Tableof Contents

 

 

 

**UNITEDSTATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-Q**

 

**(MarkOne)**

 

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

 

**For the quarterly period ended June 30, 2009**

 

**or**

 

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

 

**For thetransition period from                        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 has submitted electronically and posted onits corporate Web site, if any, every Interactive Date File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (232.405 ofthis chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).  Yes   o    No  o

 

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

 
| Large accelerated filer o | Accelerated filer o         |
|---------------------------|-----------------------------|
|                      |                        |
| Non-accelerated filer x   | Smaller reporting company o |

 

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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Tableof Contents

 
| **PART I – FINANCIAL INFORMATION4** | ** **                                                                                  |
|------------------------------------------|---------------------------------------------------------------------------------------------|
|                                     |                                                                                        |
| Item 1.                                  | Financial  Statements                                                                       | 3 |
|                                     |                                                                                        |   |
|                                     | **155  EAST TROPICANA, LLC (A Nevada Limited-Liability Company)**                           |   |
|                                     |                                                                                        |   |
|                                     | Condensed Consolidated Balance Sheets                                                       | 3 |
|                                     | Condensed Consolidated Statements of Operations                                             | 4 |
|                                     | Condensed Consolidated Statements of Cash Flows                                             | 5 |
|                                     | Notes to Condensed Consolidated Financial Statements                                        | 6 |
|                                     |                                                                                        |   |
| Item 2.                                  | Management’s  Discussion and Analysis of Financial Condition and Results of Operations | 15 |
|                                     |                                                                                        |   |
| Item 3.                                  | Quantitative  and Qualitative Disclosures About Market Risk                                 | 25 |
|                                     |                                                                                        |   |
| Item 4T.                                 | Controls and  Procedures                                                                    | 26 |
|                                     |                                                                                        |   |
| **PART  II – OTHER INFORMATION**    | ** **                                                                                  |
|                                     |                                                                                        |
| Item 6.                                  | Exhibits                                                                                    | 28 |
|                                     |                                                                                        |   |
| **SIGNATURES**                           | **29**                                                                                      |
|                                          |                                                                                             |  |  |

 

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# **PART I —FINANCIAL INFORMATION**

 

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

## ** **

### **155 EASTTROPICANA, LLC**

### **(A NEVADALIMITED-LIABILITY COMPANY)**

### ** **

### **CONDENSEDCONSOLIDATED BALANCE SHEETS**

 
| ** **                                                                                                           | ** ** | **June 30,** | ** **  | **December 31,** |   |
|----------------------------------------------------------------------------------------------------------------------|------------|-------------------|-------------|-----------------------|--------|
| ** **                                                                                                           | ** ** | **2009**          | ** **  | **2008**              |   |
| ** **                                                                                                           | ** ** | **(unaudited)**   | ** **  | ** **            |   |
| **Assets**                                                                                                           |       |              |        |                  |   |
| Current assets:                                                                                                      |       |              |        |                  |   |
| Cash and cash equivalents                                                                                            |       | $                 | 7,961,244   |                  | $      | 4,980,299 |   |
| Accounts receivable, net of allowance for doubtful accounts of  $234,905 and $199,872 in 2009 and 2008, respectively |       | 528,017           |        | 662,683               |   |
| Inventories                                                                                                          |       | 857,438           |        | 839,643               |   |
| Prepaid expenses                                                                                                     |       | 1,525,143         |        | 1,409,819             |   |
| Total current assets                                                                                                 |       | 10,871,842        |        | 7,892,444             |   |
| Property and equipment,  net                                                                                         |       | 110,879,219       |        | 111,254,020           |   |
| Other long-term assets:                                                                                              |       |              |        |                  |   |
| Deferred financing costs                                                                                             |       | 3,208,448         |        | 3,801,924             |   |
| Intangible assets                                                                                                    |       | 2,969,213         |        | 2,995,168             |   |
| Other assets                                                                                                         |       | 396,717           |        | 483,695               |   |
| Total other long-term assets                                                                                         |       | 6,574,378         |        | 7,280,787             |   |
| Total assets                                                                                                         |       | $                 | 128,325,439 |                  | $      | 126,427,251 |   |
|                                                                                                                 |       |              |        |                  |   |
| **Liabilities and Members’  (Deficit) Equity**                                                                  |       |              |        |                  |   |
| Current liabilities:                                                                                                 |       |              |        |                  |   |
| Accounts payable                                                                                                     |       | $                 | 2,008,555   |                  | $      | 2,794,378 |   |
| Accrued interest payable                                                                                             |       | 8,531,252         |        | 2,843,750             |   |
| Accrued liabilities                                                                                                  |       | 1,497,617         |        | 1,475,062             |   |
| Current portion of long-term debt                                                                                    |       | 145,301,731       |        | 141,362,004           |   |
| Total current liabilities                                                                                            |       | 157,339,155       |        | 148,475,194           |   |
| Related party royalties payable                                                                                      |       | 4,792,198         |        | 4,210,567             |   |
| Long-term debt                                                                                                       |       | 1,561,810         |        | —                |   |
| Total liabilities                                                                                                    |       | 163,693,163       |        | 152,685,761           |   |
|                                                                                                                 |       |              |        |                  |   |
| Commitments and  contingencies                                                                                       |       |              |        |                  |   |
|                                                                                                                 |       |              |        |                  |   |
| Members’ (deficit) equity:                                                                                      |       |              |        |                  |   |
| Membership interests                                                                                                 |       | 34,333,375        |        | 34,333,375            |   |
| Accumulated deficit                                                                                                  |       | (69,701,099       | )           | (60,591,885           | )      |
|                                                                                                                 |       | (35,367,724       | )           | (26,258,510           | )      |
| Total liabilities and members’ (deficit) equity                                                                 |       | $                 | 128,325,439 |                  | $      | 126,427,251 |   |

 

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

 

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

 

### **CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)**

 
| ** **                                      | ** ** | **Three Months Ended** | ** ** | **Six Months Ended** | ** ** |
|-------------------------------------------------|------------|------------------------|------------|----------------------|------------|
| ** **                                      | ** ** | **June 30,**      | ** ** | **June 30,**    | ** ** | **June 30,** | ** ** | **June 30,** | ** ** |
| ** **                                      | ** ** | **2009**               | ** ** | **2008**             | ** ** | **2009** | ** ** | **2008** | ** ** |
| ** **                                      | ** ** | ** **             | ** ** | ** **           | ** ** | ** ** | ** ** | ** ** | ** ** |
| Operating  revenues:                            |       |                   |       |                 |       |   |   |   |   |
| Casino                                          |       | $                      | 4,343,789  |                 | $          | 6,918,611 |   | $ | 9,908,983 |   | $ | 13,345,409 |   |
| Food,  beverage and entertainment               |       | 4,763,551              |       | 5,853,877            |       | 10,092,720 |   | 11,523,524 |   |
| Hotel  and other                                |       | 3,815,518              |       | 5,676,677            |       | 7,822,480 |   | 11,600,907 |   |
|                                            |       | 12,922,858             |       | 18,449,165           |       | 27,824,183 |   | 36,469,840 |   |
| Less  promotional allowances                    |       | (1,248,446             | )          | (2,013,407           | )          | (2,808,351 | ) | (3,908,916 | ) |
| Net  operating revenues                         |       | 11,674,412             |       | 16,435,758           |       | 25,015,832 |   | 32,560,924 |   |
|                                            |       |                   |       |                 |       |   |   |   |   |
| Operating  expenses:                            |       |                   |       |                 |       |   |   |   |   |
| Casino                                          |       | 2,729,934              |       | 4,492,855            |       | 5,864,749 |   | 7,528,910 |   |
| Food,  beverage and entertainment               |       | 2,853,217              |       | 3,345,668            |       | 6,219,059 |   | 7,400,611 |   |
| Hotel  and other                                |       | 1,769,002              |       | 2,055,952            |       | 3,492,854 |   | 3,985,313 |   |
| General  and administrative                     |       | 3,490,901              |       | 4,289,069            |       | 6,935,679 |   | 8,435,406 |   |
| Restructuring  expense                          |       | 476,430                |       | —               |       | 931,219 |   | — |   |
| Depreciation  and amortization                  |       | 1,708,026              |       | 1,629,734            |       | 3,339,143 |   | 3,159,260 |   |
| Related  party royalties expenses               |       | 268,518                |       | 363,884              |       | 581,632 |   | 721,793 |   |
| Total  operating expenses                       |       | 13,296,028             |       | 16,177,162           |       | 27,364,335 |   | 31,231,293 |   |
| Operating  (loss) income                        |       | (1,621,616             | )          | 258,596              |       | (2,348,503 | ) | 1,329,631 |   |
|                                            |       |                   |       |                 |       |   |   |   |   |
| Other  (expense) income:                        |       |                   |       |                 |       |   |   |   |   |
| Income  on forfeited depositsand extension fees |       | —                 |       | 5,500,000            |       | — |   | 5,500,000 |   |
| Interest  income                                |       | 23                     |       | 10,910               |       | 1,388 |   | 91,123 |   |
| Interest  expense                               |       | (3,428,647             | )          | (3,326,452           | )          | (6,762,099 | ) | (6,673,021 | ) |
| Other  (expense) income, net                    |       | (3,428,624             | )          | 2,184,458            |       | (6,760,711 | ) | (1,081,898 | ) |
| Net  (loss) income                              |       | $                      | (5,050,240 | )                    | $          | 2,443,054 |   | $ | (9,109,214 | ) | $ | 247,733 |   |

 

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

 

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

 

### **CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)**

 
| ** **                                                                                | ** ** | **Six Months Ended********June 30,********2009** | ** ** | **Six Months Ended********June 30,********2008** | ** ** |
|-------------------------------------------------------------------------------------------|------------|-------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                                                                | ** ** | ** **                                            | ** ** | ** **                                            | ** ** |
| **Cash Flow From Operating Activities**                                                   |       |                                                  |       |                                                  |       |
| Net  (loss) income                                                                        |       | $                                                     | (9,109,214 | )                                                     | $          | 247,733 |   |
| Adjustments  to reconcile net (loss) income to net cashprovided by  operating activities: |       |                                                  |       |                                                  |       |
| Depreciation  and amortization                                                            |       | 3,339,143                                             |       | 3,159,260                                             |       |
| Amortization  of deferred financing costs                                                 |       | 593,476                                               |       | 697,731                                               |       |
| Amortization  of intangible asset                                                         |       | 25,955                                                |       | 25,955                                                |       |
| Changes  in operating assets and liabilities:                                             |       |                                                  |       |                                                  |       |
| Accounts  receivable                                                                      |       | 134,666                                               |       | 687,933                                               |       |
| Inventories                                                                               |       | (17,795                                               | )          | 93,160                                                |       |
| Prepaid  expenses                                                                         |       | (115,324                                              | )          | (16,910                                               | )          |
| Accounts  payable                                                                         |       | (785,824                                              | )          | 180,428                                               |       |
| Related  party royalties payable                                                          |       | 581,631                                               |       | 721,793                                               |       |
| Accrued  interest payable                                                                 |       | 5,687,502                                             |       | —                                                |       |
| Accrued  liabilities                                                                      |       | 22,555                                                |       | 668,749                                               |       |
| Net  cash provided by operating activities                                                |       | 356,771                                               |       | 6,465,832                                             |       |
|                                                                                      |       |                                                  |       |                                                  |       |
| **Cash Flow From Investing Activities**                                                   |       |                                                  |       |                                                  |       |
| Capital  expenditures                                                                     |       | (437,122                                              | )          | (446,016                                              | )          |
| Change  in other assets                                                                   |       | 86,978                                                |       | (24,500                                               | )          |
| Net  cash used in investing activities                                                    |       | (350,144                                              | )          | (470,516                                              | )          |
|                                                                                      |       |                                                  |       |                                                  |       |
| **Cash Flow From Financing Activities**                                                   |       |                                                  |       |                                                  |       |
| Proceeds  from issuance of long-term debt                                                 |       | 3,384,298                                             |       | 246,073                                               |       |
| Principal  payments on equipment purchase agreements                                      |       | (409,980                                              | )          | (1,034,752                                            | )          |
| Purchase  deposit and extension fee payments                                              |       | —                                                |       | (3,500,000                                            | )          |
| Net  cash provided by (used in) financing activities                                      |       | 2,974,318                                             |       | (4,288,679                                            | )          |
|                                                                                      |       |                                                  |       |                                                  |       |
| Increase  in cash and cash equivalents                                                    |       | 2,980,945                                             |       | 1,706,637                                             |       |
| Cash  and cash equivalents, beginning of period                                           |       | 4,980,299                                             |       | 5,861,991                                             |       |
| Cash  and cash equivalents, end of period                                                 |       | $                                                     | 7,961,244  |                                                  | $          | 7,568,628 |   |
|                                                                                      |       |                                                  |       |                                                  |       |
| **Supplemental disclosure of cash flow information**                                      |       |                                                  |       |                                                  |       |
| Cash  paid for interest                                                                   |       | $                                                     | 481,121    |                                                  | $          | 6,673,021 |   |
|                                                                                      |       |                                                  |       |                                                  |       |   |   |
| Assets  acquired through equipment purchase agreements                                    |       | $                                                     | 2,527,221  |                                                  | $          | — |   |

 

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

 

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

 

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

### ** **

**June 30, 2009**

 

**1.  Organizationand Basis of Presentation**

** **

155 East Tropicana, LLC, a Nevadalimited-liability company (the “Company”) was formed on June 17, 2004 toacquire the real and personal property of the Hôtel San Rémo Casino and Resort(the “Hôtel San Rémo”) in Las Vegas, Nevada with the intention of renovatingthe existing casino and hotel facility with a “Hooters” entertainment conceptand theme.  The renovations werecompleted and the Hôtel San Rémo property was reopened as the new HootersCasino Hotel on February 3, 2006. The Company’s business is concentrated at the one casino and hotelproperty in Las Vegas, Nevada.  Therenovations were financed by the Company and its wholly owned subsidiary, 155East Tropicana Finance Corp., through a $130.0 million Senior Secured Notes (“Notes”)offering that closed on March 29, 2005. The Company’s membership interests are held two-thirds through FloridaHooters LLC and one-third through EW Common LLC.  The initial capitalization of the Company wasprovided by Florida Hooters LLC in the form of a $5.1 million cashcontribution and the assignment of rights with respect to the Hooters trademarkand logo and other intellectual property and by EW Common LLC in the form of a$25.0 million deemed capital contribution. The deemed capital contribution from EW Common LLC carries with it apriority return of four percent on the contribution annually.  The payment of this priority return issubject to meeting certain financial covenants associated with the Company’sdebt.

 

Florida Hooters LLC is a joint venturebetween Hooters Gaming LLC and Lags Ventures, LLC.  Hooters Gaming LLC is owned by the holders oflicenses to operate Hooters restaurants in Tampa Bay, Florida, Chicago,Illinois and downtown Manhattan in New York as well as for the sale of wholesalefoods and calendars and Nevada hotel/gaming and includes most of the originalfounders of the Hooters brand.  Pursuantto these license rights, the owners of Florida Hooters LLC operate 39 Hootersrestaurants, publish Hooters calendars and operate a Hooters foodbusiness.  Lags Ventures, LLC is owned bya holder of the license rights to certain Hooters restaurants in Nevada andSouth Florida. The owner of Lags Ventures, LLC is also the founder of the DanMarino concept restaurants and owns and operates two Dan Marino conceptrestaurants.

 

EW Common LLC is owned 90% by Eastern &Western Hotel Corporation (“Eastern & Western”) and 10% by thepresident of the Company.  Eastern &Western and its affiliates owned the real property and non-gaming assets of HôtelSan Rémo from November 1988 until the Company’s acquisition of the HôtelSan Rémo in August 2004.

 

Florida Hooters LLC and EW Common LLC enteredinto a joint venture agreement for the purpose of forming the Company anddocumenting the terms of their investments and business venture.

 

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

 

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

### ** **

**1.  Organization andBasis of Presentation (continued)**

 

The Hooters Casino Hotel currently features acasino floor with 618 slot and video poker machines, 25 table games, 696 hotelrooms including 17 suites, a tropical pool area, retail outlets and dining andentertainment options which include a Hooters restaurant, Dan Marino’srestaurant, a sports bar, several bars and Night Owl Showroom.

 

Significant inter-company transactionsbetween the Company and its wholly owned subsidiary have been eliminated inconsolidation.

 

As permitted by the rules andregulations of the Securities and Exchange Commission, certain information andfootnote disclosures normally included in financial statements prepared inaccordance with generally accepted accounting principles have been condensed oromitted.  These condensed consolidatedfinancial statements should be read in conjunction with the Company’s 2008annual consolidated financial statements and notes thereto included in theCompany’s Annual Report on Form 10-K for the year ended December 31,2008.

 

In the opinion of management, theaccompanying unaudited condensed consolidated financial statements contain alladjustments — which include normal recurring adjustments — necessary to presentfairly the Company’s financial position as of June 30, 2009 and theresults of its operations for the three month and six month periods ended June 30,2009 and 2008.  The results of operationsfor such periods are not necessarily indicative of the results to be expectedfor the full year.

 

In preparing these financial statements, the Company had evaluatedevents and transactions for potential recognition or disclosure throughAugust 14, 2009, the date the financial statements were issued. 

 

**2.  Liquidity and Financial Position**

 

The Company has significant indebtedness and financial commitments in2009.  As of June 30, 2009, theCompany has $146.9 million in total debt. Currently, the Senior Secured Credit Facility, (“Credit Facility”), isfully extended and the Company has no additional availability to borrow againstthe Credit Facility.  The Company doesnot believe it will be able to generate sufficient cash flows from operationsto fund its 2009 financial commitments and cannot provide any assurances thatit will be able to raise additional capital.

 

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

 

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

### ** **

**2. Liquidity and FinancialPosition (continued)**

 

TheCompany’s current expectations for 2009 indicate that operating cash flow willbe lower than in 2008.  During the firstsix months of 2009, the Company generated $0.8 million in cash from operatingactivities before deducting cash paid for interest.  For the year ended December 31, 2008,the Company generated approximately $7.4 million in cash from operatingactivities, excluding income from forfeited purchase deposit and extension feesrelated to the cancelled sale to Hedwigs and before deducting cash paid forinterest.

 

Basedon anticipated future operations, the Company does not believe that cash onhand at June 30, 2009 of $8.0 million and expected cash flows will beadequate to meet the total financial obligations which include (1) anticipatedoperational expenses, (2) debt service on equipment leases and the CreditFacility, (3) capital expenses and (4) scheduled payments of intereston the Notes.  The Company was unable tomake the interest payment on the Notes due April 1, 2009 and does notanticipate making the scheduled interest payment on October 1, 2009.Currently, our other obligations are being paid in the normal course ofbusiness.  Due to the Company’s inabilityto make the interest payment due April 1, 2009, an event of defaultoccurred under the indenture governing the Notes.  As a result, the note holders could exercisecertain remedies provided under the indenture.  The Company has received Notice of Default and Reservation of Rightsletters (the “Default Letters”) from the lenders under the CreditFacility.  The Default Letters state that(i) an event of default exists under the Credit Facility as a result ofthe Company’s failure to obtain control agreements for one or more depositaccounts established and maintained by the Company and as a result of failureto pay interest on the Notes, (ii) as a result of the event of default, thelenders are under no further obligation to extend further credit under theCredit Facility, (iii) the lenders will continue to evaluate its responseto the event of default, and (iv) the Company no longer has an option ofpaying the LIBOR interest rate, but must pay the Wells Fargo prime rate  plus the default rate, which is equal to fourpercentage points above prime rate.  Thelenders have not elected to accelerate the indebtedness under the CreditFacility.  The Company has entered intodiscussions with the note holders and the Credit Facility lenders to attempt tonegotiate forbearance agreements pursuant to which they would agree not toexercise, for a specified period of time, their remedies under the indenture orthe Credit Facility.  The Company hasengaged a financial advisor to assist with its evaluation of financial andstrategic alternatives, which may include a recapitalization, refinancing,restructuring or reorganization of its obligations or a sale of some or all ofits business.  The Company and itsadvisors are actively working toward such a transaction.  The Company cannot be assured that it will besuccessful in negotiating forbearance with the note holders or Credit Facilitylender or in undertaking any such alternative in the near term.

 

Ifthe Company is not successful in obtaining a forbearance or entering into atransaction to address its liquidity and capital structure, the note holdershave the ability to accelerate repayment of all amounts outstanding under theindenture ($138.5 million at June 30, 2009) and the Credit Facilitylenders have the ability to accelerate repayment of all amounts outstandingunder the Credit Facility ($14.5 million at June 30, 2009, plus anirrevocable letter of credit for $0.5 million at June 30, 2009).  If

 

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

 

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

### ** **

**2. Liquidity and FinancialPosition (continued)**

 

eitherthe Notes indebtedness or the Credit Facility indebtedness were to beaccelerated, the Company would be required to refinance or restructure thepayments on that debt.  The Companycannot be assured that it will be successful in completing a refinancing orrestructuring.  If the Company is unableto do so, it may determine to seek protection under Chapter 11 of the U.S.Bankruptcy Code.

 

Theconditions and events described above raise a substantial doubt about theCompany’s ability to continue as a going concern.  The Company has classified most of its debtat June 30, 2009, and all debt at December 31, 2008, as a currentliability on the balance sheet.  Theaccompanying condensed consolidated financial statements do not include alladjustments to reflect the possible future effects on the recoverability andclassification of assets or the amounts and classifications of liabilities thatmay result should the Company be unable to continue as a going concern.

 

**3.  Summary ofSignificant Accounting Principles**

 

*Reclassifications. *Certain reclassifications, having no effect on net loss, have been madeto the previously issued condensed consolidated financial statements to conformto the current period’s presentation of the Company’s condensed consolidatedfinancial statements.

 

*Recently Issued Accounting Pronouncements.*

 

InJune 2009, the Financial Accounting Standards Board (“FASB”) issuedStatement of Financial Accounting Standards (“SFAS”) No. 168, “The FASBAccounting Standards Codification and the Hierarchy of Generally AcceptedAccounting Principles” (“SFAS 168”). SFAS 168 establishes the FASB AccountingStandards Codification (the “Codification”) as the single source ofauthoritative nongovernmental U.S. GAAP. The Codification is effective forinterim and annual periods ending after September 15, 2009.  The Company does not expect the adoption ofSFAS 168 to have a material impact on its consolidated financial statements.

 

InJune 2009, the FASB issued SFAS No. 167, “Amendments to FASBInterpretation No. 46(R)” (“SFAS 167”). SFAS 167 is intended to improvefinancial reporting by providing additional guidance to companies involved withvariable interest entities and by requiring additional disclosures about acompany’s involvement in variable interest entities. This standard is effectivefor interim and annual periods ending after November 15, 2009.  The Company does not expect the adoption ofSFAS 167 to have a material impact on its consolidated financial statements.

 

InJune 2009, the FASB issued SFAS No. 166, “Accounting for Transfers ofFinancial Assets” (“SFAS 166”). SFAS 166 is a revision to SFAS No. 140,“Accounting for Transfers and Servicing of Financial Assets and Extinguishmentsof Liabilities”, and will require more information about transfers of financialassets and where companies have continuing exposure to the risk related totransferred financial assets. It eliminates the concept of a qualifying specialpurpose entity, changes the requirements for

 

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

 

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

### ** **

**3.  Summary ofSignificant Accounting Principles (continued)**

 

derecognizing financialassets, and requires additional disclosure. This standard is effective forinterim and annual periods ending after November 15, 2009. The Companydoes not expect the adoption of SFAS 166 to have a material impact on itsconsolidated financial statements.

 

InMay 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS165”), which establishes general standards of accounting for, and requiresdisclosure of, events that occur after the balance sheet date but beforefinancial statements are issued or are available to be issued.  The adoption of SFAS 165 became effective forthe quarter ended June 30, 2009 and has had no significant impact on theCompany’s consolidated financial statements.

 

InApril 2009, the FASB issued Staff Position (“FSP”) No. 107-1 andAccounting Principles Board (“APB”) 28-1 (“FSP 107-1” and “APB 28-1”), “InterimDisclosures about Fair Value of Financial Instruments”.  FSP 107-1 amends FASB issued SFAS No. 107,“Disclosures about Fair Values of Financial Instruments,” to requiredisclosures about fair value of financial instruments in interim financialstatements as well as in annual financial statements.  APB 28-1 amends APB Opinion No. 28“Interim Financial Reporting,” to require those disclosures in all interimfinancial statements.  FSP 107-1 and APB28-1 became effective for the quarter ended June 30, 2009.  The adoption of the FSP 107-1 and APB 28-1has had no significant impact on the Company’s consolidated financialstatements.

 

InApril 2009, the FASB issued FSP SFAS No. 115-2 and SFAS 124-2,“Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP FAS115-2”), which provides new guidance on the recognition of other-than-temporaryimpairments of investments in debt securities and provides new presentation anddisclosure requirements for other-than-temporary impairments of investments indebt and equity securities.  The FSPbecame effective on the quarter ended June 30, 2009.  The adoption of the FSP has had nosignificant impact on the Company’s consolidated financial statements.

 

InApril 2009, the FASB issued FSP SFAS No. 157-4, “Determining FairValue When the Volume and Level of Activity for the Asset or Liability HaveSignificantly Decreased and Identifying Transactions That Are Not Orderly”(“FSP FAS 157-4”), which provides additional guidance for estimating fair valuein accordance with SFAS 157.  The FSPbecame effective for the quarter ended June 30, 2009.  The adoption of the FSP has had nosignificant impact on the Company’s consolidated financial statements.

 

Avariety of proposed or otherwise potential accounting standards are currentlyunder study by standard-setting organizations and certain regulatory agencies.Because of the tentative and preliminary nature of such proposed standards, wehave not yet determined the effect, if any, that the implementation of suchproposed standards would have on our consolidated financial statements.

 

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

 

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

### ** **

**4.  Debt**

** **

Debt consists of the following:

 
| ** **                          | ** ** | **June 30,** | ** **  | **December 31,** | ** ** |
|-------------------------------------|------------|-------------------|-------------|-----------------------|------------|
| ** **                          | ** ** | **2009**          | ** **  | **2008**              | ** ** |
| 8.75%  Senior secured notes (1)     |       | $                 | 130,000,000 |                  | $          | 130,000,000 |   |
| Senior  secured credit facility (2) |       | 14,464,073        |        | 11,079,776            |       |
| Equipment  purchase agreements (3)  |       | 2,399,468         |        | 282,228               |       |
| Total  debt                         |       | $                 | 146,863,541 |                  | $          | 141,362,004 |   |

 

----

(1)         $130.0 million aggregate principal amount of8.75% Notes issued on March 29, 2005 and due in 2012.  The interest payment of $5.7 million dueApril 1, 2009 on the Notes was not paid by that date or within the 30 day graceperiod.  The Notes are currently indefault and the Note holders have the ability to exercise the remedies setforth in the indenture, including accelerating repayment of all amountsoutstanding under the indenture ($138.5 million in principal and interest atJune 30, 2009).

 

(2)         Outstanding draws against the Senior SecuredCredit Facility as of June 30, 2009 and December 31, 2008 and due on September30, 2011.  As of June 30, 2009, theCredit Facility carried an interest rate of 7.25% per annum. The CreditFacility is currently in default and the Note holders have the ability toaccelerate repayment of all amounts outstanding under the credit agreement($14.5 million in principal at June 30, 2009).    The lenders have not elected to acceleratethe indebtedness under the Credit Facility. The lenders have informed the Company that as a result of the defaults,the applicable interest rate was increased to the default rate, which equalsthe Wells Fargo prime rate plus four percentage points or 7.25% as of June 30,2009.  Interest payments on the CreditFacility are current.

 

(3)         During the first quarter of 2009, the Companyentered into a $2.5 million equipment purchase agreement with IGT for a newslot system.  The monthly payments are$78,000 per month for 36 months and the Company is current with payments.  Principal payments of $837,660 are due in thenext year on equipment purchase agreements.

 

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

 

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

### ** **

**5.  Related Party Transactions**

** **

**RoyaltiesExpense**

 

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 June 30,2009 for Hooters Gaming Corporation, Lags Venture, Inc. and Las VegasWings, Inc. were $2.5 million, $0.8 million, and $1.5 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.

 

**ProvidentAdvertising & Marketing, Inc.**

 

The majority shareholder 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 six months ended June 30, 2009 and2008, totaled $0.4 million and $0.7 million, respectively.

 

**6.Commitments and Contingencies**

 

***Litigation***

*** ***

Fromtime to time, the Company is a party to various claims arising in the normalcourse of business.  Management believes,however, that there are no proceedings pending or threatened against theCompany, which, if determined adversely, would have a material adverse effecton the Company’s financial condition, results of operations or liquidity.

 

***Contractual Commitments***

*** ***

The Company has entered into operational contractstotaling $3.4 million at June 30, 2009.

 

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

 

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

### ** **

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

 

**Hooters of America Royalty Payments**

 

Beginning on February 3, 2006, theCompany was required to pay the owner of the Hooters trademark, Hooters ofAmerica, a royalty fee equal to 2% of all net revenues of the hotel and casino(excluding the Dan Marino’s Restaurant and “13” Martini Bar) and 1% of revenuesfrom the Pete and Shorty’s Tavern less miscellaneous expenses.  The total fees paid to Hooters of Americawere $0.4 million and $0.6 million for the six months ended June 30, 2009and 2008, respectively.  These fees areincluded in general and administrative expenses on the accompanying condensedconsolidated statements of operations.

 

**Preferred Return**

 

The Company’s membership interests include anEW Common LLC preferred account, which accumulates a preferred return rate of4% per annum on the $25.0 million account balance.  Such preferred return began accumulating on March 1,2006, and accumulates whether or not there are profits or funds available forthe payment of the preferred return. Under the Notes indenture, the preferred return to EW Common LLC ispayable only if the Company’s coverage ratio of EBITDA to fixed charges (as definedin the indenture and after giving effect to the payment of the preferredreturn) is 1.5 to 1 for the fiscal year as measured after the close of thefiscal year.  As of June 30, 2009,$3.3 million relating to the preferred account has accumulated, but has notbeen paid.  As the Company’s coverageratio of EBITDA to fixed charges did not meet this defined ratio, no liabilityhas been recorded in the accompanying consolidated financial statements at June 30,2009 and December 31, 2008.

 

**7.  Purchase Agreement**

*** ***

During2007, the Company entered into a definitive Asset Purchase Agreement withHedwigs Las Vegas Top Tier, LLC (“Hedwigs”), an affiliate of the investmentgroup led by NTH Advisory Group, LLC, and subsequently entered into a first,second and third amendment to the Asset Purchase Agreement (collectively, the“Purchase Agreement”). In connection with the third amendment to the PurchaseAgreement, Hedwigs was required to make a $0.5 million payment to the Companyon or before June 6, 2008 or the Purchase Agreement automaticallyterminated. Hedwigs did not make the payment. Accordingly, the PurchaseAgreement terminated on June 6, 2008.

 

Underthe terms of the Purchase Agreement, Hedwigs offered to purchase substantiallyall of the assets of the Company for a purchase price of $98.0 million in cash,the payment of certain accrued royalties, and the assumption of certainoutstanding liabilities of the Company. The Purchase Agreement also providedthat Hedwigs would be responsible for the Company’s $130.0 million in principalamount

 

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

 

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

### ** **

**7.  Purchase Agreement (continued)**

 

of8 3/4% Senior SecuredNotes due 2012. In connection with the Purchase Agreement, Hedwigs paid a totalof $5.5 million in deposits and extension fees to the Company, which werenon-refundable and were fully earned on the dates of payment.  The deposits and extension fees were includedin income in June 2008.

 

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

## *** ***

Thefollowing discussion and analysis should be read together with our unauditedcondensed consolidated financial statements and the accompanying notes.  This discussion contains forward-lookingstatements, within the meaning of Section 27A of Securities Act of 1933,as amended, Section 21E of the Securities Exchange Act of 1934, asamended, and the Private Securities Litigation Reform Act of 1995, includingstatements regarding our expected financial position, business and financingplans.  Some of the forward-lookingstatements can be identified 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 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 Securitiesand Exchange Commission (“Commission”) on March 31, 2009, particularlyunder the heading “Risk Factors.”  Wecaution readers not to place undue reliance upon any such forward-lookingstatements, which speak only as of the date made.

 

**ExecutiveOverview**

 

***Liquidity and Financial Position***

 

Wehave significant indebtedness and financial commitments in 2009.  As of June 30, 2009 we had $146.9million in total debt.  Currently, theCredit Facility is fully extended and we have no additional availability toborrow against the Credit Facility.  We donot believe we will be able to generate sufficient cash flows from operationsto fund our 2009 financial commitments and cannot provide any assurances thatwe will be able to raise additional capital.

 

Ourcurrent expectations for 2009 indicate that operating cash flow will be lowerthan in 2008.  During the first sixmonths of 2009, we generated $0.8 million in cash from operating activitiesbefore deducting cash paid for interest. For the year ended December 31, 2008, we generated approximately$7.4 million in cash from operating activities, excluding income from forfeitedpurchase deposit and extension fees related to the cancelled sale to Hedwigsand before deducting cash paid for interest.

 

Basedon anticipated future operations, we do not believe that cash on hand at June 30,2009 of $8.0 million and expected cash flows will be adequate to meet our totalfinancial obligations which include (1) anticipated operational expenses, (2) debtservice on equipment leases and Credit Facility, (3) capital expenses and (4) scheduledpayments of interest on the Notes.  Wewere unable to make the interest payment on the Notes due April 1, 2009and do not anticipate making the scheduled interest payment on October 1,2009.  Currently, our other obligationsare being paid in the normal course of business.  Due to our inability to make the interestpayment due April 1, 2009, an event of default occurred under theindenture govering the Notes.  As aresult, the note holders could exercise certain remedies provided under theindenture governing the Notes.   We receivedDefault letters from the lenders under the Credit Facility.  The Default Letters state that (i) anevent of default exists under the Credit Facility as a result of our failure toobtain control agreements for one or more deposit accounts established andmaintained by us and also as a result of failure to pay interest on the Notes, (ii) asa result of the event of default, the lenders are under no further obligationto extend further credit under the Credit Facility, (iii) the lenders willcontinue to evaluate its response to the event of default, and (iv) we nolonger have an option of paying the LIBOR interest rate, but must pay the WellsFargo prime rate plus the default rate, which is equal to four percentagepoints 

 

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aboveprime rate.  The lenders have not electedto accelerate the indebtedness under the Credit Facility.  We have entered into discussions with thenote holders and the Credit Facility lenders to attempt to negotiateforbearance agreements pursuant to which they would agree not to exercise, fora specified period of time, their remedies under the indenture or the CreditFacility.  We have engaged a financialadvisor to assist with the evaluation of financial and strategic alternatives,which may include a recapitalization, refinancing, restructuring orreorganization of our obligations or a sale of some or all of our business.  We and our advisors are actively workingtoward such a transaction.  We cannot beassured that we will be successful in negotiating forbearance with the noteholders or Credit Facility lender or in undertaking any such alternative in thenear term.

 

Ifwe are not successful in obtaining a forbearance or entering into a transactionto address our liquidity and capital structure, the note holders have theability to accelerate repayment of all amounts outstanding under the indenture($138.5 million at June 30, 2009) and the Credit Facility lenders have theability to accelerate repayment of all amounts outstanding under the CreditFacility ($14.5 million at June 30, 2009, plus an irrevocable letter ofcredit for $0.5 million at June 30, 2009 ).  If either the Notes indebtedness or theCredit Facility indebtedness were to be accelerated, we would be required torefinance or restructure the payments on that debt.  We cannot be assured that we would besuccessful in completing a refinancing or restructuring.  If we are unable to do so, we may determineto seek protection under Chapter 11 of the U.S. Bankruptcy Code.

 

Theconditions and events described above raise a substantial doubt about theCompany’s ability to continue as a going concern.  We have classified most of our debt at June 30,2009, and all debt at December 31, 2008, as a current liability on thebalance sheet.  The accompanyingcondensed consolidated financial statements do not include all adjustments toreflect the possible future effects on the recoverability and classification ofassets or the amounts and classifications of liabilities that may result shouldwe be unable to continue as a going concern.

 

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

 

155East Tropicana, LLC (“we”, “us”, “our”, or “155”) was formed on June 17,2004 to acquire the Hôtel San Rémo Casino and Resort (“Hôtel San Rémo”), fromEastern & Western Hotel Corporation, or Eastern &Western.  Our common membership interestsare held two-thirds through Florida Hooters LLC and one-third through EW CommonLLC.

 

FloridaHooters LLC is a joint venture between Hooters Gaming LLC and Lags Ventures,LLC.  The owners of Hooters Gaming LLC,which include most of the original founders of the Hooters brand, hold licensesto sell wholesale foods and calendars and to operate hotel casinos in Nevadaand Hooters restaurants in Tampa Bay, Florida, Chicago, Illinois and downtownManhattan in New York.  Lags Ventures,LLC is owned by a holder of the license rights to certain Hooters restaurantsin Nevada and South Florida.  Pursuant tothese license rights, the owners of Florida Hooters LLC operate 39 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 two Dan Marino concept restaurants.

 

Eastern &Western owns 90% of EW Common LLC, while our President owns the balance.  Eastern & Western owned the HôtelSan Rémo from November 1988 until our acquisition of the Hôtel San Rémo in2004.

 

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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(which closed in 2007) and Pete & Shorty’s concept restaurants, whichwill allow us to operate the Hooters Casino Hotel.  The original founders of the Hooters brandsold the trademark rights (excluding certain rights they retained forthemselves) to Hooters of America in 2001. As a result, Hooters of America is the trademark owner of the Hootersbrand and the operator and franchisor of Hooters restaurants.  Pursuant to the Hooters license assignment,we are required to pay Hooters of America a royalty fee, which totaledapproximately $0.4 million for the six months ended June 30, 2009.  Aside from the abovementioned royalty fee, weare not otherwise affiliated with Hooters of America.

 

OnMarch 29, 2005, we issued $130.0 million aggregate principal amountof 8.75% Senior Secured Notes due 2012, or the old notes, in a privateplacement.  The old notes weresubsequently exchanged with the Notes registered under the Securities Act of1933 on Form S-4.  Interest paymentson the Notes are due semi-annually, on each April 1 and October 1.  We used the proceeds from the offering torefinance existing indebtedness, and used the remaining proceeds (together withcash from operations and proceeds from equipment financing) to renovate thehotel casino and to provide working capital.

 

Inconnection with the offering, we formed a wholly owned subsidiary, 155 EastTropicana Finance Corp., solely for the purpose of facilitating the offering asa co-issuer of the Notes.

 

Wealso entered into the Credit Facility concurrently with the offering.  At December 31, 2008, $11.1 million wasoutstanding on the Credit Facility.  Asof June 30, 2009, $14.5 million was outstanding on the Credit Facility,which, together with a letter of credit in the amount of $0.5 million,represents all of the funds available under the Credit Facility.

 

***Results of Operations***

 

Wegenerate hotel, casino, food, beverage, entertainment and retail revenues atthe hotel casino property.  During thequarter ended June 30, 2009, approximately 33.6% of the gross revenue wasderived from the casino, 36.9% from food, beverage and entertainment and 29.5%from hotel and other.

 

Casinorevenue is derived primarily from patrons wagering on slot machines, tablegames and other gaming activities.  Tablegames include blackjack, 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“slot hold” represent the percentage of the total amount wagered by the patronthat the casino has won.  Hold is derivedby dividing the amount won by the casino (“table game win” and “slot win”) bythe amount wagered by the patron.  Casinorevenue is recognized at the end of each gaming day.

 

Casinorevenues vary from time to time due to general economic conditions, table gamehold, slot hold, and occupancy percentages at the Hooters Casino Hotel andother hotels in Las Vegas.  Casinorevenues also vary depending upon the amount of gaming activity as well asvariations in the odds for different games of chance.  Casino revenues, room revenues, food andbeverage revenues, and other 

 

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revenuesvary due to general economic conditions and competition.

 

Room revenueis 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 timethe room is provided to the guest.

 

Food,beverage and entertainment revenues are derived from food and beverage sales inthe food, bar and entertainment outlets of the hotel casino, includingrestaurants, room service, bars, entertainment showroom and banquets.  Food, beverage and entertainment revenue isrecognized at the time food, entertainment and/or beverage is provided to theguest.  “Covers” are the number ofpatrons served in a food outlet. “Average check” is the average amount of food and beverage revenuecharged to patrons on their restaurant checks.

 

Thefollowing table summarizes the results of operations of 155, doing business asthe Hooters Casino Hotel for the quarter and six months ended June 30,2009 and 2008 (in thousands, except for percentages):

 
| ** **                                 | ** ** | **Quarter  Ended  June 30,  2009** | ** ** | **Quarter  Ended  June 30,  2008** | ** ** | **%  Change  2009-  2008** | ** ** | **Six  Months  Ended  June 30,  2009** | ** ** | **Six  Months  Ended  June 30,  2008** | ** ** | **%  Change  2009-2008** | ** ** |
|--------------------------------------------|------------|------------------------------------|------------|------------------------------------|------------|----------------------------|------------|----------------------------------------|------------|----------------------------------------|------------|--------------------------|------------|
| ** **                                 | ** ** | **(in  thousands)**                | ** ** | ** **                         | ** ** | **(in  thousands)**        | ** ** | ** **                             | ** ** |
| Casino revenues                            |       | $                                  | 4,344      |                               | $          | 6,919                      |       | -37.2                                  | %          | $                                      | 9,909      |                     | $          | 13,345 |   | -25.7 | % |
| Casino expenses                            |       | 2,730                              |       | 4,493                              |       | -39.2                      | %          | 5,865                                  |       | 7,529                                  |       | -22.1                    | %          |
| Profit margin                              |       | 37.2                               | %          | 35.1                               | %          |                       |       | 40.8                                   | %          | 43.6                                   | %          |                     |       |
|                                       |       |                               |       |                               |       |                       |       |                                   |       |                                   |       |                     |       |
| Food, beverage  and entertainment revenues |       | $                                  | 4,764      |                               | $          | 5,854                      |       | -18.6                                  | %          | $                                      | 10,093     |                     | $          | 11,524 |   | -12.4 | % |
| Food, beverage  and entertainment expenses |       | 2,853                              |       | 3,346                              |       | -14.7                      | %          | 6,219                                  |       | 7,401                                  |       | -16.0                    | %          |
| Profit margin                              |       | 40.1                               | %          | 42.8                               | %          |                       |       | 38.4                                   | %          | 35.8                                   | %          |                     |       |
|                                       |       |                               |       |                               |       |                       |       |                                   |       |                                   |       |                     |       |
| Hotel and other  revenues                  |       | $                                  | 3,816      |                               | $          | 5,677                      |       | -32.8                                  | %          | $                                      | 7,822      |                     | $          | 11,601 |   | -32.6 | % |
| Hotel and other  expenses                  |       | 1,769                              |       | 2,056                              |       | -14.0                      | %          | 3,493                                  |       | 3,985                                  |       | -12.3                    | %          |
| Profit margin                              |       | 53.6                               | %          | 63.8                               | %          |                       |       | 55.3                                   | %          | 65.6                                   | %          |                     |       |
|                                       |       |                               |       |                               |       |                       |       |                                   |       |                                   |       |                     |       |
| Promotional  allowances                    |       | $                                  | 1,248      |                               | $          | 2,013                      |       | -38.0                                  | %          | $                                      | 2,808      |                     | $          | 3,909 |   | 13.2 | % |
| Percent of  gross revenues                 |       | 9.7                                | %          | 10.9                               | %          |                       |       | 10.1                                   | %          | 10.7                                   | %          |                     |       |
|                                       |       |                               |       |                               |       |                       |       |                                   |       |                                   |       |                     |       |
| General and  administrative expenses       |       | $                                  | 3,491      |                               | $          | 4,289                      |       | -18.6                                  | %          | $                                      | 6,936      |                     | $          | 8,435 |   | -17.8 | % |
| Percent of net  revenues                   |       | 29.9                               | %          | 26.1                               | %          |                       |       | 27.7                                   | %          | 25.9                                   | %          |                     |       |
|                                       |       |                               |       |                               |       |                       |       |                                   |       |                                   |       |                     |       |
| Restructuring  expense                     |       | 476                                |       | 0                                  |       |                       |       | 931                                    |       | 0                                      |       |                     |       |
| Percent  of net revenues                   |       | 4.1                                | %          |                               |       |                       |       | 8.0                                    | %          |                                   |       |                     |       |

 

Thefollowing discussion presents an analysis of the hotel casino’s results ofoperations for the quarters and six months ended June 30, 2009 and 2008.

 

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***Comparison of Quarter Ended June 30, 2009 with the Quarter Ended June 30,2008***

 

The current state of the economy has negativelyimpacted our results of operations in the second quarter of 2009 and we expectthat impact to continue in 2009.  Becausewe are in the hospitality and recreation business, which is largely dependanton discretionary spending, we believe that the weak housing market, increasesin unemployment, decreases in air flights to Las Vegas, decreases in the valueof stock and other investments and the general tightening of spending onbusiness travel have all affected visitations to Las Vegas and the spendingbudget of our customers.

 

During the second quarter of 2009, there weredecreases in visitor volumes to Las Vegas and in customer spending, includingconvention participants.  In addition, wehave been challenged with conditions that affect our property inparticular.  We closed 235 rooms orapproximately a third of our rooms on May 28, 2009 in order to retrofitthe plumbing risers.  In addition, thecounty has been working on laying utilities down our frontage street,Tropicana, in order to provide utilities to the new airport terminal.  This has disrupted the auto traffic flow intoour property and has disrupted the walk-in traffic to our property via thewalk-way between us and the MGM Grand Hotel. This disruption occurred in the later half of the quarter.  We believe that the disruptions furtherreduced the number of patrons to our casino. To counter these business disruptions and economic conditions, we havecontinued to focus on managing costs.   Overall, operating expenses declined $2.9 million from the same quarterprior year.  Operating costs are expectedto continue to decline in the third quarter of 2009 as we continue to targetcost reductions.

 

Net loss of $5.1 million was generated for thequarter ended June 30, 2009 compared to a net income of $2.4 million forthe same quarter in 2008.  Net income forthe second quarter of 2008 was bolstered by the $5.5 million taken to incomefrom forfeited deposits and extension fees in connection with the terminationof the purchase agreement with a potential buyer. The remaining portion of theincrease in net loss was due largely to the $4.8 million decline in netrevenues, offset partially by operating cost savings of $2.9 million.

 

Net operating revenues for the quarter ended June 30,2009 were $11.7 million, a decrease of $4.8 million, or 29.0%, from $16.5million of net operating revenues generated during the same period in theprevious year.  The decline in netrevenue, as previously stated, was substantially impacted by the decline of$1.8 million in hotel revenue caused by falling room rates.  Other Las Vegas casino/hotel market leadersannounced they discounted room rates during the second quarter of 2009 toattract visitation in the current soft economy and expect the trend to continuefor the foreseeable future.

 

Promotional allowances (which are subtracted fromrevenues) decreased from $2.0 million to $1.2 million, largely due to a decreasein room and entertainment complimentaries.

 

Operating expenses (which included $0.5 million inrestructuring costs) were $13.3 million for the quarter ended June 30,2009, a decrease of $2.9 million, or 17.8%, from $16.2 million during the sameperiod in the previous year.  Thisdecrease in operating expenses was the result of an intense program of costreductions.  Property wide payroll wasanalyzed and payroll, payroll taxes and benefits were reduced by $1.3 million.Additionally, other operating expenses were evaluated and trimmed whereappropriate. This trend of reduced expenses is expected to continue into futurequarters and help us offset the decline in net revenues.

 

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Casino revenues decreased by $2.6 million, or 37.2%to $4.3 million for the quarter ended June 30, 2009, compared to $6.9million for the quarter ended June 30, 2008.   Our decline in casino revenue exceeds the12.3% decline in gaming revenue for the three months ended June 30, 2009for all casinos on the Las Vegas Strip as reported by the Nevada State GamingControl Board.

 

Tablegames revenue was $1.6 million in the second quarter of 2009, a decrease of$0.6 million, or 26.6%, compared to the table games revenue of $2.2 millionfrom the prior year’s quarter. Table game drop decreased by $4.0 million, or29.3%, to $9.7 million for the quarter ended June 30, 2009 compared to$13.7 million for the quarter ended June 30, 2008. The decrease in tablegame drop was partially offset by an increase in the table game hold percentagefrom 16.2% in 2008 to 16.9% in 2009.  Thetable games generated an average win per table of $726 per day for the quarterended June 30, 2009 as compared to $788 per day for the quarter ended June 30,2008.  According to the Gaming RevenueReports published by the Nevada State Gaming Control Board, the average win pertable per day for Las Vegas Strip casinos with annual gaming revenue of $36 to$72 million was $748 for the quarter ended June 30, 2009. Previously, wehave always compared ourselves to the published average win per table or per slotmachine for Las Vegas Strip casinos with annual gaming revenue of $12 to $36million. The Nevada State Gaming Control Board has discontinued publishinginformation for that category and we believe that the $36 to $72 million inannual gaming revenue is the next most comparable category.

 

Slotrevenue of $2.6 million for the quarter ended June 30, 2009 was a decreaseof $1.9 million or 36.6% compared to $4.5 million in the same period in2008.  The average win per machine perday was $47 for the quarter ended June 30, 2009 as compared to $72 for thequarter ended June 30, 2008. According to the Gaming Revenue Reports published by the Nevada StateGaming Control Board, the average win per machine per day for Las Vegas Stripcasinos with annual gaming revenue of $36 to $72 million was $102 for thequarter ended June 30, 2009.  Wecontinued our marketing efforts to increase slot play through targeted slotmarketing programs aimed at attracting a flow of customers to the casino floor,but we were unable to offset the effects of the slowing Las Vegas and globaleconomy.

 

Casinoexpenses, which included casino operational expenses and casino marketing,decreased by 37.8%  or $1.8 million to$2.7 million for the quarter ended June 30, 2009 compared to $4.5 millionfor the quarter ended June 30, 2008, largely due to decreases in the costof complimentaries and payroll expense. Despite the decrease in casino revenue,the profit margin for casino operations increased to 37.2% during the quarterended June 30, 2009, compared to 35.1% during the quarter ended June 30,2008, because of cost savings.

 

Food,beverage and entertainment revenue was $4.8 million for the quarter ended June 30,2009 as compared to $5.9 million for 2008, a decrease of $1.1 million, or18.6%. Food and beverage revenue declined due to a general decline in spendingby guests. Entertainment revenue declined $0.4 million, or 44.4%, due to ourconversion of the showroom from an operation in which we paid all expenses andretained all showroom revenue to an operation in which we shared revenue andexpenses with the entertainers.

 

Food,beverage and entertainment expenses decreased to $2.9 million during thequarter ended June 30, 2009 from $3.3 million during the quarter ended June 30,2008, a decrease of $0.4 million, or 14.7%. We saved $0.2 million in showroom expenses.  The remaining savings in food, beverage andentertainment expenses were facilitated by increased efficiencies in payrolland a decrease in cost of sales related to the decreased volume.

 

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Hoteland other revenue (which includes hotel room revenue, retail, spa and othermiscellaneous revenue) decreased by $1.9 million, or 32.8%, to $3.8 million forthe quarter ended June 30, 2009, from $5.7 million for the quarter ended June 30,2008. The room revenue decline of $1.8 million was the source of most of therevenue decline.  Room revenue was$2.5 million for the quarter ended June 30, 2009 compared to $4.3 millionin 2008 and was negatively affected by the increased competition for customersamong hotel casinos in Las Vegas due to the drop in visitors to Las Vegas anddisruptions caused by the closure of rooms for retrofitting and roadconstruction along our frontage street. Average daily room rates decreased by 15.9% from $69 for the quarterended June 30, 2008 to $58 for the quarter ended June 30, 2009, androom occupancy fell to 84.6% during the quarter ended June 30, 2009 from97.6% in the same quarter prior year.  Inaddition, rooms available for occupancy in the quarter ended June 30, 2009decreased by 8,343 rooms, largely due to the closure of 235 rooms from May 28,2009 to June 30, 2009 for retrofitting of plumbing risers.  The rooms are expected to be placed back inservice by mid-August.

 

Salesfrom our retail outlets decreased by $0.2 million or 16.8%

 

Hotel and other expenses decreased by $0.3 million,or 14.0%, from $2.1 million during the quarter ended June 30, 2008 to $1.8million during the quarter ended June 30, 2009, largely due to savings inpayroll.

 

Generaland administrative expense includes costs associated with advertising,marketing, information technology, finance, accounting, and propertyoperations.  General and administrative expensedecreased $0.8 million to $3.5 million for the quarter ended June 30, 2009compared to $4.3 million for the quarter ended June 30, 2008.  The decrease in expenses is due to decreasesin payroll, advertising, legal fees and various other administrative costs.

 

Restructuringcosts related to expenses associated with financial advisory services andrelated legal expenses for the quarter ended June 30, 2009 were $0.5million.  These costs are expected tocontinue in future months until our recapitalization, refinancing,restructuring or reorganization of our obligations or a sale of some or all ofour business assets is completed.

 

Depreciationand amortization expense of $1.7 million for the quarter ended June 30,2009 increased by $0.1 million from $1.6 million for the quarter ended June 30,2008.

 

Beginningon February 3, 2006, we incurred related party royalty fees pursuant toagreements with Hooters Gaming Corporation, Lags Ventures, Inc., and LasVegas Wings, Inc.  These relatedparty royalties expenses remained flat at $0.3 million for the quarters ended June 30,2009 and 2008.  The payment of therelated party 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.

 

Interestincome was approximately $23 for the quarter ended June 30, 2009, comparedto $10,910 for the quarter ended June 30, 2008. The decrease is associatedwith decreased interest rates and cash investments in 2009.

 

Interestexpense increased slightly to $3.4 million for the quarter ended June 30,2009 as compared to $3.3 in 2008 due to the modest increase in debt at June 30,2009.

 

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155is a limited-liability company and is treated as a partnership for federalincome tax purposes.  Accordingly, aprovision for federal income taxes is not recorded on our condensedconsolidated financial statements. Taxable income or loss will be included in the income tax returns of themembers.

 

***Comparison of Six Months Ended June 30, 2009 with the Six MonthsEnded June 30, 2008***

 

Net operating revenues for the six months ended June 30,2009 were $25.0 million, a decrease of $7.6 million or 23.2%, from $32.6million of net operating revenues for the six month ended June 30, 2008.

 

As discussed earlier, during 2009, there have beendecreases in visitor volumes to Las Vegas and in customer spending, includingconvention participants.  In addition, wehave been challenged with conditions that affect our property inparticular.  We closed 235 rooms orapproximately a third of our rooms on May 28, 2009 in order to retrofitthe plumbing risers.  In addition, thecounty has been working on laying utilities down our frontage street,Tropicana, in order to provide utilities to the new airport terminal.  This has disrupted the auto traffic flow intoour property and has disrupted the walk-in traffic to our property via thewalk-way between us and the MGM Grand Hotel. This disruption occurred in the second half of the quarter.  To offset these business disruptions andeconomic conditions, we have continued to focus on managing costs.

 

*Casino.*  Casino revenues decreased by $3.4 million to$9.9 million for the six months ended June 30, 2009, compared to $13.3million for the six months ended June 30, 2008 because of decreasedtraffic in the casino and a decrease in spending per player.

 

Tablegames revenue was $3.5 million in for the six months ended June 30, 2009,a decrease of $1.0 million, or 23.5%, compared to the table games revenue of$4.6 million from the prior year’s first six months.  Table game drop decreased to $21.1 million,or by 25.6%, for the six months ended June 30, 2009 compared to $28.3million for the six months ended June 30, 2008, while table game hold percentageincreased from 16.3% in 2008 to 16.8% in 2009. The table games generated an average win per table of $788 per day forthe first six months of 2009 compared to $821 for the six months of 2008. Slotrevenue of $6.1 million for the six months ended June 30, 2009 was adecrease of $2.2 million or 26.3% compared to $8.4 million in the same periodin 2008.  The average win per machine perday was $57 for the six months ended June 30, 2009 compared to $73 for thesame period in 2008.

 

Casino expenses decreased by $1.7 million or 22.1%to $5.8 million for the six months ended June 30, 2009 compared to $7.5million for the six months ended June 30, 2008. The profit margin forcasino operations decreased from 43.6% during the six months ended June 30,2008 to 40.8% during the six months ended June 30, 2009.

 

*Food, beverage and entertainment.*  Food,beverage and entertainment revenue was $10.1 million for the six months ended June 30,2009 as compared to $11.5 million for June 2008, a decrease of $1.4million or 12.4%.  The food revenuesdecreased $0.7 million or 11.1% to $5.7 million for the six months ending June 30,2009 compared to $6.4 million for six months ending June 30, 2008.Beverage revenue (which includes complimentary beverages) decreased by $0.4 millionor 8.9% to $4.0 million for the six months ended June 30, 2009 from $4.4million during the six months ended June 30, 2008.  

 

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Entertainmentrevenue declined $0.3 million due to our conversion of the showroom from anoperation in which we paid all expenses and retained all showroom revenue to anoperation in which we shared revenue and expenses with the entertainers.

 

Food,beverage and entertainment expenses decreased from $7.4 million during the sixmonths ended June 30, 2008 to $6.2 million during the six months ended June 30,2009, a decrease of $1.2 million or 16%. The profit margin for food, beverage and entertainment operationsincreased from 35.8% during the six months ended June 30, 2008 to 38.4%during the six months ended June 30, 2009 due to operational efficienciesin payroll and cost of sales in food and beverage departments. We saved $0.3million in showroom expenses.

 

*Hotel and other.*  Hotel and other revenue (which includes hotelroom revenue, retail, spa and other miscellaneous revenue) decreased by $3.8million, or 32.5%, to $7.8 million for the six months ended June 30, 2009from $11.6 million for the six months ended June 30, 2008.  Room revenue decreased $3.7 million or 42.0%to $5.1 million for the six months ended June 30, 2009, compared to $8.8million in 2008 due to the drop in visitors to Las Vegas and disruptions causedby the closure of rooms for retrofitting and road construction along ourfrontage street. The average daily room rate decreased to $53 for the sixmonths ended June 30, 2009 compared to $74 for the prior year and both theoccupancy rate and the number occupied rooms declined for the period, partiallydue to the 235 rooms taken out of service from May 28, 2009 to June 30,2009 for plumbing retrofit.

 

Salesfrom the retail outlets was $1.9 million in the six months ended June 30,2009, a decrease of $0.4 million from the six months ended June 30, 2008.

 

Hotel and other expenses decreased by $0.5 millionor 12.3% from $4.0 million during the six months ended June 30, 2008 to$3.5 million during the six months ended June 30, 2009 due to operationalefficiencies in payroll and departmental expenses. The profit margin for hoteland other was 55.3% for the six months ended June 30, 2009, compared to65.6% for the same period in the prior year. Retail sales generated a profitmargin of 40.5% for the six months ended June 30, 2009.

 

*General and administrative.*  General and administrativeexpense includes costs associated with corporate marketing, informationtechnology, and finance, accounting, and property operations.  General and administrative expense decreased$1.5 million or 17.8% to $6.9 million for the six months ended June 30,2009 compared to $8.4 million for the six months ended June 30, 2008. Thisdecrease was principally due to significant decreases in advertising andmarketing expenses, legal fees and various other administrative costs.

 

*Depreciation and amortization expense.* Depreciation and amortization expense of $3.3 million for the six monthsended June 30, 2009 increased by $0.1 million, or 5.7%, from $3.2 millionfor the six months ended June 30, 2008.

 

*Related party royalties expense.* Beginning on February 3, 2006, we incurred related party royaltyfees pursuant to agreements with Hooters Gaming Corporation, Lags Ventures, Inc.,and Las Vegas Wings, Inc.  Theserelated party royalties expense totaled $0.6 million during the six monthsended June 30, 2009 and $0.7 million for the same period in 2008. Thepayment of the related party royalties is restricted under the Notesindenture.  The fees can only be paidafter the close of the fiscal year and only if our debt coverage ratio is 1.5to 1 for that fiscal year.  The paymentsof the royalty fees are further 

 

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limitedto the sum of 2% of revenue and 3% of EBITDA as defined in the indenture.

 

*Interest income.*  Interest income was $1,388 for the six monthsended June 30, 2009, compared to $91,123 for the six months ended June 30,2008.

 

*Interest expense.*  Interest expense was $6.8million for the six months ended June 30, 2009, compared to $6.7 millionfor the six months ended June 30, 2008, an increase of $0.1 million due toincreased interest rates.

 

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

 

### ***Contractual Obligations***

 

Thefollowing table summarizes the contractual commitments of 155 as of June 30,2009:

 
| ** **                                  | ** ** | **Payments  Due By Year**   | ** ** |
|---------------------------------------------|------------|-----------------------------|------------|
| ** **                                  | ** ** | **Total**                   | ** ** | **Less  than  1 year** | ** ** | **1-3  years** | ** ** | **3-5  years** | ** ** | **Thereafter** | ** ** |
| ** **                                  | ** ** | **(dollars  in thousands)** | ** ** |
| Equipment purchase financing agreements (1) |       | $                           | 2,399      |   | $ | 837 |   | $ | 1,561 |   | $ | — |   | $ | — |   |
| Long-term debt (2)                          |       | 144,464                     |       | 144,464 |   | – |   | — |   | — |   |
| Operating contracts (3)                     |       | 3,441                       |       | 2,155 |   | 1,281 |   | 5 |   | — |   |
| Total                                       |       | $                           | 150,304    |   | $ | 147,456 |   | $ | 2,842 |   | $ | 5 |   | $ | — |   |

 

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(1)          We entered into various equipment purchase agreements in connectionwith the renovation and rebranding of the Hooters Casino Hotel.  During the first quarter of 2009, we enteredinto an equipment purchase agreement for $2.5 million in slot system equipment.

 

(2)           The long-term debt represents the$14.5 million in outstanding draws against the Credit Facility as of June 30,2009, due in September 2011, and the $130.0 million Notes issued on March 29,2005 and due in 2012.  The Company is indefault on both of these facilities.  Therepayment dates have not been adjusted for potential acceleration under thedefault provisions.

 

(3)          Operating contracts represent various contracts for services inconnection with the operations of the Hooters Casino Hotel.

 

***Liquidity and Capital Resources***

 

For additional discussion of our liquidity andcapital resources, please see “Liquidity and Financial Position” discussionpresented in the Executive Overview at the beginning of Item 2, “ManagementDiscussion and Analysis of Financial Condition and Results of Operations” andNote 2 to the accompanying consolidated financial statements.

 

For the six months ended June 30, 2009, $0.4million of cash was provided by operating activities.

 

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For the six months ended June 30, 2009, we used$0.4 million of cash in investing activities due to capital expenditures.  We currently are incurring capitalexpenditures in the retrofit of the plumbing risers.  The project is expected to cost approximately$2.4 million, of which $0.3 million was spent during the first six months of2009.

 

For the six months ended June 30, 2009, weborrowed $3.4 million on our Credit Facility, offset by $0.4 million inprincipal payments on debt.

 

TheNotes indenture contains certain provisions, which restrict or limit ourability to, among other things, incur more debt, pay dividends, redeem stock ormake other distributions, enter into transactions with affiliates or transferor sell assets.

 

OurCredit Facility is a revolving credit facility of $15.0 million.   As of March 31, 2009, we hadoutstanding draws of $14.5 million. An additional $0.5 million of the CreditFacility is not available due to an outstanding letter of credit previouslyissued.  Currently, the Credit Facilityis fully extended and we have no additional availability to borrow against theCredit Facility.  All outstandingprincipal and interest under the Credit Facility is due and payable on September 30,2011, unless accelerated under the default provisions.  Due to the default under the Notes indentureand the Credit Facility, we have classified the amount due under the CreditFacility and Notes and some equipment purchase debt, totaling $145.3 million,as a current liability at June 30, 2009. As discussed earlier in the Executive Overview at the beginning of Item2, “Management Discussion and Analysis of Financial Condition and Results ofOperations” and Note 2 to the accompanying consolidated financial statements,we are in default under both the indenture and the Credit Facility and we haveentered into discussions with the note holders and the Credit Facility lenderto attempt to negotiate forbearance agreements pursuant to which they wouldagree not to exercise, for a specified period of time, their remedies under theindenture or the Credit Facility.  Wecannot assure you that we will be successful in negotiating a forbearance withthe note holders or Credit Facility lender or in undertaking any financial or strategicalternative in the near term.

 

At June 30, 2009, we had cash and cashequivalents of approximately $8.0 million.

 

***Critical Accounting Policies and Estimates***

 

A description of critical accounting policiesand estimates is included in the management discussion and analysis included inour Annual Report on Form 10-K for the year ended December 31, 2008,filed with the Commission on March 31, 2009.

 

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

## ** **

Thefollowing discusses our exposure to market risk related to changes in interestrates, equity prices and foreign currency exchange rates.  We do not believe that their respectiveexposure to market risk is material.

 

Marketrisk is risk of loss arising from changes in market rates and prices, such asinterest rates, foreign currency exchange rates and commodity prices.  At June 30, 2009, we had $130.0 millionaggregate principal amount of the Notes, slot equipment purchase agreements of$2.3 million carrying an interest rate of 7.0%, and hotel equipment purchaseagreements of $0.1 million carrying interest rates averaging 11.72%.   The Notes carry a fixed interest rate of8.75%.  Since the Notes and equipment 

 

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purchaseagreements have fixed interest rates, there is no market risk associated withthese loans other than fair value market risk, which we believe to beinsignificant.  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 September 30,2011.  At June 30, 2009, $14.5million was outstanding under the variable rate Credit Facility, carryinginterest at 7.25%.  Assuming a 100basis-point change in prime rate at June 30, 2009 and assuming no changein the funds borrowed on the $15.0 million Credit Facility, our annual interestcost would change by approximately $145,000. We received a Notice of Default and Reservation of Rights letter (the “DefaultLetter”) from the lenders under the Credit Facility that states that events ofdefault exist and that as a result of such defaults the applicable interestrate was increased to the default rate, which equals the Wells Fargo prime rateplus four percentage points.  At June 30,2009, the default interest rate based on prime rate was 7.25%.

 

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

 

## **Item 4T.  Controls andProcedures.**

 

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

 

We evaluated the effectiveness of our disclosurecontrols and procedures as of three months ended June 30, 2009.  This evaluation was done with theparticipation of our management, including our Chief Executive Officer andChief Financial Officer.

 

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

 

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

## ** **

Our management does not expect that our disclosurecontrols and procedures or our internal controls over financial reporting willprevent all error and all fraud.  Acontrol system, no matter how well conceived and operated, can provide onlyreasonable, but not absolute, assurance that the objectives of a control systemare met.  Further, any control systemreflects limitations on resources, and the benefits of a control system must beconsidered relative to its costs. 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 

 

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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 Officerand Chief Financial Officer have evaluated our disclosure controls andprocedures (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and15d-15(e)) as of June 30, 2009, and have concluded that they are effectiveto timely alert them to material information relating to us required to beincluded in the reports that we file or submit under the Securities ExchangeAct of 1934.

 

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

## ** **

Therewere no changes in our internal controls over financial reporting that occurredduring our last fiscal quarter, *i.e.*,the quarter ended June 30, 2009, that have materially affected, or arereasonably likely to materially affect, our internal controls over financialreporting.

 

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# **PART II – OTHER INFORMATION**

 

## **Item 6.  Exhibits.**

 

Exhibits:

 
| 31.1   |   | Certification  pursuant to §302 of the Sarbanes-Oxley Act of 2002, Deborah J. Pierce * |
|--------|--------|---------------------------------------------------------------------------------------------|
|   |   |                                                                                        |
| 31.2   |   | Certification  pursuant to §302 of the Sarbanes-Oxley Act of 2002, Neil G. Kiefer *    |
|   |   |                                                                                        |
| 32.1   |   | Certification  pursuant to §906 of the Sarbanes-Oxley Act of 2002, Deborah J. Pierce * |
|   |   |                                                                                        |
| 32.2   |   | Certification  pursuant to §906 of the Sarbanes-Oxley Act of 2002, Neil G. Kiefer *    |

 

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# *** filed herewith**

 

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# **SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
| **155  EAST TROPICANA, LLC**          |                                                   |     |
|---------------------------------------|--------------------------------------------------------|----------|
|                                  |                                                   |     |
|                                  |                                                   |     |
| By:                                   | /s/  Deborah J. Pierce                                 |     | August 14,  2009 |
|                                  |                                                   |     |   |
|                                  | Deborah  J. Pierce                                     |     |   |
|                                  | *Chief  Financial Officer*                             | * * | * * |
|                                  | *(Principal  Financial and Chief  Accounting Officer)* | * * | * * |
|                                  | * *                                               | * * |
|                                  | * *                                               | * * |
| **155  EAST TROPICANA FINANCE CORP.** |                                                   |     |
|                                  |                                                   |     |
|                                  |                                                   |     |
| By:                                   | /s/  Deborah J. Pierce                                 |     | August 14,  2009 |
|                                  |                                                   |     |   |
|                                  | Deborah  J. Pierce                                     |     |   |
|                                  | *Chief  Financial Officer*                             | * * | * * |
|                                  | *(Principal  Financial and Chief  Accounting Officer)* | * * | * * |

 

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