##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
QUARTERLY PERIOD ENDED MARCH 31, 2007.
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR
THE TRANSITION PERIOD FROM ________________ TO ____________.
 1-32583
 FULL HOUSE RESORTS, INC.
  Delaware
    
    13-3391527(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)4670 S. Fort Apache Road 
Suite 190
Las Vegas, Nevada
    
    89147(Address of principal executive offices)
    
    (zip code)
 (702) 221-7800
 x o
 o x
 APPLICABLE ONLY TO CORPORATE ISSUERS
  o x




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##### Table of Contents



FULL HOUSE RESORTS, INC
TABLE OF CONTENTS
 PagePART I.
    
    Financial InformationItem 1.
    
    Condensed Consolidated Financial StatementsBalance Sheets as of March 31, 2007, (unaudited) and
December 31, 2006
    
    
    3Unaudited Statements of Operations
for the three months ended March 31, 2007 and 2006
    
    
    4Unaudited Statements of Stockholders Equity
for the three months ended March 31, 2007 and 2006
    
    
    5Unaudited Statements of Cash Flows
for the three months ended March 31, 2007 and 2006
    
    
    6Notes to Financial Statements (unaudited)
    
    
    7Item 2.
    
    Managements Discussion and Analysis or Plan of Operation
    
    
    13Item 3.
    
    Controls and Procedures
    
    
    24PART II.Item 1.
    
    Legal Proceedings
    
    
    24Item 6.
    
    Exhibits
    
    
    25Signatures
    
    
    
    
    26Exhibit Index
    
    
    27EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 
 MARCH 31,
    
    
    DECEMBER 31,2007
    
    
    2006(unaudited)ASSETSCurrent assets
Cash
    
    $
    10,633,452
    
    
    $
    22,117,482Accounts receivable, net of allowance of $205,000 in 2007
    
    
    221,482
    
    
    
    Prepaid expenses
    
    
    312,812
    
    
    
    76,204Other
    
    
    174,947
    
    
    
    115,00011,342,693
    
    
    
    22,308,686Property and equipment, net of accumulated depreciation
and amortization of $6,493,975 and $107,774
    
    
    16,627,618
    
    
    
    7,401Long-term assets related to Tribal casino projectsNotes receivable
    
    
    11,573,346
    
    
    
    10,995,782Contract rights, net of accumulated amortization of $625,549
and $608,899
    
    
    5,163,010
    
    
    
    5,160,185Land held for development
    
    
    130,000
    
    
    
    130,00016,866,356
    
    
    
    16,285,967Other long-term assetsGoodwill
    
    
    12,041,669
    
    
    
    Investment in unconsolidated joint venture
    
    
    221,676
    
    
    
    Deferred income tax assets
    
    
    
    
    
    
    159,054Deposits and other
    
    
    784,177
    
    
    
    1,395,01213,047,522
    
    
    
    1,554,066$
    57,884,189
    
    
    $
    40,156,120LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    3,663,727
    
    
    $
    2,381,260Accounts payable
    
    
    490,462
    
    
    
    153,330Accrued interest
    
    
    476,492
    
    
    
    428,051Other accrued expenses
    
    
    712,331
    
    
    
    486,841Dividend payable
    
    
    0
    
    
    
    3,042,084Income tax payable
    
    
    3,733
    
    
    
    237,623Other
    
    
    272,137
    
    
    
    272,1375,618,881
    
    
    
    7,001,326Long-term debt, net of current portion
    
    
    15,929,807
    
    
    
    Deferred income tax liability
    
    
    2,713,498
    
    
    
    18,643,305
    
    
    
    Non-controlling interest in consolidated joint venture
    
    
    2,042,968
    
    
    
    2,035,041Stockholders equityCumulative preferred stock, $.0001par value, 5,000,000
shares authorized; 700,000 shares issued and outstanding in 2006;
    
    
    
    
    
    
    70Common stock, $.0001 par value, 25,000,000 shares authorized;
19,322,276 and 18,408,380 shares issued and outstanding
    
    
    1,932
    
    
    
    1,841Additional paid-in capital
    
    
    42,595,642
    
    
    
    42,195,263Deferred compensation
    
    
    (2,278,070
    )
    
    
    (2,245,981
    )Deficit
    
    
    (8,740,469
    )
    
    
    (8,831,440
    )31,579,035
    
    
    
    31,119,753$
    57,884,189
    
    
    $
    40,156,120
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three monthsended March 31,2007
    
    
    2006RevenuesCasino
    
    $
    1,348,790
    
    
    $
    Food and beverage
    
    
    320,802
    
    
    
    Hotel
    
    
    305,044
    
    
    
    1,974,636Equity in net income of unconsolidated joint venture
    
    
    1,047,487
    
    
    
    977,5643,022,123
    
    
    
    977,564Operating costs and expensesCasino
    
    
    390,043
    
    
    
    Food and beverage
    
    
    314,166
    
    
    
    Hotel
    
    
    215,294
    
    
    
    Project development costs
    
    
    185,181
    
    
    
    110,422Selling, general and administrative
    
    
    1,752,253
    
    
    
    595,721Depreciation and amortization
    
    
    293,909
    
    
    
    18,2193,150,846
    
    
    
    724,362Unrealized gains on notes receivable, tribal governments
    
    
    404,533
    
    
    
    227,192Income from operations
    
    
    275,810
    
    
    
    480,394Other income (expense)Interest and other income
    
    
    185,501
    
    
    
    28,255Interest expense
    
    
    (260,839
    )
    
    
    (44,754
    )(75,338
    )
    
    
    (16,499
    )Income before non-controlling interest in net (income) loss of
consolidated joint venture and income taxes
    
    
    200,472
    
    
    
    463,895Non-controlling interest in net (income) loss of
consolidated joint venture
    
    
    (7,926
    )
    
    
    41,345Income before income taxes
    
    
    192,546
    
    
    
    505,240Income taxes
    
    
    (101,575
    )
    
    
    (217,848
    )Net income
    
    
    90,971
    
    
    
    287,392Less undeclared dividends on cumulative preferred stock
    
    
    
    
    
    
    (52,500
    )Net income applicable to common shares
    
    $
    90,971
    
    
    $
    234,892Net income per common shareBasic and diluted
    
    $
    0.00
    
    
    $
    0.02Weighted-average number of common shares outstandingBasic
    
    
    19,207,176
    
    
    
    10,340,380Diluted
    
    
    19,207,176
    
    
    
    11,040,928
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
THREE MONTHS ENDED MARCH 31, 2007 AND 2006
 
 paid-in
    
    
    
    
    
    
    share-based
    
    
    stockholdersShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    Deficit
    
    
    compensation
    
    
    equityBalances, January 1, 2007
    
    
    700,000
    
    
    $
    70
    
    
    
    18,408,380
    
    
    $
    1,841
    
    
    $
    42,195,263
    
    
    $
    (8,831,440
    )
    
    $
    (2,245,981
    )
    
    $
    31,119,753Conversion of
preferred shares into common shares
    
    
    (700,000
    )
    
    
    (70
    )
    
    
    700,000
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    Issuance of
restricted stock
    
    
    
    
    
    
    
    
    
    
    110,000
    
    
    
    11
    
    
    
    400,389
    
    
    
    
    
    
    
    (400,400
    )
    
    
    Deferred
share-based
compensation
recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    368,311
    
    
    
    368,311Stock option
exercises
    
    
    
    
    
    
    
    
    
    
    103,896
    
    
    
    10
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    90,971
    
    
    
    
    
    
    
    90,971Balances, March 31, 2007
    
    
    
    
    
    $
    
    
    
    
    19,322,276
    
    
    $
    1,932
    
    
    $
    42,595,642
    
    
    $
    (8,740,469
    )
    
    $
    (2,278,070
    )
    
    $
    31,579,035Balances, January 1, 2006
    
    
    700,000
    
    
    $
    70
    
    
    
    10,340,380
    
    
    $
    1,034
    
    
    $
    17,429,889
    
    
    $
    (6,429,031
    )
    
    
    (2,245,981
    )
    
    $
    11,001,962Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    287,392
    
    
    
    
    
    
    
    287,392Balances, March 31, 2006
    
    
    700,000
    
    
    $
    70
    
    
    
    10,340,380
    
    
    $
    1,034
    
    
    $
    17,429,889
    
    
    $
    (6,141,639
    )
    
    $
    (2,245,981
    )
    
    $
    11,289,354
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Three months endedMarch 31,2007
    
    
    2006Net cash provided by (used in) operating activities
    
    $
    77,494
    
    
    $
    (27,408
    )Investing activities:Advances to tribal governments, net of $33,217 and $106,589 expensed
    
    
    (161,613
    )
    
    
    (409,139
    )Repayments by co-venturer
    
    
    
    
    
    
    37,215Deposits and other cash costs related to the Stockmans Casino acquisition,
net of cash acquired of $1,020,824
    
    
    (8,217,493
    )
    
    
    (276,304
    )Acquisition of contract rights and other assets
    
    
    (105,792
    )
    
    
    (55,266
    )Net cash used in investing activities
    
    
    (8,484,898
    )
    
    
    (703,494
    )Financing activities:Dividends paid
    
    
    (3,042,084
    )Payments on long-term debt
    
    
    (34,542
    )Cash used in financing activities
    
    
    (3,076,626
    )Net decrease in cash and cash equivalents
    
    
    (11,484,030
    )
    
    
    (730,902
    )Cash and cash equivalents, beginning of period
    
    
    22,117,482
    
    
    
    3,275,270Cash and cash equivalents, end of period
    
    $
    10,633,452
    
    
    $
    2,544,368Non-cash investing and financing activities:Portion of Stockmans casino acquisition financed with long-term debt:
    
    $
    17,001,415
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 
 1.
    
    BASIS OF PRESENTATIONThe interim condensed consolidated financial statements of Full House Resorts, Inc. (Full
House) and its subsidiaries (collectively, the Company) included herein reflect all
adjustments that are, in the opinion of management, necessary to present fairly the
financial position and results of operations for the interim periods presented. Certain
information normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America has been omitted pursuant to
the interim financial information rules and regulations of the United States Securities and
Exchange Commission.These unaudited interim condensed consolidated financial statements should be read in
conjunction with the annual audited consolidated financial statements and notes thereto
included in Full Houses Annual Report on Form 10-KSB for the year ended December 31, 2006,
from which the balance sheet information as of December 31, 2006, was derived. Certain
minor reclassifications to amounts previously reported have been made to conform to the
current period presentation. The results of operations for the period ended March 31, 2007,
are not necessarily indicative of the results to be expected for the year ending December
31, 2007.The consolidated financial statements include the accounts of the Company, including
Stockmans Casino and Holiday Inn (Stockmans) since its acquisition (Note 2) January 31,
2007. Gaming Entertainment (Michigan) LLC, a 50%-owned subsidiary, has been determined to be
a variable interest entity, as defined in Financial Accounting Standards Board (FASB)
Interpretation No. 46R, Consolidation of Variable Interest Entitiesthat must also be (and
has been) consolidated. The Company accounts for its investment in Gaming Entertainment
(Delaware) LLC (GED) (Note 4), using the equity method of accounting. All material
intercompany accounts and transactions have been eliminated.2.
    
    ACQUISITION OF STOCKMANS CASINOOn January 31, 2007, the Company acquired Stockmans. The purchase price was approximately
$27.4 million (including acquisition costs of $659,846), which was financed with cash raised
through an equity offering effected during 2006, a $16 million reducing revolving loan from
a bank, and a promissory note to the seller in the approximate amount of $1.25 million (Note
6).The purchase price was allocated as follows in the first quarter of 2007:
 Current assets
    
    $
    1,437,662Other assets
    
    
    151,531Property and equipment
    
    
    16,885,000Current liabilities
    
    
    (440,514
    )Goodwill
    
    
    9,372,983$
    27,406,662
 The total acquisition cost increased $34,745 over the estimate disclosed in the
Companys 10-KSB due to additional professional costs associated with the purchase. While
the evaluation of fair market value of the assets has been completed, the Company is
currently evaluating the tax treatment and contemplates having further discussion with
seller. The resulting accounting is expected to be completed within one year of the
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purchase. Due to the current tax treatment, goodwill was adjusted upward by approximately
$2.5 million and a deferred tax liability of approximately $2.7 million was established
related to the Companys carry-over tax basis in Stockmans property assets.The following unaudited, condensed consolidated pro forma data summarizes the Companys
results of operations for the periods indicated as if the acquisition had occurred as of
January 1, 2007. This unaudited pro forma consolidated financial information is not
necessarily indicative of what the Companys actual results would have been had the
acquisition been completed on January 1, 2007, or of future financial results.
 Three months ended March 31,2007
    
    
    2006Net revenues
    
    $
    4,195,184
    
    
    $
    3,858,876Net income
    
    
    322,448
    
    
    
    940,528Earnings per share, basic and diluted
    
    
    0.02
    
    
    
    0.09
 3.
    
    SHARE-BASED COMPENSATIONFor the three months ended March 31, 2007, share-based compensation expense of $368,311
related to restricted stock grants is included in general and administrative expense. There
was no share-based compensation expense in the first quarter of 2006.On March 13, 2007 (the grant date), the Companys issued 110,000 shares of restricted stock
valued at the closing price of the Companys stock ($3.64), with no discount. The shares
vest annually through February 19, 2010, upon certain conditions including continuous
service of the recipient. The unvested grants are viewed as a series of individual awards
and the related share-based compensation expense of $400,400 has initially been recorded as
deferred compensation, reported as a reduction of stockholders equity, and will
subsequently be recognized as compensation expense on a straight-line basis as services are
provided over the vesting period.4.
    
    INVESTMENT IN UNCONSOLIDATED JOINT VENTUREThe Companys investment in unconsolidated joint venture is comprised of a 50% ownership
interest in GED, a joint venture between the Company and Harrington Raceway Inc. Since GED
has no non-operating income or expenses, it is treated as a partnership for income tax
purposes and consequently recognizes no federal or state income tax provision, income from
operations is the same as net income for each period presented, and there are no material
differences between its income for financial and tax reporting purposes. Summary information
for GEDs operations is as follows:
 Three monthsended March 31,2007
    
    
    2006Management fee revenues
    
    $
    2,223,131
    
    
    $
    2,079,940Net income
    
    
    2,094,974
    
    
    
    1,955,128
 5.
    
    NOTES RECEIVABLE, TRIBAL GOVERNMENTSThe Company has advanced funds directly to tribes to fund tribal operations and for
development expenses related to potential projects. The repayment of these notes is
contingent upon the development of the projects, and ultimately, the successful operation of
the facilities. The Companys agreements with the tribes provide
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for the reimbursement of
these advances plus applicable interest either from the proceeds of any outside financing of
the development, the actual operation itself or in the event that the Company does not
complete the development, from the revenues of the tribal gaming operation following completion of
development activities undertaken by others.As of March 31, 2007 and December 31, 2006, Full House has made advances to tribal
governments totaling $13,866,389 and $13,652,328 as follows:
 March 31,
    
    
    December 31,2007
    
    
    2006Contractual (stated) amount (not including interest):Michigan tribe
    
    $
    12,857,350
    
    
    $
    12,728,428Other
    
    
    1,009,039
    
    
    
    923,900$
    13,866,389
    
    
    $
    13,652,328Estimated fair value of
notes receivable related to
Tribal casino projects:Michigan tribe
    
    $
    10,764,274
    
    
    $
    10,258,202Other
    
    
    809,072
    
    
    
    737,580$
    11,573,346
    
    
    $
    10,995,782
 In March 2007, the estimated opening date for the New Mexico casino was extended from
the third quarter to the fourth quarter of 2008. This change in estimate results from the
Tribes desire for an updated market study and to review the size of the projected property.
The change in estimate did not have a material impact on the estimated fair value of the
related notes receivable nor the unrealized gains for the current quarter.
 The following table summarizes the changes in notes receivable, tribal government from
December 31, 2006 to March 31, 2007:
 Total
    
    
    Michigan tribe
    
    
    Other tribesBalances, January 1, 2007
    
    $
    10,995,782
    
    
    $
    10,258,202
    
    
    $
    737,580Total advances
    
    
    225,723
    
    
    
    140,584
    
    
    
    85,139Advances allocated to contract rights
    
    
    (19,475
    )
    
    
    
    
    
    
    (19,475
    )Advances expensed as period costs
    
    
    (33,217
    )
    
    
    (33,217
    )
    
    
    Unrealized gains
    
    
    404,533
    
    
    
    398,705
    
    
    
    5,828Balances, March 31, 2007
    
    $
    11,573,346
    
    
    $
    10,764,274
    
    
    $
    809,072
 6.
    
    LONG-TERM DEBTThe Company incurred substantial new debt during the quarter ended March 31, 2007, in
connection with the Stockmans acquisition. As a result, long-term debt at March 31, 2007,
consists of the following:
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Reducing revolving loan agreement, $16.0 million limit
on January 31, 2007, due January 31,2022, interest at 2.1%
above the five year LIBOR/Swap rate, adjusted annually
(7.3892% at March 31, 2007)
    
    $
    16,000,000Promissory note, $1.25 million on January 31, 2007, due
February 1, 2012, interest at a fixed annual rate of 7.44%
    
    
    1,212,274Total new debt
    
    
    17,212,274Promissory note, $2.38 million on February 15, 2002,
originally due March 15, 2003, which has been extended to
July 2007, interest based on Bank of America New York prime
rate (8.25% at March 31, 2007)
    
    
    2,381,26019,593,534Less current portion of long-term debt
    
    
    (3,663,727
    )$
    15,929,807
  Scheduled maturities of long-term debt are as follows:
 Annual periods ending March 31,2008
    
    $
    3,663,7272009
    
    
    1,293,4392010
    
    
    1,310,9502011
    
    
    1,329,8092012
    
    
    1,350,119Thereafter
    
    
    10,645,490Total
    
    $
    19,593,534
 7.
    
    INCOME TAXESFinancial Accounting Standards Board Interpretation 48, Accounting for Uncertainty in Income
Taxes(FIN 48), became effective for and was adopted by the Company beginning in 2007.
Based on the Companys assessment of its tax positions in accordance with FIN 48, there was
no impact on its opening retained earnings or the current periods results of operations as a
result of the change in accounting principle to adopt FIN 48.The difference between the Companys effective and statutory tax rates for the quarters ended
March 31, 2007 and 2006, was primarily due to the state tax provision, net of the federal
benefit.
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8.
    
    SEGMENT REPORTINGFollowing the acquisition of Stockmans in January 2007, the Companys business is comprised of three
primary business segments. The operations segment includes Stockmans casino and hotel
operation in Fallon, Nevada. The development / management segment includes costs associated
with the Companys tribal casino projects and the Delaware joint venture. The Corporate segment
reflects the management and administrative expenses of the Company. Segment information is
as follows for the three months ended March 31, 2007 and 2006.Selected Statements of Operations data:
 Development /2007
    
    Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedRevenues
    
    $
    1,974,636
    
    
    $
    1,047,487
    
    
    $
    
    
    
    $
    3,022,123Development costs
    
    
    
    
    
    
    185,181
    
    
    
    
    
    
    
    185,181Depreciation and amortization
    
    
    274,874
    
    
    
    16,650
    
    
    
    2,385
    
    
    
    293,909Income (loss) from operations
    
    
    506,406
    
    
    
    1,198,680
    
    
    
    (1,429,277
    )
    
    
    275,809Net income (loss)
    
    
    527,850
    
    
    
    1,128,917
    
    
    
    (1,565,796
    )
    
    
    90,971
 Development /2006
    
    Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    977,564
    
    
    $
    
    
    
    $
    977,564Development costs
    
    
    
    
    
    
    110,422
    
    
    
    
    
    
    
    110,422Depreciation and amortization
    
    
    
    
    
    
    16,650
    
    
    
    1,569
    
    
    
    18,219Income (loss) from operations
    
    
    
    
    
    
    1,036,988
    
    
    
    (556,594
    )
    
    
    480,394Net income (loss)
    
    
    
    
    
    
    1,012,282
    
    
    
    (777,390
    )
    
    
    234,892
 Selected Balance Sheet data:
 Development /2007
    
    Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedAssets
    
    $
    18,956,201
    
    
    $
    13,445,678
    
    
    $
    25,482,310
    
    
    $
    57,884,189Property and equipment, net
    
    
    16,615,218
    
    
    
    
    
    
    
    12,400
    
    
    
    16,627,618Goodwill
    
    
    
    
    
    
    
    
    
    
    12,041,669
    
    
    
    12,041,669Liabilities
    
    
    389,201
    
    
    
    77,171
    
    
    
    23,795,815
    
    
    
    24,262,187
 Development /2006
    
    Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedAssets
    
    $
    
    
    
    $
    10,292,457
    
    
    $
    6,521,972
    
    
    $
    16,814,429Property and equipment, net
    
    
    
    
    
    
    
    
    
    
    130,000
    
    
    
    130,000Liabilities
    
    
    
    
    
    
    549,797
    
    
    
    3,047,996
    
    
    
    3,597,793
 -11-




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##### Table of Contents



9.
    
    CONTINGENCYEnvironmental litigation.During the quarter ended September 30, 2006, previously reported
litigation involving environmental issues related to the proposed Firekeepers Casino in
Battle Creek, Michigan was settled. The terms of the settlement dismiss all environmental
claims and should allow for the Bureau of Indian Affairs to take into trust the land
designated for the Michigan Tribes casino. In exchange, the Company has agreed not to open
a casino to the public for a period of 18 months beginning September 29, 2006, but will
proceed with seeking financing for the project and the necessary approvals of the management
agreement from the National Indian Gaming Commission so that the land can be transferred
into trust, and the Company can work on the design and construction planning for the
project. On October 26, 2006, the plaintiff filed an appeal on one issue, which addresses
the basis under the Indian Gaming Regulatory Act (IGRA) pursuant to which this land is
deemed suitable for gaming and is scheduled to be heard on an expedited basis. Oral
arguments were presented on May 14, 2007 and the Court will render a ruling at a later date.
The Company has been advised by counsel that even if the appeal is successful, there are
additional bases under IGRA for the Michigan Tribe to be permitted to use the land for
gaming.
 -12-




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##### Table of Contents



Item 2. Managements Discussion and Analysis or Plan of Operation.
 Overview
   th
   -13-




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Critical accounting estimates and policies
   Long-term assets related to Tribal casino projects
 Recognition of Interest
Income and Balance Sheet Classification of Structured Notes
    -14-




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##### Table of Contents




    
    the Federal Bureau of Indian Affairs (BIA) recognizes the tribe,
    
    the tribe has the right to acquire land to be used as a casino site,
    
    the Department of the Interior has put the land into trust as a casino site,
    
    the tribe has a gaming compact with the state government,
    
    the NIGC has approved a proposed management agreement, and
    
    other legal or political obstacles exist or are likely to occur.
  
    
    a certain minimum monthly priority payment to the tribe,
    
    repayment of various senior debt associated with construction and equipping of the
casino with interest accrued thereon,
    
    repayment of various debt with interest accrued thereon due to us,
    
    management fee to us,
    
    other obligations, and
    
    the remaining funds distributed to the tribe.
 Notes receivable
  Accounting by Creditors for
Impairment of a Loan
 Contract rights
 -15-




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##### Table of Contents



Summary of long-term assets related to Tribal casino projects
  March 31,
    
    
    December 31,2007
    
    
    2006Michigan project:Notes receivable, tribal governments
    
    $
    10,764,274
    
    
    $
    10,258,202Contract rights, net
    
    
    4,671,347
    
    
    
    4,687,997Land held for development
    
    
    
    
    
    
    15,435,621
    
    
    
    14,946,199Other projects:Notes receivable, tribal governments
    
    
    809,072
    
    
    
    737,580Contract rights, net
    
    
    491,663
    
    
    
    472,188Land held for development
    
    
    130,000
    
    
    
    130,0001,430,735
    
    
    
    1,339,768$
    16,866,356
    
    
    $
    16,285,967
  -16-




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##### Table of Contents




    
    The tribe is federally recognized;
    
    adequate land for the proposed casino resort has been placed in trust
    
    the tribe has a valid gaming compact with the State of Michigan;
    
    the National Indian Gaming Commission has not yet approved the management agreement;
    
    the Bureau of Indian Affairs issued a record of decision approving the final
environmental impact statement in September 2006; and
    
    proposals for approximately $157 million of construction financing have been
obtained and the completion of financing documentation is expected in third quarter of
2007.
    March 31, 2007
    
    
    December 31, 2006· Discount rate increases 2.5%
    
    $
    (336,437
    )
    
    $
    (363,556
    )· Discount rate decreases 2.5%
    
    
    354,735
    
    
    
    384,996· Forecasted opening date delayed one quarter
    
    
    (479,117
    )
    
    
    (457,077
    )· Forecasted opening date accelerated one quarter
    
    
    501,461
    
    
    
    478,393
  March 31, 2007
    
    
    December 31, 2006Aggregate face amount of the notes receivable
    
    $
    13,866,632
    
    
    $
    13,652,328Estimated years until opening of casino:Michigan
    
    
    1.50
    
    
    
    1.75New Mexico
    
    
    1.75
    
    
    
    1.75Montana
    
    
    1.50
    
    
    
    1.75Discount rate
    
    
    20.0
    %
    
    
    20.0
    %Estimated probability rate of casino opening:Michigan
    
    
    90
    %
    
    
    90
    %New Mexico
    
    
    90
    %
    
    
    90
    %Montana
    
    
    90
    %
    
    
    90
    %
 -17-




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##### Table of Contents




    
    S&P 500, 10 and 15-year average benchmark investment returns (medium-term horizon risk premiums);
    
    Risk-free investment return equal to the 10-year average for 90-day Treasury Bills;
    
    Investment beta factor equal to the unleveraged five-year average for the hotel / gaming industry; and
    
    Project specific adjustments based on typical size premiums for micro-cap and
low-cap companies using 10 and 15-year averages.
   Consolidation of Variable Interest Entities
 Acquisition of Stockmans.
 Income taxes. Accounting for Uncertainty in Income Taxes, an Interpretation
of FASB Statement 109 vs
 -18-




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##### Table of Contents



Recently issued accounting pronouncements
 The Fair Value Option for Financial Assets and Financial Liabilities  Including an Amendment
of SFAS No. 115,
 Results of operations
 Three months ended March 31, 2007, compared to three months ended March 31, 2006
 Revenues.
 Equity in net income of unconsolidated joint venture.
 Operating Expenses
 -19-




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##### Table of Contents



General and administrative expense.
 Project development costs.
 Depreciation and amortization expense
 Other expense
 Liquidity and capital resources
     -20-




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Tribal casino projects
       -21-




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Other
   Quantitative and qualitative disclosures about market risk
  -22-




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##### Table of Contents



Safe harbor provision
   
    
    our growth strategies;
    
    our development and potential acquisition of new facilities;
    
    risks related to development and construction activities;
    
    anticipated trends in the gaming industries;
    
    patron demographics;
    
    general market and economic conditions;
    
    access to capital, including our ability to finance future business requirements;
    
    the availability of adequate levels of insurance;
    
    changes in federal, state, and local laws and regulations, including environmental and
gaming license legislation and regulations;
    
    regulatory approvals;
    
    competitive environment;
    
    risks, uncertainties and other factors described from time to time in this and our other
SEC filings and reports.
  -23-




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##### Table of Contents



Item 3. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Changes in Internal Control Over Financial Reporting.
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
    -24-




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##### Table of Contents



Item 6. Exhibits
 31.1
    
    Certification of principal executive officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of principal financial officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of principal executive and financial officers pursuant
to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 -25-




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##### Table of Contents



SIGNATURES
  FULL HOUSE RESORTS, INC.Date:  May 15, 2007
    By:
    /s/ MARK MILLERMark MillerChief Financial Officer
(on behalf of the Registrant and
as principal financial officer) -26-




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNo.
    
    Description31.1
    
    Certification of principal executive officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of principal financial officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of principal executive and financial officers pursuant
to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 -27-