767 |   |
| Long-term debt, less current portion                         |       | 172,333    |       | —                     |       |             |       | 172,333                 |       |
| Gaming equipment financing, less current  portion            |       | 2,100      |       | 1,206                      |       |             |       | 3,306                   |       |
| Fair value of interest rate swaps                            |       | 96         |       | 99                         |       |             |       | 195                     |       |
| Members’ (Deficit) Equity                               |       | (65,754    | )          | 43,062                     |       | (43,062          | )          | (65,754                 | )          |
|                                                         |       | $          | 124,629    |                       | $          | 61,387           |       | $                       | (53,169    | ) | $ | 132,847 |   |
|                                                         |       |       |       |                       |       |             |       |                    |       |
| **For the three-months ended March  31,  2006**         | ** ** | ** ** | ** ** | ** **                 | ** ** | ** **       | ** ** | ** **              | ** ** |
| **STATEMENT OF OPERATIONS**                                  |       |       |       |                       |       |             |       |                    |       |
| Net Revenues                                                 |       | $          | 15,300     |                       | $          | 15,043           |       | $                       | —     |   | $ | 30,343 |   |
| Operating Expenses:                                          |       |       |       |                       |       |             |       |                    |       |
| Casino                                                       |       | 4,620      |       | 3,441                      |       | —           |       | 8,061                   |       |
| Food and beverage                                            |       | 2,426      |       | 2,175                      |       | —           |       | 4,601                   |       |
| Hotel                                                        |       | 520        |       | 695                        |       | —           |       | 1,215                   |       |
| Other                                                        |       | 1,744      |       | 1,347                      |       | —           |       | 3,091                   |       |
| General and administrative                                   |       | 3,795      |       | 4,331                      |       | —           |       | 8,126                   |       |
| Depreciation and amortization                                |       | 1,645      |       | 1,383                      |       | —           |       | 3,028                   |       |
| Loss on sale of assets                                       |       | —     |       | 92                         |       | —           |       | 92                      |       |
|                                                         |       | 14,750     |       | 13,464                     |       | —           |       | 28,214                  |       |
| Operating income                                             |       | 550        |       | 1,579                      |       | —           |       | 2,129                   |       |
| Income from investment in subsidiary                         |       | 1,507      |       | —                     |       | (1,507           | )          | —                  |       |
| Change in fair value of swap                                 |       | 26         |       | 63                         |       | —           |       | 89                      |       |
| Interest expense                                             |       | (102       | )          | (64                        | )          | —           |       | (166                    | )          |
| Total other income (expense)                                 |       | 1,431      |       | (1                         | )          | (1,507           | )          | (77                     | )          |
| Income before cumulative change in  accounting principle     |       | 1,981      |       | 1,578                      |       | (1,507           | )          | 2,052                   |       |
| Cumulative effect of change in accounting  principle         |       | (125       | )          | (71                        | )          | —           |       | (196                    | )          |
| Net income                                                   |       | $          | 1,856      |                       | $          | 1,507            |       | $                       | (1,507     | ) | $ | 1,856 |   |

 

22

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**RBG, LLC**

 

**Notes to Condensed ConsolidatedFinancial Statements (unaudited) (continued)**

 

**9.**                                      **Consolidating CondensedFinancial Information (Cont’d)**

 
| **STATEMENT OF CASH FLOWS**                         |   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net cash provided by operating activities           |   | $      | 2,827  |   | $      | 3,589  |   | $      | — |   | $ | 6,416 |   |
| Net cash used in investing activities               |   | (158   | )      | (1,339 | )      | — |   | (1,497 | )      |
| Net cash used in financing activities               |   | (969   | )      | (316   | )      | — |   | (1,285 | )      |
|                                                |   |   |   |   |   |   |   |   |   |
| **For the three-months ended March 31,  2005** |   |   |   |   |   |   |   |   |   |
| **STATEMENT OF OPERATIONS**                         |   |   |   |   |   |   |   |   |   |
| Net Revenues                                        |   | $      | 14,735 |   | $      | 14,544 |   | $      | — |   | $ | 29,279 |   |
| Operating Expenses:                                 |   |   |   |   |   |   |   |   |   |
| Casino                                              |   | 4,126  |   | 3,586  |   | — |   | 7,712  |   |
| Food and  beverage                                  |   | 2,410  |   | 2,283  |   | — |   | 4,693  |   |
| Hotel                                               |   | 652    |   | 749    |   | — |   | 1,401  |   |
| Other                                               |   | 2,091  |   | 1,588  |   | — |   | 3,679  |   |
| General and  administrative                         |   | 3,464  |   | 3,469  |   | — |   | 6,933  |   |
| Depreciation  and amortization                      |   | 1,081  |   | 783    |   | — |   | 1,864  |   |
| Loss on sale  of assets                             |   | 17     |   | — |   | — |   | 17     |   |
|                                                |   | 13,841 |   | 12,458 |   | — |   | 26,299 |   |
| Operating income                                    |   | 894    |   | 2,086  |   | — |   | 2,980  |   |
| Income from  investment in subsidiary               |   | 2,150  |   | — |   | (2,150 | )      | — |   |
| Change in  fair value of swap                       |   | 120    |   | 286    |   | — |   | 406    |   |
| Other                                               |   | (32    | )      | — |   | — |   | (32    | )      |
| Interest  expense                                   |   | (123   | )      | (222   | )      | — |   | (345   | )      |
| Total other income                                  |   | 2,115  |   | 64     |   | (2,150 | )      | 29     |   |
| NET INCOME                                          |   | $      | 3,009  |   | $      | 2,150  |   | $      | (2,150 | ) | $ | 3,009 |   |
|                                                |   |   |   |   |   |   |   |   |   |
| **STATEMENT OF CASH FLOWS**                         |   |   |   |   |   |   |   |   |   |
| Net cash provided by operating activities           |   | $      | 3,480  |   | $      | 5,656  |   | $      | — |   | $ | 9,136 |   |
| Net cash used in investing activities               |   | (1,581 | )      | (1,368 | )      | — |   | (2,949 | )      |
| Net cash used in financing activities               |   | (994   | )      | (1,020 | )      | — |   | (2,014 | )      |

 

23

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**B & B B, Inc.(doing business as Virgin River Hotel/Casino/Bingo)**

 

### **Condensed BalanceSheets(in thousands)**

 
| ** **                                                                                                  | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                  | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                                                                                  | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| **Assets**                                                                                                  |       |               |       |                  |       |
| Current assets:                                                                                             |       |               |       |                  |       |
| Cash and  cash equivalents                                                                                  |       | $                  | 6,827      |                  | $          | 6,211 |   |
| Accounts  receivable, net                                                                                   |       | 320                |       | 155                   |       |
| Related  company receivables                                                                                |       | 2,443              |       | 122                   |       |
| Inventories                                                                                                 |       | 399                |       | 392                   |       |
| Prepaid  expenses                                                                                           |       | 1,308              |       | 1,361                 |       |
| Total current assets                                                                                        |       | 11,297             |       | 8,241                 |       |
| Property and equipment, net                                                                                 |       | 11,210             |       | 11,155                |       |
| Goodwill and other intangible assets, net                                                                   |       | 11,234             |       | 11,568                |       |
| Deferred financing fees                                                                                     |       | 1,082              |       | 1,129                 |       |
| Other assets                                                                                                |       | 18                 |       | 15                    |       |
| Total assets                                                                                                |       | $                  | 34,841     |                  | $          | 32,108 |   |
| ** **                                                                                                  | ** ** | ** **         | ** ** | ** **            | ** ** |
| **Liabilities and Stockholder’s Deficit**                                                              |       |               |       |                  |       |
| Current liabilities:                                                                                        |       |               |       |                  |       |
| Current  portion of long-term debt                                                                          |       | $                  | 124        |                  | $          | 174 |   |
| Current  portion of gaming equipment financing                                                              |       | 1,805              |       | 1,647                 |       |
| Accounts  payable                                                                                           |       | 1,115              |       | 843                   |       |
| Accrued  liabilities                                                                                        |       | 6,134              |       | 10,245                |       |
| Related  company payable                                                                                    |       | 2,682              |       | 418                   |       |
| Total current liabilities                                                                                   |       | 11,860             |       | 13,327                |       |
| Gaming equipment financing, less current  portion                                                           |       | 1,622              |       | 2,063                 |       |
| Long-term debt, less current portion                                                                        |       | 174,756            |       | 172,333               |       |
| Fair value of interest rate swaps                                                                           |       | 71                 |       | 195                   |       |
| Commitments and contingencies                                                                               |       |               |       |                  |       |
| Stockholder’s deficit:                                                                                 |       |               |       |                  |       |
| Common  stock, no par value; authorized 2,500 shares, 100 shares issued and 88 shares outstanding |       | —             |       | —                |       |
| Retained  earnings                                                                                          |       | 3,483              |       | 2,613                 |       |
| Treasury  stock, at cost                                                                                    |       | (700               | )          | (700                  | )          |
| Deemed  distribution                                                                                        |       | (156,251           | )          | (157,723              | )          |
| Total stockholder’s deficit                                                                            |       | (153,468           | )          | (155,810              | )          |
| Total liabilities and stockholder’s deficit                                                            |       | $                  | 34,841     |                  | $          | 32,108 |   |

 

The accompanying notes are an integral partof these condensed financial tatements.

 

24

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**B & B B, Inc.(doing business as Virgin River Hotel/Casino/Bingo)**

 

### **Condensed Statementsof Operations (unaudited)**

**(inthousands)**

 
| ** **                     | ** ** | **Three Months ended** | ** ** |
|--------------------------------|------------|------------------------|------------|
| ** **                     | ** ** | **March 31,**     | ** ** | **March 31,** | ** ** |
| ** **                     | ** ** | **2006**               | ** ** | **2005** | ** ** |
|                           |       |                   |       |   |   |
| Revenues                       |       |                   |       |   |   |
| Casino                         |       | $                      | 9,753      |   | $ | 8,948 |   |
| Food and  beverage             |       | 3,253                  |       | 3,115 |   |
| Hotel                          |       | 2,647                  |       | 2,264 |   |
| Other                          |       | 735                    |       | 703 |   |
| Total revenues                 |       | 16,388                 |       | 15,030 |   |
| Less-promotional  allowances   |       | (2,356                 | )          | (2,035 | ) |
| Net revenues                   |       | 14,032                 |       | 12,995 |   |
| Operating expenses:            |       |                   |       |   |   |
| Casino                         |       | 3,446                  |       | 3,723 |   |
| Food and  beverage             |       | 1,958                  |       | 1,753 |   |
| Hotel                          |       | 541                    |       | 627 |   |
| Other                          |       | 354                    |       | 373 |   |
| Related  company rent          |       | 1,575                  |       | 1,575 |   |
| General and  administrative    |       | 3,418                  |       | 3,276 |   |
| Depreciation  and amortization |       | 1,295                  |       | 647 |   |
| Total operating expenses       |       | 12,587                 |       | 11,974 |   |
| Operating income               |       | 1,445                  |       | 1,021 |   |
| Other income (expense):        |       |                   |       |   |   |
| Interest  expense              |       | (575                   | )          | (560 | ) |
| Net income                     |       | $                      | 870        |   | $ | 461 |   |

 

The accompanying notes are an integral partof these condensed financial statements.

 

25

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**B & B B, Inc.(doing business as Virgin River Hotel/Casino/Bingo)**

 

### **Condensed Statementsof Cash Flows (unaudited)**

**(inthousands)**

 
| ** **                                                                         | ** ** | **Three months ended** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                         | ** ** | **March 31,**     | ** ** | **March 31,** | ** ** |
| ** **                                                                         | ** ** | **2006**               | ** ** | **2005** | ** ** |
|                                                                               |       |                   |       |   |   |
| Cash flows from operating activities:                                              |       |                   |       |   |   |
| Net income                                                                         |       | $                      | 870        |   | $ | 461 |   |
| Adjustments  to reconcile net income to net cash provided by operating activities: |       |                   |       |   |   |
| Depreciation  and amortization                                                     |       | 1,295                  |       | 647 |   |
| Amortization  of deferred financing fees                                           |       | 48                     |       | 48 |   |
| Interest  expense on gaming equipment financing                                    |       | 21                     |       | 43 |   |
| Change in  operating assets and liabilities:                                       |       |                   |       |   |   |
|  Accounts and related company receivables,  net                               |       | (2,486                 | )          | 95 |   |
| Inventories                                                                        |       | (7                     | )          | 35 |   |
| Prepaid  expenses                                                                  |       | 53                     |       | (52 | ) |
| Accounts  payable, accrued liabilities and related company payables                |       | 2,196                  |       | 1,282 |   |
| Net cash  provided by operating activities                                         |       | 1,990                  |       | 2,559 |   |
|                                                                               |       |                   |       |   |   |
| Cash flows from investing activities:                                              |       |                   |       |   |   |
| Capital  expenditures                                                              |       | (1,016                 | )          | (226 | ) |
| Net cash used in investing activities                                              |       | (1,016                 | )          | (226 | ) |
|                                                                               |       |                   |       |   |   |
| Cash flows from financing activities:                                              |       |                   |       |   |   |
| Payment of  long-term debt                                                         |       | (49                    | )          | (46 | ) |
| Payment on  gaming equipment financing                                             |       | (304                   | )          | (216 | ) |
| Change in  other assets                                                            |       | (5                     | )          | (267 | ) |
| Net cash used in financing activities                                              |       | (358                   | )          | (529 | ) |
| Net increase in cash and cash equivalents                                          |       | 616                    |       | 1,804 |   |
| Cash and cash equivalents at beginning of  year                                    |       | 6,211                  |       | 5,918 |   |
| Cash and cash equivalents at end of period                                         |       | $                      | 6,827      |   | $ | 7,722 |   |

 

The accompanying notes are an integral partof these condensed financial statements.

 

26

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**B & B B, Inc.(doing business as Virgin River Hotel/Casino/Bingo)**

 

**CondensedStatements of Cash Flows (unaudited) (continued)**

**(inthousands)**

 
| ** **                                             | ** ** | **Three months ended** | ** ** |
|--------------------------------------------------------|------------|------------------------|------------|
| ** **                                             | ** ** | **March 31,**     | ** ** | **March 32,** | ** ** |
| ** **                                             | ** ** | **2006**               | ** ** | **2005** | ** ** |
|                                                   |       |                   |       |   |   |
| Supplemental cash flow disclosure:                     |       |                   |       |   |   |
|                                                   |       |                   |       |   |   |
| Cash paid  for interest                                |       | $                      | 1,022      |   | $ | 6 |   |
|                                                   |       |                   |       |   |   |
| Acquisition  of assets with gaming equipment financing |       | $                      | —     |   | $ | 3,234 |   |

 

The accompanying notes are an integral partof these condensed financial statements.

 

27

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**B & B B, Inc.(doing business as Virgin River Hotel/Casino/Bingo)**

 

### **Notes to CondensedFinancial Statements (unaudited)**

**March 31, 2006**

** **

**1.**                                      Basis of Presentation and Background

** **

B & B B, Inc.(the “Company” or “B&BB”) is a Nevada corporation formed on December 7,1989 for the purpose of operating the Virgin River Hotel/Casino/Bingo (“VirginRiver”) located in Mesquite, Nevada. The Company’s shares are 100.0% owned byRandy Black, Sr. (“Mr. Black”). The hotel portion of the facilitycommenced operations on June 1, 1990, and the casino portion commencedoperations on September 1, 1990. The land and buildings are owned byVirgin River Casino Corporation (“VRCC”), a Nevada corporation which is also100% owned by Mr. Black and leased to B&BB. Certain personal propertyincluding furniture and fixtures, leasehold improvements within the casino, andgaming equipment are owned by B&BB.

 

***InterimFinancial Statements***— The accompanying unaudited condensed consolidated financialstatements for the three-month period ended March 31, 2006 and 2005 areunaudited.  In the opinion of management,all adjustments (which include normal recurring adjustments) necessary for afair presentation of the Company’s financial position and results of operationsfor such periods, have been included. The accompanying unaudited condensed financial statements should be readin conjunction with the Company’s audited financial statements filed on Form 10-Kfor the year ended December 31, 2005. The results for the three-month period ended March 31, 2006 are notnecessarily indicative of the results that may be expected for the year ending December 31,2006, or for any other period.

 

**2.             RelatedCompany Receivables and Payables**

 

The related companyreceivable of the Company consists of the following (in thousands):

 
| ** **                  | ** ** | **March**       | ** ** | **December 31,** | ** ** |
|-----------------------------|------------|-----------------|------------|-----------------------|------------|
| ** **                  | ** ** | **2006**        | ** ** | **2005**              | ** ** |
| ** **                  | ** ** | **(unaudited)** | ** ** | ** **            | ** ** |
| Virgin River Casino Corp.   |       | $               | 2,443      |                  | $          | 106 |   |
| RBG, LLC                    |       | —          |       | 8                     |       |
| Casablanca Resorts, LLC     |       | —          |       | 8                     |       |
| Related company receivables |       | $               | 2,443      |                  | $          | 122 |   |

 

Therelated company payable of the Company consists of the following (inthousands):

 
| ** **                | ** ** | **March**       | ** ** | **December 31,** | ** ** |
|---------------------------|------------|-----------------|------------|-----------------------|------------|
| ** **                | ** ** | **2006**        | ** ** | **2005**              | ** ** |
| ** **                | ** ** | **(unaudited)** | ** ** | ** **            | ** ** |
| Virgin River Casino Corp. |       | $               | —     |                  | $          | 14 |   |
| RBG, LLC                  |       | 1,083           |       | 271                   |       |
| Casablanca Resorts, LLC   |       | 1,599           |       | 133                   |       |
| Related company payable   |       | $               | 2,682      |                  | $          | 418 |   |

 

**The transactions betweenthe Company and the entities above are based on informal arrangements.  At March 31, 2006 and December 31,2005, there are no specific payment terms nor do any of the receivables requirethe payment of any interest.**

 

28

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**B & B B, Inc.(doing business as Virgin River Hotel/Casino/Bingo)**

 

### **Notes to CondensedFinancial Statements (unaudited)**

 

**3.**                                      Property and Equipment

 

Property and equipmentconsists of the following (in thousands):

 
| ** **                                           | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                           | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                           | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Buildings                                            |       | 285                |       | 285                   |       |
| Land and leasehold improvements                      |       | 3,741              |       | 3,741                 |       |
| Furniture, fixtures and equipment                    |       | 26,001             |       | 25,964                |       |
| Construction in progress                             |       | 1,872              |       | 893                   |       |
|                                                 |       | 31,899             |       | 30,883                |       |
| Less–accumulated depreciation and  amortization |       | (20,689            | )          | (19,728               | )          |
| Property and equipment, net                          |       | $                  | 11,210     |                  | $          | 11,155 |   |
|                                                      |            |                    |            |                       |            |  |  |

 

As a result of the third party business valuation that was conducted inthe fourth quarter of 2005, the Company has re-evaluated the useful lives oftheir slot machines and effective January 1, 2006, has changed that estimatefrom seven years to five years.

 

**4.**                                      Long-termDebt

 

Long-term debt consistsof the following (in thousands): 

 
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                                                                                                                                                                                                                                                                                      | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Revolving  credit facility totaling $15 million with Wells Fargo Foothill, at a margin  above prime or LIBOR, as defined; collateralized by substantially all real  and personal property, leases, intangibles and other interests of the  Companies as defined.                                                |       | $                  | 3,000      |                  | $          | 2,000 |   |
| 9% senior  secured notes, interest payable semiannually, principal due January 15,  2012, callable January 15, 2009                                                                                                                                                                                   |       |               | 125,000    |                  |       | 125,000 |   |
| 12 3⁄4% senior  subordinated notes, non-cash interest will accrue at an annual rate of 12 3⁄4%  in the form of increase accreted value until January 15, 2009. Beginning  January 15, 2009, interest payable semiannually, principal due January 15,  2013, callable January 15, 2009 |       | 46,756             |       | 45,333                |       |
| Promissory  note payable to Wells Fargo Equipment Finance, Inc. payable in monthly  installments of $17 at an interest rate of 6.97%, due June 2006                                                                                                                                                   |       | 124                |       | 174                   |       |
|                                                                                                                                                                                                                                                                                                            |       | 174,880            |       | 172,507               |       |
| Less—current  portion                                                                                                                                                                                                                                                                                      |       | (124               | )          | (174                  | )          |
| Total  long-term debt                                                                                                                                                                                                                                                                                           |       | $                  | 174,756    |                  | $          | 172,333 |   |
|                                                                                                                                                                                                                                                                                                                 |            |                    |            |                       |            |  |  |  |

 

***FoothillFacility***

 

The Wells Fargo Foothillcredit facility (“Foothill Facility’) is secured by substantially all theassets of the Companies. During the life of the Foothill Facility, theCompanies may borrow up to the lesser of (1) $15.0 million less theLetter of Credit Usage, as defined, less the Bank Product Reserve, as defined,or (2) the Borrowing Base, as defined, less the Letter of CreditUsage.  At March 31, 2006, the BankProduct Reserve was approximately $102,000 and is based on the fair marketvalue at March 31, 2006 of the interest rate swap owed to Wells FargoFoothill, Inc.  Accordingly, theavailability under the Foothill Facility at March 31, 2006 was limited to$11.9 million.

 

29

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**B & B B, Inc.(doing business as Virgin River Hotel/Casino/Bingo)**

 

### **Notes to CondensedFinancial Statements (unaudited)**

### ** **

**4.**                                      Long-termDebt (cont’d)

** **

Under the terms of theFoothill Facility, interest accrues on the outstanding principal balance atLIBOR plus the LIBOR Rate Margin, which is 3.5%, or the Base Rate, as defined,plus the Base Rate Margin, which is 2%. LIBOR was approximately 5.3% at March 31, 2006.  The Foothill Facility also contains certainfinancial and other covenants.  Theseinclude a minimum trailing twelve-month Earnings before Interest, Taxes,Depreciation and Amortization (“EBITDA”) of $15,000,000 for the Companies andlimitations on other indebtedness and capital expenditures, as defined.  The Companies were in compliance with thesecovenants at March 31, 2006 and December 31, 2005.

 

The outstanding balanceon the Foothill Facility is a joint and several obligation of the Companies.The condensed balance sheet of the Company reflects the full obligation of theFoothill Facility at March 31, 2006 with the amount recorded on theconsolidated balance sheet of VRCC recognized as a deemed distribution toreflect the net obligation of the Foothill Facility on the balance sheet of theCompany at March 31, 2006. At March 31, 2006, the net amount of theFoothill Facility recorded on the Company’s balance sheet is $0.

 

***SeniorSecured and Senior Subordinated Notes***

 

In December 2004, aspart of an ownership buyout (the “Buyout”), the VRCC, RBG and B&BB (the “Issuers”)issued $125.0 million of 9% senior secured notes (“Senior Notes”) due on January 15,2012 and $39.9 million in gross proceeds of 123⁄4% senior subordinated notes(“Senior Sub Notes”) due January 15, 2013 (collectively the “Notes”).  The Notes are joint and several obligationsof the Issuers and all current and future subsidiaries of the Issuers.  Although the Notes are joint and severalobligations of the Issuers, the allocation of the balance of the Notes to theindividual balance sheets of B&BB, VRCC and RBG was according to the flowof funds at the date of the Buyout with the proceeds of the Senior Notesnecessary to purchase the interests of B&BB recorded on the balance sheetof B&BB and the remaining proceeds of the Senior Notes and Senior Sub Notesrecording on the balance sheet of VRCC. The condensed balance sheet of the Company reflects the full obligationof the Notes at March 31, 2006 with an amount that is recorded on theconsolidated balance sheet of VRCC recognized as a deemed distribution toreflect the net obligation of the Notes recorded on the balance sheet of theCompany at March 31, 2006. At March 31, 2006, the net amount of theNotes recorded on the Company’s balance sheet is $20.6 million.

 

The Senior Notes payinterest semiannually while the Senior Sub Notes accrue interest in the form ofincreased accreted value until January 15, 2009, when the carrying bookvalue of the Senior Sub Notes will be $66.0 million.  At that point the Senior Sub Notes will payinterest semiannually on the same dates as the Senior Notes.

 

The indentures (the “Indentures”)governing the Issuers’ Notes contain certain customary financial and othercovenants, which limit the Issuers’ ability to incur additional debt.  The Indentures provide that the Issuers maynot incur additional indebtedness, other than specified types of indebtedness,unless the Consolidated Coverage Ratio, on a pro-forma basis after theincurrence of the additional indebtedness is at least 2.00 to 1.00. As of March 31,2006, the Issuers have incurred $0 of additional indebtedness as defined.

 

30

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**B &BB, Inc. (doing business as Virgin River Hotel/Casino/Bingo)**

 

**Notes to CondensedFinancial Statements (unaudited) (continued)**

 

**4.**                                      Long-termDebt (cont’d)

 

TheIndentures also contain other covenants which limit the ability of the Issuersand guarantors under the Indentures (the “Guarantors”), as defined, to paydividends, redeem stock, or make other distributions, make investments, createcertain liens, enter into certain transactions with affiliates, utilize proceedsfrom asset sales, transfer or sell assets, issue or sell equity interests ofsubsidiaries and enter into certain mergers and consolidations, as defined inthe Indentures.  There are norestrictions related to the transfer of funds between the Issuers, Guarantorsand their respective subsidiaries.  TheIssuers were in compliance with these covenants at March 31, 2006 andDecember 31, 2005.

 

The Senior Notes aresecured by substantially all existing and future assets of the Issuers and theGuarantors, as defined, as well as the equity interest of the Guarantors, theequity interests of the Acquiring Shareholder and his affiliate in theIssuers.  The Guarantors are all thewholly owned subsidiaries of the Issuers. The Senior Notes are subordinated to the security interests of theFoothill Facility.  The Senior Sub Notesare subordinate to the Senior Notes and all other indebtedness of theCompanies.

 

**5.****                                     ****GamingEquipment Financing**

 

The Company from time totime enters into agreements with gaming manufacturers to finance the purchaseof gaming equipment.  Contractual termsof the agreements with the gaming manufactures consist of payment terms of lessthan one year to up to three years without interest.  In the event that an agreement with a gamingmanufacturer extends past a year, the Company will impute interest at a rate of8%.

 

Gaming equipmentfinancing consists of the following (in thousands): 

 
| ** **                                                                                                                                           | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                           | ** ** | **2006**           | ** ** | **2005**              | ** ** |
| ** **                                                                                                                                           | ** ** | **(unaudited)**    | ** ** | ** **            | ** ** |
| Gaming  equipment financing to purchase 273 games, no payments for one year and  monthly payments of $145 for 24 months beginning February 2006 |       | $                  | 2,955      |                  | $          | 3,183 |   |
| Gaming  equipment financing to purchase 20 games, monthly payments of $7 for 36  months beginning April 2005                                    |       | 150                |       | 167                   |       |
| Gaming  equipment financing to purchase 35 games, no payments for one year and  monthly payments of $8 for 24 months beginning January 2006     |       | 159                |       | 176                   |       |
| Gaming  equipment financing to purchase 4 games, monthly payments of $1 for 36 months  beginning April 2005                                     |       | 28                 |       | 32                    |       |
| Gaming equipment  financing to purchase 20 games, monthly payments of $7 for 36 months  beginning April 2005                                    |       | 135                |       | 152                   |       |
|                                                                                                                                                 |       | 3,427              |       | 3,710                 |       |
|  Less current portion                                                                                                                           |       | (1,805             | )          | (1,647                | )          |
| Gaming  equipment financing, long-term portion                                                                                                       |       | $                  | 1,622      |                  | $          | 2,063 |   |

 

31

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**B &BB, Inc. (doing business as Virgin River Hotel/Casino/Bingo)**

 

**Notes to CondensedFinancial Statements (unaudited) (continued)**

 

**6.****                                     ****Related Party Transactions**

 

Virgin River Foodmart, Inc.(“Foodmart”), a Nevada corporation, is owned by Mr. Black and formershareholders of the Company and VRCC. Participants in the Company’s slot clubprogram are able to redeem their points for gasoline at the Foodmart.  Foodmart charges the Company the retailamount of gas purchased with player points. For the three-month periods ended March 31, 2006 and 2005, Foodmarthas charged the Company $17,000 and $58,000, respectively, for gasolinepurchased with points from the Company’s slot club program.

 

Black,LoBello & Pitegoff is a law firm managed by the daughter of Mr. Black. The Company retains Black, LoBello &Pitegoff as outside legal counsel, and have paid legal fees for legal servicesin the amount of $14,000 and $0 for the three-month periods ended March 31,2006 and 2005, respectively.

 

Gaming Research is aconsulting firm retained to perform marketing research for the Company.  The principal of Gaming Research is thefather of the Company’s chief operating officer.  Gaming research received consulting fees of$43,000 and $0 during the three-months ended March 31, 2006 and 2005,respectively

 

Pursuant to theindenture, Mr. Black is entitled to a management fee for his management ofthe Company’s business of up to 5% of EBITDA, as defined.  The Company has expensed $110,000 and $96,000during the three-month periods ended March 31, 2006 and 2005,respectively, associated with this management fee.

 

32

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## **Item 2. Management’s Discussion and Analysis of Financial Condition and Resultsof Operations.**

 

***Overview***

 

We own and operate theCasaBlanca Hotel & Casino (the “Casablanca”), the Oasis Hotel andCasino (the “Oasis”) and the Virgin River Hotel & Casino (the “VirginRiver”) in Mesquite, Nevada, which is located approximately 80 miles north ofLas Vegas. We own three of the four casinos operating in Mesquite and ourproperties have a dominant market share in Mesquite. Our properties are wellestablished, each having been in operation for at least nine years, and serveas significant drive-in gaming and resort destinations. Our propertiescollectively feature over 2,200 slot machines, 75 table games, and 2,100 deluxehotel rooms, and offer extensive amenities, including championship golfcourses, full service spas, a bowling center, movie theaters, restaurants, andbanquet and conference facilities. With each of our properties, we leverage ourextensive value-oriented amenities and emphasis on slot play to target middlemarket gaming customers.

 

Our revenues areprimarily derived from gaming revenues, which include revenues from slotmachines, table games, live keno, race and sports book wagering and bingo.Gaming revenues are generally defined as gaming wins less gaming losses. Inaddition, we derive a significant amount of revenue from our hotel rooms andour food and beverage outlets. We also derive revenues from our golf courses,spa facilities, timeshare units, bowling center and other amenities.Promotional allowances consist primarily of food and beverages furnishedgratuitously to customers. The retail value of such services is included in therespective revenue classifications and is then deducted as promotionalallowances. We calculate operating income as net revenues less total operatingcosts and expenses. Operating income represents only those amounts that relateto our operations and excludes interest income, interest expense, and othernon-operating income and expenses.

 

Our entities areclassified as “flow-through” entities under the partnership or Subchapter Sprovisions of the Internal Revenue Code of 1986, as amended. Under thoseprovisions, the owners of the companies pay or are responsible for reportingour taxable income on their separate returns. Accordingly, a provision forincome taxes is not included in our financial statements.

 

RBG, LLC, a Nevadalimited-liability company, was formed in February 1997 for the purpose ofacquiring the assets of Player’s Island Resort in Mesquite, Nevada, currentlyoperating as the CasaBlanca. RBG, LLC acquired the CasaBlanca for$30.5 million. In February 2001, RBG, LLC formed a subsidiary,Casablanca Resorts, LLC, a Nevada limited-liability company, in order topurchase the assets of the Oasis in Mesquite. RBG, LLC acquired the Oasis for$31.7 million. Currently, RBG, LLC directly owns and operates theCasaBlanca, and through its wholly-owned subsidiary, owns and operates theOasis. In May 2001, Casablanca Resorts, LLC formed threesubsidiaries—Oasis Interval Ownership, LLC, a Nevada limited-liability company;Oasis Recreational Properties, Inc., a Nevada corporation; and OasisInterval Management, LLC, a Nevada limited-liability company. Oasis IntervalOwnership, LLC and Oasis Interval Management, LLC were formed in connectionwith the operation and management of time share operations. Oasis RecreationalProperties, Inc. owns the recreational facility that is associated withthe Oasis.

 

B & B B, Inc.,a Nevada corporation, was formed in December 1989 in connection with theconstruction and development of the Virgin River. B & B B, Inc.operates the hotel casino and owns certain personal property includingfurniture and fixtures, leasehold improvements and gaming equipment within thecasino. Virgin River Casino Corporation, a Nevada corporation, was formed in July 1988in connection with the construction of the Virgin River. Virgin River CasinoCorporation currently owns the land and buildings associated with the VirginRiver as well as the Virgin River Convention Center 

 

33

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(formerly known asthe Mesquite Star Hotel & Casino). Virgin River Casino Corporationgenerates income from rents received from B & B B, Inc., whichoperates the Virgin River.

 

The Virgin RiverConvention Center is currently a nonoperating casino, which we acquired out ofbankruptcy for $6.3 million in November 2000. The Virgin RiverConvention Center has 12,000 square feet of gaming space and 210 hotel rooms.We are presently using the property as a special events facility and foroverflow hotel traffic from our other properties. We believe that the VirginRiver Convention Center gives us a competitive advantage in the Mesquite marketbecause it allows us the flexibility of opening the casino to meet marketdemand and to maintain our market share in the future on a cost-effectivebasis.

 

Inorder to offer our customers attractive and modern facilities, we plan tocontinue to renovate our facilities, add amenities and remodel and expand someof our restaurants. In particular, in the future we plan to (i) add arestaurant, and an additional movie theater, and remodel the coffee shop at theVirgin River, and (ii) add a convention facility, expand and remodel thespa facility, and recondition the parking lot at the Oasis. For 2006, we planto spend an aggregate of approximately $0.6 million in capitalexpenditures for a consolidation of our laundry operation, and for a newproperty management and back office computer system. Furthermore, toaccommodate long-term market growth and high hotel occupancy rates, weplan to spend approximately $21.0 million in capital expenditures for thedevelopment and construction of a new 150 to 160 room hotel tower andconvention center that will begin in the second half of 2006 and continuethrough the second half of 2007.

 

***Key Performance Indicators***

 

Our operating results arehighly dependent on the volume of customers at our properties, which in turnimpacts the price we can charge for our hotel rooms and other amenities. Wegenerate a significant portion of our operating income from the gaming and hotelportions of our operations. Key performance indicators in our gaming and hoteloperations are as follows:

 

Gaming revenue indicators— table games drop and slot handle (volume indicators); “win” or “hold”percentage, which is not fully controllable by us. Our normal table games winpercentage is in the range of 15% to 18% of table games drop and our normalslot win percentage is in the range of 5% to 6% of slot handle.

 

Hotel revenue indicators —hotel occupancy (volume indicator); average daily rate (“ADR,” priceindicator); revenue per available room (“REVPAR”), a summary measure of hotelresults, combining ADR and occupancy rate.

 

Most of our revenue isessentially cash-based, through customers wagering with cash or paying fornon-gaming services with cash or credit cards. Our industry is capitalintensive and we rely heavily on the ability of our properties to generateoperating cash flow to repay debt financing, fund maintenance capitalexpenditures and provide excess cash for future development.

 

Our results of operationstend to be seasonal in nature. Typically, 54% of our operating income isgenerated in the first quarter and 39% is generated in the second quarter withthe remainder being generated during the final half of the year.

 

34

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***FinancialHighlights of Virgin River Casino Corporation***

 

**For theThree-Months Ended March 31, 2005 and 2006 (unaudited) (in thousands)**

 
| ** **                          | ** ** | **Three-months ended   March 31,** | ** ** | **%**    | ** ** |
|-------------------------------------|------------|-----------------------------------------|------------|----------|------------|
| ** **                          | ** ** | **2005**                                | ** ** | **2006** | ** ** | **Change** | ** ** |
| Casino revenues                     |       | $                                       | 15,996     |     | $          | 17,319 |   | 8.3 | % |
| Casino expenses                     |       | 7,712                                   |       | 8,061    |       | 4.5 | % |
| Profit margin                       |       | 51.8                                    | %          | 53.5     | %          | — |   |
|                                |       |                                    |       |     |       |   |   |
| Food and beverage revenues          |       | $                                       | 7,895      |     | $          | 7,984 |   | 1.1 | % |
| Food and beverage expenses          |       | 4,693                                   |       | 4,601    |       | (2.0 | )% |
| Profit margin                       |       | 40.6                                    | %          | 42.4     | %          | — |   |
|                                |       |                                    |       |     |       |   |   |
| Hotel revenues                      |       | $                                       | 5,341      |     | $          | 6,627 |   | 24.1 | % |
| Hotel expenses                      |       | 1,584                                   |       | 1,389    |       | (12.3 | )% |
| Profit margin                       |       | 70.3                                    | %          | 79.0     | %          | — |   |
|                                |       |                                    |       |     |       |   |   |
| Other revenues                      |       | $                                       | 6,838      |     | $          | 6,834 |   | (0.1 | )% |
| Other expenses                      |       | 3,679                                   |       | 3,091    |       | (16.0 | )% |
|                                |       |                                    |       |     |       |   |   |
| Promotional allowances              |       | $                                       | 4,867      |     | $          | 6,573 |   | 35.1 | % |
| Percent of gross revenues           |       | 13.5                                    | %          | 17.0     | %          | — |   |
|                                |       |                                    |       |     |       |   |   |
| General and administrative expenses |       | $                                       | 6,993      |     | $          | 8,170 |   | 16.8 | % |
| Percent of net revenues             |       | 22.4                                    | %          | 25.4     | %          | — |   |

 

**Three-monthsended March 31, 2006 compared to the three-months Ended March 31,2005**

 

*Consolidated Net Revenues.* Consolidated net revenues increased by 3.2%to $32.2 million for the three-months ended March 31, 2006 as compared to$31.2 million for the three-months ended March 31, 2005. The increasewas primarily due to a $1.3 million increase in casino revenues, a $1.3 millionincrease in hotel revenues and a $0.1 million increase in food and beveragerevenues offset by a $1.7 million increase in promotional allowances.

 

*Consolidated Operating Income.* Consolidated operating income decreased by21.0% to $3.4 million for the three-months ended March 31, 2006 ascompared to $4.3 million for the three-months ended March 31, 2005.In addition, our operating income margin decreased to 10.5% of net revenues forthe three-months ended March 31, 2006 as compared to 13.7% of net revenuesfor the three-months ended March 31, 2005. The main reason for the decrease was due to a $1.2 million increase indepreciation and amortization expense in the current period.

 

*Casino.* Casino revenues increased 8.3% to $17.3 million for thethree-months ended March 31, 2006 as compared to $16.0 million forthe three-months ended March 31, 2005. The increase in casino revenues wasdue to the increase in slot revenues, which increased $1.0 million between periodsas coin-in decreased $18.9 million on an increased overall hold for thethree-months ended March 31, 2006 compared to the same period in the prioryear. Table games revenues increased $0.5 million for the three months ended March 31,2006 as compared to the same period in the prior year as drop increased $0.7million between periods.  Casino profitmargin increased to 53.5% for the three-months ended March 31, 2006 ascompared to 51.8% for three-months ended March 31, 2005. The increase incasino profit margin is primarily due to most costs remaining relatively flat,with the exception of gaming taxes and advertising and promotions for thethree-months ended March 31, 2006 compared to the three-months ended March 31,2005. Overall casino expenses increased 4.5% for the three-months ended March 31,2006 compared to the same period in the prior year.

 

35

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*Food and Beverage.* Food and beverage revenues increased by 1.1% to $8.0 million for thethree-months ended March 31, 2006 as compared to $7.9 million for thethree-months ended March 31, 2005. Food and beverage expenses decreased 2%to $4.6 million for the three-month ended March 31, 2006 as compared to$4.7 million for the three-months ended March 31, 2005.

 

*Hotel.* Hotel revenues increased 24.1% to $6.6 million for the three-monthsended March 31, 2006 as compared to $5.3 million for the three-monthsended March 31, 2005. Overall occupied rooms were down approximately 9,500room nights for the three-months ended March 31, 2006 compared to thethree-months ended March 31, 2005. The average ADR increased at the Casablanca to $81 during thethree-months ended March 31, 2006 compared to $50 in the same period ofthe prior year and at the Oasis to $47 during the three-months ended March 31,2006 from $41 during the same period in the prior year.  Hotel expenses decreased 12.3% to $1.4million for the three-months ended March 31, 2006 compared $1.6 million tofor the three-months ended March 31, 2005 due to the decrease in occupiedrooms.  As a result, hotel profit marginincreased to 79.0% for the three-months ended March 31, 2006 from 70.3% inthe prior three-month period ended March 31, 2005.

 

*Other Revenues.* Other revenues remained relatively flat at $6.8 million for thethree-months ended March 31, 2006 and 2005.  Other expenses decreased 16.0% to $3.1million for the three-months ended March 31, 2006 as compared to $3.7million for the three-months ended March 31, 2005.

 

*Promotional Allowances.* Promotional allowances increased by 35.1% to$6.6 million for the three-months ended March 31, 2006 as compared to$4.9 million for the three-months ended March 31, 2005. As a percentof gross revenues, promotional allowances increased to 17.0% for thethree-months ended March 31, 2006 as compared to 13.5% for thethree-months ended March 31, 2005 as we focused our marketing attention onour better gaming customers.

 

*General and Administrative (“G&A”).* G&A expenses increased by 16.8% to $8.2 million for thethree-months ended March 31, 2006 as compared to $7.0 million for thethree-months ended March 31, 2005. As a percent of net revenues,G&A expenses increased to 25.4% for the three-months ended March 31,2006 as compared to 22.4% for the three-months ended March 31, 2005.G&A expenses increased due to a $0.3 million increase in advertisingexpenses, a $0.2 million increase in utilities, a $0.4 million increase insalaries and increases in bonuses and management fees offset by a $0.1 milliondecrease in medical expenses.

 

*Depreciation and Amortization.* Depreciation and amortization increased to$3.4 million for the three-months ended March 31, 2006 compared to$2.2 million for the three-months ended March 31, 2005. The increasewas due to the purchase of additional gaming equipment and an increase in thedepreciable asset base due to an ownership buyout (the “Buyout”) on December 20,2004.

 

*Interest Expense.* Interest expense increased to $4.4 million for the three-months ended March 31,2006 as compared to $4.3 million in the prior year due to an increase in ouraverage outstanding borrowings during the three-months ended March 31,2006 compared to the same period in the prior year.

 

*Change in Fair Value of Swaps.* Change in fair value of swaps decreasedto income of $0.1 million during the three-months ended March 31, 2006compared to income of $0.6 million in the same period of the prior year.  The decrease in income is due to a decreasein the average notional amount of the swaps outstanding.

 

*Cumulative effect of change inaccounting principle.* We adopted the provisions of SFAS 152, “*Accountingfor Real Estate Time-Sharing Transactions*.” The adoption of SFAS 152resulted in an 

 

36

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increase in our allowancefor possible credit losses of $0.2 million during the three-months ended March 31,2006 compared to $0 in the same period in the prior year.

 

**Liquidity andCapital Resources**

** **

*Cash Flows andCredit Facility*

* *

Our primary sources of liquidity and capital resourceshave been cash flow from operations and our credit facility.  As of March 31, 2006 and December 31,2005, cash and cash equivalents were $13.0 million and $9.4 million,respectively.

 

*OperatingActivities*

* *

Cashprovided by operating activities for the three-months ended March 31, 2006was $5.4 million compared to $8.9 million for the three-months ended March 31,2005. The $3.5 million decrease was primarily due to a $4.6 millionincrease in cash paid for interest offset by a $0.3 million increase inoperating income (excluding depreciation and amortization expense and othernoncash charges) and a $0.8 million increase in our overall net currentpayables and receivables during the three-month period ended March 31,2006 compared to the same period in the prior year.

 

*Investing Activities*

 

Cash used in investing activities for the three-monthsended March 31, 2006 was $1.5 million compared to $3.2 millionfor the three-months ended March 31, 2005. The majority of cash used ininvesting activities was related to capital expenditures for laundry equipmentand slot machines and related equipment.

 

*FinancingActivities*

 

Cash used in financing activities for the three-monthsended March 31, 2006 was $0.3 million compared to $1.9 millionfor the three-months ended March 31, 2005. For the three-months ended March 31,2006, $0.5 million represented a decrease in the bank overdraft balance,$2.2 million related to payments on long-term debt associated with ourcredit facility with Wells Fargo Foothill (the “Foothills Facility”), equipmentfinancing and time share financing and $0.4 million related to payments ongaming equipment financing.  Thesefinancing outflows were offset by $3.0 million of borrowings on theFoothills Facility.  For the three-monthsended March 31, 2005, $1.5 million represented a decrease in the bankoverdraft balance, $0.4 million related to payments on long-term debtassociated with equipment and time share financing, $0.1 million related topayments on gaming equipment financing, $0.1 million  related to payments on deposits, and $0.1million related to payment of debt issuance costs associated with our 9% seniorsecured notes due January 15, 2012 (the “Senior Notes”), our 12 3/4 seniorsubordinated notes due January 15, 2013 (the “Senior Sub Notes”), and ournew senior secured credit facility. These financing outflows were offset by $0.2 million of borrowingson the Foothills Facility and $0.1 million of borrowings associated withour time share financing.

 

37

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***FinancialHighlights of RBG, LLC (doing business as CasaBlanca Resort/Casino/Golf/Spa),CasaBlanca Resorts, LLC (doing business as Oasis Resort & Casino) andsubsidiaries***

** **

**For theThree-Months Ended March 31, 2005 and 2006 (unaudited) (in thousands)**

 
| ** **                          | ** ** | **Quarter ended   March 31,** | ** ** | **%**    | ** ** |
|-------------------------------------|------------|------------------------------------|------------|----------|------------|
| ** **                          | ** ** | **2005**                           | ** ** | **2006** | ** ** | **Change** | ** ** |
| Casino revenues                     |       | $                                  | 15,996     |     | $          | 17,319 |   | 8.3 | % |
| Casino expenses                     |       | 7,712                              |       | 8,061    |       | 4.5 | % |
| Profit margin                       |       | 51.8                               | %          | 53.5     | %          | — |   |
|                                |       |                               |       |     |       |   |   |
| Food and beverage revenues          |       | $                                  | 7,895      |     | $          | 7,984 |   | 1.1 | % |
| Food and beverage expenses          |       | 4,693                              |       | 4,601    |       | (2.0 | )% |
| Profit margin                       |       | 40.6                               | %          | 42.4     | %          | — |   |
|                                |       |                               |       |     |       |   |   |
| Hotel revenues                      |       | $                                  | 5,057      |     | $          | 6,376 |   | 26.1 | % |
| Hotel expenses                      |       | 1,401                              |       | 1,215    |       | (13.3 | )% |
| Profit margin                       |       | 72.3                               | %          | 80.9     | %          | — |   |
|                                |       |                               |       |     |       |   |   |
| Other revenues                      |       | $                                  | 5,185      |     | $          | 5,183 |   | — |   |
| Other expenses                      |       | 3,679                              |       | 3,091    |       | (15.9 | )% |
|                                |       |                               |       |     |       |   |   |
| Promotional allowances              |       | $                                  | 4,854      |     | $          | 6,519 |   | 34.3 | % |
| Percent of gross revenues           |       | 14.2                               | %          | 17.7     | %          | — |   |
|                                |       |                               |       |     |       |   |   |
| General and administrative expenses |       | $                                  | 6,933      |     | $          | 8,126 |   | 17.2 | % |
|                                |       |                               |       |     |       |   |   |   |   |
| Percent of net revenues             |       | 23.7                               | %          | 26.8     | %          | — |   |

** **

**Three-monthsended March 31, 2006 compared to the three-months Ended March 31,2005**

** **

*Consolidated Net Revenues.* Consolidated net revenues increased by 3.6% to $30.3 million for thethree-months ended March 31, 2006 as compared to $29.3 million forthe three-months ended March 31, 2005. The increase was primarily due to a$1.3 million increase in casino revenues, a $1.3 million increase in hotelrevenues and a $0.1 million increase in food and beverage revenues.

 

*Consolidated Operating Income.*  Consolidatedoperating income decreased by 28.6% to $2.1 million for the three-months ended March 31,2006 as compared to $3.0 million for the three-months ended March 31,2005. In addition, our operating income margin decreased to 7.0% of netrevenues for the three-months ended March 31, 2006 as compared to 10.2% ofnet revenues for the three-months ended March 31, 2005.  The main reason for the decrease was due to a$1.2 million increase in depreciation and amortization expense in the currentperiod.

 

*Casino.*  Casino revenues increased 8.3%to $17.3 million for the three-months ended March 31, 2006 ascompared to $16.0 million for the three-months ended March 31, 2005.The increase in casino revenues was due to the increase in slot revenues, whichincreased $1.0 million between periods as coin-in decreased $18.9 millionon an increased overall hold for the three-months ended March 31, 2006compared to the same period in the prior year. Table games revenues increased$0.5 million for the three months ended March 31, 2006 as compared to thesame period in the prior year as drop increased $0.7 million betweenperiods.  Casino profit margin increasedto 53.5% for the three-months ended March 31, 2006 as compared to 51.8%for three-months ended March 31, 2005. The increase in casino profitmargin is primarily due to most costs remaining relatively flat, with theexception of gaming taxes and advertising and promotions for the three-monthsended March 31, 2006 compared to the three-months ended March 31,2005. Overall casino expenses increased 4.5% for the three-months ended March 31,2006 compared to the same period in the prior year.

 

38

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*Food and Beverage.* Food and beverage revenues increased by 1.1% to $8.0 million forthe three-months ended March 31, 2006 as compared to $7.9 million for thethree-months ended March 31, 2005. Food and beverage expenses remainedrelatively flat at $4.6 million for the three-months ended March 31, 2006as compared to $4.7 million for the three months ended March 31, 2005.

 

*Hotel.*  Hotel revenues increased by26.1% to $6.4 million for the three-months ended March 31, 2006 ascompared to $5.1 million for the three-months ended March 31, 2005.  Overall occupied rooms were down 8,200 room nightsfor the three-months ended March 31, 2006 compared to the three-monthsended March 31, 2005.  The averageADR increased at the Casablanca to $81 during the three-months ended March 31,2006 compared to $50 in the same period of the prior year and at the Oasis to$47 during the three-months ended March 31, 2006 from $41 during the sameperiod in the prior year.  Hotel expensesdecreased 13.3% to $1.2 million for the three-months ended March 31, 2006compared $1.4 million for the three-months ended March 31, 2005.  Hotel profit margin increased to 80.9% forthe three-months ended March 31, 2006 from 72.3% in the prior three-monthperiod ended March 31, 2005.

 

*Other Revenues.*  Other revenues remainedrelatively flat at $5.2 million for the three-months ended March 31, 2006as compared to the prior year.  Otherexpenses decreased 15.9% to $3.1 million for the three-months ended March 31,2006 as compared to $3.7 million for the three-months ended March 31,2005.

 

*Promotional Allowances.* Promotional allowances increased by 34.3% to $6.5 million for thethree-months ended March 31, 2006 as compared to $4.9 million for thethree-months ended March 31, 2005. As a percent of gross revenues,promotional allowances increased to 17.7% for the three-months ended March 31,2006 as compared to 14.2% for the three-months ended March 31, 2005 as wefocused our marketing attention on our better gaming customers.

 

*General and Administrative.* G&A expenses increased by 17.2% to $8.1 million for thethree-months ended March 31, 2006 as compared to $6.9 million for thethree-months ended March 31, 2005. As a percent of net revenues, G&Aexpenses increased to 26.8% for the three-months ended March 31, 2006 ascompared to 23.7% for the three-months ended March 31, 2005.  G&A expenses increased due to a $0.3million increase in advertising expenses, a $0.2 million increase in utilities,a $0.4 million increase in salaries and bonuses and management fees offset by a$0.1 million decrease in medical expenses.

 

*Depreciation and Amortization.* Depreciation and amortization increased to$3.0 million for the three-months ended March 31, 2006 compared to$1.9 million for the three-months ended March 31, 2005. The increasewas due to an increase in the depreciable asset base due to the purchase ofgaming equipment and the Buyout on December 20, 2004.

 

*Interest Expense.* Interest expense decreased to $0.2 million for the three-months ended March 31,2006 compared to $0.4 million for the three-months ended March 31,2005.  The decrease was due to a decreasein our average outstanding borrowings during the three-months ended March 31,2006 compared to the three-months ended March 31, 2006.

 

*Change in Fair Value of Swaps.* Change in fair value of swaps decreasedto income of $0.1 million during the three-months ended March 31, 2006compared to income of $0.4 million in the same period of the prior year.  The decrease in income is due to a decreasein the average notional amount of the swap outstanding.

 

*Cumulative effect of change inaccounting principle.* We adopted the provisions of SFAS 152, “*Accountingfor Real Estate Time-Sharing Transactions*.” The adoption of SFAS 152resulted in an 

 

39

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increase in our allowancefor possible credit losses of $0.2 million during the three-months ended March 31,2006 compared to $0 in the same period in the prior year.

 

**Liquidity andCapital Resources**

** **

*Cash Flows andCredit Facility*

* *

Our primary sources of liquidity and capital resourceshave been cash flow from operations and our credit facility.  As of March 31, 2006 and December 31,2005, cash and cash equivalents were $11.4 million and $7.8 million,respectively.

 

*OperatingActivities*

* *

Cashprovided by operating activities for the three-months ended March 31, 2006was $6.4 million compared to $9.1 million for the three-months ended March 31,2005. The $2.4 million decrease was primarily due to a $0.4 millionincrease in operating income (excluding depreciation and amortization expenseand other noncash charges) during the three-months ended March 31, 2006compared to the prior period offset by $2.8 million increase in receivablesmainly attributable to related company amounts owed from B & B B, Inc.

 

*Investing Activities*

 

Cash used in investing activities for the three-monthsended March 31, 2006 was $1.5 million compared to $2.9 millionfor the three-months ended March 31, 2005. The majority of cash used ininvesting activities was related to capital expenditures for laundry equipmentand slot machines and related equipment.

 

*FinancingActivities*

 

Cash used in financing activities during thethree-months ended March 31, 2006 was $1.3 million compared to$2.0 million for the three-months ended March 31, 2005.  For the three-months ended March 31,2006, $0.5 million represented a decrease in the bank overdraft balance,$0.2 million related to payments on long-term debt associated withequipment and time share financing and $0.4 million related to payments ongaming equipment financing.  For thethree-months ended March 31, 2005, $1.5 million represented adecrease in the bank overdraft balance, $0.4 million related to paymentson long-term debt associated with equipment and time share financing, $0.1million related to payments on gaming equipment financing, and $0.1 wererelated to payments on deposits.  Thesefinancing outflows were offset by $0.1 million of borrowings associatedwith our time share financing.

 

40

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***FinancialHighlights of B & B B, Inc. (doing business as Virgin RiverHotel/Casino/Bingo)***

 

**For theThree-Months Ended March 31, 2005 and 2006 (unaudited) (in thousands)**

 
| ** **                          | ** ** | **Three-months ended   March 31,** | ** ** | **%**    | ** ** |
|-------------------------------------|------------|-----------------------------------------|------------|----------|------------|
| ** **                          | ** ** | **2005**                                | ** ** | **2006** | ** ** | **Change** | ** ** |
| Casino revenues                     |       | $                                       | 8,948      |     | $          | 9,753 |   | 9.0 | % |
| Casino expenses                     |       | 3,723                                   |       | 3,446    |       | (7.4 | )% |
| Profit margin                       |       | 58.4                                    | %          | 64.7     | %          | — |   |
|                                |       |                                    |       |     |       |   |   |
| Food and beverage revenues          |       | $                                       | 3,115      |     | $          | 3,253 |   | 4.4 | % |
| Food and beverage expenses          |       | 1,753                                   |       | 1,958    |       | 11.7 | % |
| Profit margin                       |       | 43.7                                    | %          | 39.8     | %          | — |   |
|                                |       |                                    |       |     |       |   |   |
| Hotel revenues                      |       | $                                       | 2,264      |     | $          | 2,647 |   | 16.9 | % |
| Hotel expenses                      |       | 627                                     |       | 541      |       | (13.7 | )% |
| Profit margin                       |       | 72.3                                    | %          | 79.6     | %          | — |   |
|                                |       |                                    |       |     |       |   |   |
| Other revenues                      |       | $                                       | 703        |     | $          | 735 |   | 4.6 | % |
| Other expenses                      |       | 373                                     |       | 354      |       | (5.1 | )% |
|                                |       |                                    |       |     |       |   |   |
| Promotional allowances              |       | $                                       | 2,035      |     | $          | 2,356 |   | 15.8 | % |
| Percent of gross revenues           |       | 13.5                                    | %          | 14.4     | %          | — |   |
|                                |       |                                    |       |     |       |   |   |
| General and administrative expenses |       | $                                       | 4,851      |     | $          | 4,993 |   | 2.9 | % |
| Percent of net revenues             |       | 37.3                                    | %          | 35.6     | %          | — |   |

 

**Three-monthsended March 31, 2006 compared to the three-months ended March 31,2005**

** **

*Combined Net Revenues.* Net revenues increased by 8.0% to $14.0million for the three-months ended March 31, 2006 as compared to$13.0 million for the three-months ended March 31, 2005. The increasewas primarily due to a $0.8 million increase in casino revenues, a $0.1 millionincrease in food and beverage revenues, and a $0.4 million increase in hotelrevenues, offset by a $0.3 million increase in promotional allowances.

 

*Combined Operating Income.* Operating income increased by 41.5% to $1.4million for the three-months ended March 31, 2006 as compared to$1.0 million for the three-months ended March 31, 2005. In addition,our operating income margin increased to 10.3% of net revenues for thethree-months ended March 31, 2006 as compared to 7.9% of net revenues forthe three-months ended March 31, 2005.

 

*Casino.* Casino revenues increased 9.0% to $9.8 million for thethree-months ended March 31, 2006 as compared to $8.9 million for thethree-months ended March 31, 2005. The increase in casino revenues was dueto the increase in slot revenues, which increased $0.7 million betweenperiods as coin-in increased $6.9 million on an increased overall hold for thethree-months ended March 31, 2006 compared to the same period in the prioryear. Table games revenues increased $0.1 million for the three months ended March 31,2006 as compared to the same period in the prior year as drop increased $0.4million between periods.  Overall casinoexpenses decreased 7.4% for the three-months ended March 31, 2006 comparedto the same period in the prior year due mainly to a decrease in labor costs. Casinoprofit margin increased to 64.7% for the three-months ended March 31, 2006as compared to 58.4% for three-months ended March 31, 2005 as result ofthe increased revenues and decreased expenses.

 

*Food and Beverage.* Food and beverage revenues increased by 4.4% to $3.3 million forthe three-months ended March 31, 2006 as compared to $3.1 million for thethree-months ended March 31, 2005. Food and beverage expenses increased to$2.0 million for the three-months ended March 31, 2006 as 

 

41

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compared to $1.8 million for the three-months ended March 31,2005.  Our food and beverage profitmargin decreased to 39.8% of net revenues for the three-months ended March 31,2006 as compared to 43.7% of net revenues for the same period in the prioryear.

 

*Hotel.* Hotel revenues increased by 16.9% to $2.6 million for thethree-months ended March 31, 2006 as compared to $2.3 million for thethree-months ended March 31, 2005. The hotel revenues increased due to anincrease in the average daily rate of $10.00 on 3,700 fewer occupied roomsduring the three-months ended March 31, 2006 compared to the same periodin the prior year.  Hotel expensesdecreased 13.7% to $0.5 million for the three-months ended March 31, 2006as compared to $0.6 million for the three months ended March 31, 2005 dueto the decrease in occupied rooms.  As aresult, hotel profit margin increased to 79.6% for the three-months ended March 31,2006 from 72.3% in the same period of the prior year.

 

*Other Revenues.* Other revenues remained relatively flat at $0.7 million for thethree-months ended March 31, 2006 as compared to the same period in theprior year.  Other expenses remainedrelatively flat as well at $0.4 million for the three-months ended March 31,2006 and March 31, 2005.

 

*Promotional Allowances.* Promotional allowances increased by 15.8% to$2.4 million for the three-months ended March 31, 2006 as compared to$2.0 million for the three-months ended March 31, 2005. As a percentof gross revenues, promotional allowances increased to 14.4% of gross revenuesfor the three-months ended March 31, 2006 as compared to 13.5% for thethree months ended March 31, 2005 as we focused our marketing attention onour better gaming customers.

 

*General and Administrative.* G&A expenses increased by 2.9% to $5.0 million for thethree-months ended March 31, 2006 as compared to $4.9 million for thethree-months ended March 31, 2005. As a percent of net revenues, G&Aexpenses decreased to 35.6% for the three-months ended March 31, 2006 ascompared to 37.3% for the three-months ended March 31, 2005.

 

*Depreciation and Amortization.* Depreciation and amortization increased to$1.3 million for the three-months ended March 31, 2006 compared to$0.6 million for the three-months ended March 31, 2005. The increasewas due to the Buyout on December 20, 2004 and the increase in depreciablebasis of assets due to the purchase of gaming equipment.

 

*Interest Expense.*  Interest expense remainedrelatively flat at $0.6 million for the three-months ended March 31, 2006as compared to the same period in the prior year.

 

**Liquidity andCapital Resources**

** **

*Cash Flows andCredit Facility*

* *

Our primary sources of liquidity and capital resourceshave been cash flow from operations and our credit facility.  As of March 31, 2006 and December 31,2005, cash and cash equivalents were $6.8 million and $6.2 million,respectively.

 

*OperatingActivities*

* *

Cashprovided by operating activities for the three-months ended March 31, 2006was $2.0 million compared to $2.6 million for the three-months ended March 31,2005. The $0.6 million decrease was primarily due to a $1.1 millionincrease in operating income (excluding depreciation and amortization expenseand other noncash charges), an increase of $0.8 million owed to Casablanca 

 

42

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Resorts, LLC and $1.5 million owed to RBG, LLC offset by an increase of$2.3 million due from Virgin River Casino Corporation and a $1.0 millionincrease in cash paid for interest.

 

*Investing Activities*

 

Cash used in investingactivities for the three-months ended March 31, 2006 was $1.0 millioncompared to $0.2 million for the three-months ended March 31, 2005.The majority of cash used in investing activities was related to capitalexpenditures for the property management and back office computer system.

 

*FinancingActivities*

 

Cash used in financingactivities for the three-months ended March 31, 2006 was $0.4 millioncompared to $0.5 million for the three-months ended March 31, 2005.For the three-months ended March 31, 2006, $0.3 million representedpayments on gaming equipment financing and $0.1 million represented payments onthe Senior Notes and the Senior Sub Notes. For the three-months ended March 31, 2005, $0.3 million representeda payment on gaming equipment financing.

 

***Capital Expenditures for VirginRiver Casino Corporation, RBG, LLC and B & B B, Inc.***

 

For the remainder offiscal 2006, we plan to spend an aggregate of approximately $0.6 millionin capital expenditures for the consolidation of our laundry operation and fora new property management and back office computer system.  In addition, we plan to spend approximately$21.0 million in capital expenditures for the development and construction of anew 150 to 160 room hotel tower and convention center that will begin in thesecond half of 2006 and continue through the second half of 2007.

 

We believe that existingcash, cash flows from operations, equipment financing and available borrowingsunder the Foothill Facility will be adequate to satisfy our anticipated uses ofcapital during the remainder of 2006.

 

*Off Balance Sheet Arrangements forVirgin River Casino Corporation, RBG, LLC and B & B B, Inc.*

 

We have no off balancesheet arrangements at March 31, 2006 or December 31, 2005.

 

*ContractualObligations and Commitments for Virgin River Casino Corporation, RBG, LLC and B &B B, Inc.*

 

A description of ourcontractual obligations and commitment for Virgin River Casino Corporation,RBG, LLC and B & B B, Inc. can be found in item 7 of our Form 10-Kfor the year ended December 31, 2005.

 

**CriticalAccounting Policies for VirginRiver Casino Corporation, RBG, LLC and B&BB, Inc.**

** **

A description of ourcritical accounting policies can be found in Item 7 of our Form 10-K forthe year ended December 31, 2005.

 

43

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## **Item 3. Quantitative and Qualitative Disclosures About Market Risk.**

## ** **

The following table provides information about ourlong-term debt at March 31, 2006:

 
| ** **                                              | ** ** | **Maturity  Date** | ** ** | **Face  Amount** | ** ** | **Carrying  Value** | ** ** | **Estimated  Fair  Value** | ** ** |
|---------------------------------------------------------|------------|--------------------|------------|------------------|------------|---------------------|------------|----------------------------|------------|
| ** **                                              | ** ** | ** **         | ** ** | ** **       | ** ** | **(in thousands)**  | ** ** | ** **                 | ** ** |
| Revolving credit facility at an interest  rate of 8.75% |       | December 2008 |       | $                | 15,000     |                | $          | 3,000                      |       | $ | 3,000 |   |
| 9% senior secured notes                                 |       | January 2012  |       | 125,000          |       | 125,000             |       | 128,125                    |       |
| 12 3⁄4% senior subordinated notes                    |       | January 2013  |       | 66,000           |       | 46,756              |       | 44,715                     |       |
| Notes payable, interest at 6.97%                        |       | June 2006     |       | 2,292            |       | 384                 |       | 384                        |       |
| Notes payable, interest at 6.21%                        |       | December 2006 |       | 574              |       | 118                 |       | 118                        |       |
| Market value of interest rate swaps                     |       | June 2006     |       | 71               |       | 71                  |       | 71                         |       |
| Total                                                   |       |               |       | $                | 208,937    |                | $          | 175,329                    |       | $ | 176,413 |   |
|                                                         |            |                    |            |                  |            |                     |            |                            |            |  |  |  |  |  |

 

We are also exposed tomarket risk in the form of fluctuations in interest rates and their potentialimpact upon our debt. Historically, this market risk is managed by utilizingderivative financial instruments in accordance with established policies andprocedures. We evaluate our exposure to market risk by monitoring interestrates in the marketplace, and do not utilize derivative financial instrumentsfor trading purposes. Our derivative financial instruments consist exclusivelyof interest rate swap agreements. Interest differentials resulting from theseagreements are recorded on an accrual basis as an adjustment to interestexpense. As of March 31, 2006, the interest rate swaps related to debt arenot matched with any of our specific fixed-rate or variable-rate debtobligations.

 

The following tableprovides information about our financial instruments that are sensitive tochanges in interest rates:

 
| ** **                                   | ** ** | **As of March 31**    | ** ** |
|----------------------------------------------|------------|----------------------------|------------|
| ** **                                   | ** ** | **2006**                   | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **Thereafter** | ** ** | **Total** | ** ** |
| ** **                                   | ** ** | **(dollars in thousands)** | ** ** |
| Long-term  debt (including current portion): |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed-rate                                   |       | $                          | 502        |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 191,000 |   | $ | 191,502 |   |
| Average  interest rate                       |       | 10.08                      | %          | 10.19 | % | 10.29 | % | 10.30 | % | 10.30 | % | 10.30 | % | 10.01 | % |
| Variable-rate                                |       | $                          | —     |   | $ | — |   | $ | — |   | $ | 3,000 |   | $ | — |   | $ | — |   | $ | 3,000 |   |
| Average  interest rate                       |       | —                     |       | — |   | — |   | 8.80 | % | — |   | — |   | 8.80 | % |
| Interest  rate swaps:                        |       |                       |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Notional  amount                             |       | $                          | —     |   | $ | 30,800 |   | $ | — |   | $ | — |   | $ | — |   | $ | — |   | $ | 30,800 |   |
| Average  payable rate                        |       | —                     |       | 5.88 | % | — |   | — |   | — |   | — |   | 5.88 | % |
| Average  receivable rate                     |       |                       |       | 5.30 | % |   |   |   |   |   |   |   |   | 5.30 | % |

 

The gaming equipmentfinancing are agreements that because of their long-term nature we imputeinterest expense for accounting purposes.  Contractually these agreements carry nointerest, therefore we believe that there is no exposure to interest rate riskand therefore have excluded those contracts from the presentation above.

 

44

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## **Item 4.  Controlsand Procedures.**

## ** **

## ***Evaluation of Disclosure Controls***

## ** **

We evaluated the effectiveness of our disclosurecontrols and procedures as of and for three months ended March 31,2006.  This evaluation was done with theparticipation of our management, including our Chief Executive Officer andChief Financial Officer.

 

Disclosure controls and procedures are controls andother procedures that are designed to ensure that information required to bedisclosed by us in the reports that we file or submit under the SecuritiesExchange Act of 1934 are recorded, processed, summarized and reported withinthe time periods specified in the Commission’s rules and forms.  Disclosure controls and procedures include,without limitation, controls and procedures designed to ensure that informationrequired to be disclosed by us in the reports that we file under the SecuritiesExchange Act of 1934 is accumulated and communicated to our manager, asappropriate to allow timely decisions regarding required disclosure.

 

## ***Limitations on the Effectiveness of Controls***

## ** **

Our management does not expect that our disclosurecontrols and procedures or our internal controls over financial reporting willprevent all error and all fraud.  Acontrol system, no matter how well conceived and operated, can provide onlyreasonable, but not absolute, assurance that the objectives of a control systemare met.  Further, any control systemreflects limitations on resources, and the benefits of a control system must beconsidered relative to its costs.  Becauseof the inherent limitations in all control systems, no evaluation of controlscan provide absolute assurance that all control issues and instances of fraud,if any, within us have been detected. These inherent limitations include the realities that judgments indecision-making can be faulty and that breakdowns can occur because of simpleerror or mistake. Additionally, controls can be circumvented by the individualacts of some persons, by collusion of two or more people, or by managementoverride of a control.  The design of acontrol system is also based upon certain assumptions about the likelihood offuture events, there can be no assurance that any design will succeed inachieving its stated goals under all potential future conditions; over time, controlsmay become inadequate because of changes in conditions, or the degree ofcompliance with the policies or procedures may deteriorate. Because of theinherent limitations in a cost-effective control system, misstatements due toerror or fraud may occur and may not be detected.

 

## ***Conclusions***

## ** **

Based on this evaluation, our Chief Executive Officerand Chief Financial Officer have evaluated our disclosure controls andprocedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and15d-15(e)) as of March 31, 2006, and have concluded that they areeffective to timely alert them to material information relating to us requiredto be included in the reports that we file or submit under the SecuritiesExchange Act of 1934.

 

## ***Changes in Internal Controls***

## ** **

There were no changes in our internal controls overfinancial reporting that occurred during our last fiscal quarter, *i.e.*, the quarter ended March 31,2006, that have materially affected, or are reasonably likely to materiallyaffect, our internal controls over financial reporting.

 

45

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# **PART II— OTHER INFORMATION**

# ** **

## **Item 1. Legal Proceedings.**

## ** **

None.

 

## **Item 1A. Risk Factors.**

## ** **

None.

 

## **Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.**

## ** **

None.

 

## **Item 3. Defaults Upon Senior Securities.**

## ** **

None.

 

## **Item 4. Submission of Matters to a Vote of Security Holders.**

## ** **

None.

 

## **Item 5. Other Information.**

## ** **

None.

 

## **Item 6. Exhibits.**

## ** **

Exhibits:

 

31.1                           Certification pursuant to §302 of the Sarbanes-Oxley Act of 2002,Robert R. Black, Sr.

 

31.2                           Certification pursuant to §302 of the Sarbanes-Oxley Act of 2002, CurtMayer

 

32.1                           Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002,Robert R. Black, Sr.

 

32.1                           Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002, CurtMayer

 

46

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# **SIGNATURES**

# ** **

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 
| **VIRGIN  RIVER CASINO CORPORATION** |
|--------------------------------------|
|                                 |   |   |   |
|                                 |   |   |   |
|                                 |   |   |   |
| By:                                  | /s/ Curt Mayer |   | May 12,  2006 |
|                                 | Curt Mayer |   |   |
| * *                             | *Chief Financial Officer  (Principal Financial and Chief   Accounting Officer)* | * * | * * |
| * *                             | * * | * * | * * |
| **RGB,  LLC**                        |
|                                 |   |   |   |
|                                 |   |   |   |
| By:                                  | /s/ Curt Mayer |   | May 12,  2006 |
|                                 | Curt Mayer |   |   |
| * *                             | *Chief Financial Officer   (Principal Financial and Chief   Accounting Officer)* | * * | * * |
| * *                             | * * | * * | * * |
| **B &  B B, INC.**          | ** ** |
|                                 |   |   |   |
|                                 |   |   |   |
| By:                                  | /s/ Curt Mayer |   | May 12,  2006 |
|                                 | Curt Mayer |   |   |
| * *                             | *Chief Financial Officer  (Principal Financial and Chief   Accounting Officer)* | * * | * * |
| * *                             | * * | * * | * * |
| * *                             | * * | * * | * * |
| **CASABLANCA  RESORTS, LLC**         | ** ** | ** ** |
|                                 |   |   |   |
|                                 |   |   |   |
| By:                                  | /s/ Curt Mayer |   | May 12,  2006 |
|                                 | Curt Mayer |   |   |
| * *                             | *Chief Financial Officer   (Principal Financial and Chief   Accounting Officer)* | * * | * * |

 

47

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| **OASIS  INTERVAL OWNERSHIP, LLC**       | ** **                                                                       | ** ** |
|------------------------------------------|----------------------------------------------------------------------------------|------------|
|                                     |                                                                             |       |   |
|                                     |                                                                             |       |   |
| By:                                      | /s/ Curt Mayer                                                                   |       | May 12,  2006 |
|                                     | Curt Mayer                                                                       |       |   |
| * *                                 | *Chief Financial Officer  (Principal Financial and Chief   Accounting Officer)*  | * *   | * * |
| * *                                 | * *                                                                         | * *   | * * |
| **OASIS  INTERVAL MANAGEMENT, LLC**      | ** **                                                                       | ** ** |
|                                     |                                                                             |       |   |
|                                     |                                                                             |       |   |
| By:                                      | /s/ Curt Mayer                                                                   |       | May 12,  2006 |
|                                     | Curt Mayer                                                                       |       |   |
| * *                                 | *Chief Financial Officer   (Principal Financial and Chief   Accounting Officer)* | * *   | * * |
| * *                                 | * *                                                                         | * *   | * * |
| **OASIS  RECREATIONAL PROPERTIES, INC.** | ** **                                                                       | ** ** |
|                                     |                                                                             |       |   |
|                                     |                                                                             |       |   |
| By:                                      | /s/ Curt Mayer                                                                   |       | May 12,  2006 |
|                                     | Curt Mayer                                                                       |       |   |
| * *                                 | *Chief Financial Officer   (Principal Financial and Chief   Accounting Officer)* | * *   | * * |

 

48

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