##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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



For the quarterly period ended June 30, 2005



or



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



For the transition period from  to



Commission File Number 000-50635



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COLONY RESORTS LVH ACQUISITIONS, LLC

(Exact Name of Registrant as Specified in its Charter)



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|                                               |  |                                        
|---------------------------------------------- |  | ---------------------------------------
|NEVADA                                         |  | 41-2120123                             
|(State or Other Jurisdiction of Incorporation) |  | (I.R.S. Employer Identification Number)



|                                         |  |           
|---------------------------------------- |  | ----------
|3000 PARADISE ROAD LAS VEGAS, NEVADA     |  | 89109     
|(Address of Principal Executive Offices) |  | (Zip Code)



702-732-5111

(Registrants Telephone Number, Including Area Code)



---



Indicate by
check mark whether the Registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and
(2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



Indicate
by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange

Act of
1934).    Yes ̈No  x



As of July 31, 2005, there were 0.90 Class A Membership Units held by Colony Resorts LVH
Coinvestment Voteco, LLC and 0.60 Class A Membership Units held by Colony Resorts LVH Voteco, LLC.



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

FORM 10-Q

TABLE OF CONTENTS



|                                     |  |                                                                                       |  |     
|------------------------------------ |  | ------------------------------------------------------------------------------------- |  | ----
|                                     |  |                                                                                       |  | Page
|PART I.                              |  | FINANCIAL INFORMATION                                                                 |  |     
|                                     |  |                                                                                      
|ITEM 1.                              |  | FINANCIAL STATEMENTS                                                                  |  |     
|                                     | 
|COLONY RESORTS LVH ACQUISITIONS, LLC |  |                                                                                      
|                                     |  |                                                                                      
|                                     |  | UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS:                                     |  |     
|                                     |  |                                                                                      
|                                     |  | UNAUDITED CONDENSED BALANCE SHEETS                                                    |  | 1   
|                                     |  |                                                                                      
|                                     |  | UNAUDITED CONDENSED STATEMENTS OF OPERATIONS                                          |  | 2   
|                                     |  |                                                                                      
|                                     |  | UNAUDITED CONDENSED STATEMENTS OF MEMBERS EQUITY                                     |  | 4   
|                                     |  |                                                                                      
|                                     |  | UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS                                          |  | 5   
|                                     |  |                                                                                      
|                                     |  | NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS                                     |  | 6   
|                                     |  |                                                                                      
|ITEM 2.                              |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  | 17  
|                                     |  |                                                                                      
|ITEM 3.                              |  | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                             |  | 24  
|                                     |  |                                                                                      
|ITEM 4.                              |  | CONTROLS AND PROCEDURES                                                               |  | 25  
|                                     |  |                                                                                      
|PART II.                             |  | OTHER INFORMATION                                                                     |  | 26  
|                                     |  |                                                                                      
|ITEM 6.                              |  | EXHIBITS                                                                              |  | 26  
|                                     | 
|SIGNATURES                           |  | 28                                                                                   



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

UNAUDITED CONDENSED BALANCE SHEETS

(In thousands)



|                                          |  |              |         |                  |   |        
|----------------------------------------- |  | ------------ | ------- | ---------------- | - | -------
|                                          |  | June 30,2005 |         | December 31,2004
|Assets                                    |  |              |         |                  |   |        
|CURRENT ASSETS:                           |  |              |         |                  |   |        
|Cash and equivalents                      |  | $            | 16,859  |                  | $ | 12,888 
|Restricted cash                           |  |              | 1,481   |                  |   | 1,420  
|Accounts receivable, net                  |  |              | 18,265  |                  |   | 16,625 
|Inventories                               |  |              | 2,848   |                  |   | 3,276  
|Prepaid expenses and other current assets |  |              | 6,500   |                  |   | 4,909  
|                                          |  |              |         |                  |   |        
|Total current assets                      |  |              | 45,953  |                  |   | 39,118 
|                                          |  |             
|PROPERTY AND EQUIPMENT, NET               |  |              | 298,107 |                  |   | 296,490
|                                          |  |             
|RESTRICTED CASH                           |  |              | 26,000  |                  |   | 26,151 
|                                          |  |             
|OTHER ASSETS, NET                         |  |              | 2,552   |                  |   | 3,638  
|                                          |  |              |         |                  |   |        
|Total assets                              |  | $            | 372,612 |                  | $ | 365,397
|                                          |  |              |         |                  |   |        
|Liabilities and Members Equity           |  |              |         |                  |   |        
|CURRENT LIABILITIES:                      |  |              |         |                  |   |        
|Account payable                           |  | $            | 5,344   |                  | $ | 2,035  
|Accrued expenses                          |  |              | 32,553  |                  |   | 34,117 
|                                          |  |              |         |                  |   |        
|Total current liabilities                 |  |              | 37,897  |                  |   | 36,152 
|                                          |  |             
|TERM LOAN                                 |  |              | 200,000 |                  |   | 200,000
|                                          |  |              |         |                  |   |        
|Total liabilities                         |  |              | 237,897 |                  |   | 236,152
|                                          |  |              |         |                  |   |        
|COMMITMENTS AND CONTINGENCIES             |  |              |         |                  |   |        
|                                          |  |             
|REDEEMABLE MEMBERS EQUITY                |  |              | 60,000  |                  |   | 60,000 
|                                          |  |             
|MEMBERS EQUITY                           |  |              | 74,715  |                  |   | 69,245 
|                                          |  |              |         |                  |   |        
|Total liabilities and members equity     |  | $            | 372,612 |                  | $ | 365,397
|                                          |  |              |         |                  |   |        



See notes to the
unaudited condensed financial statements.



1



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except unit data)



|                                                            |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|----------------------------------------------------------- |  | -------------------------------------- | ------------ | - | -------------------------------------- | - | ------------ | ------------------------------------------------------ |  | - | ------ | -
|                                                            |  |                                        |              |   |                                        |   |              | PREDECESSOR INFORMATION                                | 
|                                                            |  | For the threemonths endedJune 30, 2005 |              |   | For the threemonths endedJune 30, 2004 |   |              | For the period from April 1, 2004 throughJune 17, 2004 | 
|Revenues:                                                   |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|Casino                                                      |  | $                                      | 20,118       |   |                                        | $ | 2,769        |                                                        |  | $ | 15,992 |  
|Rooms                                                       |  |                                        | 25,661       |   |                                        |   | 2,902        |                                                        |  |   | 20,232 |  
|Food and beverage                                           |  |                                        | 16,837       |   |                                        |   | 1,897        |                                                        |  |   | 14,324 |  
|Other revenue                                               |  |                                        | 6,394        |   |                                        |   | 391          |                                                        |  |   | 4,602  |  
|                                                            |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|Total revenue                                               |  |                                        | 69,010       |   |                                        |   | 7,959        |                                                        |  |   | 55,150 |  
|                                                            |  |                                        |             
|Less: promotional allowances                                |  |                                        | (6,255       | ) |                                        |   | (700         | )                                                      |  |   | (4,875 | )
|                                                            |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|Net revenues                                                |  |                                        | 62,755       |   |                                        |   | 7,259        |                                                        |  |   | 50,275 |  
|                                                            |  |                                        |             
|Expenses:                                                   |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|Casino                                                      |  |                                        | 14,515       |   |                                        |   | 2,421        |                                                        |  |   | 11,641 |  
|Rooms                                                       |  |                                        | 6,714        |   |                                        |   | 1,177        |                                                        |  |   | 5,816  |  
|Food and beverage                                           |  |                                        | 13,271       |   |                                        |   | 1,715        |                                                        |  |   | 11,272 |  
|Other expense                                               |  |                                        | 4,300        |   |                                        |   | 490          |                                                        |  |   | 2,583  |  
|General & administrative                                    |  |                                        | 16,665       |   |                                        |   | 2,415        |                                                        |  |   | 14,036 |  
|Depreciation                                                |  |                                        | 2,196        |   |                                        |   | 268          |                                                        |  |   | 4,053  |  
|Pre-opening expenses                                        |  |                                        |             |   |                                        |   | 4,423        |                                                        |  |   |       |  
|Management fee to parent                                    |  |                                        |             |   |                                        |   |             |                                                        |  |   | 1,531  |  
|                                                            |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|                                                            |  |                                        | 57,661       |   |                                        |   | 12,909       |                                                        |  |   | 50,932 |  
|                                                            |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|Operating income (loss)                                     |  |                                        | 5,094        |   |                                        |   | (5,650       | )                                                      |  |   | (657   | )
|                                                            |  |                                        |             
|Interest expense                                            |  |                                        | (5,282       | ) |                                        |   | (621         | )                                                      |  |   |       |  
|                                                            |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|Net income (loss)                                           |  | $                                      | (188         | ) |                                        | $ | (6,271       | )                                                      |  | $ | (657   | )
|                                                            |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|Net income (loss) allocation                                |  |                                        |              |   |                                        |   |              |                                                        |  |   |        |  
|Allocable to Class A                                        |  | $                                      |             |   |                                        | $ |             |                                                        |  |   |        |  
|Allocable to Class B                                        |  | $                                      | (188         | ) |                                        | $ | (6,271       | )                                                      |  |   |        |  
|Basic weighted average Class A membership units outstanding |  |                                        | 1.50         |   |                                        |   | 1.50         |                                                        |  |   |        |  
|Basic weighted average Class B membership units outstanding |  |                                        | 1,500,000.00 |   |                                        |   | 1,500,000.00 |                                                        |  |   |        |  
|Diluted weighted average membership units outstanding       |  |                                        | 1,500,001.50 |   |                                        |   | 1,500,001.50 |                                                        |  |   |        |  
|Net income (loss) per Class A membership unit-basic         |  | $                                      | (.13         | ) |                                        | $ | (4.18        | )                                                      |  |   |        |  
|Net income (loss) per Class B membership unit-basic         |  | $                                      | (.13         | ) |                                        | $ | (4.18        | )                                                      |  |   |        |  
|Per membership unit-diluted                                 |  | $                                      | (.13         | ) |                                        | $ | (4.18        | )                                                      |  |   |        |  



See notes to the
unaudited condensed financial statements.



2



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except unit data)



|                                                            |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|----------------------------------------------------------- |  | ------------------------------------ | ------------ | - | ------------------------------------ | - | ------------ | --------------------------------------------------------- |  | - | ------- | -
|                                                            |  |                                      |              |   |                                      |   |              | PREDECESSOR INFORMATION                                   | 
|                                                            |  | For the sixmonths endedJune 30, 2005 |              |   | For the sixmonths endedJune 30, 2004 |   |              | For the period from January 1, 2004 through June 17, 2004 | 
|Revenues:                                                   |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|Casino                                                      |  | $                                    | 45,489       |   |                                      | $ | 2,769        |                                                           |  | $ | 38,471  |  
|Rooms                                                       |  |                                      | 53,709       |   |                                      |   | 2,902        |                                                           |  |   | 47,626  |  
|Food and beverage                                           |  |                                      | 34,580       |   |                                      |   | 1,897        |                                                           |  |   | 31,412  |  
|Other revenue                                               |  |                                      | 12,706       |   |                                      |   | 391          |                                                           |  |   | 10,382  |  
|                                                            |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|Total revenue                                               |  |                                      | 146,484      |   |                                      |   | 7,959        |                                                           |  |   | 127,891 |  
|                                                            |  |                                      |             
|Less: promotional allowances                                |  |                                      | (13,753      | ) |                                      |   | (700         | )                                                         |  |   | (10,695 | )
|                                                            |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|Net revenues                                                |  |                                      | 132,731      |   |                                      |   | 7,259        |                                                           |  |   | 117,196 |  
|                                                            |  |                                      |             
|Expenses:                                                   |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|Casino                                                      |  |                                      | 30,942       |   |                                      |   | 2,421        |                                                           |  |   | 25,796  |  
|Rooms                                                       |  |                                      | 13,494       |   |                                      |   | 1,177        |                                                           |  |   | 12,738  |  
|Food and beverage                                           |  |                                      | 26,621       |   |                                      |   | 1,715        |                                                           |  |   | 24,932  |  
|Other expense                                               |  |                                      | 8,066        |   |                                      |   | 490          |                                                           |  |   | 5,021   |  
|General & administrative                                    |  |                                      | 33,355       |   |                                      |   | 2,415        |                                                           |  |   | 30,295  |  
|Depreciation                                                |  |                                      | 4,568        |   |                                      |   | 268          |                                                           |  |   | 8,741   |  
|Management fee to parent                                    |  |                                      |             |   |                                      |   |             |                                                           |  |   | 3,567   |  
|Pre-opening expenses                                        |  |                                      |             |   |                                      |   | 6,326        |                                                           |  |   |        |  
|                                                            |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|                                                            |  |                                      | 117,046      |   |                                      |   | 14,812       |                                                           |  |   | 111,090 |  
|                                                            |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|Operating income (loss)                                     |  |                                      | 15,685       |   |                                      |   | (7,553       | )                                                         |  |   | 6,106   |  
|                                                            |  |                                      |             
|Interest expense                                            |  |                                      | (10,215      | ) |                                      |   | (621         | )                                                         |  |   |        |  
|                                                            |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|Net income (loss)                                           |  | $                                    | 5,470        |   |                                      | $ | (8,174       | )                                                         |  | $ | 6,106   |  
|                                                            |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|Net income (loss) allocation                                |  |                                      |              |   |                                      |   |              |                                                           |  |   |         |  
|Allocable to Class A                                        |  | $                                    |             |   |                                      | $ |             |                                                           |  |   |         |  
|Allocable to Class B                                        |  | $                                    | 5,470        |   |                                      | $ | (8,174       | )                                                         |  |   |         |  
|Basic weighted average Class A membership units outstanding |  |                                      | 1.50         |   |                                      |   | 1.50         |                                                           |  |   |         |  
|Basic weighted average Class B membership units outstanding |  |                                      | 1,500,000.00 |   |                                      |   | 1,500,000.00 |                                                           |  |   |         |  
|Diluted weighted average membership units outstanding       |  |                                      | 1,500,001.50 |   |                                      |   | 1,500,001.50 |                                                           |  |   |         |  
|Net income (loss) per Class A membership unit-basic         |  | $                                    | 3.65         |   |                                      | $ | (5.45        | )                                                         |  |   |         |  
|Net income (loss) per Class B membership unit-basic         |  | $                                    | 3.65         |   |                                      | $ | (5.45        | )                                                         |  |   |         |  
|Per membership unit-diluted                                 |  | $                                    | 3.65         |   |                                      | $ | (5.45        | )                                                         |  |   |         |  



See notes to the
unaudited condensed financial statements.



3



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

UNAUDITED CONDENSED STATEMENT OF MEMBERS EQUITY

(In thousands)



|                           |  |                     |        |                    |   |         |                      |  |   |       
|-------------------------- |  | ------------------- | ------ | ------------------ | - | ------- | -------------------- |  | - | ------
|                           |  | CapitalContribution |        | AccumulatedDeficit |   |         | Total Members Equity
|Balance, December 31, 2004 |  | $                   | 90,000 |                    | $ | (20,755 | )                    |  | $ | 69,245
|Net Income                 |  |                     |       |                    |   | 5,470   |                      |  |   | 5,470 
|                           |  |                     |        |                    |   |         |                      |  |   |       
|Balance, June 30 2005      |  | $                   | 90,000 |                    | $ | (15,285 | )                    |  | $ | 74,715
|                           |  |                     |        |                    |   |         |                      |  |   |       



See notes to the
unaudited condensed financial statements.



4



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|---------------------------------------------------------------------------------------- |  | -------------------------------------- | ------ | - | ------------------------------------- | - | -------- | ------------------------------------------------------- |  | - | ------- | -
|                                                                                         |  |                                        |        |   |                                       |   |          | PREDECESSORINFORMATION                                  | 
|                                                                                         |  | For the six months ended June 30, 2005 |        |   | For the six months endedJune 30, 2004 |   |          | For the periodfrom January 1,2004 through June 17, 2004 | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Net income (loss)                                                                        |  | $                                      | 5,470  |   |                                       | $ | (8,174   | )                                                       |  | $ | 6,106   |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Depreciation                                                                             |  |                                        | 4,568  |   |                                       |   | 268      |                                                         |  |   | 8,741   |  
|Provision for bad debts                                                                  |  |                                        | 748    |   |                                       |   |         |                                                         |  |   | (375    | )
|Interest rate cap                                                                        |  |                                        | 65     |   |                                       |   |         |                                                         |  |   |        |  
|Amortization of debt issuance cost                                                       |  |                                        | 1,114  |   |                                       |   |         |                                                         |  |   |        |  
|Change in working capital components:                                                    |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Accounts receivable                                                                      |  |                                        | (2,388 | ) |                                       |   | (3,751   | )                                                       |  |   | 12,021  |  
|Inventories, prepaid expenses and other current assets                                   |  |                                        | (1,104 | ) |                                       |   | (5,474   | )                                                       |  |   | (1,228  | )
|Accounts payable and accrued expenses                                                    |  |                                        | 1,745  |   |                                       |   |         |                                                         |  |   | (18,945 | )
|Due to/from affiliates                                                                   |  |                                        |       |   |                                       |   | 10,356   |                                                         |  |   |        |  
|Other                                                                                    |  |                                        |       |   |                                       |   |         |                                                         |  |   | 32      |  
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Net cash provided by (used in) operating activities                                      |  |                                        | 10,218 |   |                                       |   | (6,775   | )                                                       |  |   | 6,352   |  
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|CASH FLOWS USED IN INVESTING ACTIVITIES:                                                 |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Increase in restricted cash                                                              |  |                                        | (62    | ) |                                       |   | (15,675  | )                                                       |  |   |        |  
|Additions to property and equipment                                                      |  |                                        | (6,185 | ) |                                       |   | (3,761   | )                                                       |  |   | (2,998  | )
|Payment for purchase of LVH assets, net of cash acquired                                 |  |                                        |       |   |                                       |   | (276,804 | )                                                       |  |   |        |  
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Net cash used in investing activities                                                    |  |                                        | (6,247 | ) |                                       |   | (296,240 | )                                                       |  |   | (2,998  | )
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|CASH FLOWS USED IN FINANCING ACTIVITIES:                                                 |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Proceeds from term loan                                                                  |  |                                        |       |   |                                       |   | 200,000  |                                                         |  |   |        |  
|Proceeds from issuance of members equity                                                |  |                                        |       |   |                                       |   | 72,638   |                                                         |  |   |        |  
|Proceeds from mandatorily redeemable members equity                                     |  |                                        |       |   |                                       |   | 60,000   |                                                         |  |   |        |  
|Debt issuance costs                                                                      |  |                                        |       |   |                                       |   | (3,063   | )                                                       |  |   |        |  
|Change in due to affiliated companies                                                    |  |                                        |       |   |                                       |   |         |                                                         |  |   | (6,139  | )
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Net cash provided by (used in) financing activities                                      |  |                                        |       |   |                                       |   | 329,575  |                                                         |  |   | (6,139  | )
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Increase in cash and equivalents                                                         |  |                                        | 3,971  |   |                                       |   | 26,560   |                                                         |  |   | (2,785  | )
|                                                                                         |  |                                        |       
|Cash and equivalents at beginning of period                                              |  |                                        | 12,888 |   |                                       |   |         |                                                         |  |   | 12,734  |  
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Cash and equivalents at end of period                                                    |  | $                                      | 16,859 |   |                                       | $ | 26,560   |                                                         |  | $ | 9,949   |  
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Supplemental Cash Flow Information:                                                      |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Cash paid for interest, net of capitalized interest                                      |  | $                                      | 8,533  |   |                                       | $ |         |                                                         |  |   |         |  
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Non-cash financing activity:                                                             |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  
|Conversion of Advances from Affiliates to Members Equity                                |  | $                                      |       |   |                                       | $ | 17,362   |                                                         |  |   |         |  
|                                                                                         |  |                                        |        |   |                                       |   |          |                                                         |  |   |         |  



See notes to the
unaudited condensed financial statements.



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS



1. ORGANIZATION AND BASIS OF PRESENTATION



Colony Resorts LVH Acquisitions, LLC, a Nevada limited liability company (the Company), was formed at the direction of Colony Investors VI, L.P., a Delaware limited partnership (Colony VI) and
an affiliate of Colony Capital, LLC (Colony Capital), under the laws of the State of Nevada on December 18, 2003. Pursuant to the Companys Amended and Restated Operating Agreement, dated June 18, 2004 (the Operating
Agreement), the Company will continue in existence perpetually. Members of the Company, however, may terminate the Operating Agreement and dissolve the Company at any time.



The Companys members consist of Colony Resorts LVH Holdings, LLC (Holdings), which is a wholly owned
subsidiary of Colony VI, a discrete investment fund managed by an affiliate of Colony Capital, Colony Resorts LVH Co-Investment Partners, L.P. (Co-Investment Partners), Colony Resorts LVH Coinvestment Voteco, LLC (Coinvestment
Voteco) and Colony Resorts LVH Voteco, LLC (Voteco), each of which purchased Class A or Class B Membership Units on June 18, 2004 in connection with the equity financing described in Note 8.



Prior to June 18, 2004, the Company had conducted no business other than in
connection with the execution of the Purchase and Sale Agreement (as defined below), relating to the acquisition of substantially all of the assets and certain liabilities of LVH Corporation, a Nevada corporation (LVH) (the
Acquisition). LVH is a wholly-owned subsidiary of Caesars Entertainment, Inc., formerly Park Place Entertainment Corporation (Caesars) that prior to the Acquisition operated the Las Vegas Hilton, a casino resort located in
Las Vegas, Nevada (the Hotel or the Property). Commencing June 18, 2004, the revenue and expense of the Property are included in the Companys statement of operations.



Interim Financial Statements



The accompanying condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The Company believes that the disclosures are adequate to make the information presented not misleading.
In the opinion of management all adjustments (which include normal recurring adjustments) necessary for the fair presentation of the results for the interim periods have been made. The results for the three-month period ended June 30 2005 and the
six month period ended June 30, 2005, are not necessarily indicative of results to be expected for the full fiscal year.



These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2004,
included in the Companys Annual Report on Form 10-K for the year ended December 31, 2004 (filed March 31, 2005 (File Number 0-50635)) (the Form 10K).



Use of Estimates



The preparation of the unaudited condensed financial statements in accordance with accounting principles generally accepted in the United States of
America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, including related disclosure of contingent assets and liabilities. On an on-going basis, management
evaluates those estimates, including those related to asset impairments, accruals for slot marketing points, compensation and related benefits, revenue recognition, allowance for doubtful accounts, contingencies and litigation. The Company bases its
estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.



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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Cash and Cash Equivalents



Cash and cash equivalents consist of cash and short-term investments with original maturities not in excess of 90 days.



Restricted Cash



The Company has on deposit $27.5 million in various escrow accounts as of
June 30, 2005, of which $26 million is to be used for renovation projects and the remaining amounts are held for insurance, property taxes and required repairs.



Accounts Receivable



Accounts Receivable are due within one year and are recorded net of amounts estimated to be uncollectible. The Company allows for an estimated amount of
receivables that may not be collected. The Company estimates an allowance for doubtful accounts using a specific formula applied to aged receivables as well as a specific review of large balances. Historical experience is considered, as are customer
relationships, in determining specific reserves.



Concentrations of Credit Risk



Financial instruments,
which potentially subject the Company to concentrations of credit risk, consist principally of short-term investments and receivables. The short-term investments (including restricted cash equivalents) are placed with high credit quality financial
institutions, which invest such cash primarily in money market funds.



Inventories



Inventories are
stated at the lower of cost or market. Cost is determined by the first-in, first-out and specific identification methods. Inventories consist primarily of food, beverage and retail products.



Property and Equipment



Property and equipment are stated at cost. Depreciation and amortization are
provided on a straight-line basis over the estimated useful lives of the assets as follows:



|                                  |  |               
|--------------------------------- |  | --------------
|Building and improvements         |  | 15 to 40 Years
|Furniture, fixtures and equipment |  | 3 to 15 Years 



Maintenance, repairs
and renewals that neither materially add to the value of the property nor appreciably prolong its life are charged to expense as incurred. Gains or losses on disposition of property and equipment are included in the statements of operations.



Management evaluates property and equipment and other
long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets exceeds their fair value in accordance with Financial Accounting Standards Boards Statement of Financial Accounting
Standards No. 144 Accounting for the Impairment or Disposal of Long Lived Assets. Impairment losses are recognized when estimated future undiscounted cash flows expected to result from the use of the assets and their eventual disposition
are less than their carrying amounts.



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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



Capitalized interest



The interest cost associated with major construction projects is capitalized and are included in the cost of the project.
When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-average cost of the Companys outstanding borrowings. Capitalization of interest ceases when the project is
substantially complete or development activity is suspended for more than a brief period. During the three and six months ended June 30, 2005 and for the three and six months ended June 30, 2004, the Company did not have capitalized interest as
there were no significant construction projects.



Deferred Financing Costs



Deferred financing costs of
$4.5 million relate to the Companys financing of the Acquisition. The Company has commenced amortization of these costs since the closing of the Acquisition using the effective interest rate method. Amortization expense during the three and
six months ended June 30, 2005 were $557,000 and $1.1 million, respectively, and was $75,000 for the three and six months ended June 30, 2004.



Casino Revenue and Promotional Allowances



Casino revenue is the aggregate of gaming wins and losses. In accordance with industry practice, the retail value of accommodations, food and beverage,
and other services furnished to hotel/casino guests without charge is included in gross revenue and then deducted as promotional allowances.



Hotel, Food and Beverage Revenues



Hotel revenue recognition criteria are generally met at the time of occupancy. Food and beverage revenue recognition criteria are generally met at the
time of service. Deposits for future hotel occupancy or food and beverage services contracts are recorded as deferred income until revenue recognition criteria are met. Cancellation fees for hotel and food and beverage services are recognized upon
cancellation by the customer as defined by a written contract entered into with the customer.



Slot Club Promotion and Progressive Jackpot Payouts



The Company has established a promotional club to encourage repeat business from frequent and active slot machine customers
and table games patrons. Members earn points based on gaming activity and such points can be redeemed for cash. The Company accrues for club points as a reduction to revenue based upon the estimates for expected redemptions. The Company maintains a
number of progressive slot machines and table games. As wagers are made on the respective progressive games, the amount available to win (to be paid out when the appropriate jackpots are hit) increases. The Company has recorded the progressive
jackpots as a liability with a corresponding charge against casino revenue.



Advertising Costs



Costs for
advertising are expensed as incurred, except costs for direct-response advertising, which are capitalized and amortized over the period of the related program. Direct-response advertising consists primarily of mailing costs associated with the
direct-mail programs. Advertising costs that were expensed during the three and six months ended June 30, 2005 were $1.7 million and $3.2 million, respectively.



Accounting for Derivative Instruments and Hedging Activities



The Company uses an interest rate cap to assist in managing interest incurred on its Term Loan. The difference between
amounts received and amounts paid under such agreement, as well as any costs or fees, is recorded as a reduction of, or addition to, interest expense as incurred over the life of the interest rate cap.



The Company has a policy aimed at managing interest rate risk associated with
its current and anticipated future borrowings. This policy enables the Company to use any combination of interest rate swaps, futures, options, cap and similar instruments. To the extent the Company employs such financial instruments pursuant to
this policy, and the instruments qualify for hedge accounting, they are accounted for as hedging instruments.



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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



In order to qualify for hedge accounting, the underlying hedged item must expose the Company to risks
associated with market fluctuations and the financial instrument used must be designated as a hedge and must reduce the Companys exposure to market fluctuation throughout the hedge period. If these criteria are not met, a change in the market
value of the financial instrument is recognized as a gain or loss in the period of change. Otherwise, gains and losses are not recognized except to the extent that the financial instrument is disposed of prior to maturity. Net interest paid or
received pursuant to the financial instrument is included as interest expense in the period.



The Company has not designated its interest rate cap as a hedge therefore changes in the market value of the interest rate cap are recognized as gain or losses in the period of the change. During the quarter ended
June 30, 2005 and the six month period ended June 30, 2005, the Company recognized gains of $24,000 and a loss of $65,000, respectively.



Income Taxes



The Company is a limited liability company and will be treated as a partnership for federal income tax purposes. Accordingly, no provision for federal
income taxes was recorded because the taxable income or loss is included in the income tax return of the members.



Income (loss) Per Membership Unit



The Companys income (loss) per membership unit was calculated using the two-class method. Under the two-class method, income (loss) is allocated to
each class of membership unit based on the respective members participation rights in undistributed income.



The diluted income (loss) per membership unit includes the effect of the assumed conversion of the Class B Membership Units into Class A Membership Units
at a 1:1 ratio. At June 30, 2005 the 0.167 options to purchase Class A Membership Units and 166,667 options to purchase Class B Membership Units have been excluded from the diluted income (loss) per membership unit calculation, because the assumed
conversion of these options would be anti-dilutive.



2004 Incentive Plan



In connection with the closing
of the Acquisition, the Companys board and members approved the Companys 2004 Incentive Plan (the Plan). As of June 18, 2004, the Company had a total of 0.167 Class A Units and 166,667 Class B units reserved for issuance
under the Plan.



Subsequent to the closing of the Acquisition,
the Company granted 0.167 options of Class A Units and 166,667 options of Class B Units to certain executives, in accordance with the Plan. The options have a 10 year life, vest over three to five years and have an exercise price of $100 per unit
for both classes which was equal to, or greater than, the fair market value of the membership units at the date of grant.



The Company accounts for stock-based compensation, including employee stock option plans, in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees and the Financial Accounting Standards Boards Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25.
Had the Company accounted for these plans under the fair value method allowed by Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS 123), as amended by Statement of Financial
Accounting Standards No. 148, Accounting for Stock-Based CompensationTransition and Disclosure (SFAS 148), the Companys net income (loss) and income (loss) per membership unit would have been as follows on a pro
forma basis:



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



(in thousands, except membership unit data)





|                                                    |  |                                  |      |   |                                |   |      |                        |  |   |                        |   |  |   |       |  
|--------------------------------------------------- |  | -------------------------------- | ---- | - | ------------------------------ | - | ---- | ---------------------- |  | - | ---------------------- | - |  | - | ----- | -
|                                                    |  | Three months ended June 30, 2005 |      |   | Six months ended June 30, 2005 |  
|                                                    |  | Class A Membership Units         |      |   | Class BMembershipUnits         |   |      | Class AMembershipUnits |  |   | Class BMembershipUnits |  
|Net income (loss) as reported                       |  | $                                | (188 | ) |                                | $ | (188 | )                      |  | $ | 5,470                  |   |  | $ | 5,470 |  
|Stock-based compensation cost                       |  |                                  | (270 | ) |                                |   | (270 | )                      |  |   | (539                   | ) |  |   | (539  | )
|                                                    |  |                                  |      |   |                                |   |      |                        |  |   |                        |   |  |   |       |  
|Pro-forma net income (loss)                         |  | $                                | (458 | ) |                                | $ | (458 | )                      |  | $ | 4,931                  |   |  | $ | 4,931 |  
|                                                    |  |                                  |      |   |                                |   |      |                        |  |   |                        |   |  |   |       |  
|                                                    |  |                                  |      |  
|Basic income (loss) per membership unit as reported |  | $                                | (.13 | ) |                                | $ | (.13 | )                      |  | $ | 3.65                   |   |  | $ | 3.65  |  
|Stock-based compensation cost                       |  |                                  | (.18 | ) |                                |   | (.18 | )                      |  |   | (.36                   | ) |  |   | (.36  | )
|                                                    |  |                                  |      |   |                                |   |      |                        |  |   |                        |   |  |   |       |  
|Pro-forma basic income (loss) per share             |  | $                                | (.31 | ) |                                | $ | (.31 | )                      |  | $ | 3.29                   |   |  | $ | 3.29  |  
|                                                    |  |                                  |      |   |                                |   |      |                        |  |   |                        |   |  |   |       |  
|                                                    |  |                                  |      |  
|Diluted income per membership as reported           |  | $                                | (.13 | ) |                                | $ |     |                        |  | $ | 3.65                   |   |  | $ |      |  
|                                                    |  |                                  |      |   |                                |   |      |                        |  |   |                        |   |  |   |       |  
|Stock-based compensation cost                       |  |                                  | (.18 | ) |                                |   |     |                        |  |   | (.36                   | ) |  |   |      |  
|                                                    |  |                                  |      |   |                                |   |      |                        |  |   |                        |   |  |   |       |  
|Pro-forma diluted income (loss) per share           |  | $                                | (.31 | ) |                                | $ |     |                        |  | $ | 3.29                   |   |  | $ |      |  
|                                                    |  |                                  |      |   |                                |   |      |                        |  |   |                        |   |  |   |       |  



The fair value of the
option grants during 2004 was estimated on the date of grant using an appraisal of the value of the Company and its membership units. No additional grants were awarded during the six months ended June 30, 2005.



The estimated fair value of the 166,667 options at the date of grant was
$27.73 per membership unit and was computed using the black scholes method with the following weighted average assumptions: risk free interest rate of 3.24%; no expected dividend yields; and expected lives of 30 months.



Recently Issued Accounting Pronouncements



In September 2004, the Emerging Issues Task Force (EITF) of the Financial
Accounting Standards Board (FASB) reached a consensus on issue No. 04-08. The Effect of Contingently Convertible Instruments on Diluted Earnings per Share (EITF 04-08), which is effective for reporting periods ending after December 15,
2004. EITF 04-08 requires companies to include shares issuable under convertible instruments in diluted earnings per share computations (if dilutive) regardless of whether the market price trigger (or other contingent feature) has been met. As June
30, 2005 the Company does not have any instruments which are contingently convertible to membership units, and therefore the adoption of EITF 04-08, will not impact the future diluted earnings per membership of the Company.



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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



In December 2004, the FASB issued SFAS No. 123R, Share-Based Payment, which requires all
companies to measure compensation costs for all share-based payments (including employee stock options) at fair value. On April 14, 2005 the Securities and Exchange Commission announced that it would provide for a phased-in implementation of SFAS
No. 123(R). In accordance with the new implementation schedule, the Company is required to adopt SFAS No. 123(R) no later than January 1, 2006.



In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets. This statement is based on the principle that exchanges of
nonmonetary assets should be measured based on fair value of the assets exchanged. This statement is effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The Company believes that the adoption of the
statement will not have a material effect on the Companys financial condition or results of operation. .



3. ACCOUNTS RECEIVABLE



Components of accounts receivable were as follows (in thousands):



|                                                    |  |              |        |   |                  |   |        |  
|--------------------------------------------------- |  | ------------ | ------ | - | ---------------- | - | ------ | -
|                                                    |  | June 30,2005 |        |   | December 31,2004 |  
|Casino                                              |  | $            | 9,723  |   |                  | $ | 5,879  |  
|Hotel                                               |  |              | 10,917 |   |                  |   | 8,002  |  
|Affiliates                                          |  |              | 514    |   |                  |   | 2,327  |  
|Other                                               |  |              | 903    |   |                  |   | 550    |  
|                                                    |  |              |        |   |                  |   |        |  
|                                                    |  |              | 22,057 |   |                  |   | 16,758 |  
|Less: Allowance for doubtful accounts and discounts |  |              | (3,792 | ) |                  |   | (133   | )
|                                                    |  |              |        |   |                  |   |        |  
|                                                    |  | $            | 18,265 |   |                  | $ | 16,625 |  
|                                                    |  |              |        |   |                  |   |        |  



The Company extends
credit to approved casino customers following background checks and investigations of creditworthiness.



An estimated allowance for doubtful accounts and discounts is maintained to reduce the Companys receivables to their estimated net realizable value.
Although management believes the allowance is adequate, it is possible that the estimated amount of cash collections with respect to the casino accounts receivable could change.



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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



4. PROPERTY AND EQUIPMENT, NET



Components of property and equipment were as follows (in thousands):



|                                  |  |               |         |   |                   |   |         |  
|--------------------------------- |  | ------------- | ------- | - | ----------------- | - | ------- | -
|                                  |  | June 30, 2005 |         |   | December 31, 2004 |  
|Land and land improvements        |  | $             | 153,982 |   |                   | $ | 153,982 |  
|Building and improvements         |  |               | 104,669 |   |                   |   | 104,669 |  
|Furniture, fixtures and equipment |  |               | 46,131  |   |                   |   | 41,133  |  
|Construction in progress          |  |               | 2,066   |   |                   |   | 879     |  
|                                  |  |               |         |   |                   |   |         |  
|                                  |  |               | 306,848 |   |                   |   | 300,663 |  
|Less: accumulated depreciation    |  |               | (8,741  | ) |                   |   | (4,173  | )
|                                  |  |               |         |   |                   |   |         |  
|                                  |  | $             | 298,107 |   |                   | $ | 296,490 |  
|                                  |  |               |         |   |                   |   |         |  



5.
OTHER ACCRUED LIABILITIES



Other accrued liabilities consist
of the following (in thousands):



|                    |  |               |        |                   |   |       
|------------------- |  | ------------- | ------ | ----------------- | - | ------
|                    |  | June 30, 2005 |        | December 31, 2004
|Customer deposits   |  | $             | 11,732 |                   | $ | 4,639 
|Payroll and related |  |               | 11,145 |                   |   | 11,125
|Taxes and licenses  |  |               | 2,401  |                   |   | 1,811 
|Casino              |  |               | 3,245  |                   |   | 5,926 
|License fees        |  |               | 224    |                   |   | 876   
|Interest            |  |               | 748    |                   |   | 767   
|Other               |  |               | 3,058  |                   |   | 8,973 
|                    |  |               |        |                   |   |       
|                    |  | $             | 32,553 |                   | $ | 34,117
|                    |  |               |        |                   |   |       



6.
TERM LOAN



On June 18, 2004 in connection with the
consummation of the Acquisition, the Company entered into the Goldman Term Loan (the Term Loan). The Term Loan is for a principal amount of $200 million and is for an initial term of two (2) years with two one-year extensions. The
initial maturity date of the Term Loan is July 11, 2006. The Company intends to extend, or refinance, the Term Loan upon maturity. The Term Loan is subject to a $30 million holdback amount: $26 million has been set aside for renovation and
construction and $4 million was held as a debt-service reserve. The $26 million has not been utilized by the Company as of June 30, 2005; the $4 million of debt service was used in 2004. Interest on the Term Loan accrues at a rate of 6.50% plus the
greater of (i) one-Month LIBOR or (ii) 1.5%. The Term Loan provides for no amortization during the term. The Term Loan is secured by a first priority deed of trust on the Property.



Subsequent to June 30, 2005, the Company withdrew $11.2 million from restricted cash for various renovation projects, as
permitted under the terms of the Term Loan.



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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



Pursuant to the terms of the Term Loan, the Company purchased an interest rate cap at the funding of
the Term Loan for $769,000 with LIBOR strike rate of 5% for the first two years of the Term Loan and an interest rate cap with a LIBOR strike rate of 6% for any extension periods. The interest rate cap was valued at $14,000 and $79,000 at June 30,
2005 and December 31, 2004, respectively. The interest rate cap is included within other assets on the balance sheet. As a result of the decrease in value of the interest rate cap, the Company recorded a corresponding mark to market adjustment of
$65,000 which is included in interest expense in the accompanying unaudited condensed statement of operations.



7. REDEEMABLE MEMBERS EQUITY



In connection with the closing of the Acquisition, the Company, Voteco, Coinvestment Voteco, Co-Investment Partners and Holdings entered into a Sale Right
Agreement, dated June 18, 2004 (the Sale Right Agreement). Pursuant to the terms of Co-Investment Partners partnership agreement, at any time after May 23, 2008, Whitehall (a limited partner in Co-Investment Partners and an
affiliate of Goldman Sachs & Co. and Archon Financial, L.P., the lender under the Goldman Term Loan) has the right to request that Co-Investment Partners purchase all of Whitehalls interest in Co-Investment Partners at a purchase price
determined by Whitehall. Pursuant to the Sale Right Agreement, upon receiving notice from Whitehall that it has exercised the sale right above the Company must, within forty-five days elect to either (i) purchase Whitehalls interest in
Co-investment Partners or (ii) sell the Company in its entirety. If the Company elects not to purchase Whitehalls interest, it must appoint Goldman Sachs & Co. as its sole and exclusive agent for a period of one year to seek to sell the
Company at a price extrapolated from the price Whitehall established for its interest in Co-Investment Partners. In addition, on June 18, 2010, if the Company has not been sold pursuant to sale right above or otherwise, the Company shall appoint
Goldman Sachs & Co. as its sole agent to seek to sell the Company at the best price obtainable. For purposes of the statement presentation and the diluted membership unit calculation, it is assumed that the redemption of Whitehalls
interest or sale of the property will be consummated at fair value.



8. MEMBERSHIP INTERESTS



In
connection with and immediately prior to the Acquisition, the Company issued Class A Membership Units (Class A Units) to Coinvestment Voteco and Voteco on a pro rata basis in proportion to the equity contributions made by each entity. In
addition, the Company issued Class B Membership Units (Class B Units and together with the Class A Units, the Membership Units) to Co-Investment Partners and to Holdings, on a pro rata basis in proportion to the equity
contributions made by each entity. All of these entities are existing affiliates of the Company.



As of June 30, 2005, Voteco owns 0.60 Class A Units and Coinvestment Voteco owns 0.90 Class A Units. In addition, as of June 30, 2005, Holdings owns
600,000 Class B Units and Co-Investment Partners owns 900,000 Class B Units. Prior to the closing of the Acquisition, the Company executed the Operating Agreement. Pursuant to the Operating Agreement, holders of Class A Units are entitled to one
vote per unit in all matters to be voted on by voting members of the Company. Holders of Class B units are not entitled to vote, except as otherwise expressly required by law.



On June 18, 2004, the Company issued Class A Units and Class B Units in connection with the organizational structure that
was put in place in order to consummate the Acquisition. Pursuant to that organizational structure, Holdings and Co-Investment Partners, through their purchase of the non-voting Class B Units, acquired substantially all of the equity in the Company
without having any voting power or other power to control the affairs or operations of the Company, except as otherwise expressly required by law.



At the time of the closing of the Acquisition, the Company executed: (1) a Transfer Restriction Agreement by and among Thomas J. Barrack, Jr.
(Barrack), Nicholas L. Ribis (Ribis), Co-Investment Partners and Coinvestment Voteco (the Coinvestment Transfer Restriction Agreement) and (2) a Transfer Restriction Agreement by and among Mr. Barrack, Voteco and
Holdings (the Voteco Transfer Restriction Agreement).



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COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



The Companys Class A Units issued to Coinvestment Voteco are subject to the Coinvestment Transfer Restriction
Agreement, which provides, among other things, that:



| |  | Co-Investment Partners has the right to acquire Class A Units from Coinvestment Voteco on each occasion that Class B Units held by Co-Investment Partners would be transferred to a
proposed purchaser who, in connection with such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all
findings, notices or declarations required to be made with, all gaming authorities under all applicable gaming laws;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | A specific purchase price, as determined in accordance with the Coinvestment Transfer Restriction Agreement, will be paid to acquire the Class A Units from Coinvestment Voteco; and
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Coinvestment Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Co-Investment Partners.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------



The Companys Class A Units issued to Voteco are subject to the Voteco Transfer
Restriction Agreement, which provides, among other things, that:



| |  | Holdings has the right to acquire Class A Units from Voteco on each occasion that Class B Units held by Holdings would be transferred to a proposed purchaser who, in connection with
such proposed sale, has obtained all licenses, permits, registrations, authorizations, consents, waivers, orders, findings of suitability or other approvals required to be obtained from, and has made all findings, notices or declarations required to
be made with, all gaming authorities under all applicable gaming laws;
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | A specific purchase price, as determined in accordance with the Voteco Transfer Restriction Agreement, will be paid to acquire the Class A Units from Voteco; and
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Voteco will not transfer ownership of Class A Units owned by it except pursuant to such option of Holdings.
|- |  | -----------------------------------------------------------------------------------------------------------



It is currently anticipated that any future holders of the Companys Membership Units
will become a party to the Operating Agreement.



9. RELATED PARTY TRANSACTIONS



In 2004, the Company
advanced $2.1 million to Resorts International Holdings, Inc, (RIH), a company affiliated through common ownership, in connection with the acquisition by RIH of four gaming properties. The advance was fully repaid in February 2005.



In connection with the acquisition of these properties,
certain employees of the Company have provided consulting services to RIH for transition of the properties to RIH. The Company has billed RIH $808,000 through June 30, 2005 for said services. All amounts billed have been paid by RIH as of June 30,
2005 except for $476,000 which is recorded in accounts receivable as of June 30, 2005. The $476,000 was paid in July 2005.



The Company entered into a Services Agreement with Resorts International Hotel, Inc. (Resorts) an affiliate of the Company (through common
ownership) on June 18, 2004 (the Services Agreement). The Company entered into an Amended and Restated Joint Services Agreement (the Joint Services Agreement) and Amended and Restated Joint Marketing Agreement (the
Marketing Agreement) with Resorts and Resorts International Holdings, LLC, an affiliate of the Company (through common ownership) on April 26, 2005. The Services Agreement and Joint Services Agreement provide for an initial term of three
years with automatic one year renewal periods. The Marketing Agreement provides for an initial term of ten years with automatic one year renewal periods. The agreements provide that the Company and Resorts will cooperatively develop and implement
joint services and marketing programs.



During the six month
period ended June 30, 2005 the Company provided and/or received services from these affiliated companies. The total net value of services received from the affiliated companies $100,000.



14



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



10. COMMITMENTS AND CONTINGENCIES



Vice Chairman and Executive Employment Agreements



The Company has entered into a Vice Chairmans agreement and several
executive employment agreements, as amended. The agreements have initial terms of six months to five years and are subject to one-year extensions. These agreements provide that the executives will receive a base salary with either mandatory
increases or annual adjustments, annual bonus payments, and the granting of option to acquire membership units under the Companys 2004 Incentive Plan.



Hilton License Agreement



Concurrently with the closing of the Acquisition, the Company entered into a License Agreement pursuant to which the Company licenses from Hilton Inns,
Inc. (Hilton) the right to use the mark Hilton and is part of Hiltons reservation system and Hiltons HHonors Program(TM). The License Agreement commenced on the date of the closing of the Acquisition
and expires on December 31, 2008. During the term of the License Agreement, the Company is required to pay Hilton an annual fee of $2,000,000 plus 1% of the Hotels gross room revenue to fund national and regional group advertising and sales
and business promotion efforts by Hilton.



Easements



The Hilton Grand Vacations property,
located adjacent to the Hotel, has an easement for use of approximately 260 parking spaces (out of approximately 4,800 parking spaces). There is also an easement for the use of the monorail that runs through the Hotel property.



Environmental



An independent environmental consultant performed a Phase I environmental
site assessment in accordance with the American Society for Testing and Materials (ASTM) standards on the Las Vegas Hilton property in December 2004. This assessment involved visual inspection, interviews with site personnel, review of
certain publicly available records and preparation of a written report. The assessment did not include any testing of soil or groundwater at the property. According to certain historical data integrated into the Phase I report, in 2000 it was
discovered that there is a plume of tetrachloroethene in the groundwater and the property was listed as a leaking underground storage tank site. The contamination is believed to originate from an off-site source, but the source has not yet been
identified.



To date, the Nevada Division of Environmental
Protection has not required any additional investigation at the property. The Phase I report states that levels of tetrachloroethene and total petroleum hydrocarbons in the groundwater beneath the property in 2000 exceeded certain limits allowed
under a National Pollutant Discharge Elimination System permit. The Phase I report indicates that the allowable levels have been exceeded in the past and a treatment system is needed to ensure compliance with applicable requirements. The Phase I
report also identified asbestos-containing materials at the Hotel. The Company expects to manage these materials pursuant to an operations and maintenance program.



The Company has not determined what the cost, if any, will be with respect to the groundwater or the asbestos issue,
however, the Company believes that the issues will not have a material effect upon its financial position or results of operations. There can be no assurance, however, that the estimated capital and operating costs for the treatment system will not
be exceeded or that there will be no claims or other liabilities associated with the foregoing conditions.



15



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##### Table of Contents

COLONY RESORTS LVH ACQUISITIONS, LLC

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS(Continued)



Litigation



The Company is not a party to any material litigation and, it is not aware of any action, suit or proceedings against it
that has been threatened by any person.



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##### Table of Contents

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



The following discussion and analysis of the Companys financial condition and results of operations should be read in conjunction with the financial
statements, the related notes to financial statements and Managements Discussion and Analysis of Financial Condition and Results of Operations included in the Companys Annual Report on Form 10-K and the unaudited interim
condensed financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q.



Overview



Prior to June 18, 2004, Colony Resorts LVH Acquisitions, LLC (the Company) conducted no business other than in connection with the completion
of the acquisition of substantially all of the assets and certain liabilities of LVH Corporation, a Nevada corporation (LVH) (the Acquisition). LVH is a wholly-owned subsidiary of Caesars Entertainment, Inc., formerly Park
Place Entertainment Corporation (Caesars) that prior to the Acquisition, operated the Las Vegas Hilton, a casino resort located in Las Vegas, Nevada (the Hotel or Property). The Acquisition closed on June 18,
2004. Since June 18, 2004, the Company has owned and operated the Property and accordingly has a limited operating history. The following discussion of the Companys results of operations compares the three and six months ended June 30, 2005 to
the three and six months ended June 30, 2004, as if the acquisition of the Property had occurred on January 1, 2004. Accordingly, the discussion compares the 2005 operating results of the Property when owned by the Company to those generated while
the Property was owned and operated by Caesars during 2004.



Casino revenue is derived primarily from patrons wagering on slot machines, table games and other gaming activities. Table games generally include Blackjack or Twenty One, Craps, Baccarat and Roulette. Other gaming activities include the
Race and Sports Book. Casino revenue is defined as the win from gaming activities, computed as the difference between gaming wins and losses, not the total amounts wagered. Table game volume, table game drop (terms which are
used interchangeably), and slot handle are casino industry specific terms that are used to identify 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 patrons that the casino has won. Hold is derived by dividing the amount won by the casino by the amount wagered by patrons. Casino revenue is recognized at the end of each gaming
day.



Casino revenues vary from time to time due to general
economic conditions, popularity of entertainment offerings, table game hold, slot hold, and occupancy percentages in the hotels. Casino revenues also vary depending upon the amount of gaming activity as well as variations in the odds for different
games of chance. The Property also uses technology, such as cashless wagering on slot machines, to increase revenues and/or decrease expenses. Casino revenues, room revenues, food and beverage revenues and other revenues vary due to general economic
conditions and competition.



Rooms revenue is derived from
rooms and suites rented to guests. Average daily rate is an industry specific term used to define the average amount of revenue per rented room per day. Occupancy percentage defines the total percentage of rooms occupied, and
is computed by dividing the number of rooms occupied by the total number of rooms available. Room revenue is recognized at the time the room is provided to the guest.



Food and beverage revenues are derived from food and beverage sales in the food outlets of the Property, including
restaurants, room service and banquets. Food and beverage revenue is recognized at the time the food and/or beverage are provided to the guest.



Other revenue includes retail sales, entertainment sales, telephone and other miscellaneous income at the casino/hotel. Such revenue is recognized at the
time the goods or services are provided to the guest.



17



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##### Table of Contents

Results of Operations



Comparison of three months ended June 30, 2005 with June 30, 2004



Net revenues:



For the Three Months Ended June 30

(dollars in thousands)



|                             |  |      |        |   |      |   |        |         |  |    |  
|---------------------------- |  | ---- | ------ | - | ---- | - | ------ | ------- |  | -- | -
|                             |  | 2005 |        |   | 2004 |   |        | %CHANGE | 
|Casino                       |  | $    | 20,118 |   |      | $ | 18,761 |         |  | 7  | %
|Rooms                        |  |      | 25,661 |   |      |   | 23,134 |         |  | 11 | %
|Food and beverage            |  |      | 16,837 |   |      |   | 16,221 |         |  | 4  | %
|Other                        |  |      | 6,394  |   |      |   | 4,993  |         |  | 28 | %
|                             |  |      |        |   |      |   |        |         |  |    |  
|                             |  |      | 69,010 |   |      |   | 63,109 |         |  | 9  | %
|Less  promotional allowance |  |      | (6,255 | ) |      |   | (5,575 | )       |  | 12 | %
|                             |  |      |        |   |      |   |        |         |  |    |  
|Total net revenues           |  | $    | 62,755 |   |      | $ | 57,534 |         |  | 9  | %
|                             |  |      |        |   |      |   |        |         |  |    |  



Casino



Casino revenues increased $1.4 million, or 7%, to $20 million for the
quarter ended June 30, 2005, compared to $18.8 million for the quarter ended June 30, 2004. An increase in gaming volume resulted in increased casino revenues. The table games hold percentage for the three month period ended June 30, 2005 was 10.7%
versus 13.5% for the comparable period in the prior year. The slot machine win percentage was 5.4% in both periods. Table games volume increased approximately 55% and slot machine volume increased 35% for the quarter ended June 30, 2005 compared to
the quarter ended June 30, 2004. The increase in casino volume is primarily due to more frequent and more robust casino marketing programs aimed at specific table game players and refinements to the Hotels slot club loyalty program.



The casino departments operating margin was 28% for the
quarter ended June 30, 2005 compared to 25% for the quarter ended June 30, 2004. The increased operating margin was primarily attributable to more efficient use of promotional spending which drove higher revenues at a lower incremental cost in the
most recently completed quarter.



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##### Table of Contents

Rooms



During the quarter ended June 30, 2005, an average daily room rate of $103 as compared to $93 during the quarter ended June 30, 2004, resulted in an 11%
increase in rooms department revenue. Revenue per available room of $285 during the quarter ended June 30, 2005 compared to $241 during the same period in 2004. Rooms revenue for the three month period ended June 30, 2005 were $25.7 million,
compared to $23.1 million during 2004. Convention traffic continues to be the mainstay of the Hotel representing 46% of the Hotels occupied room nights during the quarter ended June 30, 2005. The Hotel departments operating margin for
the three month period ended June 30, 2005 increased to 74% compared to 70% for the quarter ended June 30, 2004 as a result of the $10 increase in average daily rate.



Food and Beverage



Food and beverage revenues were $16.8 million for the quarter ended June 30, 2005, representing an increase of $600,000 or 4% compared to $16.2 million
for 2004. The increase is primarily attributable to pricing increases and additional covers at the Hotels casual dining restaurants. The Hotels food and beverage operating margin for the quarter ended June 30, 2005 improved to 21% versus
20% for the quarter ended June 30, 2004 due to certain pricing initiatives.



Other



Other revenues include retail
sales, entertainment sales, telephone and miscellaneous income at the Hotel. Other revenue increased $1.4 million or 28% to $6.4 million for the quarter ended June 30, 2005. The increase was primarily attributable to the increase in entertainment
revenue from strong attendance at the performances by Barry Manilow. At the present time, Barry Manilow is scheduled to continue to perform in the Hotels showroom through the first quarter 2006.



Operating expenses



For the Three Months Ended June 30

(dollars in thousands)



|                            |  |      |        |      |   |         |  |      |   
|--------------------------- |  | ---- | ------ | ---- | - | ------- |  | ---- | --
|                            |  | 2005 |        | 2004 |   | %Change | 
|Casino                      |  | $    | 14,515 |      | $ | 14,062  |  | 3    | % 
|Rooms                       |  |      | 6,714  |      |   | 6,993   |  | (4   | )%
|Food and beverage           |  |      | 13,271 |      |   | 12,987  |  | 2    | % 
|General and administrative  |  |      | 16,665 |      |   | 16,451  |  | 1    | % 
|Other                       |  |      | 4,300  |      |   | 3,073   |  | 40   | % 
|Depreciation & amortization |  |      | 2,196  |      |   | 4,321   |  | (49  | )%
|                            |  |      |        |      |   |         |  |      |   
|                            |  |      | 57,661 |      |   | 57,887  |  |     |   
|                            |  |      |       
|Pre-opening*                |  |      |       |      |   | 4,423   |  | (100 | )%
|Management fee to parent    |  |      |       |      |   | 1,531   |  | (100 | )%
|                            |  |      |        |      |   |         |  |      |   
|Total                       |  | $    | 57,661 |      | $ | 63,841  |  | (10  | )%
|                            |  |      |        |      |   |         |  |      |   

---

|* | Pre-opening expenses relate to the Companys pre-acquisition expenses.
|- | ----------------------------------------------------------------------



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##### Table of Contents

Fluctuations in the Hotels operating expenses are generally based upon the change in volume of
guests staying in the Hotel and utilizing the Hotels amenities, including the casino, the food and beverage outlets and the entertainment venues. Total operating expenses, excluding pre-opening expenses and management fees incurred in 2004,
were relatively unchanged, when comparing the quarter ended June 30, 2005 to the same quarter in 2004 even though there were increases in Casino and Other expenses. The increase in Casino department expenses is a direct result of increased business
volume at the Hotel and increased promotional spending compared to the prior year. The 40% increase in Other expenses is a direct result of production costs associated with the Barry Manilow performances in the Hotels showroom. These increases
were offset by decreases in General and Administrative and Depreciation expense.



Depreciation



The reduction in
Depreciation expense for the three month period ended June 30, 2005 compared with the three month period ended June 30, 2004 resulted from the Acquisition of the Hotel in June 2004 and corresponding application of purchase accounting to assets
acquired. Based on a third party appraisal, a significant amount of the purchase price was allocated to land from building and improvements.



Interest



Interest expense related to the Companys $200 million Term Loan was $5.3 million during the quarter ended June 30, 2005. The Company manages its
interest rate risk through the use of an interest rate cap.



Operating
Income (loss)



Operating income for the
three months ended June 30, 2005 was $5.1 million compared to an operating loss of $6.3 million for the three months ended June 30, 2004. Non-recurring pre-opening expenses and management fees contributed $5.9 million to the loss in 2004. Enhanced
revenue levels and cost containment initiatives implemented by the Company in the periods subsequent to the June 18, 2004 acquisition of the Hotel drove the improved results in the quarter ended June 30, 2005 as evident in the operating income line
item.



Comparison of six months ended June 30, 2005 with June 30, 2004



Net revenues:



For the Six Months Ended June 30

(dollars in thousands)



|                             |  |      |         |   |      |   |         |         |  |    |  
|---------------------------- |  | ---- | ------- | - | ---- | - | ------- | ------- |  | -- | -
|                             |  | 2005 |         |   | 2004 |   |         | %CHANGE | 
|Casino                       |  | $    | 45,489  |   |      | $ | 41,240  |         |  | 10 | %
|Rooms                        |  |      | 53,709  |   |      |   | 50,528  |         |  | 6  | %
|Food and beverage            |  |      | 34,580  |   |      |   | 33,309  |         |  | 4  | %
|Other                        |  |      | 12,706  |   |      |   | 10,773  |         |  | 18 | %
|                             |  |      |         |   |      |   |         |         |  |    |  
|                             |  |      | 146,484 |   |      |   | 135,850 |         |  | 8  | %
|Less  promotional allowance |  |      | (13,753 | ) |      |   | (11,395 | )       |  | 21 | %
|                             |  |      |         |   |      |   |         |         |  |    |  
|Total net revenues           |  | $    | 132,731 |   |      |   | 124,455 |         |  | 7  | %
|                             |  |      |         |   |      |   |         |         |  |    |  



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##### Table of Contents

Casino



Casino revenues increased $4.2 million, or 10% to $45.5 million for the six months ended June 30, 2005 versus 2004. An increase in gaming volume
translated into increased revenues despite the fact that table games hold for the six month period ended June 30, 2005 was 11.6% as compared to 14.8% in the comparable prior year period. The slot win percentage for the six month period ended June
30, 2005 was 5.4% as compared to 5.5% in the comparable prior year period. Table game volume increased 46.6% and slot machine volume increased 18.7% for the six months ended June 30, 2005 compared to the six months ended June 30, 2004.



The increase in casino volume is primarily due to expanded casino
marketing programs aimed at both table and slot machine players, and increased visitation at the Hotel due to the opening of Barry Manilow in the Hotel showroom.



The casino operating margin was relatively unchanged between the 2005 and 2004 six month periods ended June 30.



Rooms



The Hotel maintained an average daily room rate of $109 for the six months ended June 30, 2005 as compared to $103 for the
six months ended June 30, 2004. The Hotel generated revenue per available room of $298 during the six months ended June 30, 2005 as compared to $259 during the six months ended June 30, 2004. Rooms revenue for the six months ended June 30, 2005 was
$53.7 million, a 6% increase over the same period in 2004. The increase in rooms revenue is a result of the increase in occupancy from 91% to 93% coupled with a $6 increase in the average daily rate during the six months ended June 30, 2005 when
compared to the same period in 2004. Convention traffic represented 47% of the Hotels occupied room nights during the six months ended June 30, 2005 versus 56% in 2004. The Hotels operating margin for the six months ended June 30, 2005
increased to 74% compared to 72% for the six months ended June 30, 2004 due to the improved revenue levels.



Food and Beverage



Food and beverage revenues were $34.6 million for the six months ended June 30, 2005 representing an increase of $1.3 million, or 4%. The increase is primarily attributable to pricing increases and additional covers at the Hotels
casual dining restaurants. The Hotels food and beverage margin for the six month period ended June 30, 2005 was 23% compared to 20% for the six months ended June 30, 2004.



Other



Other revenues include retail sales, entertainment sales, telephone and miscellaneous income at the Hotel. Other revenue increased $1.9 million or 18% for
the six months ended June 30, 2005. The increase is primarily attributable to the increase in entertainment revenue from attendance at performances by Barry Manilow.



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##### Table of Contents

Operating expenses



|                            |  |      |         |      |   |          |  |      |   
|--------------------------- |  | ---- | ------- | ---- | - | -------- |  | ---- | --
|                            |  | 2005 |         | 2004 |   | % Change | 
|Casino                      |  | $    | 30,942  |      | $ | 28,217   |  | 10   | % 
|Rooms                       |  |      | 13,494  |      |   | 13,915   |  | (3   | )%
|Food and beverage           |  |      | 26,621  |      |   | 26,647   |  |     | % 
|General & Administrative    |  |      | 33,355  |      |   | 32,710   |  | 2    | % 
|Other                       |  |      | 8,066   |      |   | 5,511    |  | 46   | % 
|Depreciation & amortization |  |      | 4,568   |      |   | 9,009    |  | (49  | )%
|                            |  |      |         |      |   |          |  |      |   
|                            |  |      | 117,046 |      |   | 116,009  |  | 1    | % 
|                            |  |      |        
|Pre-opening*                |  |      |        |      |   | 6,326    |  | (100 | )%
|Management fee to parent    |  |      |        |      |   | 3,567    |  | (100 | )%
|                            |  |      |         |      |   |          |  |      |   
|Total                       |  | $    | 117,046 |      | $ | 125,902  |  | (7   | )%
|                            |  |      |         |      |   |          |  |      |   

---

|* | Pre-opening expenses relate to the Companys pre-acquisition expenses
|- | ---------------------------------------------------------------------



Total operating expenses, excluding pre-opening expenses and management fees, were relatively flat during the six months ended June, 30, 2005 when
compared to 2004. Specific fluctuations were seen in the Casino department where expenses were $30.9 million for the six months ended June 30, 2005, or 10% greater than the comparable period in 2004, due to (1) costs associated with supporting the
addition gaming volume and (2) the cost of expanded marketing programs and promotional activities. Casino revenues increased a similar 10% for these same six month periods. Other expenses were $8.1 million for the six months ended June 30, 2005
representing a 46% increase from the comparable period in 2004. The increase is primarily attributable to the cost of producing the Barry Manilow performances in the Hotels showroom.



Depreciation



The reduction in depreciation expense for the six month period June 30, 2005 versus the comparable prior year period
resulted from the acquisition of the Hotels assets by the Company in June 2004. Based on a third party appraisal, a significant amount of the purchase price was allocated to land and building improvements.



Interest



Interest expense for the six months ended June 30, 2005 was $10.2 million. The Companys only debt outstanding is in
the form of the Term Loan used to finance the acquisition of the Hotel.



Operating Income (Loss)



The Hotel
recorded operating income of $15.7 million for the six months ended June 30, 2005 compared with an operating loss of $1.4 million for the comparable prior year period. The operating loss for the six months ended June 30, 2004 includes pre-opening
expenses of $6.3 million. Improved operating results in the first half of 2005 were driven by the implementation of various marketing programs, the success of Barry Manilow and corresponding improved revenue streams.



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##### Table of Contents

Financial Condition



Liquidity and Capital Resources



Cash flow provided by operations was $10 million for the six months ended June 30, 2005 compared to the $13.4 million used by operations in the six months
ended June 30, 2004. The Company received $7.6 million in advances from an affiliate to fund the Acquisition in the quarter ended March 31, 2004. The advances were converted to an equity contribution at the completion of the Acquisition.



As of June 30, 2005, the Company had cash and equivalents of $16.9 million
of which $4 million was cash in the casino used to fund daily operations. For the remainder of 2005, the Company expects to fund Property operations, capital expenditures, and debt service requirements from existing cash balances, operating cash
flow and funds held in escrow for property renovations.



The
Company incurred capital expenditures of $6.2 million for the six months ended June 30, 2005. The Company anticipates additional capital expenditures of $17.7 million throughout the remainder of 2005, most of which will be funded through the $26
million of restricted cash, as permitted under the terms of the Term Loan.



Other Factors Affecting Liquidity



While the Company believes that its cash flows from operations together with cash on hand will be adequate to fund its activities, including the capital expenditures that the Company plans to make, no assurances can be made that such
sources will be sufficient to meet such requirements. Covenants under the Term Loan restrict our future borrowing capacity however subject to certain conditions the Term Loan does permit the Company to incur additional debt to fund working capital.
If circumstances warrant, the Company may seek to obtain a working capital line of credit. The Term Loan is for a principal amount of $200 million and is for an initial term of two (2) years. It has an initial maturity date of July 11,
2006 and contains a provision for two one-year extensions. The Company intends to extend, or refinance, the Term Loan upon maturity. A downturn in the economy, increase in revenue or wagering taxes, acts of terrorism, war or military actions would
impact the Companys casino operations and negatively impact its cash flows from operations. If this were to occur, the Company would be required to adjust its capital spending plans.



Off-Balance Sheet Arrangements



The Company is not currently subject to any off-balance sheet arrangements which it believes
will have a material adverse impact on its financial condition.



Critical
Accounting Policies



A summary of the Companys significant
accounting policies can be found in Note 2 to financial statements included within this Form 10-Q. The Companys preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Significant among those estimates are the useful lives and potential impairment of long-term assets, such as buildings and equipment and the adequacy of the Companys allowance for uncollectible
receivables. These estimated amounts are based on management of the Companys best judgments using both historical information and known trends of the Property, the City of Las Vegas and the gaming industry. Because of the uncertainty inherent
in any estimate, it is likely that the actual results will differ from the initial estimates, and the differences could be material.



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##### Table of Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



The following discusses the Companys exposure to market risk related to changes in interest rates, equity prices and foreign currency exchange
rates. The Company does not believe that its exposure to market risk is material.



Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. The Companys primary exposure to market risk
is interest rate risk associated with its long-term debt. The Company attempts to manage its interest rate risk by the use of an interest rate cap on its Term Loan. The ability to enter into interest rate cap allows the Company to manage its
interest rate risk associated with its variable rate debt.



The
Company does not hold or issue financial instruments for trading purposes and does not enter into derivative transactions that would be considered speculative positions. The Companys derivative financial instruments consist exclusively of the
interest rate cap which does not qualify for hedge accounting. Interest differentials resulting from these agreements are recorded on an accrual basis as an adjustment to interest expense.



As of June 30, 2005 the Term Loan has a floating interest rate based on 6.50%
plus the greater of (i) one-month LIBOR or (ii) 1.5%. The initial term of the Term Loan is two years with two one-year extension options. The Term Loan is subject to interest rate risk and the interest payments associated with the Term Loan will
increase if LIBOR increases.



Pursuant to the terms of the Term
Loan, the Company purchased an interest rate cap with a LIBOR strike rate of 5% for the first two years of the Term Loan and an interest rate cap with a LIBOR strike rate of 6% for any extension periods; therefore, a hypothetical increase in LIBOR
of 100 basis points from the rates in effect on the date of this Form 10-Q would not cause the interest payments on the Term Loan to increase significantly. The Company does not currently anticipate a sudden change in LIBOR during the term of the
Term Loan.



The Company has not had any material changes in its
exposure to market risk since December 31, 2004.



The Company
does not have any significant foreign currency exchange rate risk or commodity price risk and it does not currently trade any market sensitive instruments.



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##### Table of Contents

ITEM 4. CONTROLS AND PROCEDURES



Prior to the closing of the Acquisition, the Company was a development stage company and as such, the management, under the supervision and with the participation of its Chief Executive Officer and Executive Vice President of Finance were
developing a system of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) and performed an evaluation of the effectiveness of the design and operation of Companys
disclosure controls and procedures implemented at such time. Since the closing of the Acquisition, a system has been put in place that the Companys management, including its Chief Executive Officer and Executive Vice President of Finance,
believe include disclosure controls and procedures that are effective.



There have been no changes since the closing of the Acquisition in the Companys internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Companys internal
control over financial reporting.



SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS



This Quarterly
Report on Form 10-Q contains forward-looking statements relating to future events and future performance of the Company within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including, without limitation, statements regarding the Companys expectations, beliefs, intentions or future strategies that are signified by the words expects, anticipates, intends, believes or
similar language. Actual results could differ materially from those anticipated in such forward-looking statements.



All forward-looking statements included in this document are based on information available to the Company on the date hereof, and the Company assumes no
obligation to update any forward-looking statements. The Company cautions investors that its business and financial performance are subject to substantial risks and uncertainties.



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##### Table of Contents

PART II. OTHER INFORMATION



ITEM 6. EXHIBITS



|               |  |                                                                                                                                                                      
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NUMBER |  | Description of Exhibits                                                                                                                                              
|2.1            |  | Purchase and Sale Agreement, dated as of December 24, 2003, by and among Colony Resorts LVH Acquisitions, LLC, LVH Corporation and Caesars Entertainment Corporation*
|               | 
|3.1            |  | Articles of Organization, dated as of December 18, 2003, for Colony Resorts LVH Acquisitions, LLC*                                                                   
|               | 
|3.2            |  | Operating Agreement, dated as of December 22, 2003, for Colony Resorts LVH Acquisitions, LLC*                                                                        
|               | 
|3.3            |  | Amended and Restated Operating Agreement, dated June 18, 2004, for Colony Resorts LVH Acquisitions, LLC+                                                             
|               | 
|3.4            |  | Amendment No. 1 to the Amended and Restated Operating Agreement, dated July 23, 2004, for Colony Resorts LVH Acquisitions, LLC****                                   
|               | 
|3.5            |  | Amendment to Articles of Organization, dated June 25, 2004, for Colony Resorts LVH Acquisitions, LLC*****                                                            
|               | 
|10.1           |  | Deposit Escrow Agreement, dated as of December 24, 2003, by and among LVH Corporation, Colony Resorts LVH Acquisitions, LLC and Nevada Title Company*                
|               | 
|10.2           |  | Coinvestment Transfer Restriction Agreement, dated June 18, 2004, by and among Mr. Barrack, Mr. Ribis, Co-Investment Partners and Coinvestment Voteco+               
|               | 
|10.3           |  | Transfer Restriction Agreement, dated June 18, 2004, by and among Mr. Barrack, Holdings and Voteco+                                                                  
|               | 
|10.4           |  | Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Rodolfo Prieto*                                             
|               | 
|10.5           |  | Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser*                                        
|               | 
|10.6           |  | Employment Agreement, dated as of March 9, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Kenneth Ciancimino*                                         
|               | 
|10.7           |  | Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Rodolfo Prieto*                                                
|               | 
|10.8           |  | Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Schaffhauser*                                           
|               | 
|10.9           |  | Letter Agreement, dated as of March 10, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Kenneth Ciancimino*                                            
|               | 
|10.10          |  | Employment Agreement, dated as of May 17, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Gonzalo De Varona.***                                        
|               | 
|10.11          |  | Employment Agreement, dated as of April 12, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Robert Stewart.***                                         



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##### Table of Contents

|      |  |                                                                                                                                                                                                                                                                    
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.12 |  | Vice Chairman Agreement, dated June 18, 2004, between Colony Resorts LVH Acquisitions, LLC and Nicholas L. Ribis.****                                                                                                                                              
|      | 
|10.13 |  | Colony Resorts LVH Acquisitions, LLC 2004 Incentive Plan****                                                                                                                                                                                                       
|      | 
|10.14 |  | Loan Agreement, dated June 18, 2004, by and between Colony Resorts LVH Acquisition, LLC and Archon Financial, L.P.+                                                                                                                                                
|      | 
|10.15 |  | Sale Right Agreement, dated June 18, 2004, by and among Colony Resorts LVH Acquisitions, LLC, Colony Resorts LVH Holdings, LLC, Colony Resorts LVH Coinvestment Voteco, LLC, Colony Resorts LVH
Voteco, LLC and Colony Resorts LVH Co-Investment Partners, L.P.****
|      | 
|10.16 |  | Services Agreement, dated June 18, 2004, between Colony Resorts LVH Acquisitions, LLC and Resorts International Hotel and Casino, Inc.****                                                                                                                         
|      | 
|10.17 |  | Amended and Restated Joint Marketing Agreement, dated April 26, 2005, by and among Colony Resorts LVH Acquisitions, LLC, Resorts International Hotel, Inc. and Resorts International Holdings,
LLC+++                                                              
|      | 
|10.18 |  | Amended and Restated Joint Services Agreement, dated April 26, 2005, by and among Colony Resorts LVH Acquisitions, LLC, Resorts International Hotel, Inc. and Resorts International Holdings,
LLC+++                                                               
|      | 
|10.19 |  | Employment Agreement, dated as of May 11, 2003, between LVH Corporation and Thomas Page.****                                                                                                                                                                       
|      | 
|10.20 |  | Addendum to Employment Agreement, dated as of June 22, 2004, by and between Colony Resorts LVH Acquisitions, LLC and Thomas Page.****                                                                                                                              
|      | 
|14.1  |  | Code of Ethics++                                                                                                                                                                                                                                                   
|      | 
|31.1  |  | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          
|      | 
|31.2  |  | Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                          
|      | 
|32.1  |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                            
|      | 
|32.2  |  | Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                            

---

METHOD OF FILING



|      |  |                                                                                                                                    
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------
|*     |  | Incorporated by reference to the Registrants Form 10, filed March 15, 2004 (File Number 0-50635).                                 
|**    |  | Incorporated by reference to the Registrants Amendment No. 1 to Form 10, filed April 26, 2004 (File Number 0-50635).              
|***   |  | Incorporated by reference to the Registrants Post-Effective Amendment No. 1 to Form 10, filed June 17, 2004 (File Number 0-50635).
|+     |  | Incorporated by reference to the Registrants Quarterly Report on Form 10-Q, filed June 28, 2004 (File Number 0-50635).            
|****  |  | Incorporated by reference to Registrants Post-Effective Amendment No. 2 to Form 10 filed August 13, 2004 (File Number 0-50635).   
|***** |  | Incorporated by reference to Registrants Quarterly Report on Form 10-Q filed August 23, 2004 (File Number 0-50635).               
|++    |  | Incorporated by reference to Registrants Annual Report on Form 10-K filed March 31, 2005 (File Number 0-50635)                    
|+++   |  | Incorporated by reference to Registrants Quarterly Report on Form 10-Q filed May 16, 2005 (File Number 0-50635).                  



|(b) | Reports on Form 8-K
|--- | -------------------



27



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##### Table of Contents

SIGNATURES



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



|                    |  |                                      |  |                                            
|------------------- |  | ------------------------------------ |  | -------------------------------------------
|                    |  | COLONY RESORTS LVH ACQUISITIONS, LLC
|                    |  |                                     
|Date: July 31, 2005 |  | By:                                  |  | /s/ Rodolfo Prieto                         
|                    |  |                                      |  | Rodolfo Prieto                             
|                    |  |                                      |  | Chief Executive Officer and General Manager
|                    |  |                                     
|Date: July 31, 2005 |  | By:                                  |  | /s/ Robert Schaffhauser                    
|                    |  |                                      |  | Robert Schaffhauser                        
|                    |  |                                      |  | Executive Vice President of Finance        



28