**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

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**FORM 10-Q/A**

**(MarkOne)**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

**For the quarterly period ended June 30, 2006**

**or**

**o**                                 TRANSITIONREPORT 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**                                |   | **20-1363044**          |
|-------------------------------------------|--------|-------------------------|
| **NEVADA**                                |   | **20-2546581**          |
| (State or Other  Jurisdiction             |   | (I.R.S. Employer        |
| of Incorporation  or Organization)        |   | 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 checkmark whether the registrant (1) has filed all reports required by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor such shorter period that the registrant was required to file such reports)and (2) has been subject to such filing requirements for the past 90days.    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     Accelerated filer o     Non-accelerated filer x

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).     Yes  o    No  x

 

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| **EXPLANATORY NOTE**                                                                                      |   |   |
|-----------------------------------------------------------------------------------------------------------|--------|--------|
| ** **                                                                                                |   |   |
| **PART  I – FINANCIAL INFORMATION**                                                                  |   |   |
|                                                                                                      |   |   |
| Item 2.  Management’s Discussion and Analysis of  Financial Condition and Results of Operations |   |   |
| ** **                                                                                                |   |   |
| **PART II  – OTHER INFORMATION**                                                                     |   |   |
|                                                                                                      |   |   |
| Item 6.   Exhibits                                                                                   |   |   |
| ** **                                                                                                |   |   |
| **SIGNATURES**                                                                                            |   |   |

 

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**EXPLANATORY NOTE**

155 EastTropicana, LLC and 155 East Tropicana Finance Corp. (collectively, the “Company”)is filing this Amendment Number 1 to the Company’s Quarterly Report on Form10-Q, for the quarter ended June 30, 2006 (the “Original Filing”), solely tocorrect a figure in Item. 2. Management’s Discussion and Analysis of FinancialCondition and Results of Operations – Comparison of Quarter Ended June 30, 2006with the Quarter Ended June 30, 2005 – Casino. The Original Filing misstatedthat the Company’s table games generated an average win per table of $1,622 perday for the quarter ended June 30, 2006, while the average win per table wasactually $1,020 for the quarter ended June 30, 2006. This Form 10-Q/A does notpurport to provide a general update or discussion of any other developmentsubsequent to the Original Filing.  Allother information filed in the Original Filing remains unchanged.

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**PART I – FINANCIAL INFORMATION**

**Item2.  Management’s Discussion and Analysisof Financial Condition and Results of Operations.**

The followingdiscussion and analysis should be read together with our unaudited consolidatedfinancial statements and the accompanying notes.  This discussion contains forward-looking statements,within the meaning of Section 27A of Securities Act of 1933, as amended,Section 21E of the Securities Exchange Act of 1934, as amended, and the PrivateSecurities Litigation Reform Act of 1995, including statements regarding ourexpected 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, or the Commission, on March 31, 2006, particularly under theheading “Risk Factors.”  We cautionreaders not to place undue reliance upon any such forward-looking statements,which speak only as of the date made.

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

155 East Tropicana, LLC, or we, us, our, or 155, was formed on June 17,2004 to acquire the Hôtel San Rémo Casino and Resort, or the 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.  Hooters Gaming LLCis owned by the holders of licenses to operate Hooters restaurants in the TampaBay, Chicago and Manhattan areas as well as for wholesale foods, calendars andNevada hotel/gaming, and includes most of the original founders of the Hootersbrand.  Lags Ventures, LLC is owned by aholder of the license rights to Hooters restaurants in South Florida and theState of Nevada.  Pursuant to theselicense rights, the owners of Florida Hooters LLC operate 41 Hootersrestaurants, publish Hooters calendars, and operate a Hooters foodsbusiness.  The owner of Lags Ventures,LLC is also the founder of the Dan Marino concept restaurants and owns andoperates 4 Dan Marino concept restaurants.

Eastern & Western owns 90% of EW Common LLC, while our Presidentand interim Chief Operating Officer, Michael Hessling, owns the balance.  Eastern & Western is beneficially ownedby Sukeaki and Toyoroku Izumi.  Eastern& Western owned the Hôtel San Rémo from November 1988 until our acquisitionof the Hôtel San Rémo in 2004.  Mr.Hessling served as the Hôtel San Rémo’s executive vice president and chiefexecutive officer from January 1989 until the acquisition, at which time hebecame our Chief Operating Officer. Effective as of June 30, 2006, Mr. Hessling was appointed President ofthe Company.  Mr. Hessling will continueto serve on the management board and will act as both President and ChiefOperating Officer until a new Chief Operating Officer is appointed.

Ouraffiliates have granted us assignments of certain license agreements pertainingto the use of the Hooters brand as well as the Dan Marino, “13” Martini Bar andPete & Shorty’s concept restaurants, which will allow us to operate theHooters Casino Hotel.  The originalfounders of the Hooters brand sold

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thetrademark rights (excluding certain rights they retained for themselves) toHooters of America in 2001.  As a result,Hooters of America is the trademark owner of the Hooters brand and the operatorand franchisor of 424 Hooters restaurants. Pursuant to the Hooters license assignment, we are required to payHooters of America a royalty fee, which totaled $598,913 from February 3, 2006(grand opening) through June 30, 2006. Aside from the abovementioned royalty fee, we are not otherwise affiliatedwith Hooters of America.

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.  Initially, we acquired$67.5 million of the real property and non-gaming assets and agreed thatadditional cash payments associated with the transfer of working capital andthe remaining $5.0 million in gaming assets would be transferred to us uponobtaining the gaming and liquor licenses necessary to take over operations ofthe hotel casino.  In connection with theacquisition, we refinanced $43.7 million of Eastern & Western’s existingindebtedness, incurred additional expenses and obligations of $5.9 million, andissued to Eastern & Western $25.0 million of preferred membership interestrepresenting one-third of our common membership interests.  EW Common LLC was formed to hold Eastern& Western’s membership interests in us. Concurrently, we issued to Florida Hooters LLC two-thirds of ourcommon membership interests in exchange for $5.1 million cash and theassignment of certain rights with respect to trademarks and licenses valued at$4.2 million, based on a valuation from a third-party appraiser.

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 with theCommission.  Interest payments on theNotes are due semi-annually, on each April 1 and October 1.  We used the proceeds from the old notesoffering to refinance existing indebtedness, and have used and are using theremaining proceeds (together with cash from operations and proceeds fromequipment financing), to renovate the hotel casino and to provide workingcapital.

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

We also entered into a $15.0 million senior secured creditfacility (the “Credit Facility”) concurrently with the offering of the oldnotes.  As discussed in more detail underLiquidity and Capital Resources (155 East Tropicana, LLC), the Credit Facilitywas amended on January 1, 2006, and again on June 6, 2006.  During the six months ended June 30, 2006, wedrew $304,953 against the Credit Facility (all of which was outstanding at June30, 2006) to pay the lender fees related to the amendments of the CreditFacility.

Prior to November 1, 2005,we conducted no business or operations other than in connection with theacquisition and subsequent leasing of the Hôtel San Rémo.  Through October 31, 2005, Eastern &Western held the gaming license in Nevada and owned all gaming assets used bythe Hôtel San Rémo.  Under a casino leaseand hotel lease, Eastern & Western operated the Hôtel San Rémo.  After obtaining the necessary gaming andliquor licenses to operate the hotel casino in October 2005, we assumedoperations of the hotel casino on November 1, 2005 and the leases with Eastern& Western were terminated.

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The renovations included a redesign of the main entrance, a renovationand expansion of the casino and restaurant areas, a remodel of the hotel roomsand a renovation and expansion of the pool area.  On February 3, 2006, the new Hooters CasinoHotel was opened for business.  The Hooters Casino Hotel features a casinofloor with 658 slot and video poker machines, 32 table games, 696 newlyrenovated hotel rooms including 17 suites, a tropical pool area, retailoutlets, a day spa, and dining and entertainment options which include aHooters restaurant, Dan Marino’s Fine Food, a coffee shop restaurant, a sportsbar, and several bars.

In August 2004, we acquired the real property and other assets of theHôtel San Rémo.  Since November 1, 2005,we have also operated the hotel casino, and accordingly, have a limitedoperating history.  Therefore, thediscussion of operations herein focuses on the revenues and expenses for thesix months and quarter ended June 30, 2006 and 2005 as if there was no changein ownership or operation of the hotel casino. 

***Resultsof Operations***

We generatedhotel, casino, food and beverage, entertainment and retail revenues at thehotel casino property.  During the sixmonths ending June 30, 2006, approximately 37.9% of the gross revenue wasderived from the casino, 30.1% from hotel and other, and 32.0% from food andbeverage. 

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. 

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. 

Food and beverage revenues are derived from food and beverage sales inthe food outlets of the hotel casino, including restaurants, bars, room serviceand banquets.  Food and beverage revenueis recognized at the time food and/or beverage is provided to the guest.  “Covers” are the number of patrons served ina food outlet.  “Average check” is theaverage amount of food and beverage revenue charged to patrons on theirrestaurant checks.

Casino revenues vary fromtime to time due to general economic conditions, table game hold, slot hold,and occupancy percentages at the Hooters Casino Hotel and other hotels in LasVegas.  Casino revenues also varydepending upon the amount of gaming activity as well as variations in the oddsfor different games of chance.  Casinorevenues, room revenues, food and beverage revenues, and other revenues varydue to general economic conditions and competition.  During 2006, Las Vegas has

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continued to experiencean upward trend in total visitation, as well as gaming win, hotel occupancy andhotel daily average room rates.

The following table summarizes the results of operations of 155, doingbusiness as the Hooters Casino Hotel (which opened on February 3, 2006), forthe quarter and six months ended June 30, 2006 and the combined results ofoperations of the Hôtel San Rémo and 155 for the quarter and six months endedJune 30, 2005 (in thousands, except for percentages):
| ** **                           | ** ** | **155**                                 | ** ** | **COMBINED**                            | ** ** | ** **               | ** ** | **155**                                         | ** ** | **COMBINED**                                    | ** ** | ** **               | ** ** |
|--------------------------------------|------------|-----------------------------------------|------------|-----------------------------------------|------------|--------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------|------------|--------------------------|------------|
| ** **                           | ** ** | **Quarter  Ended  June 30,  2006** | ** ** | **Quarter  Ended  June 30,  2005** | ** ** | **%  Change  2006-2005** | ** ** | **Six Months  Ended  June 30,  2006** | ** ** | **Six Months  Ended  June 30,  2005** | ** ** | **%  Change  2006-2005** | ** ** |
| ** **                           | ** ** | **(in thousands)**                 | ** ** | ** **                              | ** ** | **(in thousands)**  | ** ** | ** **                                      | ** ** |
| Casino revenues                      |       | $                                       | 6,824      |                                    | $          | 2,896                    |       | 135.6                                           | %          | $                                               | 13,722     |                     | $          | 6,214 |   | 120.8 | % |
| Casino expenses                      |       | 3,996                                   |       | 1,658                                   |       | 141.0                    | %          | 6,963                                           |       | 3,423                                           |       | 103.4                    | %          |
| Profit margin                        |       | 41.4                                    | %          | 42.7                                    | %          |                     |       | 49.3                                            | %          | 44.9                                            | %          |                     |       |
|                                 |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| Food and beverage  revenues          |       | $                                       | 6,428      |                                    | $          | 1,722                    |       | 273.3                                           | %          | $                                               | 11,581     |                     | $          | 3,636 |   | 218.5 | % |
| Food and beverage  expenses          |       | 5,380                                   |       | 1,569                                   |       | 242.8                    | %          | 9,606                                           |       | 3,142                                           |       | 205.7                    | %          |
| Profit margin                        |       | 16.3                                    | %          | 8.8                                     | %          |                     |       | 17.1                                            | %          | 13.6                                            | %          |                     |       |
|                                 |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| Hotel and other  revenues            |       | $                                       | 6,375      |                                    | $          | 3,990                    |       | 59.8                                            | %          | $                                               | 10,875     |                     | $          | 8,451 |   | 28.7 | % |
| Hotel and other  expenses            |       | 2,480                                   |       | 1,080                                   |       | 129.7                    | %          | 4,197                                           |       | 2,198                                           |       | 90.9                     | %          |
| Profit margin                        |       | 61.1                                    | %          | 72.9                                    | %          |                     |       | 61.4                                            | %          | 74.0                                            | %          |                     |       |
|                                 |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| Promotional allowances               |       | $                                       | 1,310      |                                    | $          | 529                      |       | 147.9                                           | %          | $                                               | 2,731      |                     | $          | 1,112 |   | 145.7 | % |
| Percent of gross  revenues           |       | 6.7                                     | %          | 6.1                                     | %          |                     |       | 7.5                                             | %          | 6.1                                             | %          |                     |       |
|                                 |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| General and  administrative expenses |       | $                                       | 5,791      |                                    | $          | 1,992                    |       | 190.7                                           | %          | $                                               | 9,117      |                     | $          | 4,034 |   | 126.0 | % |
| Percent of net revenues              |       | 31.6                                    | %          | 24.7                                    | %          |                     |       | 27.3                                            | %          | 23.5                                            | %          |                     |       |
|                                 |       |                                    |       |                                    |       |                     |       |                                            |       |                                            |       |                     |       |
| Preopening expenses                  |       | $                                       | —     |                                    | $          | 335                      |       | -100.0                                          | %          | $                                               | 5,293      |                     | $          | 600 |   | 782.1 | % |
| Percent of net revenues              |       | —                                  |       | 4.1                                     | %          |                     |       | 15.8                                            | %          | 3.5                                             | %          |                     |       |

 

The following discussion presents an analysis of the hotel casino’sresults of operations for the quarter and six months ended June 30, 2006 and2005, respectively.

***Comparison of Quarter Ended June 30, 2006 with the Quarter Ended June30, 2005***

Net operatingrevenues for the quarter ended June 30, 2006 were $18.3 million, an increase of$10.2 million or 126.7%, from $8.1 million of net operating revenues generatedby Hôtel San Rémo during the same period in the previous year.  The significant increase in net operatingrevenues was due to increased activity in the casino and food and beverageoutlets related to the new Hooters Casino Hotel, as discussed below.

*Casino.* Casino revenues increased by $3.9 million to $6.8 million for thequarter ended June 30, 2006, compared to $2.9 million for the quarter endedJune 30, 2005.  Table games revenue was$3.0 million in 2006, an increase of $2.1 million, or 245.3%, compared to thetable games revenue of $0.9 million from the prior year’s quarter.  Table game drop increased to $16.8 million,or by 171.5%, for the

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quarterended June 30, 2006 compared to the quarter ended June 30, 2005, but table gamehold percentage decreased from 18.4% in 2005 to 17.6% in 2006.  The table games generated an average win pertable of $1,020 per day for the quarter ended June 30, 2006 as compared to $627per day for the quarter ended June 30, 2005. Slot revenue of $3.8 million for the quarter ended June 30, 2006 was anincrease of 86.4% compared to $2.0 million in the same period in 2005.  The average win per machine per day was $67for the quarter ended June 30, 2006 as compared to $43 for the quarter endedJune 30, 2005.  This is a decrease fromthe average win per machine per day of $99 experienced in the first two monthsafter opening the Hooters Casino Hotel. We have experienced disruptions on the slot floor in May and June as weadded new slot products and modified our slot floor layout.  We are also increasing our promotionalefforts to attract additional slot play.

Casino expensesincreased by 141.0% to $4.0 million for the quarter ended June 30, 2006compared to $1.7 million for the quarter ended June 30, 2005 due to increasesin payroll and other operational expenses. The profit margin for casino operations also decreased slightly from42.7% during the quarter ended June 30, 2005 to 41.4% during the quarter endedJune 30, 2006 due to increases in other operational expenses during 2006.

*Food and beverage.*  Food and beverage revenue was$6.4 million for the quarter ended June 30, 2006 as compared to $1.7 millionfor 2005, an increase of 273.3%.  Theincrease was a result of added food covers after the grand opening of HootersCasino Hotel.  Covers increased in allrestaurants dramatically after the grand opening.  Beverage revenue (which includescomplimentary beverages) increased by $2.9 million, or 605.4%, from $0.5million during the quarter ended June 30, 2005.

Food and beverage expenses increased from $1.6 million during thequarter ended June 30, 2005 to $5.4 million during the quarter ended June 30,2006, an increase of $3.8 million.  Theincrease is due to increases in payroll, cost of food, and other operationalexpenses associated with the increase in business volume.  However, the number of food and beverageoutlets also increased from Hôtel San Rémo’s five outlets to nine outlets atHooters Casino Hotel after the grand opening. The profit margin for food and beverage operations increased by 7.5% forthe quarter ended June 30, 2006 due to operational efficiencies in payroll andcost of sales.  

*Hotel and other.*  Hotel and other revenue (which includes hotelroom revenue, retail, spa and other miscellaneous revenue) increased by $2.4million, or 59.8%, to $6.4 million for the quarter ended June 30, 2006 from$4.0 million for the quarter ended June 30, 2005.  Room revenue was $4.5 million for the quarterended June 30, 2006 compared to $3.7 million in 2005.  This increase was a result of an increase inaverage daily room rates partially offset by a decrease in occupancyrates.  Average daily room ratesincreased by 37.1% from $70 for the quarter ended June 30, 2005 to $96 for thequarter ended June 30, 2006, while occupancy rates decreased from 85.5% for thequarter ended June 30, 2005 to 73.9% for the quarter ended June 30, 2006.

Sales from our retail outlets selling Hooters logo merchandiseincreased the amount of other revenue significantly.  Retail revenue was $1.5 million or 23.7% ofhotel and other revenue in the quarter ended June 30, 2006 and has increasedfrom $0.2 million during the quarter ended June 30, 2005, an increase of $1.3million.  

Hotel and other expensesincreased by 129.7% from $1.1 million during the quarter ended June 30, 2005 to$2.5 million during the quarter ended June 30, 2006 due to increases in cost ofsales, payroll,

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and other expenses inhotel and retail operations.  The profitmargin for room was 66.5% in the second quarter of 2006 compared to 74.2% forthat same period in the prior year due to increased payroll expense andupgraded room amenities.  Retail salesgenerated a profit margin of 29.0%. 

*General and administrative.*  General and administrativeexpense includes costs associated with corporate marketing, informationtechnology, finance, accounting, and property operations.  General and administrative expense increased$3.8 million to $5.8 million for the quarter ended June 30, 2006 compared to$2.0 million for the quarter ended June 30, 2005.  This increase was principally due tosignificant increases in advertising and marketing, and payroll expenses forthe quarter ended June 30, 2006.

*Depreciation and amortization expense.* Depreciation and amortization expense of $1.7 million for the quarterended June 30, 2006 increased by $1.2 million, or 237.4%, from $0.5 million forthe quarter ended June 30, 2005.  Theincrease in depreciation expense was due to additional depreciation of fixedasset additions placed in service beginning February 3, 2006.  

*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 quarter ended June 30,2006.  The payment of the related partyroyalties is restricted under the Notes indenture.  The fees can only be paid after the close ofthe fiscal year and only if our debt coverage ratio is 1.5 to 1 for that fiscalyear.  The payments of the royalty feesare further limited to the sum of 2% of revenue and 3% of EBITDA, as defined inthe indenture.

*Loss on disposal of assets.*  The loss on disposal of assetsin the second quarter of 2006 of $0.2 million is 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 $0.1 million for thequarter ended June 30, 2006, compared to $0.7 million for the quarter endedJune 30, 2005.  The decrease resultedfrom greater interest income earned during 2005 on the investment of $130.0million in Notes proceeds.

*Interest expense.*  Interest expense was $3.2million for the quarter ended June 30, 2006, compared to $3.1 million for thequarter ended June 30, 2005, 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 theequipment purchase agreements we entered into during 2006.

*Related party lease income.*  During the period from August3, 2004 through October 31, 2005, we leased the hotel casino to Eastern &Western under two separate lease agreements. Pursuant to the casino lease agreement, the casino, showroom, liquorservicing areas and other casino related areas were leased for $125,000 permonth.  Pursuant to the hotel leaseagreement for the hotel, restaurants, and other areas of the hotel casinoproperty, rental income was $250,000 per month, plus a percentage rent equal to100% of all revenues received by Eastern & Western from the operation ofthe hotel and restaurants, less operating expenses and working capitalreserves, as defined in the hotel lease agreement.  For the quarter ended June 30, 2005, a totalof $1.6 million was earned in rental income under the casino and hotel leases.

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*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, 2006 with the Six Months EndedJune 30, 2005***

The results ofoperations for the six months ended June 30, 2006 includes the month of January2006 when the property was essentially closed for remodeling and the first fivemonths of operations of the Hooters Casino Hotel from February 3, 2006 throughJune 30, 2006.  Net operating revenuesfor the six months ended June 30, 2006 were $33.4 million, an increase of $16.2million or 94.6%, from $17.2 million of net operating revenues generated byHôtel San Rémo during the same period in the previous year.  Included in the net revenues for the firstsix months of 2006 were $33.1 million generated by the Hooters Casino Hoteloperations beginning on February 3, 2006. The increase in net operating revenues was due to increased activity inthe casino and food and beverage outlets related to the new Hooters CasinoHotel.

*Casino.*  Casino revenues increased by $7.5 million to$13.7 million for the six months ended June 30, 2006, compared to $6.2 millionfor the six months ended June 30, 2005. Casino revenue of $13.6 million was generated after the grand opening onFebruary 3, 2006.  Table games revenuewas $5.9 million in 2006, an increase of $4.0 million, or 209.4%, compared tothe table games revenue of $1.9 million from the prior year’s first sixmonths.  With the exception of $34,000,all table games revenue was generated after the grand opening.  Table game drop increased to $33.9 million,or by 234.4%, for the six months ended June 30, 2006 compared to the six monthsended June 30, 2005, but table game hold percentage decreased from 18.8% in2005 to 17.4% in 2006.  The table gamesgenerated an average win per table of $1,204 per day after February 3, 2006 ascompared to $702 for the same period in 2005. Slot revenue of $7.6 million for the six months ended June 30, 2006 wasan increase of 77.7% compared to $4.3 million in the same period in 2005.  With the exception of $0.1 million, theentire slot revenue was generated after the grand opening.  The average win per machine per day was $80from February 3, 2006 to June 30, 2006 compared to $45 for the same period in2005.

Casino expensesincreased by 103.4% to $7.0 million for the six months ended June 30, 2006compared to $3.4 million for the six months ended June 30, 2005 due toincreases in payroll and other operational expenses.  However, the profit margin for casinooperations increased from 44.9% during the six months ended June 30, 2005 to49.3% during the six months ended June 30, 2006 due to payroll expenses beingproportionally lower during 2006 in comparison to revenue.  The percentage of payroll expenses incomparison to revenue for the six months ended June 30, 2006 and 2005 were24.4% and 29.5%, respectively.

*Food and beverage.*  Food and beverage revenue was$11.6 million for the six months ended June 30, 2006 as compared to $3.6million for 2005, an increase of 218.5%. The increase in food revenues was a result of increased customer volumeafter the grand opening.  Beveragerevenue (which includes complimentary beverages) increased by $4.3 million, or406.5%, from $1.1 million during the six months ended June 30, 2005.

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Food and beverage expenses increased from $3.1 million during the sixmonths ended June 30, 2005 to $9.6 million during the six months ended June 30,2006, an increase of $6.5 million.  Theincrease is due to increases in payroll, cost of food, and other operationalexpenses associated with the increase in business volume.  However, the number of food and beverageoutlets also increased from Hôtel San Rémo’s five outlets to nine outlets atHooters Casino Hotel after the grand opening. The profit margin for food and beverage operations increased from 13.6%during the six months ended June 30, 2005 to 17.1% during the six months endedJune 30, 2006 due to operational efficiencies in payroll and cost ofsales.  

*Hotel and other.*  Hotel and other revenue (which includes hotelroom revenue, retail, spa and other miscellaneous revenue) increased by $2.4million, or 28.7%, to $10.9 million for the six months ended June 30, 2006 from$8.5 million for the six months ended June 30, 2005.  Room revenue slightly decreased to $7.7million for the six months ended June 30, 2006 compared to $7.8 million in2005.  This decrease was the result ofthe hotel being essentially closed from January 2 to February 2, 2006.  As planned, the Company made the decision tostop taking room reservations after January 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.  This compares to room revenue of$6.7 million for the same five months in 2005, with an occupancy rate of 87.4%and an average daily rate of $75.  TheCompany has committed to increase sales and marketing efforts to continue theimprovement of our occupancy rates in the third and fourth quarters of2006.  

Sales from our retail outlets selling Hooters logo merchandise largelyoffset the decline in room revenue. Retail revenue was $2.6 million or 24.3% of hotel and other revenue inthe six months ended June 30, 2006 and has increased from $0.5 million duringthe six months ended June 30, 2005, an increase of $2.1 million.  

Hotel and otherexpenses increased by 90.9% from $2.2 million during the six months ended June30, 2005 to $4.2 million during the six months ended June 30, 2006 due toincreases in payroll and other expenses in hotel and retail operations.  The profit margin for rooms was 66.7% in thesecond quarter of 2006 compared to 75.3% for the same period in the prior yeardue to increased payroll expense and upgraded room amenities.  Retail sales generated a profit margin of30.0%.  

*General and administrative.*  General and administrativeexpense includes costs associated with corporate marketing, informationtechnology, finance, accounting, and property operations.  General and administrative expense increased$5.1 million to $9.1 million for the six months ended June 30, 2006 compared to$4.0 million for the six months ended June 30, 2005.  This increase was principally due toincreases in advertising and marketing, and payroll expenses for the six monthsended June 30, 2006.

*Depreciation and amortization expense.* Depreciation and amortization expense of $2.8 million for the six monthsended June 30, 2006 increased by $1.8 million, or 182.0%, from $1.0 million forthe six months ended June 30, 2005.  Theincrease in depreciation expense was due to additional depreciation of fixedasset additions placed in service beginning February 3, 2006.  

*Pre-openingexpenses.*  Pre-opening expenses are costs associatedwith the start-up activities for the new Hooters Casino Hotel and consist ofsalaries and wages, legal, professional, advertising, marketing, and othergeneral administrative expenses. Pre-opening expenses increased by $4.7 million to

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$5.3million for the six months ended June 30, 2006 compared to $0.6 million duringthe six months ended June 30, 2005, largely due to increased training expensesduring the month of January 2006 and the costs of the grand opening celebrationfor the Hooters Casino Hotel in February 2006.

*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 the six months ended June30, 2006.  The payment of the relatedparty royalties is restricted under the Notes indenture.  The fees can only be paid after the close ofthe fiscal year and only if our debt coverage ratio is 1.5 to 1 for that fiscalyear.  The payments of the royalty feesare further limited to the sum of 2% of revenue and 3% of EBITDA as defined inthe indenture.

*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 $0.4 million for the sixmonths ended June 30, 2006, compared to $0.8 million for the six months endedJune 30, 2005.  The decrease resultedfrom greater interest income earned during 2005 on the investment of $130.0 millionin old notes proceeds.

*Interest expense.*  Interest expense was $6.2million for the six months ended June 30, 2006, compared to $4.4 million forthe six months ended June 30, 2005, an increase of $1.8 million.  The increase in interest expense is largelyattributable to $5.7 million in interest expense on the $130.0 million in oldnotes, issued in March 2005, which were exchanged for the Notes.

*Loss on extinguishment of debt.*  Theloss on extinguishment of debt in 2005 was related to the payoff of our bankloan with the proceeds of the old notes on March 29, 2005.

*Related party lease income.*  During the period from August3, 2004 through October 31, 2005, we leased the hotel casino to Eastern &Western under two separate lease agreements. Pursuant to the casino lease agreement, the casino, showroom, liquorservicing areas and other casino related areas were leased for $125,000 permonth.  Pursuant to the hotel leaseagreement for the hotel, restaurants, and other areas of the hotel casinoproperty, rental income was $250,000 per month, plus a percentage rent equal to100% of all revenues received by Eastern & Western from the operation ofthe hotel and restaurants, less operating expenses and working capitalreserves, as defined in the hotel lease agreement.  For the six months ended June 30, 2005, atotal of $3.9 million was received in rental income under the casino and hotelleases.

*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.

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***Contractual Obligations***

The following table summarizes the contractual commitments of 155 as ofJune 30, 2006:
| ** **                         | ** ** | **Payments Due By Year** | ** ** |
|------------------------------------|------------|-----------------------------------------|------------|
| ** **                         | ** ** | **Total**                               | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **3-5 years** | ** ** | **Thereafter** | ** ** |
| ** **                         | ** ** | **(dollars in thousands)**    | ** ** |
| Equipment purchase  agreements (1) |       | $                                       | 4,948      |   | $ | 2,151 |   | $ | 2,797 |   | $ | — |   | $ | — |   |
|                               |       |                                    |       |   |   |   |   |   |   |   |   |
| Long-term debt (2)                 |       | 130,305                                 |       | — |   | 305 |   | 130,000 |   | — |   |
|                               |       |                                    |       |   |   |   |   |   |   |   |   |
| Operating contracts (3)            |       | 5,460                                   |       | 2,903 |   | 2,200 |   | 357 |   | — |   |
|                               |       |                                    |       |   |   |   |   |   |   |   |   |
| Total                              |       | $                                       | 140,713    |   | $ | 5,054 |   | $ | 5,302 |   | $ | 130,357 |   | $ | — |   |

 

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

(2)          The long-term debt represents the $130.0 million in Notes due in 2012,and amounts drawn against the Credit Facility during the six months ended June30, 2006.

(3)          Operating contracts represent various contracts for services inconnection with the operations of the hotel.

***Liquidity and Capital Resources (155 East Tropicana, LLC)***

For the six monthsended June 30, 2006, we used $7.9 million of cash in operating activitiesduring the six months ended June 30, 2006, largely due to our net loss of $12.3million, which was offset by non-cash charges of $4.7 million.

For the six monthsended June 30, 2006, $3.2 million of cash was provided by investing activities,consisting of a use of cash for capital expenditures of $25.3 million offset bya reduction in restricted funds of $27.8 million and a reduction in otherassets of $0.6 million.  At June 30,2006, $1.5 million was held as restricted cash. This balance largely represents interest earned on the restricted funds,and will be available for general purposes in the future. 

For the six months ended June 30, 2006, we used $0.9 million of cash infinancing activities, largely as a result of principal payments on equipmentdebt.

The Notes’ indenture contains certain provisions which restrict orlimit our ability to, among other things, incur more debt, pay dividends,redeem stock or make other distributions, enter into transactions withaffiliates or transfer or sell assets. 

We entered into a $15.0million senior secured credit facility (the “Credit Facility”) concurrentlywith the offering of the old notes.  TheCredit Facility is a four-year revolving Credit Facility of $15.0 million,maturing on March 30, 2009. The original Credit Facility called forrestrictions on the availability of the full $15.0 million amount of the CreditFacility, based on a multiple of the trailing twelve-month EBITDA, or BorrowingBase.  EBITDA is defined for any fiscalperiod as our consolidated net income (or loss), minus extraordinary gains andinterest income, plus interest expense, income taxes and depreciation andamortization for such period, and subject to other adjustments as defined inthe Credit Facility agreement.  OnJanuary 30, 2006, the Credit Facility was amended to allow us, during the

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period of February 1,2006 to June 30, 2006, to obtain advances in the aggregate principal amount ofup to $15.0 million, without regard to the Borrowing Base requirement.  We drew $304,953 against the Credit Facilityduring the six months ended June 30, 2006 (all of which was outstanding at June30, 2006) to pay the lender fees related to this amendment and to pay for otherexpenses related to the Credit Facility. Subsequent to June 30, 2006, we drew an additional $330,000 against theCredit Facility for slot machine purchases.

At March 31, 2006, we failed to meet two covenant requirementsassociated with the Credit Facility involving (1) the maintenance of a rollingtwelve month adjusted EBITDA of $1,000,000 and (2) a senior debt to EBITDAratio of 21:1 at March 31, 2006. Specifically, the rolling twelve month adjusted EBITDA at March 31, 2006was approximately $700,000 and the senior debt to EBITDA ratio was 30:1.  On May 11, 2006, we received a waiver ofdefault from the agent for the lender through March 31, 2006.  The CreditFacility was amended on June 6, 2006. The following amendments were made to the Credit Facility: (1)permanently removed the Borrowing Base concept which limited the amount thatcould be borrowed under the credit agreement, (2) modified the definition ofEBITDA, allowing for the add back of all pre-opening costs and removing theprevious $6.0 million cap, and (3) amended the financial covenant requirementsto alter the applicable periods when we must meet certain minimum EBITDA and maximumsenior debt ratios.  An amendment fee of$100,000 was paid to the lender in June 2006. At June 30, 2006, we were in compliance with the amended covenants.

As anticipated in our $130.0 million Note offering document, we enteredinto equipment financing of $5.8 million during the six months ending June 30,2006, of which $4.9 million was outstanding at June 30, 2006. 

We expect to spend approximately $2.3 million in capital expendituresin 2006 above the amount spent for remodeling. Approximately $0.8 million will be paid for from slot financing and mostof the remaining $1.5 million has already been spent.

We believe that we have the flexibility to cover operationalcontingencies, working capital needs, capital expenditures, and debt serviceobligations during 2006 through the use of cash (which totaled $8.5 million atJune 30, 2006), restricted cash (which totaled $1.5 million at June 30, 2006),our cash flow from operations, and our ability to draw against our $15.0million Credit Facility.  

***Liquidity and Capital Resources (Hôtel San Rémo)***

For the six months ended June 30, 2005, Hôtel San Rémo generated $0.3million in cash flow from operations, primarily due to net income of $0.2million generated during the six months.

For the six months ended June 30, 2005, net cash of $0.2 million wasused in investing activities as a result of purchasing other assets.  

For the six months ended June 30, 2005, net cash of $1.0 million wasused in financing activities largely as a result of advances toaffiliates.  

As the result of the above factors, the Hôtel San Rémo’s net cashdecreased $0.9 million, from $4.5 million at December 31, 2004 to $3.6 millionat March 31, 2005.

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As of November 1, 2005, Hôtel San Rémo ceased operations as a hotel andcasino business, as all remaining assets were transferred to either 155 or theformer owner of the hotel.

***CriticalAccounting Policies and Estimates***

A description ofcritical accounting policies and estimates is included in the managementdiscussion and analysis included in our Annual Report on Form 10-K for the yearended December 31, 2005 filed with the Commission on March 31, 2006.

**PART II – OTHER INFORMATION**

**Item6.  Exhibits.**

Exhibits:

31.1         Certificationpursuant to §302 of the Sarbanes-Oxley Act of 2002, Deborah J. Pierce

31.2         Certificationpursuant to §302 of the Sarbanes-Oxley Act of 2002, Neil G. Kiefer

32.1         Certificationpursuant to §906 of the Sarbanes-Oxley Act of 2002, Deborah J. Pierce

32.1         Certificationpursuant 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 21, 2006 |
|                                 |  Deborah J.  Pierce                |       |   |
| * *                             | * Chief  Financial Officer*        | * *   | * * |
| * *                             | * (Principal  Financial and Chief* | * *   | * * |
| * *                             | * Accounting  Officer)*            | * *   | * * |
| ** **                           | ** **                              | ** ** |
| ** **                           | ** **                              | ** ** |
| **155 EAST TROPICANA FINANCE CORP.** | ** **                              | ** ** |
|                                 |                                    |       |
|                                 |                                    |       |
| By:                                  |  /s/  Deborah J. Pierce            |       |   | August 21, 2006 |
|                                 |  Deborah J.  Pierce                |       |   |
| * *                             | * Chief  Financial Officer*        | * *   | * * |
| * *                             | * (Principal  Financial and Chief* | * *   | * * |
| * *                             | * Accounting  Officer)*            | * *   | * * |
|                                      |                                         |            |  |  |  |  |

 

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