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**U.S. SECURITIES AND EXCHANGECOMMISSION****WASHINGTON, D.C. 20549**

**FORM 10–QSB**
| **ý** | **QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE  SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001.** |
|------------|--------------------------------------------------------------------------------------------------------------------------------------|

 

**OR**
| **o** | **TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE  SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM  ________________ TO ______________.** |
|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

**CommissionFile No.    0–20630**

**FULL HOUSE RESORTS, INC.**(Exact name of small business issuer asspecified in its charter)****

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| Delaware                                                                 | 13–3391527     |
|--------------------------------------------------------------------------|---------------------|
|                                                                          |                     |
| (State or other  jurisdiction of                                         | (I.R.S. Employer    |
| incorporation or  organization)                                          | Identification No.) |
|                                                                     |                |
| 2300 W. Sahara Ave.                                                      |                |
|          Suite 450,  Box 23 |                |
| Las Vegas,  Nevada                                                  | 89102               |
|                                                                          |                     |
| (Address of principal  executive offices)                                | (zip code)          |

(702) 221–7800

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(Registrant's telephonenumber)

Checkwhether the issuer (1) filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the past 12 months (or forsuch 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 ý          No o

**APPLICABLE ONLY TO CORPORATE ISSUERS**

Asof August 11, 2001, Registrant had 10,340,380 shares of its $.0001 par valuecommon stock outstanding.

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**FULL HOUSE RESORTS, INC.TABLE OF CONTENTS**

|     |     |                                                                                                                     |
|----------|----------|--------------------------------------------------------------------------------------------------------------------------|
| PART I.  |     | Financial Information                                                                                                    |
|     |     |                                                                                                                     |
|     | Item 1.  | Unaudited Condensed Consolidated Financial  Statements                                                                   |
|     |     |                                                                                                                     |
|     |     |  Unaudited  Condensed Consolidated Balance Sheets   as of June 30, 2001 and December 31, 2000                  |
|     |     |                                                                                                                     |
|     |     |  Unaudited  Condensed Consolidated Statements of Operations  for the three months ended June 30, 2001 and 2000 |
|     |     |                                                                                                                     |
|     |     |  Unaudited Condensed Consolidated Statements  of Operations  for the six months ended  June 30, 2001 and 2000  |
|     |     |                                                                                                                     |
|     |     |  Unaudited  Condensed Consolidated Statements of Cash Flows  for the six months ended June 30, 2001 and 2000   |
|     |     |                                                                                                                     |
|     |     |  Notes  to Unaudited Condensed Consolidated Financial Statements                                                    |
|     |     |                                                                                                                     |
|     | Item  2. | Management's  Discussion and Analysis of Financial   Condition and Results of Operations                            |
|     |     |                                                                                                                     |
| PART II. |     | Other Information                                                                                                        |
|     |     |                                                                                                                     |
|     |     | Signatures                                                                                                               |

 

**FULLHOUSE RESORTS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS**

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| **ASSETS**                                   | **JUNE 30,** **2001**                                                                                                                                                         |       | **DECEMBER 31,** **2000** |       |
|----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------|------------|
|                                         | ****                                                                                                                                                                               |       | ****                           |       |
| CURRENT  ASSETS:                             |                                                                                                                                                                               |       |                           |       |
|                                         | Cash  and cash equivalents                                                                                                                                                         | $          | 484,778                        |       | $ | 455,143 |   |
|                                         | Receivables                                                                                                                                                                        | 283,212    |                           | -          |   |
|                                         | Prepaid  expenses                                                                                                                                                                  | 77,886     |                           | 92,804     |   |
|                                         |                                                                                                                                                                                    |       |                                |       |
|                                         | Total  current assets                                                                                                                                                              | 845,876    |                           | 547,947    |   |
|                                         |                                                                                                                                                                               |       |                           |       |   |
| LAND  HELD FOR DEVELOPMENT                   | 4,621,670                                                                                                                                                                          |       | 4,621,670                      |       |
|                                         |                                                                                                                                                                               |       |                           |       |
| FIXTURES  AND EQUIPMENT, net                 | 35,011                                                                                                                                                                             |       | 47,202                         |       |
|                                         |                                                                                                                                                                               |       |                           |       |
| INVESTMENTS  IN JOINT VENTURES               | 321,760                                                                                                                                                                            |       | 3,192,634                      |       |
|                                         |                                                                                                                                                                               |       |                           |       |
| GOODWILL,  net                               | 126,579                                                                                                                                                                            |       | 379,713                        |       |
|                                         |                                                                                                                                                                               |       |                           |       |
| NOTES  RECEIVABLE                            | 897,291                                                                                                                                                                            |       | 1,667,269                      |       |
|                                         |                                                                                                                                                                               |       |                           |       |
| GAMING  CONTRACT RIGHTS, net                 | 5,508,994                                                                                                                                                                          |       | -                              |       |
|                                         |                                                                                                                                                                               |       |                           |       |
| DEFERRED  TAX ASSET                          | 72,924                                                                                                                                                                             |       | 294,900                        |       |
|                                         |                                                                                                                                                                               |       |                           |       |
| DEPOSITS  AND OTHER ASSETS                   | 2,458,912                                                                                                                                                                          |       | 2,701,344                      |       |
|                                         |                                                                                                                                                                                    |       |                                |       |
| TOTAL                                        | $                                                                                                                                                                                  | 14,889,017 |                           | $          | 13,452,679 |   |
|                                         |                                                                                                                                                                                    |       |                                |       |
| **LIABILITIES  AND STOCKHOLDERS' EQUITY**    |                                                                                                                                                                               | ** ** |                           | ** ** |
|                                         |                                                                                                                                                                               |       |                           |       |
| CURRENT  LIABILITIES:                        |                                                                                                                                                                               |       |                           |       |
|                                         | Accounts  payable                                                                                                                                                                  | $          | 15,240                         |       | $ | 18,106 |   |
|                                         | Payable  to joint ventures                                                                                                                                                         | -          |                           | 27,831     |   |
|                                         | Accrued  expenses                                                                                                                                                                  | 153,038    |                           | 182,024    |   |
|                                         |                                                                                                                                                                                    |       |                                |       |
|                                         | Total  current liabilities                                                                                                                                                         | 168,278    |                           | 227,961    |   |
|                                         |                                                                                                                                                                                    |       |                                |       |
| LONG–TERM  DEBT, net of current portion | 4,500,000                                                                                                                                                                          |       | 3,150,000                      |       |
|                                         |                                                                                                                                                                                    |       |                                |       |
| COMMITMENTS  AND CONTINGENCIES               |                                                                                                                                                                               |       |                           |       |
|                                         |                                                                                                                                                                               |       |                           |       |
| STOCKHOLDERS'  EQUITY:                       |                                                                                                                                                                               |       |                           |       |
|                                         |                                                                                                                                                                               |       |                           |       |
|                                         | Cumulative  preferred stock, par value $.0001, 5,000,000 shares authorized; 700,000  shares issued and outstanding; aggregate liquidation preference of $3,990,000  and $3,885,000 | 70         |                 | 70         |        |
|                                         | Common  stock, par value $.0001, 25,000,000 shares authorized; 10,340,380 shares  issued and outstanding                                                                           | 1,034      |                      | 1,034      |      |
|                                         | Additional  paid in capital                                                                                                                                                        | 17,429,889 |                           | 17,429,889 |   |
|                                         | Accumulated  deficit                                                                                                                                                               | (7,210,254 | )                              | (7,356,275 | ) |
|                                         |                                                                                                                                                                                    |       |                                |       |
|                                         | Total  stockholders' equity                                                                                                                                                        | 10,220,739 |                           | 10,074,718 |   |
|                                         |                                                                                                                                                                                    |       |                                |       |
| TOTAL                                        | $                                                                                                                                                                                  | 14,889,017 |                           | $          | 13,452,679 |   |
|                                         |                                                                                                                                                                                    |       |                                |       |
|                                              |                                                                                                                                                                                    |            |                                |            |  |  |  |  |

Seenotes to unaudited condensed consolidated financial statements.

**FULLHOUSE RESORTS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

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|                                                      | **THREE MONTHS ENDED****JUNE  30,** |      |
|-----------------------------------------------------------|-------------------------------------|-----------|
|                                                      | **2001**                            |      | **2000** |   |
|                                                      | ****                                |      | **** |   |
| OPERATING  REVENUES:                                      |                                |      |   |   |
|                                                      | Joint  ventures                     | $         | 802,452 |   | $ | 901,713 |   |
|                                                      | Management  fees                    | 593,425   |   | - |   |
|                                                      |                                     |      |  |   |
|                                                      | Total  operating revenues           | 1,395,877 |   | 901,713 |   |
|                                                      |                                     |      |  |   |
|                                                      |                                |      |   |   |
| OPERATING  COSTS AND EXPENSES:                            |                                |      |   |   |
|                                                      | Joint  venture pre-opening costs    | -         |   | 120,966 |   |
|                                                      | Development  costs                  | 196,933   |   | - |   |
|                                                      | General  and administrative         | 480,695   |   | 492,971 |   |
|                                                      | Depreciation  and amortization      | 182,736   |   | 132,797 |   |
|                                                      |                                     |      |  |   |
|                                                      | Total  operating costs and expenses | 860,364   |   | 746,734 |   |
|                                                      |                                     |      |  |   |
| INCOME  FROM OPERATIONS                                   | 535,513                             |      | 154,979 |   |
| Interest  expense                                         | (90,974                             | )         | (83,028 | ) |
| Interest  and other income                                | 2,886                               |      | 2,498 |   |
|                                                      |                                     |      |  |   |
| INCOME  BEFORE INCOME TAXES                               | 447,425                             |      | 74,449 |   |
| INCOME  TAX PROVISION                                     | (254,643                            | )         | (107,366 | ) |
|                                                      |                                     |      |  |   |
| NET  INCOME (LOSS)                                        | 192,782                             |      | (32,917 | ) |
| Less,  undeclared dividends on cumulative preferred stock | 52,500                              |      | 52,500 |   |
|                                                      |                                     |      |  |   |
| NET  INCOME (LOSS) APPLICABLE TO COMMON SHARES            | $                                   | 140,282   |   | $ | (85,417 | ) |
|                                                      |                                     |      |  |   |
| NET  INCOME (LOSS) PER COMMON SHARE, Basic and Diluted    | $                                   | 0.01      |   | $ | (0.01 | ) |
|                                                      |                                     |      |  |   |
| Weighted  average number of common shares                 |                                |      |   |   |
| Outstanding;   Basic and Diluted                | 10,340,380                          |      | 10,340,380 |   |
|                                                      |                                     |      |  |   |
|                                                           |                                     |           |  |  |  |  |  |  |

Seenotes to unaudited condensed consolidated financial statements.

**FULL HOUSE RESORTS, INC. ANDSUBSIDIARIESUNAUDITED CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS**

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|                                                                     | **SIX MONTHS ENDED  JUNE 30,**      |           |
|--------------------------------------------------------------------------|-------------------------------------|----------------|
|                                                                     | **2001**                            |           | **2000** |   |
|                                                                     | ****                                |           | **** |   |
| OPERATING REVENUES:                                                      |                                |           |   |   |
|                                                                     | Joint  ventures                     | $              | 1,806,765 |   | $ | 1,767,313 |   |
|                                                                     | Management  fees                    | 593,425        |   | - |   |
|                                                                     |                                     |           |  |   |
|                                                                     | Total  operating revenues           | 2,400,190      |   | 1,767,313 |   |
|                                                                     |                                     |           |  |   |
| OPERATING  COSTS AND EXPENSES:                                           |                                |           |   |   |
|                                                                     | Joint venture pre-opening costs     | 122,441        |   | 257,593 |   |
|                                                                     | Development  costs                  | 446,933        |   | - |   |
|                                                                     | General  and administrative         | 878,919        |   | 924,987 |   |
|                                                                     | Depreciation  and amortization      | 315,398        |   | 265,615 |   |
|                                                                     |                                     |           |  |   |
|                                                                     | Total  operating costs and expenses | 1,763,691      |   | 1,448,195 |   |
|                                                                     |                                     |           |  |   |
| INCOME  FROM OPERATIONS                                                  | 636,499                             |           | 319,118 |   |
| Interest  expense                                                        | (159,684                            | )              | (165,306 | ) |
| Interest  and other income                                               | 6,181                               |           | 5,904 |   |
|                                                                     |                                     |           |  |   |
| INCOME  BEFORE INCOMES TAXES                                             | 482,996                             |           | 159,716 |   |
| INCOME  TAX PROVISION                                                    | (336,976                            | )              | (195,022 | ) |
|                                                                     |                                     |           |  |   |
| NET  INCOME (LOSS)                                                       | 146,020                             |           | (35,306 | ) |
| Less,  undeclared dividends on cumulative preferred stock                | 105,000                             |           | 105,000 |   |
|                                                                     |                                     |           |  |   |
| NET  INCOME (LOSS) APPLICABLE TO COMMON SHARES                           | $                                   | 41,020         |   | $ | (140,306 | ) |
|                                                                     |                                     |           |  |   |
| NET  INCOME (LOSS) PER COMMON SHARE, Basic and Diluted                   | $                                   | 0.00           |   | $ | (0.01 | ) |
|                                                                     |                                     |           |  |   |
| Weighted  average number of common shares Outstanding, Basic and Diluted | 10,340,380                          |      | 10,340,380 |      |
|                                                                     |                                     |           |  |   |
|                                                                          |                                     |                |  |  |  |  |  |  |

Seenotes to unaudited condensed consolidated financial statements.

**FULLHOUSE RESORTS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

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|                                                  | **SIX MONTHS ENDED  JUNE 30,**                                                            |       |
|-------------------------------------------------------|-------------------------------------------------------------------------------------------|------------|
|                                                  | **2001**                                                                                  |       | **2000** |   |
|                                                  | ****                                                                                      |       | **** |   |
| CASH  FLOWS FROM OPERATING ACTIVITIES:                |                                                                                      |       |   |   |
|                                                  | Net  income (loss)                                                                        | $          | 146,020 |   | $ | (35,306 | ) |
|                                                  | Adjustments  to reconcile net income (loss) to net cash provided by operating activities: |       |   |   |   |
|                                                  | Depreciation  and amortization                                                            | 315,398    |   | 265,615 |   |
|                                                  | Amortization  of deferred compensation expense                                            | -          |   | 27,719 |   |
|                                                  | Expired  purchase option                                                                  | 250,000    |   | - |   |
|                                                  | Equity  in income of joint ventures                                                       | (1,684,324 | ) | (1,509,720 | ) |
|                                                  | Distributions  from joint ventures                                                        | 1,529,462  |   | 1,419,154 |   |
|                                                  |  Changes in operating assets and  liabilities:                                       |       |   |   |   |
|                                                  | Receivables                                                                               | (194,395   | ) | 34,057 |   |
|                                                  | Prepaid  expenses                                                                         | 14,918     |   | 17,713 |   |
|                                                  | Other  assets                                                                             | (7,567     | ) | (95,857 | ) |
|                                                  | Deferred  taxes                                                                           | 221,976    |   | 113,812 |   |
|                                                  | Accounts  payable and accrued expenses                                                    | (31,853    | ) | (61,688 | ) |
|                                                  |                                                                                           |       |  |   |
|                                                  | Net  cash provided by operating activities                                                | 559,635    |   | 175,499 |   |
|                                                  |                                                                                           |       |  |   |
| CASH  FLOWS FROM INVESTING ACTIVITIES:                |                                                                                      |       |   |   |
|                                                  | Purchases  of 50% joint venture interest                                                  | (1,800,000 | ) | - |   |
|                                                  | Advances  on note receivable                                                              | (80,000    | ) | - |   |
|                                                  | Deposits  on purchase options                                                             | -          |   | (50,000 | ) |
|                                                  | Receivables  from joint ventures                                                          | -          |   | (71,393 | ) |
|                                                  |                                                                                           |       |  |   |
|                                                  | Net  cash used in investing activities                                                    | (1,880,000 | ) | (121,393 | ) |
|                                                  |                                                                                           |       |  |   |
| CASH  FLOWS FROM FINANCING ACTIVITIES:                |                                                                                      |       |   |   |
|                                                  | Proceeds  from line of credit                                                             | 1,800,000  |   | - |   |
|                                                  | Repayment  of line of credit                                                              | (450,000   | ) | (250,000 | ) |
|                                                  |                                                                                           |       |  |   |
|                                                  | Net  cash provided by (used in) financing activities                                      | 1,350,000  |   | (250,000 | ) |
|                                                  |                                                                                           |       |  |   |
| NET  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 29,635                                                                                    |       | (195,894 | ) |
| CASH  AND CASH EQUIVALENTS, BEGINNING OF PERIOD       | 455,143                                                                                   |       | 438,800 |   |
|                                                  |                                                                                           |       |  |   |
| CASH  AND CASH EQUIVALENTS, END OF PERIOD             | $                                                                                         | 484,778    |   | $ | 242,906 |   |
|                                                  |                                                                                           |       |  |   |
|                                                       |                                                                                           |            |  |  |  |  |  |  |  |  |

Seenotes to unaudited condensed consolidated financial statements.

**FULL HOUSE RESORTS, INC. ANDSUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATEDFINANCIAL STATEMENTS**

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**1.**          **SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Interim Condensed Consolidated FinancialStatements -*** The interim condensedconsolidated financial statements of Full House Resorts, Inc. (the"Company") included herein reflect all adjustments which are, in theopinion of management, necessary to present fairly the financial position andresults of operations for the interim periods presented.  All such adjustments are of a normal recurringnature. Certain information and note disclosures normally included in financialstatements prepared in accordance with accounting principles generally acceptedin the United States of America have been omitted pursuant to the rules andregulations of the Securities and Exchange Commission.

Theseunaudited condensed consolidated financial statements should be read inconjunction with the consolidated financial statements and notes theretoincluded in the Company's Annual Report on Form 10–KSB for the year endedDecember 31, 2000.  The results ofoperations for the period ended June 30, 2001 are not necessarily indicative ofthe results to be expected for the year ending December 31, 2001.

***Consolidation –***The unaudited condensed consolidated financial statements include the accountsof the Company and all its majority–owned subsidiaries. Prior to March 31, 2001, we had four jointventures with GTECH that were accounted for using the equity method.  Three of these joint ventures are now whollyowned by the Company, and accordingly are no longer accounted for using theequity method.  All materialintercompany accounts and transactions have been eliminated.

***Reclassifications*****-**Certainprior year amounts have been reclassified to conform with the current yearpresentation.

**2.**          **RECENT ACCOUNTING PRONOUNCEMENTS**

InJuly 2001, the Financial Accounting Standards Board issued SFAS No. 141,“Business Combinations” and SFAS No. 142, “Goodwill and Other IntangibleAssets.”  SFAS 141 prohibits the poolingof interests method of accounting for business combinations initiated afterJune 30, 2001.  SFAS 142, which will beeffective January 2002, requires, among other things, the discontinuance ofgoodwill amortization.  In addition, thestandard includes provisions for the reclassification of certain existing intangiblesas goodwill, reassessment of the useful lives of existing intangibles, andongoing assessments of potential impairment of existing goodwill.

Asof June 30, 2001 the Company had goodwill, net of accumulated amortization, of$126,579, which will be fully amortized in our third quarter.  In addition, existing intangibles consist ofnet Gaming Contract Rights of $5,508,994 and Hard Rock licensing anddevelopment rights of $2,367,880 included in Deposits and Other Assets.  The Company has not yet determined theimpact, if any, that this statement will have on its consolidated financialposition or results of operations.

**3.**          **JOINTVENTURE ACQUISITION**

             OnMarch 30, 2001 we acquired GTECH’s 50% interest in three joint venture projectsthat had been equally owned by the two companies: Gaming Entertainment, LLC,owner of an agreement continuing through August 2002, with the Coquille Tribe,which conducts gaming at The Mill Casino in Oregon; Gaming EntertainmentMichigan, LLC, owner of a Management Agreement with the Nottawaseppi Huron Bandof Potawatomi to develop and manage a gaming facility near Battle Creek; andGaming Entertainment California, LLC owner of a Management Agreement with theTorres-Martinez Band of Desert Cahuilla Indians to develop and manage a gamingfacility near Palm Springs.

             Thepurchase price was $1,800,000, and was funded through our existing creditfacility.  As part of this transaction,GTECH has extended the due date of our $3,000,000 promissory note from January25, 2001 until January 25, 2002, with interest at prime.  Also as part of this transaction, GTECH isno longer required to provide the necessary financing for the two developmentprojects (Michigan and California) that we acquired.  This transaction did not include our other joint venture withGTECH, Gaming Entertainment (Delaware), LLC, owner of a management agreementcontinuing through 2011, to manage Midway Slots & Simulcast in Harrington,Delaware.

             Inaddition to the gaming contract rights, we acquired the other 50% interest in anote receivable from the Michigan tribe in the amount of $396,146.  The excess purchase price over the fairvalue of assets acquired was allocated to the gaming contract rights acquiredbased on the discounted present value of expected future cash flows.  The excess purchase price of $1,403,854 wasallocated as follows:

|                | Value   |      | Amortization Term |       |
|---------------------|---------|-----------|------------------------|------------|
|                |         |      |                        |       |
| Michigan contract   | $       | 1,141,682 |                   | 8.0  years |   |
| California contract | 182,776 |      | 8.0  years             |       |
| Oregon contract     | 79,396  |      | 1.4  years             |       |
|                |         |      |                   |       |
|                | $       | 1,403,854 |                   |       |   |

**4.**          **GAMINGCONTRACT RIGHTS**

             As aresult of the GTECH acquisition, the three joint ventures that had previouslybeen accounted for using the equity method are now wholly owned consolidatedentities.  A substantial portion of ourinvestment in these joint ventures was comprised of previously contributedMichigan gaming rights of $4,155,213 that we acquired in 1995.  Now that these are wholly-owned consolidatedentities, these previously contributed rights are reflected in Gaming ContractRights, along with the rights acquired in the GTECH acquisition of$1,403,854.  The Investments in JointVentures on the balance sheet now reflects our ownership interest in only theDelaware LLC.

**5.**          **     JOINT VENTURE INVESTMENTS**

             ThroughMarch 30, 2001 we had four joint ventures with GTECH.  The Delaware venture, which continues as a joint venture withGTECH, manages a slot operation at Harrington Raceway in Harrington.  As of March 31, 2001, the other threeprevious joint ventures became wholly owned by us, and accordingly are nolonger accounted for using the equity method. The Oregon venture developed the Mill Casino in North Bend for theCoquille Indian Tribe.   The Michiganventure, which has a management agreement with a Tribe in Battle Creek, and theCalifornia venture, which has an agreement with a Tribe in Thermal are bothstill in the development stage. Successful development and, ultimately, sustaining profitable operationsis dependent upon future events, including appropriate regulatory approvals andadequate market demand.  These twoventures have not generated any revenues, and the costs incurred to date relateto pre-opening expenses such as payroll, legal, and consulting.

 

SUMMARYINFORMATION FOR THE THREE MONTH PERIODS ENDED JUNE 30,

| **2001**                | Delaware  |      | Oregon |   | Michigan |   | California |   |
|-------------------------|-----------|-----------|--------|--------|----------|--------|------------|--------|
|                    |           |      |        |   |          |   |            |   |
| Revenues                | $         | 4,605,502 |   | $      | -        |   | $          | -      |   | $ | - |   |
| Income  from operations | 1,604,905 |      | -      |   | -        |   | -          |   |
| Net  income             | 1,604,905 |      | -      |   | -        |   | -          |   |
|                         |           |           |        |        |          |        |            |        |  |  |  |  |

 

| **2000**                       | Delaware  |      | Oregon  |   | Michigan |   | California |    |
|--------------------------------|-----------|-----------|---------|--------|----------|--------|------------|---------|
|                           |           |      |         |   |          |   |            |    |
| Revenues                       | $         | 3,822,672 |    | $      | 588,504  |   | $          | -       |   | $ | - |   |
| Income  (loss) from operations | 1,221,509 |      | 581,916 |   | (211,550 | )      | (30,382    | )       |
| Net  income (loss)             | 1,221,509 |      | 581,916 |   | (211,550 | )      | (30,382    | )  |
|                                |           |           |         |        |          |        |            |         |  |  |  |  |

 

SUMMARYINFORMATION FOR THE SIX MONTH PERIODS ENDED JUNE 30,

| **2001**                       | Delaware  |      | Oregon  |   | Michigan |   | California |   |
|--------------------------------|-----------|-----------|---------|--------|----------|--------|------------|--------|
|                           |           |      |         |   |          |   |            |   |
| Revenues                       | $         | 8,570,331 |    | $      | 570,137  |   | $          | -      |   | $ | - |   |
| Income  (loss) from operations | 3,048,797 |      | 564,734 |   | (197,522 | )      | (47,360    | )      |
| Net  income (loss)             | 3,048,797 |      | 564,734 |   | (197,522 | )      | (47,360    | )      |
|                                |           |           |         |        |          |        |            |        |  |  |  |  |

 

| **2000**                       | Delaware  |      | Oregon    |   | Michigan  |   | California |   |
|--------------------------------|-----------|-----------|-----------|--------|-----------|--------|------------|--------|
|                           |           |      |           |   |           |   |            |   |
| Revenues                       | $         | 6,965,199 |      | $      | 1,144,376 |   | $          | -      |   | $ | - |   |
| Income  (loss) from operations | 2,396,838 |      | 1,137,787 |   | (471,148  | )      | (44,038    | )      |
| Net  income (loss)             | 2,396,838 |      | 1,137,787 |   | (471,148  | )      | (44,038    | )      |
|                                |           |           |           |        |           |        |            |        |  |  |  |  |

 

**6.        SEGMENT INFORMATION**

Sincethe GTECH acquisition transaction, we now view our business in three primarybusiness segments.  The Operationssegment includes the performance of the Delaware and Oregon projects.  The Development segment includes costsassociated with our activities in Michigan, California, and Mississippi.  The Corporate segment reflects themanagement and administrative expenses of the business.

 

SUMMARYINFORMATION FOR THE THREE MONTH PERIODS ENDED JUNE 30,

| **2001** |                             |       |      |        |   |      |   |         |   |   |   |      |
|----------|----------------------------------|------------|-----------|-------------|--------|-----------|--------|--------------|--------|--------|--------|-----------|
|     |                             | Operations |      | Development |   | Corporate |   | Consolidated |   |
|     |                             |       |           |        |   |           |   |         |        |   |   |           |   |
|     |                             |       |      |        |   |      |   |         |   |   |   |      |   |
|     | Revenues                         | $          | 1,395,877 |        | $      | -         |   | $            | -      |   | $      | 1,395,877 |   |
|     | Pre-opening  / Development costs | -          |      | 196,933     |   | -         |   | 196,933      |   |
|     | Income  (loss) from operations   | 1,339,678  |      | (376,960    | )      | (427,205  | )      | 535,513      |   |
|     | Net  income (loss)               | 744,238    |      | (271,406    | )      | (280,050  | )      | 192,782      |   |

 

| **2000** |                             |       |    |        |   |      |   |         |   |   |   |    |
|----------|----------------------------------|------------|---------|-------------|--------|-----------|--------|--------------|--------|--------|--------|---------|
|     |                             | Operations |    | Development |   | Corporate |   | Consolidated |   |
|     |                             |       |         |        |   |           |   |         |        |   |   |         |   |
|     |                             |       |    |        |   |      |   |         |   |   |   |    |   |
|     | Revenues                         | $          | 901,713 |        | $      | -         |   | $            | -      |   | $      | 901,713 |   |
|     | Pre-opening  / Development costs | -          |    | 120,966     |   | -         |   | 120,966      |   |
|     | Income  (loss) from operations   | 859,524    |    | (205,344    | )      | (499,201  | )      | 154,979      |   |
|     | Net  income (loss)               | 430,434    |    | (135,527    | )      | (327,824  | )      | (32,917      | )      |

 

SUMMARYINFORMATION FOR THE SIX MONTH PERIODS ENDED JUNE 30,

| **2001** |                             |       |      |        |   |      |   |         |   |   |   |      |
|----------|----------------------------------|------------|-----------|-------------|--------|-----------|--------|--------------|--------|--------|--------|-----------|
|     |                             | Operations |      | Development |   | Corporate |   | Consolidated |   |
|     |                             |       |           |        |   |           |   |         |        |   |   |           |   |
|     |                             |       |      |        |   |      |   |         |   |   |   |      |   |
|     | Revenues                         | $          | 2,400,190 |        | $      | -         |   | $            | -      |   | $      | 2,400,190 |   |
|     | Pre-opening  / Development costs | -          |      | 569,384     |   | -         |   | 569,384      |   |
|     | Income  (loss) from operations   | 2,301,802  |      | (833,779    | )      | (831,524  | )      | 636,499      |   |
|     | Net  income (loss)               | 1,249,308  |      | (558,530    | )      | (544,758  | )      | 146,020      |   |

 

| **2000** |                             |       |      |        |   |      |   |         |   |   |   |      |
|----------|----------------------------------|------------|-----------|-------------|--------|-----------|--------|--------------|--------|--------|--------|-----------|
|     |                             | Operations |      | Development |   | Corporate |   | Consolidated |   |
|     |                             |       |           |        |   |           |   |         |        |   |   |           |   |
|     |                             |       |      |        |   |      |   |         |   |   |   |      |   |
|     | Revenues                         | $          | 1,767,313 |        | $      | -         |   | $            | -      |   | $      | 1,767,313 |   |
|     | Pre-opening  / Development costs | -          |      | 257,593     |   | -         |   | 257,593      |   |
|     | Income  (loss) from operations   | 1,682,935  |      | (426,349    | )      | (937,468  | )      | 319,118      |   |
|     | Net  income (loss)               | 846,571    |      | (264,919    | )      | (616,958  | )      | (35,306      | )      |

 

 

**Item 2.****Management's Discussion and Analysis of FinancialCondition and Results of Operations.**

**Resultsof Operations for the Three and Six Months Ended June 30, 2001 Compared toThree and Six Months Ended June 30, 2000**

             **Revenues. **As a result of the acquisition of GTECH’s interest inthree joint venture projects, our classification of revenues is not directlycomparable to prior periods.  Therevenues related to our Delaware contract continue to be reported as jointventure revenue, but as of March 31, 2001, the revenue related to the Oregoncontract is now reported as management fees.

             Total operating revenues increased$494,164, or 55% for the three month period and $632,877 or 36% for the sixmonth period as compared to the same periods in 2000.  These increases are due to improved performance in Delaware andthe acquisition of the additional 50% interest in Oregon.

***             DelawareJoint Venture.*** Our share of income from the Delaware jointventure was $802,452, an increase of $191,697, for the three month period, and$1,524,398, an increase of $325,979 for the six month period.  On May 11, 2000 we opened an expansion ofthe Harrington facility, and these revenue increases are primarily attributableto the increased gaming capacity.  As webegin the third quarter our comparisons will no longer be driven by thisadditional capacity.

***             Oregon.***  Our management fees from the Oregon contractwere $593,425 for the three month period compared to joint venture revenue of$290,958, in the prior year.  Oregonrelated revenues for the six month period were $875,792 compared to $568,894 inthe prior year.  These increasesprimarily reflect the increase in our ownership percentage.  Additionally, continued growth in the marketcontributed to revenue increases at the facility that more than offset the feepercentage reduction from 12% of revenue to 11% in accordance with themanagement agreement.

             **Cost and Expenses.**As aresult of our acquisition of GTECH’s interest in three joint venture projects,our classification of expenses is not directly comparable to priorperiods.  The expenses related to ourCalifornia and Michigan projects, which had been reported as joint venturepre-opening costs, as of March 31, 2001 are now reported as development costs.

             **Pre-opening and Development**.  Total development related costs (Jointventure pre-opening costs and Development costs) for the California andMichigan projects were $196,933 compared to $120,966 for the three monthperiod, and $319,374 compared to $257,593 for the six month period.  The majority of these costs were due toincreased activities related to the Michigan venture with the Huron PotawatomiTribe in Battle Creek.  These costs wereprimarily for legal and consulting fees to assist the Tribe in obtainingsuitable land and complying with the requirements of the Indian GamingRegulatory Act.

             During the three month periodsthere were no other development costs. For the six month periods, we expensed $250,000 in the first quarter of2001 related to the expiration of a land purchase option in Biloxi Mississippithat we chose not to exercise or renew.

             **General and Administrative Expenses*.***   General and administrative expensesdecreased by $12,276 and $46,068 for the respective three and six month periodsended June 30, 2001.  These decreasesare primarily due to reduced payroll expenses.

             **Depreciationand Amortization.    **Amortizationexpense increased $50,073 for both the three and six month periods whichreflects the amortization of the Gaming Rights acquired in the GTECHacquisition transaction which is described in Notes 3 and 4 of the condensedconsolidated financial statements. Goodwill amortization was $126,567 and $253,134 for the respective threeand six month periods.  The remaininggoodwill balance of $126,579 will be expensed in the third quarter of 2001.

**             Interest Expense*.***  Interest expense increased by $7,946 for thethree month period and decreased by $5,622 for the six month period.  These changes are a result of changes in theamounts outstanding under our bank line, coupled with a decrease in interestrates.

**             Interest and Other Income*.***  Interest and other income was comparable inboth the three and six  month periodsand is primarily due to earnings on invested cash balances.

**             Income Tax Provision*.***   Income tax expense increased by $147,277and $141,954 for the respective three and six month periods.  These increases are primarily due toincreased earnings.  The effective taxrate reflects a combination of state taxes on joint venture earnings combined with the tax effect of non-deductibleamortization expenses.  For federal taxpurposes we have net operating loss carryforwards of approximately $1,335,000which may be carried forward to offset future taxable income.  The loss carryforwards expire in 2010through 2019.  The availability of theloss carryforwards may be limited in the event of a significant change inownership of the Company or that of our subsidiaries.

**             Liquidity and Capital Resources**

             At June 30, 2001, we had cash andcash equivalents of $484,778.  For thesix months ended June 30, 2001, cash of $559,635 was provided by operatingactivities, as compared to $175,499 in the prior year period.  The increase is primarily due to increasedearnings.  Net cash used in investingactivities was $1,880,000, primarily for the GTECH acquisition transaction.  In the prior year period, $121,393 was usedin investing activities, for options and deposits related to the Biloxi projectas well as joint venture activities in Michigan.  Financing activities consisted of draws and repayments on ourcredit line.   A draw of $1,800,000 wasused to fund the GTECH acquisition transaction.  As a result of these factors, there was a net increase in cashand cash equivalents of $29,635 during the first six months of 2001.

             OnMarch 30, 2001, we acquired GTECH’s 50% interest in three joint ventureprojects that had been equally owned by the two companies: Gaming Entertainment,LLC, owner of an agreement continuing through August 2002, with the CoquilleTribe, which conducts gaming at The Mill Casino in Oregon; Gaming EntertainmentMichigan, LLC, owner of a Management Agreement with the Nottawaseppi Huron Bandof Potawatomi to develop and manage a gaming facility near Battle Creek; andGaming Entertainment California, LLC owner of a Management Agreement with theTorres-Martinez Band of Desert Cahuilla Indians to develop and manage a gamingfacility near Palm Springs.

             Thepurchase price was $1,800,000, and was funded through our existing creditfacility.  As part of this transaction,GTECH has extended the due date of our $3,000,000 promissory note from January25, 2001 until January 25, 2002, with interest at prime.  Also as part of this transaction, GTECH is nolonger required to provide the necessary financing for the two developmentprojects (Michigan and California) that we acquired.  Since we do not have the financial resources to fund theseprojects alone, we are actively pursuing alternative means of financing thesedevelopments.

             Thistransaction did not include our other joint venture with GTECH, GamingEntertainment (Delaware), LLC, owner of a management agreement continuingthrough 2011, to manage Midway Slots & Simulcast in Harrington,Delaware.  As a result of thiscontinuing agreement with GTECH, our receipt of revenues from the operations ofour Delaware joint venture project is governed by the terms of the relatedagreement.  It provides that net cash flow(after certain deductions) is to be distributed monthly to Full House andGTECH.  While we do not believe thatthis arrangement will adversely impact our liquidity, our continuing cash flowis dependent on the operating performance of this joint venture, and theability to receive monthly distributions

             Our long-term debt represents the$3,000,000 balance on the GTECH promissory note and $1,500,000 due under thebank line of credit, which was used to fund the GTECH acquisition.  We expect to repay these amounts with acombination of cash from operations and leveraging our ownership of the gamingcontracts acquired.

             We have a $2 million line of creditwith Coast Community bank in Mississippi. The line bears interest at prime plus1⁄2%, with interest payable monthly.  Anyoutstanding principal is due at maturity in February 2002.  At June 30, 2001, there was $1,500,000outstanding at a rate of 8%.

             As part of the Michigan andCalifornia management agreements with the tribes, we have advanced funds fortribal operations and the construction of a tribal community center.  The Notes Receivable is attributable to thisfunding, and the repayment obligation is dependent on the future profitableoperation of the tribes’ gaming enterprise.

             In November 1998, we executed aseries of agreements with Hard Rock Cafe International related to the proposeddevelopment project in Biloxi, Mississippi. Pursuant to a licensing agreement, the Company has the right to developand operate a Hard Rock Casino in Biloxi. We have paid a territory fee of $2,000,000.  In September 1998, the Company and Allen E. Paulson formed alimited liability company, equally owned, for the purpose of developing thisproject.  Mr. Paulson agreed tocontribute a gaming vessel (the former Treasure Bay barge in Tunica, MS.), andwe agreed to contribute our rights to the Hard Rock agreements.  In June 2001, we agreed to dissolve thiscompany with each party retaining their respective rights and assets.  We continue to pursue the development of aHard Rock in Biloxi.

             As of June 30, 2001, Full House hadcumulative undeclared and unpaid dividends in the amount of $1,890,000 on the700,000 outstanding shares of its 1992–1 Preferred Stock. Such dividendsare cumulative whether or not declared, and are currently in arrears.

             This report contains certainforward looking statements made pursuant to the Private Securities LitigationReform Act of 1995, such as statements relating to our development plans andexpectations, and financing availability. These statements are subject to risks and uncertainties discussed inthis report and in our other filings with the Securities and ExchangeCommission, which could cause actual results or timing to differ materiallyfrom that implied by such statements.

             **QuantitativeDisclosure About Market Risk. **Marketrisk is the risk of loss from changes in market rates or prices, such asinterest rates and commodity prices.  Weare exposed to market risk in the form of changes in interest rates and thepotential impact such changes may have on our variable rate debt.  We have not invested in derivative basedfinancial instruments.

**PART II– OTHER INFORMATION**

 

**Item 1.  Legal Proceedings**

Inthe Allen E. Paulson et al. vs. Jefferies & Company, Inc., et al.litigation filed in U.S. District Court for the Central District of California,Case No. 98-2644 FMC, which included a Third Party Complaint against theCompany, we reached a de minimis settlement in July with both Jefferies andPaulson releasing us from this litigation.

**Item 3.  Defaults upon Senior Securities**

Asof June 30, 2001, cumulative dividends were $1,890,000, which were undeclared,unpaid and were in arrears, with respect to our Series 1992–1 PreferredStock, which class ranks prior to our Common Stock with regard to dividend andliquidation rights.

##### **Item 4. Submission of Matters to a Vote of Security Holders**

Weheld our Annual Meeting of Stockholders on May 30, 2001.  A total of 9,473,152 shares (86%) wererepresented by proxy or in person, and cast their votes on the followingmatters:

| Election of Directors: | **FOR**   |   | **AGAINST** |   |
|------------------------|-----------|--------|-------------|--------|
| Lee  A. Iacocca        | 9,467,167 |   | 5,985       |   |
| William  P. McComas    | 9,467,167 |   | 5,985       |   |
| Ronald  K. Richey      | 9,467,167 |   | 5,985       |   |
| Michael  P. Shaunnessy | 9,467,167 |   | 5,985       |   |

             Ratification of Deloitte &Touche LLP to serve as independent accountants for the current year:

                           **FOR**: 9,465,167             **AGAINST**:   4,385        **ABSTAIN**:   3,600

 

**Item 6.  Exhibits andReports on Form 8-K**

(a)         Exhibits  - None

(b)        Reports on Form 8–K;

TheCompany filed current reports dated April 14, 2001 and June 22, 2001 related tothe acquisition of GTECH Corporation’s interest in three joint ventures thathad been equally owned by the parties.

 

**SIGNATURES**

             Pursuant to the requirements of theSecurities Exchange Act of 1934, as amended, the Company has duly caused thisreport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

 

|                         |   | **FULL HOUSE RESORTS, INC.**                                           |
|------------------------------|--------|------------------------------------------------------------------------|
| Date:   August 14, 2001 |   |                                                                   |
|                         | By     |    /s/  MICHAEL P. SHAUNNESSY                                |
|                         |   |                                                                        |
|                         |   |  Michael P. Shaunnessy, Executive V.P. – Finance             |
|                         |   |       (Principal Accounting and Financial Officer) |