**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**FORM 10-Q**

| **(Mark One)**                                    |
|---------------------------------------------------|
| ** **                                        |
| **x**                                             |   | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934** |
| ** **                                        |
| **For the  quarterly period ended June 30, 2007** |
| ** **                                        |
| **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 333-124924**

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**155 EastTropicana, LLC155 East Tropicana Finance Corp.**

(Exact Name of Registrant as Specified in its Charter)

| **NEVADA  NEVADA**                                                |   | **20-1363044  20-2546581**               |
|-------------------------------------------------------------------|--------|------------------------------------------|
| (State or Other  Jurisdiction   of Incorporation or Organization) |   | (I.R.S. Employer  Identification Number) |
|                                                              |   |                                     |
| **115 East  Tropicana Avenue  Las Vegas, Nevada**                 |   | **89109**                                |
| (Address of  Principal Executive Offices)                         |   | (Zip Code)                               |

 

**(702)597-6076**

(Registrant’s Telephone Number, Including Area Code)

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Indicate by check mark whether the registrant (1) hasfiled all reports required by Section 13 or 15(d) of the Securities ExchangeAct of 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports) and (2) has been subject to suchfiling requirements for the past 90 days.    Yes  **x**    No o

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer,or a non-accelerated filer.  Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 ofthe Exchange Act (Check one):

Large accelerated filer o           Acceleratedfiler o           Non-acceleratedfiler **x**

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No  **x**

 

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**p**
| **PART I – FINANCIAL  INFORMATION**                          |                                                                                        |
|-------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
|                                                              |                                                                                        |
| Item 1.                                                           | Financial Statements                                                                        |   |
|                                                              |                                                                                        |   |
| **155 EAST  TROPICANA, LLC (A Nevada Limited-Liability Company)** |                                                                                        |
|                                                              | Condensed  Consolidated Balance Sheets                                                      |   |
|                                                              | Condensed  Consolidated Statements of Operations                                            |   |
|                                                              | Condensed Consolidated  Statements of Cash Flows                                            |   |
|                                                              | Notes to  Condensed Consolidated Financial Statements                                       |   |
|                                                              |                                                                                        |   |
| Item 2.                                                           | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |   |
|                                                              |                                                                                        |   |
| Item 3.                                                           | Quantitative  and Qualitative Disclosures About Market Risk                                 |   |
|                                                              |                                                                                        |   |
| Item 4.                                                           | Controls and  Procedures                                                                    |   |
|                                                              |                                                                                        |   |
| **PART II – OTHER  INFORMATION**                             |                                                                                        |
|                                                              |                                                                                        |
| Item 1.                                                           | Legal Proceedings                                                                           |   |
|                                                              |                                                                                        |   |
| Item 1A.                                                          | Risk Factors                                                                                |   |
|                                                              |                                                                                        |
| 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                                                                           |   |
|                                                              |                                                                                        |   |
| Item 6.                                                           | Exhibits                                                                                    |   |
|                                                              |                                                                                        |   |
| **SIGNATURES**                                                    |                                                                                        |

 

2

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# **PART I –FINANCIAL INFORMATION**

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

### **155 East Tropicana, LLC (A Nevada Limited-Liability Company)**

### **Condensed Consolidated Balance Sheets**

| ** **                                                                                                          | ** ** | **June 30,** | ** **  | **December 31,** | ** ** |
|---------------------------------------------------------------------------------------------------------------------|------------|-------------------|-------------|-----------------------|------------|
| ** **                                                                                                          | ** ** | **2007**          | ** **  | **2006**              | ** ** |
| ** **                                                                                                          | ** ** | **(unaudited)**   | ** **  | ** **            | ** ** |
| **Assets**                                                                                                          | ** ** | ** **        | ** **  | ** **            | ** ** |
| Current assets:                                                                                                     |       |              |        |                  |       |
| Cash and cash  equivalents                                                                                          |       | $                 | 4,917,445   |                  | $          | 6,164,192 |   |
| Accounts  receivable, net of allowance for doubtful accounts of $60,239 and $99,921 in  2007 and 2006, respectively |       | 1,895,194         |        | 1,609,756             |       |
| Inventories                                                                                                         |       | 930,032           |        | 846,651               |       |
| Prepaid expenses                                                                                                    |       | 1,765,370         |        | 1,569,980             |       |
| Total current  assets                                                                                               |       | 9,508,041         |        | 10,190,579            |       |
| Property and equipment,  net                                                                                        |       | 119,641,044       |        | 122,135,784           |       |
| Other long-term assets:                                                                                             |       |              |        |                  |       |
| Deferred  financing costs                                                                                           |       | 5,668,894         |        | 6,366,625             |       |
| Intangible  assets                                                                                                  |       | 6,531,164         |        | 6,557,119             |       |
| Other assets                                                                                                        |       | 343,273           |        | 343,273               |       |
| Total other  long-term assets                                                                                       |       | 12,543,331        |        | 13,267,017            |       |
| Total assets                                                                                                        |       | $                 | 141,692,416 |                  | $          | 145,593,380 |   |
|                                                                                                                |       |              |        |                  |       |
| **Liabilities and Members’ Equity**                                                                            | ** ** | ** **        | ** **  | ** **            | ** ** |
| Current liabilities:                                                                                                |       |              |        |                  |       |
| Accounts payable                                                                                                    |       | $                 | 3,322,986   |                  | $          | 2,969,064 |   |
| Accrued interest  payable                                                                                           |       | 2,843,750         |        | 2,843,750             |       |
| Accrued  liabilities                                                                                                |       | 2,047,658         |        | 2,266,740             |       |
| Deposit                                                                                                             |       | 1,000,000         |        | —                |       |
| Current portion  of long-term debt                                                                                  |       | 2,047,102         |        | 1,859,319             |       |
| Total current  liabilities                                                                                          |       | 11,261,496        |        | 9,938,873             |       |
| Long-term debt                                                                                                      |       | 134,134,435       |        | 133,081,099           |       |
| Related party royalties  payable                                                                                    |       | 2,179,850         |        | 1,461,881             |       |
| Total  liabilities                                                                                                  |       | 147,575,781       |        | 144,481,853           |       |
|                                                                                                                |       |              |        |                  |       |
| Commitments and  contingencies                                                                                      |       |              |        |                  |       |
|                                                                                                                |       |              |        |                  |       |
| Members’ equity:                                                                                               |       |              |        |                  |       |
| Membership  interests                                                                                               |       | 34,333,375        |        | 34,333,375            |       |
| Accumulated  deficit                                                                                                |       | (40,216,740       | )           | (33,221,848           | )          |
|                                                                                                                |       | (5,883,365        | )           | 1,111,527             |       |
| Total  liabilities and members’ equity                                                                         |       | $                 | 141,692,416 |                  | $          | 145,593,380 |   |

 

*Theaccompanying notes are an integral part of these condensed consolidatedfinancial statements.*

3

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**155 East Tropicana, LLC (A Nevada Limited-Liability Company)**

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

| ** **                                                                                        | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|----------------------------------|------------|--------------------------------|------------|
| ** **                                                                                        | ** ** | **June 30,**                | ** ** | **June 30,**              | ** ** | **June 30,** | ** ** | **June 30,** | ** ** |
| ** **                                                                                        | ** ** | **2007**                         | ** ** | **2006**                       | ** ** | **2007** | ** ** | **2006** | ** ** |
|                                                                                              |       |                             |       |                           |       |   |   |   |   |
| Operating  revenues:                                                                              |       |                             |       |                           |       |   |   |   |   |
| Casino                                                                                            |       | $                                | 6,159,979  |                           | 6,531,575  |   | $ | 12,303,263 |   | 13,205,086 |   |
| Food, beverage and entertainment                                                                  |       | 6,373,307                        |       | 6,428,002                      |       | 12,280,213 |   | 11,580,978 |   |
| Hotel and other                                                                                   |       | 6,398,391                        |       | 6,375,222                      |       | 13,033,304 |   | 10,875,478 |   |
|                                                                                              |       | 18,931,677                       |       | 19,334,799                     |       | 37,616,780 |   | 35,661,542 |   |
| Less promotional  allowances                                                                      |       | (1,661,811                       | )          | (1,310,271                     | )          | (3,092,574 | ) | (2,731,362 | ) |
| Net operating  revenues                                                                           |       | 17,269,866                       |       | 18,024,528                     |       | 34,524,206 |   | 32,930,180 |   |
|                                                                                              |       |                             |       |                           |       |   |   |   |   |
| Operating  expenses:                                                                              |       |                             |       |                           |       |   |   |   |   |
| Casino                                                                                            |       | 3,727,569                        |       | 3,703,278                      |       | 7,166,321 |   | 6,445,936 |   |
| Food, beverage and entertainment                                                                  |       | 4,815,888                        |       | 5,379,663                      |       | 9,317,998 |   | 9,605,911 |   |
| Hotel and other                                                                                   |       | 2,247,399                        |       | 2,480,034                      |       | 4,398,835 |   | 4,196,618 |   |
| General and administrative                                                                        |       | 5,137,901                        |       | 5,790,726                      |       | 9,851,831 |   | 9,116,742 |   |
| Depreciation and amortization                                                                     |       | 1,840,966                        |       | 1,687,318                      |       | 3,537,570 |   | 2,821,551 |   |
| Pre-opening expenses                                                                              |       | —                           |       | —                         |       | — |   | 5,292,834 |   |
| Related party royalties expenses                                                                  |       | 371,179                          |       | 394,779                        |       | 717,969 |   | 740,476 |   |
| Loss on disposal of assets                                                                        |       |                             |       | 221,793                        |       |   |   | 1,199,470 |   |
| Total operating  expenses                                                                         |       | 18,140,902                       |       | 19,657,591                     |       | 34,990,524 |   | 39,419,538 |   |
| Operating loss                                                                                    |       | (871,036                         | )          | (1,633,063                     | )          | (466,318 | ) | (6,489,358 | ) |
|                                                                                              |       |                             |       |                           |       |   |   |   |   |
| Other income  (expense):                                                                          |       |                             |       |                           |       |   |   |   |   |
| Interest income                                                                                   |       | 15,013                           |       | 120,568                        |       | 52,441 |   | 401,848 |   |
| Interest expense, net of capitalized interest of  $202,873 for the six months ended June 30, 2006 |       | (3,309,430                       | )          | (3,222,737                     | )          | (6,581,015 | ) | (6,243,801 | ) |
| Other income  (expense), net                                                                      |       | (3,294,417                       | )          | (3,102,169                     | )          | (6,528,574 | ) | (5,841,953 | ) |
| Net loss                                                                                          |       | $                                | (4,165,453 | )                              | $          | (4,735,232 | ) | $ | (6,994,892 | ) | (12,331,311 | ) |
|                                                                                                   |            |                                  |            |                                |            |  |  |  |  |  |  |  |

 

*Theaccompanying notes are an integral part of these condensed consolidatedfinancial statements.*

4

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**155 East Tropicana, LLC (A Nevada Limited-Liability Company)**

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

| ** **                                                                       | ** ** | **Six Months Ended  June 30,  2007** | ** ** | **Six Months Ended  June 30,  2006** | ** ** |
|----------------------------------------------------------------------------------|------------|-----------------------------------------------------|------------|-----------------------------------------------------|------------|
|                                                                             | ** ** | ** **                                          | ** ** | ** **                                          | ** ** |
| **Cash  Flow From Operating Activities**                                         |       |                                                |       |                                                |       |
| Net loss                                                                         |       | $                                                   | (6,994,892 | )                                                   | $          | (12,331,311 | ) |
| Adjustments to reconcile net loss to net cash  provided by operating activities: |       |                                                |       |                                                |       |
| Depreciation and amortization                                                    |       | 3,537,570                                           |       | 2,821,551                                           |       |
| Amortization of deferred financing costs                                         |       | 697,731                                             |       | 639,726                                             |       |
| Amortization of intangible asset                                                 |       | 25,955                                              |       | 25,955                                              |       |
| Loss on disposal of assets                                                       |       | —                                              |       | 1,199,470                                           |       |
| Changes in operating assets and liabilities:                                     |       |                                                |       |                                                |       |
| Accounts receivable                                                              |       | (285,438                                            | )          | (375,155                                            | )          |
| Inventories                                                                      |       | (83,381                                             | )          | (762,847                                            | )          |
| Prepaid expenses                                                                 |       | (195,390                                            | )          | (1,529,185                                          | )          |
| Accounts payable                                                                 |       | 353,922                                             |       | 728,952                                             |       |
| Related party royalties payable                                                  |       | 717,969                                             |       | 743,196                                             |       |
| Accrued interest payable                                                         |       | —                                              |       | (20,646                                             | )          |
| Accrued liabilities                                                              |       | (219,082                                            | )          | 1,006,523                                           |       |
| Net cash (used  in) provided by operating activities                             |       | (2,445,036                                          | )          | (7,853,771                                          | )          |
|                                                                             |       |                                                |       |                                                |       |
| **Cash  Flow From Investing Activities**                                         |       |                                                |       |                                                |       |
| Capital  expenditures                                                            |       | (730,211                                            | )          | (19,267,120                                         | )          |
| Decrease in  construction payable                                                |       | —                                              |       | (6,034,450                                          | )          |
| Change in  restricted cash                                                       |       | —                                              |       | 27,846,926                                          |       |
| Change in other  assets                                                          |       | —                                              |       | 605,372                                             |       |
| Net cash (used  in) provided by investing activities                             |       | (730,211                                            | )          | 3,150,728                                           |       |
|                                                                             |       |                                                |       |                                                |       |
| **Cash  Flow From Financing Activities**                                         |       |                                                |       |                                                |       |
| Due from (to)  Hotel San Remo                                                    |       | —                                              |       | (190,333                                            | )          |
| Payment of debt  financing costs                                                 |       | —                                              |       | (240,557                                            | )          |
| Proceeds from  issuance of Notes                                                 |       | 1,924,607                                           |       | 304,953                                             |       |
| Principal  payments on debt                                                      |       | (996,107                                            | )          | (817,691                                            | )          |
| Deposit                                                                          |       | 1,000,000                                           |       | —                                              |       |
| Net cash  provided by (used in) financing activities                             |       | 1,928,500                                           |       | (943,628                                            | )          |
|                                                                             |       |                                                |       |                                                |       |
| Decrease in cash  and cash equivalents                                           |       | (1,246,747                                          | )          | (5,646,671                                          | )          |
| Cash and cash  equivalents, beginning of period                                  |       | 6,164,192                                           |       | 14,191,385                                          |       |
| Cash and cash  equivalents, end of period                                        |       | $                                                   | 4,917,445  |                                                | $          | 8,544,714 |   |
|                                                                             |       |                                                |       |                                                |       |
| **Supplemental  disclosure of cash flow information**                            |       |                                                |       |                                                |       |
| Cash paid for  interest, net of capitalized interest                             |       | $                                                   | 5,883,284  |                                                | $          | 6,264,447 |   |
| Assets acquired  through equipment loans                                         |       | $                                                   | 312,619    |                                                | $          | 5,765,275 |   |

 

*The accompanying notes are anintegral part of these condensed consolidated financial statements.*

5

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**155 East Tropicana, LLC(A Nevada Limited-Liability Company)**

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

**June 30, 2007**

**1.  Organizationand Basis of Presentation**

155 East Tropicana, LLC, a Nevada limited-liability company (the “Company”)was incorporated on June 17, 2004 to acquire the real and personalproperty of the Hôtel San Rémo Casino and Resort (the “Hôtel San Rémo”) in LasVegas, Nevada with the intention of renovating the existing casino and hotelfacility with a “Hooters” entertainment concept and theme.  The renovations were completed and the HôtelSan Rémo property was reopened as the new Hooters Casino Hotel on February 3,2006.  The Company’s business isconcentrated at the one casino and hotel property in Las Vegas, Nevada.  The renovations were financed by the Companyand it’s wholly owned subsidiary, 155 East Tropicana Finance Corp., through a$130.0 million Senior Secured Notes offering that closed on March 29,2005.  The Company’s membership interestsare held two-thirds through Florida Hooters LLC and one-third through EW CommonLLC.  The initial capitalization of theCompany was provided by Florida Hooters LLC in the form of a $5.1 millioncash contribution and the assignment of rights with respect to the Hooterstrademark and logo and other intellectual property and by EW Common LLC in theform of a $25.0 million deemed capital contribution.  The deemed capital contribution from EWCommon LLC carries with it a priority return of four percent on thecontribution annually.  The payment ofthis priority return is subject to meeting certain financial covenantsassociated with the Company’s debt.

Florida Hooters LLC is a joint venture between Hooters Gaming LLC andLags Ventures, LLC.  Hooters Gaming LLCis owned by the holders of licenses to operate Hooters restaurants in TampaBay, Florida, Chicago, Illinois and downtown Manhattan in New York as well asfor the sale of wholesale foods and calendars and Nevada hotel/gaming andincludes most of the original founders of the Hooters brand.  Pursuant to these license rights, the ownersof Florida Hooters LLC operate 38 Hooters restaurants, publish Hooterscalendars and operate a Hooters food business. Lags Ventures, LLC is owned by a holder of the license rights to Hootersrestaurants in South Florida and the State of Nevada.  The owner of Lags Ventures, LLC is also thefounder of the Dan Marino concept restaurants and owns and operates two DanMarino concept restaurants. 

EW Common LLC is owned 90% by Eastern & Western Hotel Corporation(“Eastern & Western”) and 10% by Michael J. Hessling, president of theCompany.  Eastern & Western andits affiliates owned the real property and non-gaming assets of Hôtel San Rémofrom November 1988 until the Company’s acquisition of the Hôtel San Rémoin August 2004.  

Florida Hooters LLC and EW Common LLC entered into a joint ventureagreement for the purpose of forming the Company and documenting the terms oftheir investments and business venture.

6

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OnFebruary 3, 2006, the newly renovated and re-branded Hooters Casino Hotel wasopened for business.  The Hooters Casino Hotel currently features a casinofloor with 654 slot and video poker machines, 30  table games, 696 newly renovated hotel roomsincluding 17 suites, a tropical pool area, retail outlets, a day spa, anddining and entertainment options which include a Hooters restaurant, Dan Marino’sFine Food, a coffee shop restaurant, a sports bar, and several bars. Therenovations included a redesign of the main entrance, a renovation and expansionof the casino and restaurant areas, a remodel of the hotel rooms and arenovation and expansion of the pool area.

As permitted by the rules and regulations of the Securities andExchange Commission, certain information and footnote disclosures normallyincluded in financial statements prepared in accordance with generally acceptedaccounting principles have been condensed or omitted.  These condensed consolidated financialstatements should be read in conjunction with the Company’s 2006 annualconsolidated financial statements and notes thereto included in the Company’sAnnual Report on Form 10-K for the year ended December 31, 2006.

In the opinion of management, the accompanying unaudited condensedconsolidated financial statements contain all adjustments – which includenormal recurring adjustments – necessary to present fairly the Company’sfinancial position as of June 30, 2007, the results of its operations for thethree month and six month periods ended June 30, 2007 and 2006.  The results of operations for such periodsare not necessarily indicative of the results to be expected for the fullyear.  

**2.  Reclassifications**

Certainreclassifications, having no effect on net loss, have been made to thepreviously issued condensed consolidated financial statements to conform to thecurrent period’s presentation of the Company’s condensed consolidated financialstatements.

7

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**3.  Long-term Debt**

Long-termdebt consists of the following:
|                                              | ** ** | **June 30,** | ** **  | **December 31,** | ** ** |
|----------------------------------------------|------------|-------------------|-------------|-----------------------|------------|
| ** **                                   | ** ** | **2007**          | ** **  | **2006**              | ** ** |
| 8.75% Senior  secured notes (1)              |       | $                 | 130,000,000 |                  | $          | 130,000,000 |   |
| Senior secured  credit facility (2)          |       | 2,837,217         |        | 912,610               |       |
| Equipment  purchase financing agreements (3) |       | 3,344,320         |        | 4,027,808             |       |
| Total debt                                   |       | 136,181,537       |        | 134,940,418           |       |
| Less: Current  portion of debt               |       | (2,047,102        | )           | (1,859,319            | )          |
| Total long-term  debt                        |       | $                 | 134,134,435 |                  | $          | 133,081,099 |   |

 

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(1)          $130.0 millionaggregate principal amount of 8.75% Senior Secured Notes issued on March 29,2005 and due on 2012.

(2)          Outstanding draws against the Senior SecuredCredit Facility as of June 30, 2007 and December 31, 2006, due on March 30,2009.  At the Company’s option, theinterest rate will be either the agent for the lender’s prime rate plus 2.00%per annum or LIBOR plus 3.50% per annum. As of June 30, 2007, the Credit Facility carried an interest rate of8.985% per annum.

(3)          During the six months ended June 30, 2007,the Company entered into a $0.3 million loan agreement to purchaseapproximately $0.4 million in hotel equipment. The loan, which is collateralized by the equipment purchased, has a termof 18 months with an imputed interest rate of 12.7%.  

**4.  Related Party Transactions**

**RoyaltiesExpense**

Pursuant to agreements related to the use of certain trademarks, theCompany must pay fees and royalties to related parties.  A fee equal to 3%of all net profits earned from gaming activities is payable to Hooters GamingCorporation, a consent fee equal to 6% of net revenues generated by the DanMarino’s Restaurant and 13 Martini Bar is payable to Lags Ventures, Inc. and afee of 4% of cash sales from the Hooters branded restaurant, and 3% of thegross sales with any merchandise with a Hooters logo, is payable to Las VegasWings, Inc.  The total fees accrued at June 30, 2007 for Hooters GamingCorporation, Lags Venture, Inc. and Las Vegas Wings, Inc. were $1.2 million,$0.3 million, and $0.7 million, respectively. The Company began accruing these fees when the Hooters Casino Hotelopened on February 3, 2006.  The paymentof these royalty fees is restricted under the indenture governing the notes.

8

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**Provident Advertising & Marketing, Inc.**

The majority shareholder of ProvidentAdvertising & Marketing, Inc. (“Provident”) is Edward C. Droste,a member of the Company’s management board and an indirect beneficial owner of3.96% of the Company’s membership interests. Provident was engaged by the Company to provide services related to theplanning and development of an initial advertising and marketing plan and forthe continued development and implementation of a strategic marketing plan forthe Hooters Casino Hotel.  Providentcontinues to be involved as the Company’s advertising firm.  In addition, the Company purchases Hooterslogo items from Provident for uniforms and for resale in the Company’s giftshops.  The amounts paid to Providentduring the six months ended June 30, 2007 and 2006 totaled $1.0 million and$1.9 million, respectively.

**5. Commitments and Contingencies**

***Litigation***

From time to time, the Company is a party to various claims arising inthe normal course of business. Management believes, however, that there are no proceedings pending orthreatened against the Company, which, if determined adversely, would have amaterial adverse effect on the Company’s financial condition, results ofoperations or liquidity.

***Contractual Commitments***

The Company has entered intooperational contracts totaling $8.2 million at June 30, 2007.

**Hooters of America Royalty Payments**

Beginning on February 3, 2006, the Company was required to pay theowner of the Hooters trademark, Hooters of America, a royalty fee equal to 2%of all net revenues of the hotel and casino (excluding the Dan Marino’sRestaurant and 13 Martini Bar) and 1% of revenues from the Pete and Shorty’sTavern less miscellaneous expenses.  Thetotal fees paid to Hooters of America were $0.6 million for both the six monthsended June 30, 2007 and 2006. These fees are included in general andadministrative expenses on the accompanying condensed consolidated statementsof operations.

9

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***Preferred*** Return

TheCompany’s membership interests include an EW Common LLC preferred account,which accumulates a preferred return rate of 4% per annum on the $25.0 millionaccount balance.  Such preferred returnbegan accumulating on March 1, 2006, and accumulates whether or not there areprofits or funds available for the payment of the preferred return.  Under the Notes indenture, the preferredreturn to EW Common LLC is payable only if the Company’s coverage ratio ofEBITDA to fixed charges (as defined in the indenture and after giving effect tothe payment of the preferred return) is 1.5 to 1 for the fiscal year asmeasured after the close of the fiscal year. As of June 30, 2007, $1.4 million relating to the preferred account hasaccumulated, but has not been paid.  Asthe Company’s coverage ratio of EBITDA to fixed charges did not meet thisdefined ratio, no liability has been recorded in the accompanying consolidatedfinancial statements at June 30, 2007 and December 31, 2006.

***6.  Subsequent Events***

On April 30, 2007, the Company entered into a definitive Asset PurchaseAgreement (the “Agreement”) with Hedwigs Las Vegas Top Tier, LLC (the “Buyer”),and on May 3, 2007, the Company entered into a definitive Casino OperationsLease (the “Lease”) with the Buyer.  OnMay 7, 2007, the Company entered into a First Amendment to Asset PurchaseAgreement (the “First Amendment”) with the Buyer.  Additionally, on August 8, 2007, the Companyentered into a Second Amendment to Asset Purchase Agreement (the “SecondAmendment”) with the Buyer.

Under the terms ofthe Agreement, the Buyer has offered to purchase essentially all of the assetsof the Company for a purchase price of $95.0 million in cash, the payment ofcertain accrued royalties, and the assumption of certain outstandingliabilities of the Company.  The Buyerwill also be responsible for the Company’s $130.0 million in principal amountof 8.75% Senior Secured Notes due 2012. Under the terms of the Second Amendment, the requirement under theAgreement that the Buyer deposit in escrow the sum of $2.0 million upon theoccurrence of certain events related to the restructuring of the Agreement wasamended to provide that the Buyer pay non-refundable earnest money deposits of (1) $0.5 millionbefore 12:00 noon PST on August 14, 2007 and (2) $1.5 million by5:00 p.m. PST on November 15, 2007.  The$0.5 million deposit due on August 14, 2007 was received by theCompany.  Both deposits will be appliedagainst the purchase price if the transaction closes.  The Second Amendment provides for a closingdate on or before December 31, 2007, which the Buyer may extend under certainconditions by paying an extension fee of $0.5 million for each month theAgreement is extended.  Any such extensionfees paid are not refundable and will not be credited toward the purchaseprice.  Notwithstanding the Buyer’s rightto extend the closing date, the Company may terminate the Agreement if theclosing has not occurred on or before June 30, 2008. Additionally, priorto receipt of the $1.5 million deposit above, the Company may solicit competingoffers from parties other than the Buyer, but may not enter into an agreementrelating to such offers.

As provided in the Agreement, the closing will besubject to the completion of due diligence, financing, and licensing, amongother customary conditions. There can be no assurance that (i) the conditionsto closing under Agreement will ever be satisfied, or (ii) any transactioncontemplated under the Agreement will be consummated, or (iii) if a transactionis consummated, it will be on the same or similar terms as currently providedunder the Agreement.

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## **Item 2.  Management’s Discussionand Analysis of Financial Condition and Results of Operations.**

The following discussion andanalysis should be read together with our unaudited condensed consolidatedfinancial statements and the accompanying notes.  This discussion contains forward-lookingstatements, within the meaning of Section 27A of Securities Act of 1933, asamended, Section 21E of the Securities Exchange Act of 1934, as amended, andthe Private Securities Litigation Reform Act of 1995, including statementsregarding our expected financial position, business and financing plans.  Some of the forward-looking statements can beidentified by the use of forward-looking term such as “believes,” “expects,” “may,”“will,” “should,” “could,” “seek,” “intends,” “plans,” “estimates,” “anticipates,”or other comparable terms. Forward-looking statements involve inherent risks and uncertaintieswhich could cause actual results to differ materially from those in theforward-looking statement, including those discussed herein and elsewhere inour Annual Report on Form 10-K filed with the Securities and ExchangeCommission (“Commission”) on April 2, 2007, particularly under the heading “RiskFactors.”  We caution readers not toplace undue reliance upon any such forward-looking statements, which speak onlyas of the date made.

***Overview for 155 East Tropicana, LLC***

155 East Tropicana, LLC (“we”, “us”, “our”, or “155”) was formed onJune 17, 2004 to acquire the Hôtel San Rémo Casino and Resort (“Hôtel San Rémo”),from Eastern & Western Hotel Corporation, or Eastern & Western.  Our common membership interests are heldtwo-thirds through Florida Hooters LLC and one-third through EW Common LLC.

Florida Hooters LLC is a joint venture between Hooters Gaming LLC andLags Ventures, LLC.  The owners ofHooters Gaming LLC, which include most of the original founders of the Hootersbrand, hold licenses to sell wholesale foods and calendars and to operate hotelcasinos in Nevada and Hooters restaurants in Tampa Bay, Florida, Chicago, Illinoisand downtown Manhattan in New York.  LagsVentures, LLC is owned by a holder of the license rights to Hooters restaurantsin South Florida and the State of Nevada. Pursuant to these license rights, the owners of Florida Hooters LLCoperate 38 Hooters restaurants, publish Hooters calendars, and operate aHooters foods business.  The owner ofLags Ventures, LLC is also the founder of the Dan Marino concept restaurantsand owns and operates two Dan Marino concept restaurants.

Eastern & Western owns 90% of EW Common LLC, while our President,Michael Hessling, owns the balance. Eastern & Western owned the Hôtel San Rémo from November 1988 untilour acquisition of the Hôtel San Rémo in 2004.

Our affiliates have granted us assignments of certain license agreementspertaining to the use of the Hooters brand as well as the Dan Marino, 13Martini Bar and Pete & Shorty’s concept restaurants, which will allow us tooperate the Hooters Casino Hotel.  Theoriginal founders of the Hooters brand sold the trademark rights (excludingcertain rights they retained for themselves) to Hooters of America in2001.  As a result, Hooters of America isthe trademark owner of the Hooters brand and the operator and franchisor ofHooters restaurants.  Pursuant to theHooters license assignment, we are required to pay Hooters of America a royaltyfee, which totaled approximately $0.6 million for the six months ended June 30,2007.  Aside from the abovementionedroyalty fee, we are not otherwise affiliated with Hooters of America.

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In August 2004, we agreed to the acquisition of the real property andother assets of the Hôtel San Rémo for approximately $74.6 million includingtransaction costs and expenses, and as adjusted for final purchase priceadjustments.

On March 29, 2005, we issued $130.0 million aggregate principalamount of 83⁄4% Senior Secured Notes due 2012, or the old notes, in a privateplacement.  The old notes weresubsequently exchanged with new notes, or the Notes, registered under theSecurities Act of 1933 on Form S-4. Interest payments on the Notes are due semi-annually, on each April 1and October 1.  We used the proceeds fromthe offering to refinance existing indebtedness, and used the remainingproceeds (together with cash from operations and proceeds from equipmentfinancing) to renovate the hotel casino and to provide working capital.

In connection with the offering, we formed a wholly owned subsidiary,155 East Tropicana Finance Corp., solely for the purpose of facilitating theoffering as a co-issuer of the old notes.

We also entered into a $15.0 million senior secured creditfacility (“Credit Facility”) concurrently with the offering.  At June 30, 2007, $2.8 million wasoutstanding on the Credit Facility.

***Results of Operations***

We generate hotel, casino,food, beverage and entertainment and retail revenues at the hotel casinoproperty.  During the quarter ended June30, 2007, approximately 32.3% of the gross revenue was derived from the casino,33.9% from food, beverage and entertainment and 33.8% from hotel and other.

Casino revenue is derived primarily from patrons wagering on slotmachines, table games and other gaming activities.  Table games include blackjack, craps,roulette, and specialty games.  Casinorevenue is defined as the win from gaming activities, computed as thedifference between gaming wins and losses, not the total amount wagered.  “Table game drop” and “slot handle” arecasino industry specific terms used to identify the amount wagered by patronsfor a casino table game or slot machine, respectively.  “Table game hold” and “slot hold” representthe percentage of the total amount wagered by the patron that the casino haswon.  Hold is derived by dividing theamount won by the casino (“table game win” and “slot win”) by the amountwagered by the patron.  Casino revenue isrecognized at the end of each gaming day.

Casino revenues vary from time to time due to general economicconditions, table game hold, slot hold, and occupancy percentages at theHooters Casino Hotel and other hotels in Las Vegas.  Casino revenues also vary depending upon theamount of gaming activity as well as variations in the odds for different gamesof chance.  Casino revenues, roomrevenues, food and beverage revenues, and other revenues vary due to generaleconomic conditions and competition. During 2007, Las Vegas has continued to experience an upward trend intotal visitation, as well as gaming win, hotel occupancy and hotel dailyaverage room rates.

Room revenue is derived from rooms and suites rented to guests.  “Average daily rate” is an industry specificterm used to define the average amount of revenue per rented room per day.  “Occupancy percentage” defines the totalpercentage of rooms occupied, and is computed by dividing the number of roomsoccupied by the total number of rooms available.  Room revenue is recognized at the time theroom is provided to the guest.

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Food, beverage and entertainment revenues are derived from food andbeverage sales in the food, bar and entertainment outlets of the hotel casino,including restaurants, room service, bars, entertainment showroom andbanquets.  Food, beverage andentertainment revenue is recognized at the time food and/or beverage isprovided to the guest.  “Covers” are thenumber of patrons served in a food outlet. “Average check” is the average amount of food and beverage revenuecharged to patrons on their restaurant checks.

The following table summarizes the results of operations of 155, doingbusiness as the Hooters Casino Hotel (which opened on February 3, 2006), for thequarter and six months ended June 30, 2007 and 2006 (in thousands, except forpercentages):
| ** **                                 | ** ** | **Quarter  Ended  June 30,  2007** | ** ** | **Quarter  Ended  June 30,  2006** | ** ** | **%  Change  2007-2006** | ** ** | **Six Months  Ended  June 30,  2007** | ** ** | **Six Months  Ended  June 30,  2006** | ** ** | **%  Change  2007-2006** | ** ** |
|--------------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------|------------|--------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|--------------------------|------------|
| ** **                                 | ** ** | **(in thousands)**                 | ** ** | ** **                              | ** ** | **(in thousands)**  | ** ** | ** **                                      | ** ** |
| Casino revenues                            |       | $                                       | 6,160      |                                    | $          | 6,532                    |       | -5.7                                            | %          | $                                               | 12,303     |                     | $          | 13,205 |   | -6.8 | % |
| Casino expenses                            |       | 3,728                                   |       | 3,703                                   |       | 0.7                      | %          | 7,166                                           |       | 6,446                                           |       | 11.2                     | %          |
| Profit margin                              |       | 39.5                                    | %          | 43.3                                    | %          |                     |       | 41.8                                            | %          | 51.2                                            | %          |                     |       |
|                                       |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| Food, beverage and  entertainment revenues |       | $                                       | 6,373      |                                    | $          | 6,428                    |       | -0.9                                            | %          | $                                               | 12,280     |                     | $          | 11,581 |   | 6.0 | % |
| Food, beverage and  entertainment expenses |       | 4,816                                   |       | 5,380                                   |       | -10.5                    | %          | 9,318                                           |       | 9,606                                           |       | -3.0                     | %          |
| Profit margin                              |       | 24.4                                    | %          | 16.3                                    | %          |                     |       | 24.1                                            | %          | 17.1                                            | %          |                     |       |
|                                       |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| Hotel and other  revenues                  |       | $                                       | 6,398      |                                    | $          | 6,375                    |       | 0.4                                             | %          | $                                               | 13,033     |                     | $          | 10,875 |   | 19.8 | % |
| Hotel and other  expenses                  |       | 2,247                                   |       | 2,480                                   |       | -9.4                     | %          | 4,399                                           |       | 4,197                                           |       | 4.8                      | %          |
| Profit margin                              |       | 64.9                                    | %          | 61.1                                    | %          |                     |       | 66.2                                            | %          | 61.4                                            | %          |                     |       |
|                                       |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| Promotional  allowances                    |       | $                                       | 1,662      |                                    | $          | 1,310                    |       | 26.9                                            | %          | $                                               | 3,093      |                     | $          | 2,731 |   | 13.2 | % |
| Percent of gross  revenues                 |       | 8.8                                     | %          | 6.8                                     | %          |                     |       | 8.2                                             | %          | 7.7                                             | %          |                     |       |
|                                       |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| General and  administrative expenses       |       | $                                       | 5,138      |                                    | $          | 5,791                    |       | -11.3                                           | %          | $                                               | 9,852      |                     | $          | 9,117 |   | 8.1 | % |
| Percent of net  revenues                   |       | 29.9                                    | %          | 31.6                                    | %          |                     |       | 28.5                                            | %          | 27.7                                            | %          |                     |       |
|                                       |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| Preopening  expenses                       |       | $                                       | —     |                                    | $          | —                   |       |                                            |       | $                                               | —     |                     | $          | 5,293 |   | -100.0 | % |
| Percent of net revenues                    |       | —                                  |       | —                                  |       |                     |       | 0.0                                             | %          | 15.8                                            | %          |                     |       |

 

***Comparison of Quarter Ended June 30, 2007 with the Quarter Ended June30, 2006***

Net operating revenues forthe quarter ended June 30, 2007 were $17.3 million, a decrease of $0.7 millionor 4.2%, from $18.0 million generated during the same period in the previousyear.

*Casino.*  Casino revenues decreased by $0.4 million to$6.2 million for the quarter ended June 30, 2007, compared to $6.5 million forthe quarter ended June 30, 2006.  The$0.4 million decrease in casino revenues occurred as a result of the $0.6million decrease in casino revenues during April 2007 as compared to April2006.  In April 2006, we benefited fromthe extra volume created by the publicity and excitement surrounding the grandopening in February 2006.  Table gamesrevenue was $2.7 million for the quarter ended June 30, 2007, a decrease of$0.3 million, or 9.2%, compared to the table games revenue of $3.0 million fromthe prior year’s quarter.  Again, theentire decrease of $0.3 million occurred when comparing April 2007 to April2006.  Table game drop decreased by $1.8million, or by 10.7%, for

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thequarter ended June 30, 2007 compared to the quarter ended June 30, 2006, buttable game hold percentage increased from 17.6% in 2006 to 17.9% in 2007.  The table games generated an average win pertable of $983 per day for the quarter ended June 30, 2007 as compared to $1,018per day for the quarter ended June 30, 2006. Slot revenue of $3.3 million for the quarter ended June 30, 2007 was adecrease of $0.2 million or 5.5% compared to $3.5 million in the same period in2006.  Slot revenue declined $0.3 millionwhen comparing April 2007 to April 2006. The average win per machine per day (before deducting participationfees) was $61 for the quarter ended June 30, 2007 as compared to $67 for thequarter ended June 30, 2006.

Casino expenses of $3.7million for the quarter ended June 30, 2007 were comparable to the expenses forthe quarter ended June 30, 2006. The profit margin for casino operationsdecreased slightly from 43.3% during the quarter ended June 30, 2006 to 39.5%during the quarter ended June 30, 2007 due to the decrease in revenues.

*Food, beverage, and entertainment.*  Food,beverage and entertainment revenue remained consistent with $6.4 milliongenerated for both quarters ended June 30, 2007 and June 30, 2006. Beveragerevenue of $2.5 million (which includes complimentary beverages) decreased by$0.5 million, or 17.7%, from $3.0 million during the quarter ended June 30,2006. The decrease was due to the elimination of the Martini Bar, whichgenerated $0.4 million in the quarter ended June 30, 2006. In mid-April 2007,we added a showroom to replace Martini Bar and it has generated $0.3 million inentertainment ticket revenues.

Food revenue increased from $3.4 million for the quarter ended June 30,2006 to $3.6 million for the same quarter in 2007 an increase of 5.4%. Theincreased revenue was due largely to food specials in the Dan Marino’sRestaurant and the coffee shop.

 Food, beverage and entertainmentexpenses decreased from $5.4 million during the quarter ended June 30, 2006 to$4.8 million during the quarter ended June 30, 2007, a decrease of $0.6million.  The cost savings is due todecreases in payroll, cost of food, and other operational expenses.  The profit margin for food, beverage, andentertainment operations increased to 24.9% for the quarter ended June 30, 2007from 16.3% in the same quarter in 2006 due to operational efficiencies.

*Hotel and other.*  Hotel and other revenue (which includes hotelroom revenue, retail, spa, and other miscellaneous revenue) remained consistentat $6.4 million for both the quarter ended June 30, 2007 and June 30, 2006.

Room revenue was $4.8 million for the quarter ended June 30, 2007compared to $4.5 million in 2006.  Thisincrease was a result of, an increase in occupancy rates, offset by a decreasein average daily room rates.  Average dailyroom rates decreased by 18.8% from $96 for the quarter ended June 30, 2006 to$78 for the quarter ended June 30, 2007, while occupancy rates increased from73.9% for the quarter ended June 30, 2006 to 95.7% for the quarter ended June30, 2007. Occupancy rates increased largely because of successful targetedmarketing efforts in southern California and increased sales through thewholesalers, internet providers and our group sales.

Sales from our retail outlets selling Hooters logo merchandisedecreased 5.5% from $1.4 million for the quarter ended June 2006 to $1.3million for the quarter ended June 2007. Other miscellaneous revenue declined$0.2 million.

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Hotel and other expensesdecreased by 9.4% from $2.5 million during the quarter ended June 30, 2006  to $2.2 million during the quarter ended June30, 2007 due to decreases in cost of sales and payroll for retailoperations.  The profit margin for roomsales was 66.4% in the second quarter of 2007 compared to 66.1% for that sameperiod in the prior year.  Retail salesgenerated a profit margin of 43.2% for the quarter ended June 30, 2007 comparedto 29.4% for the quarter ended June 30, 2006.

*General and administrative.*  General and administrativeexpense includes costs associated with marketing, information technology,  finance, accounting, and property operations.  Included in general and administrativeexpense for the quarter ended June 30, 2007 is also $0.2 million in legal andaccounting expense associated with the purchase agreement documentation andnegotiation.  General and administrativeexpense decreased $0.7 million to $5.1 million for the quarter ended June 30,2007 compared to $5.8 million for the quarter ended June 30, 2006.  This decrease was principally due tosignificant decreases in advertising and marketing expenses for the quarterended June 30, 2007 as compared to the same quarter in 2006.  Even though the $5.1 million spent in generaland administrative expense represents a decrease from the same quarter in 2006,it is an increase from recent previous quarters.  We spent $4.2 million in the fourth quarterof 2006 and $4.7 million in the first quarter of 2007.  During the first and second quarter of 2007we rolled out our new direct mail program. We also advertised our new slot cash back program, food specials, BobbySlayton comedy show, and our “Swipe for a Million” promotion using billboards,radio and TV. We launched a media campaign directed at southern Californiagamblers in an effort to boost consumer awareness of Hooters Casino Hotel.  These additional expenses increased thesecond quarter marketing expenses by approximately $0.6 million.  We will not be incurring these marketingexpenses in the third quarter.

*Depreciation and amortization expense.* Depreciation and amortization expense of $1.8 million for the quarterended June 30, 2007 increased by $0.1 million, or 9.1%, from $1.7 million forthe quarter ended June 30, 2006.  Theincrease in depreciation expense was due to additional depreciation expense forfixed asset additions.

*Related party royalties expense.* Beginning on February 3, 2006, we incurred related party royalty feespursuant to agreements with Hooters Gaming Corporation, Lags Ventures, Inc.,and Las Vegas Wings, Inc.  These relatedparty royalties expense totaled $0.4 million during the quarters ended June 30,2007 and 2006. The payment of the related party royalties is restricted underthe Notes indenture.  The fees can onlybe paid after the close of the fiscal year and only if our debt coverage ratiois 1.5 to 1 for that fiscal year.  Thepayments of the royalty fees are further limited to the sum of 2% of revenueand 3% of EBITDA, as defined in the indenture.

*Loss on disposal of assets.*  The loss on disposal of assetsin the second quarter of 2006 of $0.2 million was the result of retiring andreplacing certain old slot machines and other equipment and replacing thecarpeting on the casino floor in connection with the Hooters Casino Hotelremodel.

*Interest income.*  Interest income was $15,000 for the quarterended June 30, 2007, compared to $121,000 for the quarter ended June 30,2006.  The decrease resulted from greaterinterest income earned during 2006 on the investment of $130.0 million in Notesproceeds.

*Interest expense.*  Interest expense was $3.3million for the quarter ended June 30, 2007, compared to $3.2 million for thequarter ended June 30, 2006, an increase of $0.1 million.  The increase in interest expense is largelyattributable to $0.1 million in interest expense on the Credit Facility and the

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equipmentpurchase agreements we entered into during 2006 and 2007.

*Provision for income taxes.*  155 is a limited-liabilitycompany and is treated as a partnership for federal income tax purposes.  Accordingly, a provision for federal incometaxes is not recorded on our consolidated financial statements.  Taxable income or loss will be included inthe income tax returns of the members.

***Comparison of Six Months Ended June 30, 2007 with the Six Months EndedJune 30, 2006***

During the six months, endedJune 30, 2006, operations were essentially closed from January 1 throughFebruary 2, 2006 while substantial remodeling was performed on all public areasof the casino hotel.  Minimal revenue of$0.6 million was generated during the remodel period.

The results of operationsfor the six months ended June 30, 2006 includes the month of January 2006 whenthe property was essentially closed for remodeling and the first five months ofoperations of the Hooters Casino Hotel from February 3, 2006 through June 30,2006.  Net operating revenues for the sixmonths ended June 30, 2007 were $34.5 million, an increase of $1.6 million or4.8%, from $32.9 million of net operating revenues for the six month ended June30, 2006.

*Casino.*  Casino revenues decreased by $0.9 million to$12.3 million for the six months ended June 30, 2007, compared to $13.2 millionfor the six months ended June 30, 2006. Casino revenue of $13.1 million was generated after the grand opening onFebruary 3, 2006.  Table games revenuewas $5.3 million in 2007, a decrease of $0.6 million, or 10.9%, compared to thetable games revenue of $5.9 million from the prior year’s first sixmonths.  With the exception of $34,000,all table games revenue was generated after the grand opening in 2006.  Table game drop decreased to $31.2 million,or by 8.6%, for the six months ended June 30, 2007 compared to $33.9 millionfor the six months ended June 30, 2006, while table game hold percentagedecreased from 17.4% in 2006 to 16.8% in 2007. The table games generated an average win per table of $922 per day forthe first six months of 2007 compared to $1,204 from opening to June 30, 2006.Slot revenue of $6.7 million for the six months ended June 30, 2007 was adecrease of 5.3% compared to $7.1 million in the same period in 2006.  With the exception of $0.1 million, theentire slot revenue for the six months ended June 30, 2006 was generated afterthe grand opening. The average win per machine per day was $80 from February 3,2006 to June 30, 2006 compared to $63 for the six months ended June 30, 2007.

Casino expenses increased by$0.8 million or 11.2% to $7.2 million for the six months ended June 30, 2007compared to $6.4 million for the six months ended June 30, 2006 due toincreases in payroll and other operational expenses when comparing a full sixmonths of operations in 2007 to a short period of February 3, 2006 through June30, 2006. The profit margin for casino operations decreased from 51.2% duringthe six months ended June 30, 2006 to 41.8% during the six months ended June30, 2007.

*Food, beverage and entertainment.*  Food,beverage and entertainment revenue was $12.3 million for the six months endedJune 30, 2007 as compared to $11.6 million for June 2006, an increase of6.0%.  The food revenues increased $1.1million or 17.1% to $7.2 million for the six months ending June 30, 2007compared to $6.1 million for six months ending June 30, 2006. Beverage revenue(which includes complimentary beverages) decreased by $0.6 million or 19.4% to$4.8 million for the six months ended June 30, 2007 from $5.4 million duringthe six months ended June 30, 2006. The decline was

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largelydue to the closing of the Martini Bar and a general decline in other barrevenue. Entertainment ticket revenue was a $0.3 million for the six monthsended which was the result of adding a showroom venue in place of the MartiniBar in April 2007. There was no entertainment revenue in 2006.

Food, beverage and entertainment expenses decreased from $9.6 millionduring the six months ended June 30, 2006 to $9.3 million during the six monthsended June 30, 2007, a decrease of $0.3 million or 3.1%.  The profit margin for food, beverage andentertainment operations increased from 17.1% during the six months ended June30, 2006 to 24.1% during the six months ended June 30, 2007 due to operationalefficiencies in payroll and cost of sales.

*Hotel and other.*  Hotel and other revenue (which includes hotelroom revenue, retail, spa and other miscellaneous revenue) increased by $2.2million, or 19.8%, to $13.0 million for the six months ended June 30, 2007 from$10.9 million for the six months ended June 30, 2006.  Room revenue increased $2.2 million or 30.0%to $9.9 million for the six months ended June 30, 2007 compared to $7.7 millionin 2006.  This increase was the result ofhotel occupancy of 93.5% in 2007 compared to 76.6% in 2006, partially offset bya decrease in average daily room rate. Hotel revenue in 2006 was negatively impacted when the Company stoppedrenting rooms from January 2, 2006 to February 2, 2006 to accommodate theremodeling activities for the grand opening. For the months of February through June 2006, room revenue was $7.5million with an occupancy rate of 76.6% and average daily room rate of $101.The average daily room rate decreased to $84 for the six months ended June 30,2007.

Sales from the retail outlets was $2.7 million or 21.0% of hotel andother revenue in the six months ended June 30, 2007, an increase of $0.1million from the six months ended June 30, 2006.

Hotel and other expensesincreased by 4.8% from $4.2 million during the six months ended June 30, 2006to $4.4 million during the six months ended June 30, 2007 due to the lack ofoperational expenses during the partial closing of operations in 2006 fromJanuary 1 through February 2. The profit margin for hotel and other was 66.2%for the six months ended June 30, 2007 compared to 61.4% for the same period inthe prior year. Retail sales generated a profit margin of 43.2% for the sixmonths ended June 30, 2007.

*General and administrative.*  General and administrativeexpense includes costs associated with corporate marketing, informationtechnology, and finance, accounting, and property operations.  General and administrative expense increased$0.7 million to $9.9 million for the six months ended June 30, 2007 compared to$9.1 million for the six months ended June 30, 2006. Again, the lower expensesin the six months ended June 30, 2006 were due to the closing of operationsprior to February 3, 2006 due to the remodel.

*Depreciation and amortization expense.* Depreciation and amortization expense of $3.5 million for the six monthsended June 30, 2007 increased by $0.7 million, or 24.0%, from $2.8 million forthe six months ended June 30, 2006, due to the new assets placed in serviceFebruary 2006 and after.

*Pre-opening expenses.*  Pre-opening expenses are costsassociated with the start-up activities for the new Hooters Casino Hotel andconsist of salaries and wages, legal, professional, advertising, marketing, andother general administrative expenses. Pre-opening expenses were $5.3 million for the six months ended June 30,2006.

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*Related party royalties expense.* Beginning on February 3, 2006, we incurred related party royalty feespursuant to agreements with Hooters Gaming Corporation, Lags Ventures, Inc.,and Las Vegas Wings, Inc.  These relatedparty royalties expense totaled $0.7 million during both the six months endedJune 30, 2007 and 2006. The payment of the related party royalties isrestricted under the Notes indenture. The fees can only be paid after the close of the fiscal year and only ifour debt coverage ratio is 1.5 to 1 for that fiscal year.  The payments of the royalty fees are furtherlimited to the sum of 2% of revenue and 3% of EBITDA as defined in theindenture.

*Loss on disposal of assets.*  The loss on disposal of assetsin 2006 of $1.2 million is the result of retiring and replacing certain oldslot machines and other equipment and the carpeting on the casino floor inconnection with the Hooters Casino Hotel remodel.

*Interest income.*  Interest income was $0.1 million for the sixmonths ended June 30, 2007, compared to $0.4 million for the six months endedJune 30, 2006.  The decrease resultedfrom greater interest income earned during 2006 on the investment of $130.0million in Notes proceeds.

*Interest expense.*  Interest expense was $6.6million for the six months ended June 30, 2007, compared to $6.2 million forthe six months ended June 30, 2006, an increase of $0.4 million. This waslargely due to the increased use of the line of credit with Wells Fargo andequipment financing entered into in 2006 and 2007.

*Provision for income taxes.*  155 is a limited-liabilitycompany and is treated as a partnership for federal income tax purposes.  Accordingly, a provision for federal incometaxes is not recorded on our consolidated financial statements.  Taxable income or loss will be included inthe income tax returns of the members.

***Contractual Obligations***

The following table summarizes the contractualcommitments of 155 as of June 30, 2007:
| ** **                                   | ** ** | **Payments Due By Year** | ** ** |
|----------------------------------------------|------------|-----------------------------------------|------------|
| ** **                                   | ** ** | **Total**                               | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **3-5 years** | ** ** | **Thereafter** | ** ** |
| ** **                                   | ** ** | **(dollars in thousands)**    | ** ** |
| Equipment  purchase financing agreements (1) |       | $                                       | 3,344      |   | $ | 2,047 |   | $ | 1,272 |   | 25 |   | $ | — |   |
| Long-term debt  (2)                          |       | 132,837                                 |       | — |   | 2,837 |   | — |   | 130,000 |   |
| Operating  contracts (3)                     |       | 8,215                                   |       | 4,682 |   | 2,771 |   | 728 |   | 34 |   |
| Total                                        |       | $                                       | 144,396    |   | $ | 6,729 |   | $ | 6,880 |   | $ | 753 |   | $ | 130,034 |   |
|                                              |            |                                         |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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(1)          155entered into various equipment purchase financing agreements for the newHooters Casino Hotel. 

(2)          Thelong-term debt represents the $130.0 million in Notes due in 2012, and amountsdrawn against the Credit Facility during the six months ended June 30, 2007. 

(3)          Operatingcontracts represent various contracts for services in connection with hoteloperations.

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***Liquidity and Capital Resources***

For the six months endedJune 30, 2007, we used $2.4 million of cash in operating activities, largelydue to our net loss of $7.0 million, which was partially offset by $5.0 millionof non-cash depreciation and amortization charges and payment-restrictedrelated party royalty fees.

For the six months endedJune 30, 2007, $0.7 million of cash was used for capital expenditures.

For the six months endedJune 30, 2007, we were provided $1.9 million of cash from financing activities.We borrowed $1.9 million on our new line of credit, offset by $1.0 million inprincipal payments on debt. During the quarter, we also received $1.0 milliondeposit of earnest money relating to the pending sale.

The Notes indenture contains certain provisions, which restrict orlimit our ability to, among other things, incur more debt, pay dividends, redeemstock or make other distributions, enter into transactions with affiliates ortransfer or sell assets.

Our Credit Facility is afour-year revolving Credit Facility of $15.0 million, maturing on March 30,2009. We currently have outstanding draws of $2.8 million at June 30,2007.   All outstanding principal andinterest under the Credit Facility is due and payable on March 30, 2009.

We believe that we have the flexibility to cover operationalcontingencies, working capital needs, capital expenditures, and debt serviceobligations expected as of 06/30/07  overthe next twelve months through; (1) the use of cash (which totaled $4.9 millionat June 30, 2007); (2) our cash flow from operations; and (3) our ability todraw against our $15.0 million Credit Facility, along with other availableequipment financing.

On April 30, 2007, weentered into an Asset Purchase Agreement (the “Agreement”) with Hedwigs LasVegas Top Tier, LLC (the “Buyer”) which was amended on May 7, 2007 and August8, 2007. Pursuant to the terms of the Agreement, the Buyer has offered topurchase essentially all of our assets for a purchase price of $95.0 million incash, the payment of certain accrued royalties, and the assumption of certainoutstanding debt. The Buyer also agreed to be responsible for the Notes. Wereceived from the Buyer a nonrefundable earnest money deposit of $1.0 million,which will be applied against the purchase price if the transaction closes. TheAugust 8, 2007 amendment to the Agreement provided that the Buyer pay anon-refundable earnest money deposit of $0.5 million before12:00 noon PST on August 14, 2007. The $0.5 million deposit was receivedon August 14, 2007.

There can be no assurancethat the conditions to closing under the Agreement will ever be satisfied, orany transaction contemplated under the Agreement will be consummated, or if atransaction is consummated, it will be on the same or similar terms ascurrently provided under the Agreement.

***Critical Accounting Policies and Estimates***

A description of critical accounting policies andestimates is included in the management discussion and analysis included in ourAnnual Report on Form 10-K for the year ended December 31, 2006 filed with theCommission on April 2, 2007.

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## **Item 3.  Quantitative andQualitative Disclosures About Market Risk.**

The following discusses our exposure to market risk related to changesin interest rates, equity prices and foreign currency exchange rates.  We do not believe that our respective exposureto market risk is material.

Market risk is risk of loss arising from changes in market rates andprices, such as interest rates, foreign currency exchange rates and commodityprices.  At June 30, 2007, we had$130,000,000 aggregate principal amount Senior Secured Notes due April 2, 2012,slot equipment purchase agreements of $2.9 million carrying an imputed interestrate of 3.327%, and hotel equipment purchase agreements of $0.4 millioncarrying an imputed interest rate of 12.7%. The Notes carry a fixed interest rate of 83⁄4%, provided no events ofdefault remain unresolved.  Since theNotes and equipment purchase loans have fixed interest rates, there is nomarket risk associated with these loans. We have market risk associated with funds that may be borrowed on the$15.0 million Credit Facility, due to an interest rate that floats withthe LIBOR or prime rate.  The term of theCredit Facility will mature on March 30, 2009. At June 30, 2007, $2.8 million was outstanding under the variable rateCredit Facility, carrying interest at 8.985%.

**We do not have any significant foreign currency exchange rate risk orcommodity price risk and do not currently trade any market sensitiveinstruments.**

## **Item 4.  Controls and Procedures.**

## ***Evaluation ofDisclosure Controls***

We evaluated the effectiveness of our disclosurecontrols and procedures as of three months ended June 30, 2007.  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 theEffectiveness 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. Because of the inherent limitations in all control systems, noevaluation of controls can provide absolute assurance that all control issuesand instances of fraud, if any, within us have been detected.  These inherent limitations include therealities that judgments in decision-making can be faulty and that breakdownscan occur because of simple error or mistake. Additionally, controls can becircumvented by the individual acts of some persons, by collusion of two ormore people, or by management override of a control.  Because the design of a control system isbased upon certain assumptions about the likelihood of future events, there canbe no assurance that any design will succeed in achieving its stated goalsunder all potential future conditions. Over time, controls may

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become inadequate becauseof changes in conditions, or the degree of compliance with the policies orprocedures may deteriorate. Because of the inherent limitations in acost-effective control system, misstatements due to error or fraud may occurand 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)and 15d-15(e)) as of June 30, 2007, and have concluded that they are effectiveto timely alert them to material information relating to us required to beincluded in the reports that we file or submit under the Securities ExchangeAct of 1934.

## ***Changes in InternalControls***

There were no changes in our internal controls over financial reportingthat occurred during our last fiscal quarter, *i.e.*,the quarter ended June 30, 2007, that have materially affected, or arereasonably likely to materially affect, our internal controls over financialreporting.

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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.**

Inaccordance with Securities and Exchange Commission rules, the followinginformation in this Item 5 is provided in lieu of a Current Report on Form 8-K,Item 1.01, Entry into a Material Definitive Agreement, that would otherwise bedue within 4 business days after the August 8, 2007, date noted below.

Aspreviously reported, on April 30, 2007, 155 East Tropicana, LLC (the “Company”)entered into a definitive Asset Purchase Agreement (the “Agreement”) withHedwigs Las Vegas Top Tier, LLC (the “Buyer”), an affiliate of the investmentgroup led by NTH Advisory Group, LLC. Also as previously reported, on May 7, 2007, the Company entered into aFirst Amendment to Asset Purchase Agreement with the Buyer.  On August 8, 2007, the Company entered into aSecond Amendment to Asset Purchase Agreement (the “Second Amendment”) with theBuyer.

Underthe terms of the Second Amendment, the requirement under the Agreement that theBuyer deposit in escrow the sum of $2.0 million upon the occurrence of certainevents related to the restructuring of the Agreement was amended to providethat the Buyer pay non-refundable earnest money deposits of (1) $0.5 millionby 12:00 noon PST on August 14, 2007 and (2) $1.5 million by5:00 p.m. PST on November 15, 2007.  The$0.5 million deposit due August 14, 2007 was received by theCompany.  Both deposits will be appliedagainst the purchase price if the transaction closes.  The Second Amendment provides for a closingdate on or before December 31, 2007, which the Buyer may extend under certainconditions by paying an extension fee of $0.5 million for each month theAgreement is extended.  Any such extensionfees paid are not refundable and will not be credited toward the purchaseprice.  Notwithstanding the Buyer’s rightto extend the closing date, the Company may terminate the Agreement if the closinghas not occurred on or before June 30, 2008. Additionally, prior toreceipt of the $1.5 million deposit above, the Company may solicit competingoffers from parties other than the Buyer, but may not enter into an agreementrelating to such offers.

Theclosing under the Agreement remains subject to the completion of certainconditions described in the Agreement. There can be no assurance that (i) theconditions to closing under the Agreement will ever be satisfied, or (ii) anytransaction contemplated under the Agreement will be consummated, or (iii) if atransaction is consummated, it will be on the same or similar terms ascurrently provided under the Agreement.

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Theforegoing summary of the Second Amendment does not purport to be complete andis subject to, and qualified in its entirety by, the full text of the SecondAmendment which is included in Exhibit 10.1 and incorporated herein byreference.

## **Item 6. Exhibits.**

Exhibits:
| 10.1   |   | Second Amendment to Asset Purchase Agreement signed  August 8, 2007.                                                                                                                                                          |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                          |
| 10.2   |   | First Amendment to Asset Purchase Agreement signed  May 1, 2007 is incorporated herein by reference to the Company’s Current  Report on Form 8-K dated May 9, 2007, Exhibit 10.1.                                        |
|   |   |                                                                                                                                                                                                                          |
| 10.3   |   | Asset Purchase Agreement by and between Hedwigs Las  Vegas Top Tier, LLC, and 155 East Tropicana, LLC is incorporated herein by  reference to the Company’s Current Report on Form 8-K dated May 4, 2007,  Exhibit 10.1. |
|   |   |                                                                                                                                                                                                                          |
| 31.1   |   | Certification pursuant to  §302 of the Sarbanes-Oxley Act of 2002, Deborah J. Pierce                                                                                                                                     |
|   |   |                                                                                                                                                                                                                          |
| 31.2   |   | Certification pursuant to  §302 of the Sarbanes-Oxley Act of 2002, Neil G. Kiefer                                                                                                                                        |
|   |   |                                                                                                                                                                                                                          |
| 32.1   |   | Certification pursuant to  §906 of the Sarbanes-Oxley Act of 2002, Deborah J. Pierce                                                                                                                                     |
|   |   |                                                                                                                                                                                                                          |
| 32.2   |   | Certification pursuant to  §906 of the Sarbanes-Oxley Act of 2002, Neil G. Kiefer                                                                                                                                        |

 

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# **SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.
| **155 EAST TROPICANA, LLC** |                                                                           |
|-----------------------------|--------------------------------------------------------------------------------|
|                        |                                                                           |
|                        |                                                                           |
| By:                         | /s/ Deborah J. Pierce                                                          |                 August 14, 2007 |
|                        | Deborah J. Pierce                                                              |   |
|                        | *Chief Financial Officer  (Principal Financial and Chief  Accounting Officer)* | * * |

 
| **155 EAST TROPICANA FINANCE  CORP.** |                                                                           |
|---------------------------------------|--------------------------------------------------------------------------------|
|                                  |                                                                           |
|                                  |                                                                           |
| By:                                   | /s/ Deborah J. Pierce                                                          |                 August 14, 2007 |
|                                  | Deborah J. Pierce                                                              |   |
|                                  | *Chief Financial Officer  (Principal Financial and Chief  Accounting Officer)* | * * |

 

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