** **

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

 

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**FORM 10-Q**

** **

**(MarkOne)**

 

| **x**      | ** ** | **Q****UARTERLY REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES** |
|------------|------------|---------------------------------------------------------------------------------------|
| ** ** | ** ** | ** ****EXCHANGE ACT OF 1934**                                                    |

 

**For the quarterly period ended March 31, 2008**

** **

**or**

 

| **o**      | ** ** | **TRANSITION REPORT PURSUANT TO  SECTION 13 OR 15(d) OF THE SECURITIES** |
|------------|------------|------------------------------------------------------------------------------------|
| ** ** | ** ** | **EXCHANGE ACT OF 1934**                                                           |

** **

 

**For thetransition periodfrom              to              **

 

**Commission File Number 333-124924**

** **

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** **

**155 East Tropicana, LLC**

**155 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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Indicateby check mark whether the registrant (1) has filed all reports required bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports) and (2) has been subject to such filingrequirements for the past 90 days.    Yes  x    No  o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions of “large accelerated filer,” “accelerated filer,” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer  o                     |   | Accelerated filer o          |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated filer x                        |   | Smaller reporting  company o |
| (Do not check if a  smaller reporting company) |   |                              |

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act).     Yes  o    No  x

** **

 

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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 (unaudited)*                                        | 3      |
| * *                                   | *Condensed Consolidated Statements  of Operations (unaudited)*                              | 4      |
| * *                                   | *Condensed  Consolidated Statements of Cash Flows (unaudited)*                              | 5      |
| * *                                   | *Notes to Condensed Consolidated Financial Statements  (unaudited)*                         | 6      |
| * *                                   | * *                                                                                    |   |
| Item 2.                                    | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 12     |
|                                       |                                                                                        |   |
| Item 3.                                    | Quantitative  and Qualitative Disclosures About Market Risk                                 | 18     |
|                                       |                                                                                        |   |
| Item 4T.                                   | Controls and  Procedures                                                                    | 19     |
|                                       |                                                                                        |   |
| **PART II  – OTHER INFORMATION** |                                                                                        |
| ** **                                 |                                                                                        |
| Item 1.                                    | Legal Proceedings                                                                           | 20     |
|                                       |                                                                                        |   |
| Item 1A.                                   | Risk Factors                                                                                | 20     |
|                                       |                                                                                        |   |
| Item 2.                                    | Unregistered  Sales of Equity Securities and Use of Proceeds                                | 20     |
|                                       |                                                                                        |   |
| Item 3.                                    | Defaults Upon  Senior Securities                                                            | 20     |
|                                       |                                                                                        |   |
| Item 4.                                    | Submission  of Matters to a Vote of Security Holders                                        | 20     |
|                                       |                                                                                        |   |
| Item 5.                                    | Other Information                                                                           | 20     |
|                                       |                                                                                        |   |
| Item 6.                                    | Exhibits                                                                                    | 20     |
|                                       |                                                                                        |   |
| **SIGNATURES**                             | **21**                                                                                      |

 

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# **PART I– FINANCIAL INFORMATION**

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

 

### **155 EAST TROPICANA, LLC(A NEVADA LIMITED-LIABILITY COMPANY)**

### ** **

### **CONDENSED CONSOLIDATEDBALANCE SHEETS**

 
| ** **                                                                                                           | ** ** | **March 31,** | ** **  | **December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------|------------|--------------------|-------------|-----------------------|------------|
| ** **                                                                                                           | ** ** | **2008**           | ** **  | **2007**              | ** ** |
| ** **                                                                                                           | ** ** | **(unaudited)**    | ** **  | ** **            | ** ** |
| **Assets**                                                                                                           |       |               |        |                  |       |
| Current assets:                                                                                                      |       |               |        |                  |       |
| Cash and cash  equivalents                                                                                           |       | $                  | 11,158,634  |                  | $          | 5,861,991 |   |
| Accounts  receivable, net of allowance for doubtful accounts of $105,192 and $90,831 in  2008 and 2007, respectively |       | 1,893,674          |        | 1,880,454             |       |
| Inventories                                                                                                          |       | 837,465            |        | 931,029               |       |
| Prepaid expenses                                                                                                     |       | 1,566,282          |        | 1,576,356             |       |
| Total current  assets                                                                                                |       | 15,456,055         |        | 10,249,830            |       |
| Property and  equipment, net                                                                                         |       | 115,701,679        |        | 117,084,512           |       |
| Other long-term  assets:                                                                                             |       |               |        |                  |       |
| Deferred  financing costs                                                                                            |       | 4,622,296          |        | 4,971,161             |       |
| Intangible  assets                                                                                                   |       | 6,492,231          |        | 6,505,209             |       |
| Other assets                                                                                                         |       | 364,022            |        | 336,022               |       |
| Total other  long-term assets                                                                                        |       | 11,478,549         |        | 11,812,392            |       |
| Total assets                                                                                                         |       | $                  | 142,636,283 |                  | $          | 139,146,734 |   |
|                                                                                                                 |       |               |        |                  |       |
| **Liabilities  and Members’ (Deficit) Equity**                                                                  |       |               |        |                  |       |
| Current  liabilities:                                                                                                |       |               |        |                  |       |
| Accounts payable                                                                                                     |       | $                  | 3,820,627   |                  | $          | 2,974,233 |   |
| Accrued interest  payable                                                                                            |       | 5,687,500          |        | 2,843,750             |       |
| Accrued  liabilities                                                                                                 |       | 1,920,890          |        | 1,399,930             |       |
| Purchase deposit  and extension payments                                                                             |       | 5,000,000          |        | 3,500,000             |       |
| Current portion  of long-term debt                                                                                   |       | 8,092,690          |        | 2,035,273             |       |
| Total current  liabilities                                                                                           |       | 24,521,707         |        | 12,753,186            |       |
| Related party  royalties payable                                                                                     |       | 3,206,705          |        | 2,848,796             |       |
| Long-term debt                                                                                                       |       | 130,110,524        |        | 136,552,084           |       |
| Total  liabilities                                                                                                   |       | 157,838,936        |        | 152,154,066           |       |
|                                                                                                                 |       |               |        |                  |       |
| Commitments and  contingencies                                                                                       |       |               |        |                  |       |
|                                                                                                                 |       |               |        |                  |       |
| Members’  (deficit) equity:                                                                                     |       |               |        |                  |       |
| Membership  interests                                                                                                |       | 34,333,375         |        | 34,333,375            |       |
| Accumulated  deficit                                                                                                 |       | (49,536,028        | )           | (47,340,707           | )          |
|                                                                                                                 |       | (15,202,653        | )           | (13,007,332           | )          |
| Total  liabilities and members’ (deficit) equity                                                                |       | $                  | 142,636,283 |                  | $          | 139,146,734 |   |

 

*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)**

 

### **CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS**

 
| ** **                        | ** ** | **Three Months Ended  March 31,** | ** ** | **Three Months Ended  March 31,** | ** ** |
|-----------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------|------------|
| ** **                        | ** ** | **2008**                                         | ** ** | **2007**                                         | ** ** |
| ** **                        | ** ** | **(unaudited)**                                  | ** ** | **(unaudited)**                                  | ** ** |
| Operating  revenues:              |       |                                             |       |                                             |       |
| Casino                            |       | $                                                | 6,426,798  |                                             | $          | 6,143,284 |   |
| Food, beverage  and entertainment |       | 5,669,647                                        |       | 5,906,906                                        |       |
| Hotel and other                   |       | 5,924,230                                        |       | 6,634,913                                        |       |
|                              |       | 18,020,675                                       |       | 18,685,103                                       |       |
| Less promotional  allowances      |       | (1,895,509                                       | )          | (1,523,548                                       | )          |
| Net operating  revenues           |       | 16,125,166                                       |       | 17,161,555                                       |       |
|                              |       |                                             |       |                                             |       |
| Operating  expenses:              |       |                                             |       |                                             |       |
| Casino                            |       | 3,036,055                                        |       | 3,345,967                                        |       |
| Food, beverage  and entertainment |       | 4,054,943                                        |       | 4,502,110                                        |       |
| Hotel and other                   |       | 1,929,361                                        |       | 2,151,436                                        |       |
| General and  administrative       |       | 4,146,337                                        |       | 4,713,930                                        |       |
| Depreciation and  amortization    |       | 1,529,526                                        |       | 1,696,604                                        |       |
| Related party  royalties expense  |       | 357,909                                          |       | 346,790                                          |       |
| Total operating  expenses         |       | 15,054,131                                       |       | 16,756,837                                       |       |
| Operating income                  |       | 1,071,035                                        |       | 404,718                                          |       |
|                              |       |                                             |       |                                             |       |
| Other income  (expense):          |       |                                             |       |                                             |       |
| Interest income                   |       | 80,213                                           |       | 37,428                                           |       |
| Interest expense                  |       | (3,346,569                                       | )          | (3,271,585                                       | )          |
| Other income  (expense), net      |       | (3,266,356                                       | )          | (3,234,157                                       | )          |
| Net loss                          |       | $                                                | (2,195,321 | )                                                | $          | (2,829,439 | ) |

 

*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)**

 

### **CONDENSEDCONSOLIDATED STATEMENTS OF CASH FLOWS**

 
| ** **                                                                       | ** ** | **Three Months Ended  March 31,  2008** | ** ** | **Three Months Ended  March 31,  2007** | ** ** |
|----------------------------------------------------------------------------------|------------|--------------------------------------------------------|------------|--------------------------------------------------------|------------|
| ** **                                                                       | ** ** | **(unaudited)**                                        | ** ** | **(unaudited)**                                        | ** ** |
| **Cash  Flow From Operating Activities**                                         |       |                                                   |       |                                                   |       |
| Net loss                                                                         |       | $                                                      | (2,195,321 | )                                                      | $          | (2,829,439 | ) |
| Adjustments to  reconcile net loss to net cash provided by operating activities: |       |                                                   |       |                                                   |       |
| Depreciation and  amortization                                                   |       | 1,529,526                                              |       | 1,696,604                                              |       |
| Amortization of  debt issuance costs                                             |       | 348,865                                                |       | 348,866                                                |       |
| Amortization of  intangible asset                                                |       | 12,978                                                 |       | 12,978                                                 |       |
| Changes in  assets and liabilities:                                              |       |                                                   |       |                                                   |       |
| Accounts  receivable                                                             |       | (13,220                                                | )          | (451,831                                               | )          |
| Inventories                                                                      |       | 93,564                                                 |       | (13,928                                                | )          |
| Prepaid expenses                                                                 |       | 10,074                                                 |       | (146,374                                               | )          |
| Accounts payable                                                                 |       | 846,391                                                |       | 835,137                                                |       |
| Accrued interest  payable                                                        |       | 2,843,750                                              |       | 2,843,750                                              |       |
| Accrued  liabilities                                                             |       | 520,960                                                |       | (245,270                                               | )          |
| Related party  royalties payable                                                 |       | 357,909                                                |       | 346,791                                                |       |
| Net cash  provided by operating activities                                       |       | 4,355,476                                              |       | 2,397,284                                              |       |
|                                                                             |       |                                                   |       |                                                   |       |
| **Cash  Flow From Investing Activities**                                         |       |                                                   |       |                                                   |       |
| Capital  expenditures                                                            |       | (146,690                                               | )          | (249,590                                               | )          |
| Change in other  assets                                                          |       | (28,000                                                | )          | (5,000                                                 | )          |
| Net cash used in  investing activities                                           |       | (174,690                                               | )          | (254,590                                               | )          |
|                                                                             |       |                                                   |       |                                                   |       |
| **Cash  Flow From Financing Activities**                                         |       |                                                   |       |                                                   |       |
| Proceeds from  issuance of long-term debt                                        |       | 130,390                                                |       | 1,843,074                                              |       |
| Principal  payments on equipment purchase agreements                             |       | (514,533                                               | )          | (517,552                                               | )          |
| Purchase deposit  and extension payments                                         |       | 1,500,000                                              |       | —                                                 |       |
| Net cash  provided by financing activities                                       |       | 1,115,857                                              |       | 1,325,522                                              |       |
|                                                                             |       |                                                   |       |                                                   |       |
| Increase in cash  and cash equivalents                                           |       | 5,296,643                                              |       | 3,468,216                                              |       |
| Cash and cash  equivalents, beginning of period                                  |       | 5,861,991                                              |       | 6,164,192                                              |       |
| Cash and cash  equivalents, end of period                                        |       | $                                                      | 11,158,634 |                                                   | $          | 9,632,408 |   |
|                                                                             |       |                                                   |       |                                                   |       |
| **Supplemental  disclosure of cash flow information**                            |       |                                                   |       |                                                   |       |
| Cash paid for  interest, net of capitalized interest                             |       | $                                                      | 502,819    |                                                   | $          | 427,835 |   |
|                                                                             |       |                                                   |       |                                                   |       |
| Assets acquired  through equipment loans                                         |       | $                                                      | —     |                                                   | $          | 312,619 |   |

 

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

 

5

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**155 EASTTROPICANA, LLC(A NEVADA LIMITED-LIABILITY COMPANY)**

 

### **Notes to Condensed Consolidated Financial Statements (unaudited)**

 

**March 31, 2008**

 

**1.  Organization and Basis of Presentation**

** **

155East Tropicana, LLC, a Nevada limited-liability company (the “Company”) wasincorporated on June 17, 2004 to acquire the real and personal property ofthe Hôtel San Rémo Casino and Resort (the “Hôtel San Rémo”) in Las Vegas,Nevada with the intention of renovating the existing casino and hotel facilitywith 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.

 

FloridaHooters LLC is a joint venture between Hooters Gaming LLC and Lags Ventures,LLC.  Hooters Gaming LLC is owned by theholders of licenses to operate Hooters restaurants in Tampa Bay, Florida,Chicago, Illinois and downtown Manhattan in New York as well as for the sale ofwholesale foods and calendars and Nevada hotel/gaming and includes most of theoriginal founders of the Hooters brand. Pursuant to these license rights, the owners of Florida Hooters LLCoperate 40 Hooters restaurants, publish Hooters calendars and operate a Hootersfood business.  Lags Ventures, LLC isowned by a holder of the license rights to certain Hooters restaurants in Nevadaand South Florida.  The owner of LagsVentures, LLC is also the founder of the Dan Marino concept restaurants andowns and operates two Dan Marino concept restaurants.

 

EWCommon LLC is owned 90% by Eastern & Western Hotel Corporation (“Eastern &Western”) and 10% by Michael J. Hessling, president of the Company.  Eastern & Western and its affiliatesowned the real property and non-gaming assets of Hôtel San Rémo from November 1988until the Company’s acquisition of the Hôtel San Rémo in August 2004.

 

FloridaHooters LLC and EW Common LLC entered into a joint venture agreement for thepurpose of forming the Company and documenting the terms of their investmentsand business venture.

 

6

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**155 EASTTROPICANA, LLC(A NEVADA LIMITED-LIABILITY COMPANY)**

 

**Notesto Condensed Consolidated Financial Statements (unaudited) (continued)**

 

**1.  Organizationand Basis of Presentation (continued)**

 

OnFebruary 3, 2006, the newly renovated and re-branded Hooters Casino Hotelwas opened for business.  The Hooters Casino Hotel currently features acasino floor with 630 slot and video poker machines, 31 table games, 696 newlyrenovated hotel rooms including 17 suites, a tropical pool area, retail outlets,a day spa, and dining and entertainment options which include a Hootersrestaurant, Dan Marino’s restaurant (which began offering 24 hour service as ofOctober 24, 2007), a sports bar, several bars and Night Owl Showroom. Therenovations included a redesign of the main entrance, a renovation andexpansion of the casino and restaurant areas, a remodel of the hotel rooms anda renovation and expansion of the pool area.

 

Significantinter-company transactions between the Company and its wholly owned subsidiaryhave been eliminated in consolidation.

 

Aspermitted by the rules and regulations of the Securities and ExchangeCommission, certain information and footnote disclosures normally included infinancial statements prepared in accordance with generally accepted accountingprinciples have been condensed or omitted. These condensed consolidated financial statements should be read inconjunction with the Company’s 2007 annual consolidated financial statementsand notes thereto included in the Company’s Annual Report on Form 10-K forthe year ended December 31, 2007.

 

Inthe opinion of management, the accompanying unaudited condensed consolidatedfinancial statements contain all adjustments – which include normal recurringadjustments – necessary to present fairly the Company’s financial position asof March 31, 2008, the results of its operations for the three monthperiods ended March 31, 2008 and 2007. The results of operations for such periods are not necessarilyindicative of the results to be expected for the full year.

 

**2.  Summaryof Significant Accounting Principles**

 

*Reclassifications.* Certain reclassifications, having no effecton net loss, have been made to the previously issued condensed consolidatedfinancial statements to conform to the current period’s presentation of theCompany’s condensed consolidated financial statements.

 

*RecentlyIssued Accounting Pronouncements.*

 

InSeptember 2006, the FASB issued SFAS No. 157, *Fair Value Measurements*,which defines fair value, establishes a framework for measuring fair value inGAAP, and expands disclosures about fair value measurements.  SFAS 157 does not require any new fair valuemeasurements, but provides guidance on how to measure fair value by providing afair value hierarch used to classify the source of the information.  SFAS 157 is effective for financialstatements issued for fiscal years beginning after November 15, 2007 andinterim periods within these fiscal years. In February 2008, FASB issued FASB Staff Position (“FSP”) FAS157-2, which defers the effective date of SFAS 157 to fiscal years beginningafter November 15, 2008, and interim periods within those fiscal years,for nonfinancial assets and nonfinancial liabilities that are recognized ordisclosed at fair value in an entity’s financial statements on a recurringbasis.  We are evaluating SFAS 157 andhave not yet determined the determined the impact the adoption will have on theconsolidated financial statements.

 

InFebruary 2007, the FASB issued SFAS No. 159, *The Fair Value Option for Financial Assets andFinancial Liabilities*. SFAS 159 permits entities to choose tomeasure many financial instruments and certain other items at fair value. Theobjective of the guidance is to improve financial reporting by providingentities with the opportunity to mitigate volatility in reported earningscaused by measuring related assets and liabilities differently without havingto apply complex hedge accounting provisions. SFAS 159 is effective as of thebeginning of the first fiscal year after November 15, 2007. Early adoptionis permitted as of the beginning of the fiscal year on or before November 15,2007, provided the provisions of SFAS 157 are also applied.  We are evaluating our options provided forunder this statement and their potential impact on the consolidated financialstatements when implemented.

 

InDecember 2007, the FASB issued SFAS 160,”Noncontrolling Interests inConsolidated Financial Statements-An Amendment of ARB No. 51”.  SFAS 160 establishes new accounting andreporting standards for the noncontrolling interest in a subsidiary and for thedeconsolidation of a subsidiary. Specifically, this statement requires the recognition of anoncontrolling interest as equity in the consolidated financial statements andseparate from the parent’s equity.  Inaddition, the amount of net income attributable to the noncontrolling interestshould be included in consolidated net income on the face of the incomestatement.  SFAS 160 is effective forfiscal years, and interim periods within those fiscal years, beginning on orafter December 15, 2008.  Earlyadoption is prohibited.  We areevaluating SFAS 160 and have not yet determined the impact the adoption willhave on the consolidated financial statements.

 

InDecember 2007, FASB issued SFAS 141R, “Business Combinations”.  Under SFAS 141R, an acquiring entity will berequired to recognize all the assets acquired and liabilities assumed in atransaction at the acquisition-date fair value, with limited exceptions,replacing SFAS 141’s cost-allocation process. SFAS 141R also includes a substantial number of new disclosurerequirements.  SFAS 141R is to be appliedprospectively to business combinations for which the acquisition date is on orafter the beginning of the first annual reporting period beginning on or after December 15,2008.  Early adoption is prohibited.  We will adopt SFAS 141R in the first quarterof 2009.  The impact on our accountingfor future business combinations once adopted will be dependent uponacquisitions that are made in the future.

 

7

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**155 EASTTROPICANA, LLC(A NEVADA LIMITED-LIABILITY COMPANY)**

 

**Notes to Condensed Consolidated Financial Statements (unaudited)(continued)**

** **

**2.  Summaryof Significant Accounting Principles (continued)**

 

InMarch 2008, the FASB issued SFAS No. 161, “Disclosures aboutDerivative Instruments and Hedging Activities.” The provisions will be effective as of January 1, 2009.  This statement requires enhanced disclosuresabout (i) how and why a company uses derivative instruments, (ii) howit accounts for derivative instruments and related hedged items under SFAS No. 133,“Accounting for Derivative Instruments and Hedging Activities” and (iii) howderivative instruments and related hedged items affect a company’s financialresults.  The Company currently does nothave any derivative instruments.  TheCompany will evaluate the impact of this statement on its financial statementsif and when it evaluates any potential derivative agreements.

 

**3.  Long-term Debt**

** **

Long-term debt consists of the following:

 
| ** **                          | ** ** | **March 31,** | ** **  | **December 31,** | ** ** |
|-------------------------------------|------------|--------------------|-------------|-----------------------|------------|
| ** **                          | ** ** | **2008**           | ** **  | **2007**              | ** ** |
| 8.75% Senior  secured notes (1)     |       | $                  | 130,000,000 |                  | $          | 130,000,000 |   |
| Senior secured  credit facility (2) |       | 6,385,955          |        | 6,255,565             |       |
| Equipment  purchase agreements (3)  |       | 1,817,259          |        | 2,331,792             |       |
| Total debt                          |       | 138,203,214        |        | 138,587,357           |       |
| Less: Current  portion of debt      |       | (8,092,690         | )           | (2,035,273            | )          |
| Total long-term  debt               |       | $                  | 130,110,524 |                  | $          | 136,552,084 |   |

 

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(1)   $130.0 million aggregate principal amount of8.75% Senior Secured Notes (the “Notes”) issued on March 29, 2005 and dueon 2012.

 

(2)   Outstanding drawsagainst the Senior Secured Credit Facility as of March 31, 2008 and December 31,2007, due on March 30, 2009.  At theCompany’s option, the interest rate will be either the agent for the lender’sprime rate plus 2.00% per annum or LIBOR plus 3.50% per annum.  As of March 31, 2008, the CreditFacility carried an interest rate of 6.52% per annum.

 

(3)   During the firstquarter ended March 31, 2007, the Company entered into a $0.3 million loanagreement to purchase approximately $0.4 million in hotel equipment.  The loan, which is collateralized by theequipment purchased, has a term of 18 months with an imputed interest rate of12.7%.

 

**4.  Related Party Transactions**

** **

**Royalties Expense**

 

Pursuantto agreements related to the use of certain trademarks, the Company must payfees and royalties to related parties.  A fee equal to 3% of all netprofits earned from gaming activities is payable to Hooters Gaming Corporation,a consent fee equal to 6% of net revenues generated by the Dan Marino’sRestaurant and “13” Martini Bar (which closed in 2007) is payable to LagsVentures, Inc. and a fee of 4% of cash sales from the Hooters brandedrestaurant, and 3% of the gross sales with any merchandise with a Hooters logo,is payable to Las Vegas Wings, Inc.  The total fees accrued at March 31,2008 for Hooters Gaming Corporation, Lags Venture, Inc. and Las VegasWings, Inc. were $1.7 million, $0.6 million, and $0.9 million,respectively.  The Company began accruingthese fees when the Hooters Casino Hotel opened on February 3, 2006.  The payment of these royalty fees isrestricted under the indenture governing the Notes.

 

8

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**155 EASTTROPICANA, LLC(A NEVADA LIMITED-LIABILITY COMPANY)**

 

**Notes to Condensed Consolidated Financial Statements (unaudited)(continued)**

 

**4.  Related Party Transactions (continued)**

 

**Provident Advertising &Marketing, Inc.**

 

The majorityshareholder of Provident Advertising & Marketing, Inc.(“Provident”) is Edward C. Droste, a member of the Company’s management boardand an indirect beneficial owner of 3.96% of the Company’s membershipinterests.  Provident was engaged by theCompany to provide services related to the planning and development of aninitial advertising and marketing plan and for the continued development andimplementation of a strategic marketing plan for the Hooters Casino Hotel.  Provident continues to be involved as theCompany’s advertising firm.  In addition,the Company purchases Hooters logo items from Provident for uniforms and forresale in the Company’s gift shops.  Theamounts paid to Provident during the quarters ended March 31, 2008 and2007 totaled $0.3 million and $0.4 million, respectively.

 

***5.  Commitments andContingencies***

 

***Litigation***

 

From time to time, the Company is a party tovarious claims arising in the normal course of business.  Management believes, however, that there areno proceedings pending or threatened against the Company which, if determinedadversely, would have a material adverse effect on the Company’s financialcondition, results of operations or liquidity.

 

***Contractual Commitments***

 

TheCompany has entered into operational contracts totaling $6.7 million at March 31,2008.

 

**Hooters of America Royalty Payments**

 

Beginningon February 3, 2006, the Company was required to pay the owner of theHooters trademark, Hooters of America, a royalty fee equal to 2% of all netrevenues of the hotel and casino (excluding the Dan Marino’s Restaurant and “13”Martini Bar) and 1% of revenues from the Pete and Shorty’s Tavern lessmiscellaneous expenses.  The total feespaid to Hooters of America were $0.3 million and $0.3 million for the quartersended March 31, 2008 and 2007, respectively.  These fees are included in general andadministrative expenses on the accompanying condensed consolidated statementsof operations.

 

9

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**155 EASTTROPICANA, LLC(A NEVADA LIMITED-LIABILITY COMPANY)**

 

**Notes to Condensed Consolidated Financial Statements (unaudited)(continued)**

 

**5. Commitments and Contingencies(continued)**

 

**Preferred Return**

 

The Company’s membership interests include an EWCommon LLC preferred account which accumulates a preferred return rate of 4%per annum on the $25.0 million account balance. Such preferred return began accumulating on March 1, 2006, andaccumulates whether or not there are profits or funds available for the paymentof the preferred return.  Under the Notesindenture, the preferred return to EW Common LLC is payable only if the Company’scoverage ratio of EBITDA to fixed charges (as defined in the indenture andafter giving effect to the payment of the preferred return) is 1.5 to 1 for thefiscal year as measured after the close of the fiscal year.  As of March 31, 2008, $2.1 millionrelating to the preferred account has accumulated, but has not been paid.  As the Company’s coverage ratio of EBITDA tofixed charges did not meet this defined ratio, no liability has been recordedin the accompanying consolidated financial statements at March 31, 2008and December 31, 2007.

 

***6.  Purchase Agreement***

 

OnApril 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 CasinoOperations Lease (the “Lease”) with the Buyer. On May 7, 2007, the Companyentered into a First Amendment to Asset Purchase Agreement with the Buyer.Additionally, on August 8, 2007, the Company entered into a SecondAmendment to Asset Purchase Agreement with the Buyer.

 

Underthe terms of the Agreement, as amended, the Buyer has offered to purchaseessentially all of the assets of the Company for a purchase price of $95.0million in cash, the payment of certain accrued royalties, and the assumptionof certain outstanding liabilities of the Company. The Buyer will also beresponsible for the Company’s $130.0 million in principal amount of 8.75%Senior Secured Notes due 2012.  Inconnection with the Agreement, as amended, the Company has received threenonrefundable deposit payments, (aggregating $3.0 million) including (1) a$1.0 million payment on May 7, 2007 and (2) a $0.5 million payment onAugust 14, 2007 and a $1.5 million deposit payment on November 26,2007.   All deposits will be appliedagainst the purchase price if the transaction closes.

 

TheAgreement, as amended, provided for a closing date on or before December 31,2007, which the Buyer could extend under certain conditions by paying $0.5million for each month the Agreement is extended. Four extension fees of $0.5million each were received by the Company from December through March 2008.In April 2008, an additional extension fee payment of $0.5 million wasreceived.  The extension fees paid arenot refundable and will not be credited toward the purchase price. The companyhas recognized the extension fees as deferred revenue until the transaction iseither consummated or terminated. Notwithstanding the Buyer’s right to extend the closing date, theCompany may terminate the Agreement if the closing has not occurred on orbefore June 30, 2008.

 

10

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**155 EASTTROPICANA, LLC(A NEVADA LIMITED-LIABILITY COMPANY)**

 

**Notes to Condensed Consolidated Financial Statements (unaudited)(continued)**

 

**6.  Purchase Agreement (continued)**

 

Asprovided in the Agreement, the closing will be subject to the completion of duediligence, financing, and licensing, among other customary conditions. Therecan be no assurance that (i) the conditions to closing under Agreementwill ever be satisfied, or (ii) any transaction contemplated under theAgreement will be consummated, or (iii) if a transaction is consummated,it will be on the same or similar terms as currently provided under theAgreement.

 

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## ** **

## **Item 2.  Management’s Discussion and Analysis ofFinancial Condition and Results of Operations.**

 

The following discussion and analysis should be readtogether with our unaudited condensed consolidated financial statements and theaccompanying notes.  This discussioncontains forward-looking statements, within the meaning of Section 27A ofSecurities Act of 1933, as amended, Section 21E of the Securities Exchange Actof 1934, as amended, and the Private Securities Litigation Reform Act of 1995,including statements regarding our expected financial position, business andfinancing plans.  Some of theforward-looking statements can be identified by the use of forward-looking termsuch as “believes,” “expects,” “may,” “will,” “should,” “could,” “seek,”“intends,” “plans,” “estimates,” “anticipates,” or other comparable terms.  Forward-looking statements involve inherentrisks and uncertainties which could cause actual results to differ materiallyfrom those in the forward-looking statement, including those discussed hereinand elsewhere in our Annual Report on Form 10-K filed with the Securities andExchange Commission (“Commission”), on April 2, 2007, 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 (“we”, “us”, “our”,or “155”) was formed on June 17, 2004 to acquire the Hôtel San Rémo Casinoand Resort (“Hôtel San Rémo”), from Eastern & Western HotelCorporation (“Eastern & Western”). Our common membership interests areheld two-thirds through Florida Hooters LLC and one-third through EW CommonLLC.

 

Florida Hooters LLC is a joint venturebetween Hooters Gaming LLC and Lags Ventures, LLC. The owners of Hooters GamingLLC, which include most of the original founders of the Hooters brand, holdlicenses to sell wholesale foods and calendars and to operate hotel casinos inNevada and Hooters restaurants in Tampa Bay, Florida, Chicago, Illinois, anddowntown Manhattan in New York. Lags Ventures, LLC is owned by a holder of thelicense rights to certain Hooters restaurants in Nevada and South Florida.Pursuant to these license rights, the owners of Florida Hooters LLC operate 40Hooters restaurants, publish Hooters calendars, and operate a Hooters foodsbusiness. The owner of Lags Ventures, LLC is also the founder of the Dan Marinoconcept restaurants and owns and operates 2 Dan Marino concept restaurants.

 

Eastern & Western owns 90% of EWCommon LLC, while our President owns the balance. Eastern & Westernowned the Hôtel San Rémo from November 1988 until our acquisition of theHôtel San Rémo in 2004.

 

Our affiliates have granted us assignments ofcertain license agreements pertaining to the use of the Hooters brand as wellas the Dan Marino, “13” Martini Bar (which closed in 2007) and Pete &Shorty’s concept restaurants, which will allow us to operate the Hooters CasinoHotel. The original founders of the Hooters brand sold the trademark rights(excluding certain rights they retained for themselves) to Hooters of Americain 2001. As a result, Hooters of America is the trademark owner of the Hootersbrand and the operator and franchisor of Hooters restaurants. Pursuant to theHooters license assignment, we are required to pay Hooters of America a royaltyfee, which totaled approximately $1.2 million for the year ending December 31,2007. Aside from the abovementioned royalty fee, we are not

 

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otherwise affiliated with Hooters of America.

 

In August 2004, we agreed to theacquisition of the real property and other assets of the Hôtel San Rémo forapproximately $74.6 million including transaction costs and expenses, and asadjusted for final purchase price adjustments.

 

On March 29, 2005, we issued$130.0 million aggregate principal amount of 8.75% Senior Secured Notesdue 2012, or the old notes, in a private placement. The old notes weresubsequently exchanged with new notes (“Notes”) registered under the SecuritiesAct of 1933 on Form S-4. Interest payments on the Notes are duesemi-annually, on each April 1 and October 1. We used the proceedsfrom the 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 awholly owned subsidiary, 155 East Tropicana Finance Corp., solely forfacilitating the offering as a co-issuer of the Notes.

 

We also entered into a $15.0 millionsenior secured credit facility (the “Credit Facility”) concurrently with theoffering. At March 31, 2008, $6.4 million was outstanding on the CreditFacility.

 

***Results of Operations***

 

We generate hotel, casino, food and beverage,entertainment and retail revenues at the hotel casino property.  During the quarter ended March 31, 2008,approximately 36% of the gross revenue was derived from the casino, 31% fromfood and beverage, and 33% from hotel and other.

 

Casino revenue is derived primarily frompatrons wagering on slot machines, table games and other gamingactivities.  Table games includeblackjack, craps, roulette, and specialty games.  Casino revenue is defined as the win fromgaming activities, computed as the difference between gaming wins and losses,not the total amount wagered.  “Tablegame drop” and “slot handle” are casino industry specific terms used toidentify the amount wagered by patrons for a casino table game or slot machine,respectively.  “Table game hold” and “slothold” represent the percentage of the total amount wagered by the patron thatthe casino has won.  Hold is derived bydividing the amount 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 togeneral economic conditions, table game hold, slot hold, and occupancypercentages at the Hooters 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.

 

Room revenue is derived from rooms andsuites rented to guests.  “Average dailyrate” is an industry specific term used to define the average amount of revenueper rented room per day.  “Occupancypercentage” defines the total percentage of rooms occupied, and is computed bydividing the

 

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number of rooms occupied by the total number of rooms available.  Room revenue is recognized at the timethe room is provided to the guest.

 

Food and beverage revenues are derived fromfood and beverage sales in the food outlets of the hotel casino, includingrestaurants, room service and banquets. Food and beverage revenue is recognized at the time food and/or beverageis provided to the guest.  “Covers” arethe number 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 ofoperations of 155, doing business as the Hooters Casino Hotel (which opened on February 3,2006), for the quarters ended March 31, 2008 and 2007 (in thousands,except for percentages):

 
| ** **                                 | ** ** | **Quarter Ended  March 31,  2008** | ** ** | **Quarter Ended  March 31,  2007** | ** ** | **%  Change  2008 - 2007** | ** ** |
|--------------------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|--------------------------------------|------------|
| ** **                                 | ** ** | **(in thousands)**                      | ** ** | ** **                                   | ** ** |
| Casino revenues                            |       | $                                            | 6,427      |                                         | $          | 6,143                                |       | 4.6 | % |
| Casino expenses                            |       | 3,036                                        |       | 3,346                                        |       | -9.3                                 | %          |
| Profit margin                              |       | 52.8                                         | %          | 45.5                                         | %          |                                 |       |
|                                       |       |                                         |       |                                         |       |                                 |       |
| Food, beverage and  entertainment revenues |       | $                                            | 5,670      |                                         | $          | 5,907                                |       | -4.0 | % |
| Food, beverage and  entertainment expenses |       | 4,055                                        |       | 4,502                                        |       | -9.9                                 | %          |
| Profit margin                              |       | 28.5                                         | %          | 23.8                                         | %          |                                 |       |
|                                       |       |                                         |       |                                         |       |                                 |       |
| Hotel and other  revenues                  |       | $                                            | 5,924      |                                         | $          | 6,635                                |       | -10.7 | % |
| Hotel and other  expenses                  |       | 1,929                                        |       | 2,151                                        |       | -10.3                                | %          |
| Profit margin                              |       | 67.4                                         | %          | 67.6                                         | %          |                                 |       |
|                                       |       |                                         |       |                                         |       |                                 |       |
| Promotional allowances                     |       | $                                            | 1,896      |                                         | $          | 1,524                                |       | 24.4 | % |
| Percent of gross  revenues                 |       | 10.5                                         | %          | 8.2                                          | %          |                                 |       |
|                                       |       |                                         |       |                                         |       |                                 |       |
| General and  administrative expenses       |       | $                                            | 4,146      |                                         | $          | 4,714                                |       | -12.0 | % |
| Percent of net revenues                    |       | 25.7                                         | %          | 27.5                                         | %          |                                 |       |

 

The following discussion presents an analysisof the hotel casino’s results of operations for the quarters ended March 31,2008 and 2007.

 

***Comparison of Quarter Ended March 31, 2008with the Quarter Ended March 31, 2007***

 

Net operating revenues forthe quarter ended March 31, 2008 were $16.1 million, a decrease of $1.1 millionor 6.0%, from $17.2 million of net operating revenues generated during the sameperiod in the previous year. . The decline in net revenue, as previouslystated, was largely as a result of the decline of $0.7 million in room revenuecaused by falling room rates.  Other LasVegas casino/hotel market leaders announced they discounted room rates duringthe first quarter of 2008 to attract visitation in the current soft economy andexpect the trend to continue.

 

Promotional allowances(which are subtracted from revenues) increased from $1.4 million to $1.9million, largely due to the promotional give away of show tickets and rooms tocasino customers.

 

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Operating expenses were$15.1 million for the quarter ended March 31, 2008, a decrease of $1.7million or 10.2%, from $16.8 million during the same period in the previousyear.  This decrease in operatingexpenses was the result of an intense program of cost reductions.  Property wide payroll was analyzed in thelast quarter of 2007 and payroll was reduced in several areas where there wasexcess capacity in restaurants.  We alsoreduced payroll in areas that did not impact our excellent customer service.  Additionally, other operating expenses wereevaluated and trimmed where appropriate. This trend of reduced expenses, whichbegan in the fourth quarter of 2007, is expected to continue into futurequarters and will positively impact profits.

 

Casino revenues increased by$0.3 million to $6.4 million for the quarter ended March 31, 2008,compared to $6.1 million for the quarter ended March 31, 2007. Theincrease is due to our successful casino promotions that have brought in morecustomers to play on the casino floor. We were successful in increasing casino revenues in the first quarter inspite of a decline of 3.0% in gaming revenue for all casinos on the Las VegasStrip as reported by the Nevada State Gaming Control Board.

 

Table games revenue was $2.4 million in thefirst quarter of 2008, a decrease of $0.2 million, or 6.3%, compared to thetable games revenue of $2.6 million from the prior year’s quarter. Table gamedrop decreased by $1.5 million, or 9.3%, to $14.7 million for the quarter endedMarch 31, 2008 compared to the $16.2 million for the quarter ended March 31,2007. The decrease in table game drop was partially offset by an increase inthe table game hold percentage from 15.8% in 2007 to 16.4% in 2008.  The table games generated an average win pertable of $855 per day for the quarter ended March 31, 2008 as compared to$866 per day for the quarter ended March 31, 2007.  According to the Gaming Revenue Reportspublished by the Nevada State Gaming Control Board, the average win per tableper day for Las Vegas Strip casinos with annual gaming revenue of $12 to $36million was $862 for the quarter ended March 31, 2008.

 

Slot revenue of $3.8 million for the quarterended March 31, 2008 was an increase of 11.8% compared to $3.4 million inthe same period in 2007.  The average winper machine per day was $74 for the quarter ended March 31, 2008 ascompared to $65 for the quarter ended March 31, 2007.  According to the Gaming Revenue Reportspublished by the Nevada State Gaming Control Board, the average win per machineper day for Las Vegas Strip casinos with annual gaming revenue of $12 to $36million was $76 for the quarter ended March 31, 2008.  We continued targeting our marketing effortsto increase slot play through targeted slot marketing programs aimed atattracting a flow of customers to the casino floor.

 

Casino expenses which included casinooperational expenses and casino marketing decreased by 9.3% to $3.0 million forthe quarter ended March 31, 2008 compared to $3.3 million for the quarterended March 31, 2007 largely due to decreases in payroll expense. Theprofit margin for casino operations increased from 45.5% during the quarterended March 31, 2007 to 52.8% during the quarter ended March 31,2008.

 

Food, beverage and entertainment revenue was$5.7 million for the quarter ended March 31, 2008 as compared to $5.9million for 2007 a decrease of $0.2 million, or 4.0%. Food and beverage revenuedeclined due to a loss of food covers caused by the closure of the Dam CoffeeShop in October 2007.  The declinein food and beverage revenue was partially offset by the increase inentertainment ticket revenue of $0.3 million in the first quarter of 2008 as aresult of opening the Bobby Slayton show in April 2007.

 

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Food, beverage and entertainment expenses decreasedto $4.0 million during the quarter ended March 31, 2008 from $4.5 millionduring the quarter ended March 31, 2007, a decrease of $0.5 million or9.9%.  The savings in food, beverage andentertainment expenses were facilitated by increased efficiencies in payrolland other operating expenses with the closing of our excess restaurantcapacity.

 

Hotel and other revenue (which includes hotelroom revenue, retail, spa and other miscellaneous revenue) decreased by $0.7million, or 10.7%, to $5.9 million for the quarter ended March 31, 2008,from $6.6 million for the quarter ended March 31, 2007. Room revenuewas $4.4 million for the quarter ended March 31, 2008 compared to $5.1million in 2007 Average daily room rates decreased by 11.0% from $90 for the quarterended March 31, 2007 to $80 for the quarter ended March 31, 2008, andoccupancy rates decreased from 91.3% for the period from quarter ended March 31,2007 to 87.9% for the quarter ended March 31, 2008.

 

Sales from our retail outlets selling Hooterslogo merchandise decreased by $0.1 million or 6.2%

 

Hotel and other expensesdecreased by $0.3 million, or 10.3%, from $2.2 million during the quarter endedMarch 31, 2007 to $1.9 million during the quarter ended March 31,2008, largely due to savings in payroll and other room department operatingexpenses. Because of those efficiencies, the profit margin for hotel and otherrevenue was 67.4% in the first quarter of 2008 compared to 67.6% for that sameperiod in the prior year, despite the decline in revenue of 10.7%

 

General and administrative expense includescosts associated with advertising, marketing, information technology, finance,accounting, and property operations. General and administrative expensedecreased $0.6 million to $4.1 million for the quarter ended March 31,2008 compared to $4.7 million for the quarter ended March 31, 2007. Thedecrease in expenses is due to decreases in payroll, advertising, legal feesand various other administrative costs.

* *

*Depreciation and amortizationexpense.*  Depreciationand amortization expense of $1.5 million for the quarter ended March 31,2008 decreased by $0.2 million, or 9.8%, from $1.7 million for the quarterended March 31, 2007.

* *

*Related party royalties expenses.*  Beginning on February 3, 2006, weincurred related party royalty fees pursuant to agreements with Hooters GamingCorporation, Lags Ventures, Inc., and Las Vegas Wings, Inc.  These related party royalties expensesremained flat at $0.3 million for the quarters ended March 31, 2008 and2007.  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.

* *

*Interest income.*  Interest income was approximately $80,213 forthe quarter ended March 31, 2008, compared to $37,428 for the quarterended March 31, 2007. The increase is associated with increased cashinvestments in 2008 and interest earned on trade receivables.

* *

*Interest expense.*  Interest expense remained constant at $3.3million for the quarter ended March 31, 2007 and 2008 with the modestincrease in debt at March 31, 2008 offset by a decrease in interest rates.

 

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

 

***Contractual Obligations***

 

The following table summarizes thecontractual commitments of 155 East Tropicana, LLC as of March 31, 2008:

 
| ** **                         | ** ** | **Payments Due By Year** | ** ** |
|------------------------------------|------------|-----------------------------------------|------------|
| ** **                         | ** ** | **Total**                               | ** ** | **Less than  1 year** | ** ** | **1-3 years** | ** ** | **4-5 years** | ** ** | **Thereafter** | ** ** |
| ** **                         | ** ** | **(dollars in thousands)**    | ** ** |
| Long-term debt (1)                 |       | $                                       | 136,386    |   | 6,386 |   | $ | — |   | 130,000 |   | — |   |
| Equipment purchase  agreements (2) |       | 1,817                                   |       | 1,706 |   | 111 |   | — |   | — |   |
| Operating contracts (3)            |       | 4,163                                   |       | 1,229 |   | 1,213 |   | 55 |   | — |   |
| Total                              |       | $                                       | 142,366    |   | $ | 9,321 |   | $ | 1,324 |   | $ | 130,055 |   | $ | — |   |
|                                    |            |                                         |            |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

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| (1) |   | The long-term debt  represents the $6.4 million in outstanding draws against the Credit Facility  as of March 31, 2008 due on March 30, 2009 and the $130.0 million  Notes issued on March 29, 2005 and due on 2012. |
|-----|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) |   | We entered into various  equipment purchase agreements in connection with the renovation and  rebranding of the Hooters Casino Hotel.                                                                                               |
| (3) |   | Operating contracts  represent various contracts for services in connection with the operations of  the Hooters Casino Hotel.                                                                                                       |

 

 

***Liquidity and Capital Resources (155 EastTropicana, LLC)***

 

For the quarter ended March 31,2008, $4.4 million of cash was provided by operating activities and we used$0.2 million of cash in investing activities largely due to capitalexpenditures.

 

For the quarter ended March 31, 2008,$1.1 million of cash was provided by financing activities, as a result of thereceipt of $1.5 million in extension payments on the pending purchase agreementwith Hedwigs Las Vegas Top Tier, LLC (the “Purchase Agreement’), partiallyoffset by $0.5 million in principal payments on our equipment debt. On April 30,2008 we received an additional extension fee of $0.5 million, which extendedthe Purchase Agreement to May 31, 2008.

 

The Notes indenture contains certainprovisions which restrict or limit our ability to, among other things, incurmore debt, pay dividends, redeem stock or make other distributions, enter intotransactions with affiliates or transfer or sell assets.

 

Our four-year revolving Credit Facility of $15.0 million, which matureson March 30, 2009, currently has outstanding draws of $6.4 million at March 31,2008.  All outstanding principal andinterest

 

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under the Credit Facilityis due and payable on March 30, 2009. If the sale of the property, ascontemplated under the Purchase Agreement, is not consummated, we will beginnegotiations with the holder of the Credit Facility to extend the revolvingCredit Facility beyond that date.

 

During the quarter ended March 31, 2007,we entered into a new equipment financing agreement for $0.3 million.  At March 31, 2008, $1.7 million wasoutstanding under equipment financing agreements.

 

We believe that we have the flexibility tocover operational contingencies, working capital needs, capital expenditures,and debt service obligations during 2008 through the use of cash (which totaled$11.2 million at March 31, 2008, including $3.8 million required in dailyoperations), our cash flow from operations, and our ability to draw against our$15.0 million Credit Facility, along with other available equipment financingand the receipt of extension fees payments called for under the PurchaseAgreement that have been received subsequent to December 31, 2007.

 

On April 1, 2008 interest payment of$5.7 million due on the Notes was paid from available cash.

 

***Critical AccountingPolicies and Estimates***

 

We prepare our consolidated financialstatements in conformity with accounting principles generally accepted in theUnited States.  Certain of our accountingpolicies, including the estimated useful lives assigned to our assets, healthbenefit reserves, slot point reserves and determination of bad debt reserves,require that we apply significant judgment in defining the appropriateassumptions for calculating financial estimates.  By their nature, these judgments are subjectto an inherent degree of uncertainty.  Ourjudgments are based in part on our historical experience, terms of existingcontracts, observance of trends in the gaming industry and information obtainedfrom independent valuation experts or other outside sources.  We cannot assure you that our actual resultswill conform to our estimates.  Foradditional information on critical accounting policies and estimates, see “Item7 Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and the notes to our audited consolidated financial statementsincluded in our Annual Report on Form 10-K for the year ended December 31,2007.

 

## **Item 3.  Quantitative and Qualitative DisclosuresAbout Market Risk.**

 

The following discusses our exposure tomarket risk related to changes in interest rates, equity prices and foreigncurrency exchange rates.  We do notbelieve that their respective exposure to market risk is material.

 

Market risk is risk of loss arising fromchanges in market rates and prices, such as interest rates, foreign currencyexchange rates and commodity prices.  At March 31,2008, we had $130.0 million aggregate principal amount of the Notes, slotequipment purchase agreements of $1.7 million carrying an imputed interest rateof 3.327%, and hotel equipment purchase agreements of $0.1 million carryinginterest rates averaging 11.72%.   TheNotes carry a fixed interest rate of 8.75 %, provided no events of default haveoccurred.  Since the Notes and equipmentpurchase agreements have fixed interest rates, there is no market riskassociated with these loans other than fair value market risk, which we believeto be insignificant.  We have market riskassociated with funds that may be borrowed on the $15.0 million CreditFacility, due to an interest rate that floats with the LIBOR or primerate.  The term of the Credit Facilitywill mature on March 30,2009.  At March 31, 2008, $6.4million was outstanding under the variable rate Credit Facility, carryinginterest at 6.52%.  Assuming a 100basis-point change in LIBOR at March 31, 2008 and assuming no change inthe funds borrowed on the $15.0 million Credit Facility, our annual interestcost would change by approximately $64,000.

** **

**We do nothave any significant foreign currency exchange rate risk or commodity pricerisk and do not currently trade any market sensitive instruments.**

 

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

## ** **

## ***Evaluation of DisclosureControls***

 

We evaluated the effectiveness of our disclosure controls andprocedures as of three months ended March 31, 2008.  This evaluation was done with theparticipation of our management, including our Chief Executive Officer andChief Financial Officer.

 

Disclosure controls and procedures are controls and other proceduresthat are designed to ensure that information required to be disclosed by us inthe reports that we file or submit under the Securities Exchange Act of 1934are recorded, processed, summarized and reported within the time periodsspecified 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 disclosure controls andprocedures or our internal controls over financial reporting will prevent allerror and all fraud.  A control system,no matter how well conceived and operated, can provide only reasonable, but notabsolute, assurance that the objectives of a control system are met.  Further, any control system reflectslimitations 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 become inadequate because of changes inconditions, or the degree of compliance with the policies or procedures maydeteriorate. Because of the inherent limitations in a cost-effective controlsystem, misstatements due to error or fraud may occur and may not be detected.

 

## ***Conclusions***

 

Based on this evaluation, our Chief Executive Officer and ChiefFinancial Officer have evaluated our disclosure controls and procedures (asdefined in the Securities Exchange Act of 1934 Rules 13a-15(e) and15d-15(e)) as of March 31, 2008, and have concluded that they areeffective to timely alert them to material information relating to us requiredto be included in the reports that we file or submit under the SecuritiesExchange Act of 1934.

 

## ***Changes in InternalControls***

 

There were no changes in our internalcontrols over financial reporting that occurred during our last fiscal quarter,*i.e.*, the quarter ended March 31,2008, that have materially affected, or are reasonably likely to materiallyaffect, our internal controls over financial reporting.

 

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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 andUse of Proceeds.**

 

None.

 

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

 

None.

 

## **Item 4.  Submission of Matters to a Vote of SecurityHolders.**

 

None.

 

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

 

None.

 

## **Item 6.  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

 

32.2         Certificationpursuant to §906 of the Sarbanes-Oxley Act of 2002, Neil G. Kiefer

 

20

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# **SIGNATURES**

 

Pursuant to the requirements of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.

 

 
| **155 EAST TROPICANA, LLC**           | ** **                                                                      |
|---------------------------------------|---------------------------------------------------------------------------------|
|                                  |                                                                            |   |
|                                  |                                                                            |   |
| By:                                   | /s/ Deborah J. Pierce                                                           |   | May 14, 2008 |
|                                  |                                                                            |   |
|                                  | Deborah J. Pierce                                                               |   |
|                                  | *Chief Financial Officer  (Principal Financial and Chief   Accounting Officer)* | * * |
|                                  |                                                                            |   |
|                                  |                                                                            |   |
| **155 EAST TROPICANA  FINANCE CORP.** |                                                                            |
|                                  |                                                                            |   |
|                                  |                                                                            |   |
| By:                                   | /s/ Deborah J. Pierce                                                           |   | May 14, 2008 |
|                                  |                                                                            |   |
|                                  | Deborah J. Pierce                                                               |   |
|                                  | *Chief Financial Officer  (Principal Financial and Chief   Accounting Officer)* |   |
|                                       |                                                                                 |  |  |  |

 

21

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