##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 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
 BLACK GAMING, LLC
  Nevada
    
    20-8160036(State or Other Jurisdiction
    
    (I.R.S. Employerof Incorporation or Organization)
    
    Identification Number)10777 West Twain Avenue, Las Vegas, NV
    
    89135(Address of Principal Executive Offices)
    
    (Zip Code)
 (702) 318-6888
 þ o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if smaller reporting company)
 o þ




---



##### 



PART I  FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS

3Condensed Consolidated Balance Sheets-September 30, 2008 (unaudited) and December 31, 2007

3Condensed Consolidated Statements of Operations (unaudited) for the Three and Nine Months
Ended September 30, 2008 and 2007

4Condensed Consolidated Statements of Cash Flows (unaudited) for the Three and Nine
Months Ended September 30, 2008 and 2007

5Notes to Condensed Consolidated Financial Statements (unaudited)

7ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

23ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

32ITEM 4. CONTROLS AND PROCEDURES

32PART II  OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS

34ITEM 1A. RISK FACTORS

34ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

35ITEM 3. DEFAULTS UPON SENIOR SECURITIES

35ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

35ITEM 5. OTHER INFORMATION

35ITEM 6. EXHIBITS

36SIGNATURES

37Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




---



##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 Black Gaming, LLC and Subsidiaries
 
 Condensed Consolidated Balance Sheets
(in thousands)
 September 30, 2008
    
    
    December 31, 2007(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    11,246
    
    
    $
    9,503Accounts receivable, net
    
    
    1,646
    
    
    
    1,986Related party receivables
    
    
    270
    
    
    
    327Inventories
    
    
    1,739
    
    
    
    1,800Property held for vacation interval sales
    
    
    321
    
    
    
    336Prepaid expenses
    
    
    4,013
    
    
    
    4,180Current portion of notes receivable
    
    
    243
    
    
    
    150Total current assets
    
    
    19,478
    
    
    
    18,282Property and equipment, net
    
    
    118,959
    
    
    
    131,480Notes receivable, less current portion
    
    
    191
    
    
    
    537Goodwill and other intangible assets, net
    
    
    20,733
    
    
    
    35,828Deferred financing fees
    
    
    5,208
    
    
    
    6,259Other assets
    
    
    1,798
    
    
    
    1,898Total assets
    
    $
    166,367
    
    
    $
    194,284Liabilities and Members DeficitCurrent liabilities:Bank overdraft
    
    $
    12
    
    
    $
    821Current portion of gaming equipment financing
    
    
    384
    
    
    
    1,025Current portion of long-term debt
    
    
    14,795
    
    
    
    9,500Accounts payable
    
    
    2,818
    
    
    
    2,950Accrued liabilities
    
    
    14,618
    
    
    
    17,605Total current liabilities
    
    
    32,627
    
    
    
    31,901Gaming equipment financing, less current portion
    
    
    153
    
    
    
    15Long term debt
    
    
    188,685
    
    
    
    183,047Total liabilities
    
    
    221,465
    
    
    
    214,963Commitments and contingencies (Note 10)Members deficit
    
    
    (55,098
    )
    
    
    (20,679
    )Total liabilities and members deficit
    
    $
    166,367
    
    
    $
    194,284
   3




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 
 Condensed Consolidated Statements of Operations (unaudited)
(in thousands)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007Revenues:Casino
    
    $
    18,023
    
    
    $
    24,940
    
    
    $
    63,605
    
    
    $
    81,673Food and beverage
    
    
    7,048
    
    
    
    9,746
    
    
    
    25,055
    
    
    
    31,497Hotel
    
    
    6,574
    
    
    
    7,226
    
    
    
    22,618
    
    
    
    27,028Other
    
    
    2,857
    
    
    
    4,123
    
    
    
    13,116
    
    
    
    15,363Total revenues
    
    
    34,502
    
    
    
    46,035
    
    
    
    124,394
    
    
    
    155,561Lesspromotional allowances
    
    
    (6,257
    )
    
    
    (9,073
    )
    
    
    (21,613
    )
    
    
    (30,277
    )Net revenues
    
    
    28,245
    
    
    
    36,962
    
    
    
    102,781
    
    
    
    125,284Operating expenses:Casino
    
    
    10,998
    
    
    
    13,685
    
    
    
    33,023
    
    
    
    40,668Food and beverage
    
    
    4,415
    
    
    
    4,977
    
    
    
    16,089
    
    
    
    16,798Hotel
    
    
    1,775
    
    
    
    1,609
    
    
    
    5,630
    
    
    
    4,808Other
    
    
    2,265
    
    
    
    2,301
    
    
    
    7,275
    
    
    
    9,092General and administrative
    
    
    9,733
    
    
    
    13,137
    
    
    
    30,458
    
    
    
    38,176Depreciation and amortization
    
    
    4,111
    
    
    
    4,007
    
    
    
    12,534
    
    
    
    12,366(Gain) loss on sale and disposal
of assets
    
    
    (6
    )
    
    
    5
    
    
    
    198
    
    
    
    103Impairment of long lived assets
    
    
    
    
    
    
    
    
    
    
    3,833
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    12,497
    
    
    
    Total operating expenses
    
    
    33,291
    
    
    
    39,721
    
    
    
    121,537
    
    
    
    122,011Operating (loss) income
    
    
    (5,046
    )
    
    
    (2,759
    )
    
    
    (18,756
    )
    
    
    3,273Other (income) expense:Other income
    
    
    (315
    )
    
    
    
    
    
    
    (315
    )
    
    
    Interest expense, net
    
    
    5,395
    
    
    
    5,178
    
    
    
    15,978
    
    
    
    15,394Net loss
    
    $
    (10,126
    )
    
    $
    (7,937
    )
    
    $
    (34,419
    )
    
    $
    (12,121
    )
   4




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 
 Condensed Consolidated Statements of Cash Flows (unaudited)
(in thousands)
 Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2007Cash flows from operating activities:Net loss
    
    $
    (34,419
    )
    
    $
    (12,121
    )Depreciation and amortization
    
    
    12,534
    
    
    
    12,366Loss on sale and disposal of assets
    
    
    198
    
    
    
    103Impairment of long lived assets
    
    
    3,833
    
    
    
    Goodwill impairment
    
    
    12,497
    
    
    
    Amortization of deferred financing fees
    
    
    1,201
    
    
    
    1,201Accretion of senior subordinated notes
    
    
    5,638
    
    
    
    4,982Interest expense on gaming equipment financing
    
    
    4
    
    
    
    3Cost of vacation interval sales
    
    
    15
    
    
    
    84Change in operating assets and liabilities:Accounts and related party receivables, net
    
    
    397
    
    
    
    1,066Inventories
    
    
    61
    
    
    
    (126
    )Prepaid expenses
    
    
    167
    
    
    
    133Notes receivable
    
    
    253
    
    
    
    428Change in other assets
    
    
    (66
    )
    
    
    (624
    )Accounts payable and accrued liabilities
    
    
    (2,820
    )
    
    
    1,255Net cash (used in) provided by operating activities
    
    
    (507
    )
    
    
    8,750Cash flows from investing activities:Proceeds received from sale of assets
    
    
    317
    
    
    
    324Capital expenditures
    
    
    (814
    )
    
    
    (13,782
    )Net cash used in investing activities
    
    
    (497
    )
    
    
    (13,458
    )Cash flows from financing activities:Proceeds from issuance of long term debt
    
    
    13,975
    
    
    
    15,500Payment of gaming equipment financing
    
    
    (1,589
    )
    
    
    (3,644
    )Payment of long term debt
    
    
    (8,680
    )
    
    
    (6,000
    )Payment of financing costs
    
    
    (150
    )
    
    
    Decrease in bank overdraft
    
    
    (809
    )
    
    
    (1,770
    )Net cash provided by financing activities
    
    
    2,747
    
    
    
    4,086Net increase (decrease) in cash and cash equivalents
    
    
    1,743
    
    
    
    (622
    )Cash and cash equivalents at beginning of period
    
    
    9,503
    
    
    
    11,118Cash and cash equivalents at end of period
    
    $
    11,246
    
    
    $
    10,496
   5




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Condensed Consolidated Statements of Cash Flows (unaudited) (continued)
(in thousands)
 Nine Months EndedSeptember 30, 2008
    
    

September 30, 2007Supplemental cash flow disclosure:Cash paid for interest
    
    $
    12,000
    
    
    $
    11,790Noncash investing and financing activities:Acquisition of gaming assets with seller
financing
    
    $
    1,082
    
    
    $
    254
   6




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 
 Notes to Condensed Consolidated Financial Statements (unaudited)
 1. Basis of Presentation and Background
    
    
    VRCC received 100 shares of R. Black, Inc. (RBI) from the Black
Trust. The Black Trust owns 100% of the outstanding shares of VRCC.
The 100 shares of RBI representing 100% of the outstanding capital
stock of RBI, was exchanged for 3.68 shares of VRCC held by the Black
Trust, representing 3.68% of the outstanding capital stock of VRCC.
RBI does not have any material operations, liabilities or assets other
than a 5.47% ownership in RBG. The transfer of shares of RBI to VRCC
was accounted for at the historical cost of RBG as RBI and VRCC were
under common control.
    
    VRCC received a 3.8% membership interest in RBG from the Black Trust
in exchange for 2.57 shares of VRCC held by the Black Trust,
representing 2.57% of the outstanding capital stock of VRCC. The
transfer of membership interests of RBG to VRCC was accounted for at
historical cost as the Black Trust and VRCC were under common control.
    
    VRCC received a 1.92% membership interest in RBG from Glenn Teixeira
in exchange for 1.29 shares of VRCC held by the Black Trust,
representing 1.29% of the outstanding capital stock of VRCC. The
acquisition of the membership interests from RBG from Glenn Teixeira
was accounted for at fair value as it was considered an acquisition of
a minority interest of a subsidiary. Based upon an internal analysis
the fair value of Glenn Teixeiras interest approximated book value.
    7




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 1.
    
    Basis of Presentation and Background (continued)
 Interim Financial Statements
  Reclassifications
 Recently Issued Accounting Standards
    8




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 1.
    
    Basis of Presentation and Background (continued)
      9




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 2.
    
    Discontinued Operations
   For the Three Months Ended
    
    
    For the Nine Months EndedSeptember 30, 2007
    
    
    September 30, 2007Operating revenues
    
    $
    164
    
    
    $
    2,137Operating expenses
    
    
    559
    
    
    
    2,148Depreciation
    
    
    45
    
    
    
    135Loss on sale and disposal of assets
    
    
    3
    
    
    
    3Loss from discontinued operations
    
    $
    (443
    )
    
    $
    (149
    )
 3.
    
    Property and Equipment
  September 30, 2008
    
    
    December 31, 2007Land
    
    $
    32,812
    
    
    $
    32,812Building
    
    
    77,919
    
    
    
    77,897Land and leasehold improvements
    
    
    18,110
    
    
    
    17,940Furniture and fixtures
    
    
    84,396
    
    
    
    83,922Construction in progress
    
    
    1,458
    
    
    
    5,325214,695
    
    
    
    217,896Less: accumulated depreciation
    
    
    (95,736
    )
    
    
    (86,416
    )Property and equipment, net
    
    $
    118,959
    
    
    $
    131,480
  10




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 4.
    
    Notes Receivable
  September 30, 2008
    
    
    December 31, 2007Vacation interval notes receivable
    
    $
    578
    
    
    $
    912Allowance for possible credit losses
    
    
    (144
    )
    
    
    (225
    )Total notes receivable
    
    
    434
    
    
    
    687Less: current portion
    
    
    (243
    )
    
    
    (150
    )Non-current notes receivable
    
    $
    191
    
    
    $
    537
   5.
    
    Accrued Liabilities
  September 30, 2008
    
    
    December 31, 2007Accrued management fees
    
    $
    495
    
    
    $
    863Accrued taxes
    
    
    768
    
    
    
    1,072Accrued insurance
    
    
    1,426
    
    
    
    1,212Accrued slot program
    
    
    4,197
    
    
    
    4,299Accrued wages, benefits and other personnel costs
    
    
    3,197
    
    
    
    2,043Accrued interest
    
    
    2,466
    
    
    
    5,343Accrued other
    
    
    2,069
    
    
    
    2,773Total accrued liabilities
    
    $
    14,618
    
    
    $
    17,605
  11




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 6.
    
    Gaming Equipment Financing
  September 30, 2008
    
    
    December 31, 2007Gaming equipment financing to
purchase 478 games, no payments
for
one year and monthly payments of
$251 for 24 months beginning
February 2006
    
    $
    
    
    
    $
    248Gaming equipment financing to
purchase 68 games, no payments
for
one year and monthly payments of
$43 for 24 months beginning
January 2006
    
    
    
    
    
    
    43Gaming equipment financing to
purchase 70 games, no payments
for
one year and monthly payments of
$39 for 24 months beginning
March 2006
    
    
    
    
    
    
    38Gaming equipment financing to
purchase 80 games, monthly
payments of $27 for 36 months beginning April 2005
    
    
    
    
    
    
    165Gaming equipment financing to
purchase 64 games, no payments
for
one year and monthly payments of
$26 for 24 months beginning
February 2006
    
    
    
    
    
    
    52Gaming equipment financing to
purchase 38 games, monthly
payments of $13 for 36 months beginning April 2005
    
    
    
    
    
    
    37Gaming equipment financing to
purchase 55 games, no payments
for
one year and monthly payments of
$16 for 24 months beginning
January 2006
    
    
    
    
    
    
    282Gaming equipment financing,
monthly payments of $3 for 36
months
beginning January 2005
    
    
    
    
    
    
    1Gaming equipment financing to
purchase 4 games, monthly
payments
of $1 for 36 months beginning April 2005
    
    
    
    
    
    
    8Gaming equipment financing to
purchase 6 games, no payments
for
one year and monthly payments of
$6 for 24 months beginning
February 2007
    
    
    11
    
    
    
    36Gaming equipment financing,
monthly payments of $1 for 36
months
beginning July 2006
    
    
    9
    
    
    
    18Gaming equipment financing, no
payments for 18 months and
monthly payments of $1 for 36 months beginning July 2006
    
    
    5
    
    
    
    104Gaming equipment financing,
monthly payments of $1 for 36
months
and beginning on July 2006
    
    
    4
    
    
    
    8Gaming equipment financing,
monthly payments of $27 for 9
months
and beginning April 2008
    
    
    84
    
    
    
    Gaming equipment financing,
monthly payments of $12 for 11
months
and beginning February 2008
    
    
    35
    
    
    
    Gaming equipment financing,
monthly payments of $38 for 11
months
and beginning February 2008
    
    
    112
    
    
    
    Gaming equipment financing,
monthly payments of $2 for 9
months
beginning April 2008
    
    
    21
    
    
    
    Gaming equipment financing,
monthly payments of $10 for 28
months
beginning October 2008
    
    
    256
    
    
    
    537
    
    
    
    1,040Less: current portion
    
    
    (384
    )
    
    
    (1,025
    )Gaming equipment financing,
long-term portion
    
    $
    153
    
    
    $
    15
  12




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 7.
    
    Long-term Debt
  September 30, 2008
    
    
    December 31, 2007Revolving credit facility
totaling $15 million with Wells
Fargo Foothill, due June 30,
2011, at a margin above prime
or LIBOR, as defined;
collateralized by substantially
all assets of the Company as
defined
    
    $
    14,795
    
    
    $
    9,5009% senior secured notes,
interest payable semiannually,
principal due January 15, 2012,
callable January 15, 2009
    
    
    125,000
    
    
    
    125,00012 3/4 % senior subordinated
notes, non-cash interest will
accrue at an annual rate of 12
3/4 % in the form of increased
accreted value until January
15, 2009. Beginning July 15,
2009, interest payable
semiannually, principal due
January 15, 2013, callable
January 15, 2009
    
    
    63,685
    
    
    
    58,047203,480
    
    
    
    192,547Less: current portion
    
    
    (14,795
    )
    
    
    (9,500
    )Total long-term debt
    
    $
    188,685
    
    
    $
    183,047
 Revolving Facility
     13




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 7.
    
    Long-term Debt (continued)
  1.
    
    The LIBOR Rate Margin has been increased to 5% from 3.50%, and the Base Rate
Margin has been increased to 5% from 2%. Therefore, the interest rate premium payable
in respect of loans available under the Credit Agreement has been increased
accordingly;2.
    
    The minimum EBITDA covenant has been reduced from $15.0 million to $10.0
million for the September 2008 through December 2008 reporting periods;3.
    
    The Borrowing Base multiple has been increased from 1.0x to 1.5x from the
execution of the Forbearance Agreement until January 15, 2009;4.
    
    The Company has been allowed to temporarily shut down a currently operating
casino during the Forbearance Period
  Senior Secured and Senior Subordinated Notes
 3 4
    14




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 7.
    
    Long-term Debt (continued)
    8.
    
    Related Party Transactions
        15




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 9. Impairment of Long Lived Assets
   Goodwill and Other
Intangible Assets
    10. Commitment and Contingencies
   16




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 11. Supplemental Guarantor Condensed Consolidating Financial Statements
   17




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements (unaudited) (continued)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAs of September 30, 2008BALANCE SHEET (unaudited)Current Assets, including intercompany
accounts
    
    $
    4,652
    
    
    $
    74,044
    
    
    $
    
    
    
    $
    (59,218
    )
    
    $
    19,478Property and equipment, net
    
    
    226
    
    
    
    118,733
    
    
    
    
    
    
    
    
    
    
    
    118,959Other Intangibles
    
    
    
    
    
    
    20,733
    
    
    
    
    
    
    
    
    
    
    
    20,733Other assets excluding intercompany
accounts
    
    
    
    
    
    
    110,315
    
    
    
    
    
    
    
    (103,118
    )
    
    
    7,197Total Assets
    
    $
    4,878
    
    
    $
    323,825
    
    
    $
    
    
    
    $
    (162,336
    )
    
    $
    166,367Current Liabilities, including intercompany
accounts
    
    $
    8,579
    
    
    $
    83,266
    
    
    $
    
    
    
    $
    (59,218
    )
    
    $
    32,627Long-term debt, less current portion
    
    
    
    
    
    
    188,685
    
    
    
    
    
    
    
    
    
    
    
    188,685Gaming equipment financing, less current
portion
    
    
    
    
    
    
    153
    
    
    
    
    
    
    
    
    
    
    
    153Members (Deficit) Equity
    
    
    (3,701
    )
    
    
    51,721
    
    
    
    
    
    
    
    (103,118
    )
    
    
    (55,098
    )Total Liabilities & Members (Deficit)
Equity
    
    $
    4,878
    
    
    $
    323,825
    
    
    $
    
    
    
    $
    (162,336
    )
    
    $
    166,367
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedAs of December 31, 2007BALANCE SHEETCurrent Assets, including intercompany
accounts
    
    $
    5,257
    
    
    $
    43,001
    
    
    $
    
    
    
    $
    (29,976
    )
    
    $
    18,282Property and equipment, net
    
    
    420
    
    
    
    131,060
    
    
    
    
    
    
    
    
    
    
    
    131,480Goodwill and Other Intangibles
    
    
    
    
    
    
    35,828
    
    
    
    
    
    
    
    
    
    
    
    35,828Other assets excluding intercompany
accounts
    
    
    
    
    
    
    111,812
    
    
    
    
    
    
    
    (103,118
    )
    
    
    8,694Total Assets
    
    $
    5,677
    
    
    $
    321,701
    
    
    $
    
    
    
    $
    (133,094
    )
    
    $
    194,284Current Liabilities, including intercompany
accounts
    
    $
    8,077
    
    
    $
    53,800
    
    
    $
    
    
    
    $
    (29,976
    )
    
    $
    31,901Long-term debt, less current portion
    
    
    
    
    
    
    183,047
    
    
    
    
    
    
    
    
    
    
    
    183,047Gaming equipment financing, less current
portion
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    15Members (Deficit) Equity
    
    
    (2,400
    )
    
    
    84,839
    
    
    
    
    
    
    
    (103,118
    )
    
    
    (20,679
    )Total Liabilities & Members (Deficit)
Equity
    
    $
    5,677
    
    
    $
    321,701
    
    
    $
    
    
    
    $
    (133,094
    )
    
    $
    194,284
  18




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 11. Supplemental Guarantor Condensed Consolidating Financial Statements (continued)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedFor the three months ending
September 30, 2008STATEMENT OF OPERATIONS
(unaudited)Net Revenues
    
    $
    
    
    
    $
    29,820
    
    
    $
    
    
    
    $
    (1,575
    )
    
    $
    28,245Operating Expenses:Casino
    
    
    
    
    
    
    10,998
    
    
    
    
    
    
    
    
    
    
    
    10,998Food and beverage
    
    
    
    
    
    
    4,415
    
    
    
    
    
    
    
    
    
    
    
    4,415Hotel
    
    
    
    
    
    
    1,775
    
    
    
    
    
    
    
    
    
    
    
    1,775Other
    
    
    
    
    
    
    2,265
    
    
    
    
    
    
    
    
    
    
    
    2,265General and administrative
    
    
    333
    
    
    
    10,975
    
    
    
    
    
    
    
    (1,575
    )
    
    
    9,733Depreciation and amortization
    
    
    12
    
    
    
    4,099
    
    
    
    
    
    
    
    
    
    
    
    4,111Loss on
disposal of assets
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    (6
    )Impairment of long lived assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating loss
    
    
    (345
    )
    
    
    (4,701
    )
    
    
    
    
    
    
    
    
    
    
    (5,046
    )Other (Income) Expense:Other Income
    
    
    
    
    
    
    (315
    )
    
    
    
    
    
    
    
    
    
    
    (315
    )Interest expense, net
    
    
    
    
    
    
    5,395
    
    
    
    
    
    
    
    
    
    
    
    5,395Net loss
    
    $
    (345
    )
    
    $
    (9,781
    )
    
    $
    
    
    
    $
    
    
    
    $
    (10,126
    )STATEMENT
OF CASH FLOWSNet cash used in operating activities
    
    $
    
    
    
    $
    (4,042
    )
    
    $
    
    
    
    $
    
    
    
    $
    (4,042
    )Net cash used in investing activities
    
    
    
    
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    (128
    )Net cash
provided by financing activities
    
    
    
    
    
    
    7,273
    
    
    
    
    
    
    
    
    
    
    
    7,273
  19




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 11.
    
    Supplemental Guarantor Condensed Consolidating Financial Statements (continued)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedFor the nine months ending
September 30, 2008STATEMENT OF OPERATIONS
(unaudited)Net Revenues
    
    $
    
    
    
    $
    107,506
    
    
    $
    
    
    
    $
    (4,725
    )
    
    $
    102,781Operating Expenses:Casino
    
    
    
    
    
    
    33,023
    
    
    
    
    
    
    
    
    
    
    
    33,023Food and beverage
    
    
    
    
    
    
    16,089
    
    
    
    
    
    
    
    
    
    
    
    16,089Hotel
    
    
    
    
    
    
    5,630
    
    
    
    
    
    
    
    
    
    
    
    5,630Other
    
    
    
    
    
    
    7,275
    
    
    
    
    
    
    
    
    
    
    
    7,275General and administrative
    
    
    1,262
    
    
    
    33,921
    
    
    
    
    
    
    
    (4,725
    )
    
    
    30,458Depreciation and amortization
    
    
    37
    
    
    
    12,497
    
    
    
    
    
    
    
    
    
    
    
    12,534Loss on disposal of assets
    
    
    
    
    
    
    198
    
    
    
    
    
    
    
    
    
    
    
    198Impairment of long lived assets
    
    
    
    
    
    
    3,833
    
    
    
    
    
    
    
    
    
    
    
    3,833Goodwill impairment
    
    
    
    
    
    
    12,497
    
    
    
    
    
    
    
    
    
    
    
    12,497Operating loss
    
    
    (1,299
    )
    
    
    (17,457
    )
    
    
    
    
    
    
    
    
    
    
    (18,756
    )Other (Income) Expense:Other Income
    
    
    
    
    
    
    (315
    )
    
    
    
    
    
    
    
    
    
    
    (315
    )Interest expense, net
    
    
    2
    
    
    
    15,976
    
    
    
    
    
    
    
    
    
    
    
    15,978Net loss
    
    $
    (1,301
    )
    
    $
    (33,118
    )
    
    $
    
    
    
    $
    
    
    
    $
    (34,419
    )STATEMENT OF CASH FLOWSNet cash provided by (used in) operating
activities
    
    $
    12
    
    
    $
    (519
    )
    
    $
    
    
    
    $
    
    
    
    $
    (507
    )Net cash used in investing activities
    
    
    (12
    )
    
    
    (485
    )
    
    
    
    
    
    
    
    
    
    
    (497
    )Net cash provided by financing activities
    
    
    
    
    
    
    2,747
    
    
    
    
    
    
    
    
    
    
    
    2,747
  20




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedFor the three months ending September
30, 2007STATEMENT OF OPERATIONS
(unaudited)Net Revenues
    
    $
    
    
    
    $
    38,537
    
    
    $
    
    
    
    $
    (1,575
    )
    
    $
    36,962Operating Expenses:Casino
    
    
    
    
    
    
    13,685
    
    
    
    
    
    
    
    
    
    
    
    13,685Food and beverage
    
    
    
    
    
    
    4,977
    
    
    
    
    
    
    
    
    
    
    
    4,977Hotel
    
    
    
    
    
    
    1,609
    
    
    
    
    
    
    
    
    
    
    
    1,609Other
    
    
    
    
    
    
    2,301
    
    
    
    
    
    
    
    
    
    
    
    2,301General and administrative
    
    
    715
    
    
    
    13,997
    
    
    
    
    
    
    
    (1,575
    )
    
    
    13,137Depreciation and amortization
    
    
    5
    
    
    
    4,002
    
    
    
    
    
    
    
    
    
    
    
    4,007Loss on disposal of assets
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    5Operating (loss) income
    
    
    (720
    )
    
    
    (2,039
    )
    
    
    
    
    
    
    
    
    
    
    (2,759
    )Other Expense:Interest expense, net
    
    
    
    
    
    
    5,178
    
    
    
    
    
    
    
    
    
    
    
    5,178Net loss
    
    $
    (720
    )
    
    $
    (7,217
    )
    
    $
    
    
    
    $
    
    
    
    $
    (7,937
    )STATEMENT OF CASH FLOWSNet cash (used in) provided by
operating activities
    
    $
    (36
    )
    
    $
    1,056
    
    
    $
    
    
    
    $
    
    
    
    $
    1,020Net cash provided by (used in) investing
activities
    
    
    36
    
    
    
    (6,120
    )
    
    
    
    
    
    
    
    
    
    
    (6,084
    )Net cash provided by financing activities
    
    
    
    
    
    
    3,947
    
    
    
    
    
    
    
    
    
    
    
    3,947
  21




---



##### Table of Contents



Black Gaming, LLC and Subsidiaries
 Notes to Condensed Consolidated Financial Statements (unaudited) (continued)
 Non-Guarantor
    
    
    GuarantorParent
    
    
    Subsidiaries
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedFor the nine months ended September
30, 2007STATEMENT OF OPERATIONS
(unaudited)Net Revenues
    
    $
    
    
    
    $
    130,009
    
    
    $
    
    
    
    $
    (4,725
    )
    
    $
    125,284Operating Expenses:Casino
    
    
    
    
    
    
    40,668
    
    
    
    
    
    
    
    
    
    
    
    40,668Food and beverage
    
    
    
    
    
    
    16,798
    
    
    
    
    
    
    
    
    
    
    
    16,798Hotel
    
    
    
    
    
    
    4,808
    
    
    
    
    
    
    
    
    
    
    
    4,808Other
    
    
    
    
    
    
    9,092
    
    
    
    
    
    
    
    
    
    
    
    9,092General and administrative
    
    
    2,010
    
    
    
    40,891
    
    
    
    
    
    
    
    (4,725
    )
    
    
    38,176Depreciation and amortization
    
    
    13
    
    
    
    12,353
    
    
    
    
    
    
    
    
    
    
    
    12,366Loss on disposal of assets
    
    
    
    
    
    
    103
    
    
    
    
    
    
    
    
    
    
    
    103Operating (loss) income
    
    
    (2,023
    )
    
    
    5,296
    
    
    
    
    
    
    
    
    
    
    
    3,273Other Expense:Interest expense, net
    
    
    
    
    
    
    15,394
    
    
    
    
    
    
    
    
    
    
    
    15,394Net loss
    
    $
    (2,023
    )
    
    $
    (10,098
    )
    
    $
    
    
    
    $
    
    
    
    $
    (12,121
    )STATEMENT OF CASH FLOWSNet cash provided by operating activities
    
    $
    134
    
    
    $
    8,616
    
    
    $
    
    
    
    $
    
    
    
    $
    8,750Net cash used in investing activities
    
    
    (134
    )
    
    
    (13,324
    )
    
    
    
    
    
    
    
    
    
    
    (13,458
    )Net cash provided by financing activities
    
    
    
    
    
    
    4,086
    
    
    
    
    
    
    
    
    
    
    
    4,086
  22




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 You should read the following discussion and analysis together with our unaudited condensed
consolidated financial statements and the accompanying notes. This discussion contains
forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995, including statements regarding our expected financial position,
business and financing plans. Some of the forward-looking statements can be identified by the use
of forward-looking terms such as believes, expects, may, will, should, could, seek,
intends, plans, estimates, anticipates, or other comparable terms. Forward-looking
statements involve inherent risks and uncertainties which could cause actual results to differ
materially from those in the forward-looking statement, including those discussed herein and
elsewhere in our Form 10-K for the year ended December 31, 2007, particularly under the heading
Risk Factors. We caution readers not to place undue reliance upon any such forward-looking
statements, which speak only as of the date made. Unless the context indicates otherwise, all
references to the Company, Black Gaming, we, us and our refer to Black Gaming, LLC and
its direct and indirect wholly owned subsidiaries, Virgin River Casino Corporation, RBG, LLC, B & B
B, Inc., Casablanca Resorts, LLC, Oasis Interval Ownership, LLC, Oasis Interval Management, LLC,
Oasis Recreational Properties, Inc. and R. Black, Inc.
 Overview
      23




---



##### Table of Contents




    
    VRCC received 100 shares of R. Black, Inc. (RBI) from the Black Trust. The Black Trust
owns 100% of the outstanding shares of VRCC. The 100 shares of RBI, representing 100% of the
outstanding capital stock of RBI, were exchanged for 3.68 shares of VRCC held by the Black
Trust, representing 3.68% of the outstanding capital stock of VRCC. RBI does not have any
material operations, liabilities or assets other than a 5.47% ownership in RBG. The transfer
of shares of RBI to VRCC was accounted for at the historical cost of RBG as RBI and VRCC were
under common control.
    
    VRCC received a 3.8% membership interest in RBG from the Black Trust in exchange for 2.57
shares of VRCC held by the Black Trust, representing 2.57% of the outstanding capital stock of
VRCC. The transfer of membership interests of RBG to VRCC was accounted for at historical cost
as the Black Trust and VRCC were under common control.
    
    VRCC received a 1.92% membership interest in RBG from Glenn Teixeira in exchange for 1.29
shares of VRCC held by the Black Trust, representing 1.29% of the outstanding capital stock of
VRCC. The acquisition of the membership interests in RBG from Glenn Teixeira was accounted for
at fair value as it was considered an acquisition of a minority interest of a subsidiary.
Based upon an internal analysis the fair value of Glenn Teixeiras interest approximated book
value.
      24




---



##### Table of Contents



Key Performance Indicators
   Financial Highlights of Black Gaming, LLC and Subsidiaries
    25




---



##### Table of Contents



For the three and nine months ended September 30, 2008 and 2007 (unaudited) (in thousands)
 Three
Months Ended September 30,
    
    
    %
    
    

Nine
Months Ended September 30,
    
    
    %2008
    
    
    2007
    
    
    Change
    
    
    2008
    
    
    2007
    
    
    ChangeCasino revenues
    
    $
    18,023
    
    
    $
    24,940
    
    
    
    (27.7
    %)
    
    $
    63,605
    
    
    $
    81,673
    
    
    
    (22.1
    %)Casino expenses
    
    
    10,998
    
    
    
    13,685
    
    
    
    (19.6
    %)
    
    
    33,023
    
    
    
    40,668
    
    
    
    (18.8
    %)Profit margin
    
    
    39.0
    %
    
    
    45.1
    %
    
    

    
        
    
    48.1
    %
    
    
    50.2
    %
    
    

    Food and beverage revenues
    
    $
    7,048
    
    
    $
    9,746
    
    
    
    (27.7
    %)
    
    $
    25,055
    
    
    $
    31,497
    
    
    
    (20.5
    %)Food and beverage expenses
    
    
    4,415
    
    
    
    4,977
    
    
    
    (11.3
    %)
    
    
    16,089
    
    
    
    16,798
    
    
    
    (4.2
    %)Profit margin
    
    
    37.4
    %
    
    
    48.9
    %
    
    

    
        
    
    35.8
    %
    
    
    46.7
    %
    
    

    Hotel revenues
    
    $
    6,574
    
    
    $
    7,226
    
    
    
    (9.0
    %)
    
    $
    22,618
    
    
    $
    27,028
    
    
    
    (16.3
    %)Hotel expenses
    
    
    1,775
    
    
    
    1,609
    
    
    
    10.3
    %
    
    
    5,630
    
    
    
    4,808
    
    
    
    17.1
    %Profit margin
    
    
    73.0
    %
    
    
    77.7
    %
    
    

    
        
    
    75.1
    %
    
    
    82.2
    %
    
    

    Other revenues
    
    $
    2,857
    
    
    $
    4,123
    
    
    
    (30.7
    %)
    
    $
    13,116
    
    
    $
    15,363
    
    
    
    (14.6
    %)Other expenses
    
    
    2,265
    
    
    
    2,301
    
    
    
    (1.6
    %)
    
    
    7,275
    
    
    
    9,092
    
    
    
    (20.0
    %)Promotional allowances
    
    $
    6,257
    
    
    $
    9,073
    
    
    
    (31.0
    %)
    
    $
    21,613
    
    
    $
    30,277
    
    
    
    (28.6
    %)Percent of gross revenues
    
    
    18.1
    %
    
    
    19.7
    %
    
    

    
        
    
    17.4
    %
    
    
    19.5
    %
    
    

    General and
administrative    expenses
    
    $
    9,733
    
    
    $
    13,137
    
    
    
    (25.9
    %)
    
    $
    30,458
    
    
    $
    38,176
    
    
    
    (20.2
    %)Percent of net revenues
    
    
    34.5
    %
    
    
    35.5
    %
    
    

    
        
    
    29.6
    %
    
    
    30.5
    %
    
    

    
 Three and nine months ended September 30, 2008 compared to the three and nine months ended
September 30, 2007
 Consolidated Net Revenues.
  Consolidated Operating Income.
  26




---



##### Table of Contents



Casino.
  Food and Beverage.
  Hotel.
  27




---



##### Table of Contents



Other Revenues.
  Promotional Allowances.
  General and Administrative (G&A).
   28




---



##### Table of Contents



Depreciation and Amortization.
  Interest Expense.
  Liquidity and Capital Resources
 Cash Flows and Credit Facility
  Operating Activities
  Investing Activities
   29




---



##### Table of Contents



Financing Activities
  Contractual Obligations and Commitments for Black Gaming, LLC
    1.
    
    The LIBOR Rate Margin has been increased to 5% from 3.50%, and the Base Rate
Margin has been increased to 5% from 2%. Therefore, the interest rate premium payable
in respect of loans available under the Credit Agreement has been increased
accordingly;2.
    
    The minimum EBITDA covenant has been reduced from $15.0 million to $10.0
million for the September 2008 through December 2008 reporting periods;3.
    
    The Borrowing Base multiple has been increased from 1.0x to 1.5x from the
execution of the Forbearance Agreement until January 15, 2009;4.
    
    The Company has been allowed to temporarily shut down a currently operating
casino during the Forbearance Period. (While
the Company is considering a variety of alternatives as discussed
elsewhere herein, no decision has been made whether to temporarily
close one of its casinos.)
   30




---



##### Table of Contents



Other Liquidity Matters
    3 4
  31




---



##### Table of Contents



Critical Accounting Policies for Black Gaming, LLC
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Maturity
    
    
    Face
    
    
    Carrying
    
    
    EstimatedDate
    
    
    Amount
    
    
    Value
    
    
    Fair ValueSenior secured credit facility
at an average interest rate of
6.93%
    
    June 2011
    
    $
    15,000
    
    
    $
    14,795
    
    
    $
    14,7959% senior secured notes
    
    January 2012
    
    
    125,000
    
    
    
    125,000
    
    
    
    84,53812 3/4% senior subordinated notes
    
    January 2013
    
    
    66,000
    
    
    
    63,685
    
    
    
    26,320Total
    
    
    
    
    
    $
    206,000
    
    
    $
    203,480
    
    
    $
    125,653
   Current Portion as of September 30,2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    Thereafter
    
    
    TotalLong-term debt
(including current
portion):Fixed-rate
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    125,000
    
    
    $
    66,000
    
    
    $
    
    
    
    $
    191,000Average interest rate
    
    
    10.27
    %
    
    
    10.30
    %
    
    
    10.30
    %
    
    
    10.30
    %
    
    
    12.48
    %
    
    
    12.75
    %
    
    
    10.48
    %Variable-rate
    
    $
    14,795
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    14,795Average interest rate
    
    
    6.93
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.93
    %
  
 Item 4. Controls and Procedures.
 Evaluation of Disclosure Controls
   32




---



##### Table of Contents



Limitations on the Effectiveness of Controls
  Conclusions
  Changes in Internal Controls
 i.e.
  33




---



##### Table of Contents



PART
II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  Risks Related to Our Business
 Recent Economic Developments  The economic slow down and probable recession have had an
adverse impact on our business.
  Risks Related to the Notes and the Foothill Facility
   34




---



##### Table of Contents



3 4
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
   35




---



##### Table of Contents



Item 6. Exhibits.
 10.1
    
    Forbearance, Consent and Third Amendment to Credit Agreement dated November 3,
2008, by and among Black Gaming, LLC, B & B B, Inc., Virgin River Casino Corporation,
RBG, LLC, Casablanca Resorts, LLC, Oasis Interval Management, LLC, Oasis Interval
Ownership, LLC, Oasis Recreational Properties, Inc., R. Black, Inc., Wells Fargo
Foothill, Inc. as the arranger and administrative agent and the other lending parties
thereto31.1
    
    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, Sean P. McKay32.1
    
    Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002, Robert R. Black, Sr.32.2
    
    Certification pursuant to §906 of the Sarbanes-Oxley Act of 2002, Sean P. McKay
  36




---



##### Table of Contents



SIGNATURES
  BLACK GAMING, LLCBy:
    
    /s/ Sean P. McKay
    
    November 7, 2008Sean P. McKayChief Accounting Officer(Principal Financial Officer)
  37




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description10.1
    
    
    Forbearance, Consent and Third Amendment to Credit Agreement dated November 3, 2008, by and
among Black Gaming, LLC, B & B B, Inc., Virgin River Casino Corporation, RBG, LLC, Casablanca
Resorts, LLC, Oasis Interval Management, LLC, Oasis Interval Ownership, LLC, Oasis
Recreational Properties, Inc., R. Black, Inc., Wells Fargo Foothill, Inc. as the arranger and
administrative agent and the other lending parties thereto31.1
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
  38