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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission File No. 1-32583
 FULL HOUSE RESORTS, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    13-3391527(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification No.)4670 S. Fort Apache, Ste. 190
    
    89147Las Vegas, Nevada
    
    (Zip Code)(Address of principal executive offices)
 (702) 221-7800  (Registrants telephone number, including area code)
 þ o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non Accelerated Filer o
    
    Smaller reporting company þ
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes o No þ




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##### 



FULL HOUSE RESORTS, INC.
 INDEX
 PagePART I. Financial InformationItem 1. Condensed Consolidated Financial StatementsBalance Sheets as of March 31, 2008 (unaudited), and December 31, 2007
    
    
    3Unaudited Statements of Operations for the three months ended March 31, 2008 and 2007
    
    
    4Unaudited Statements of Cash Flows for the three months ended March 31, 2008 and 2007
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4T. Controls and Procedures
    
    
    24PART II. Other InformationItem 1. Legal Proceedings
    
    
    24Item 6. Exhibits
    
    
    24Signatures
    
    
    25Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2008
    
    
    2007ASSETSCurrent assetsCash
    
    $
    7,199,065
    
    
    $
    7,975,860Accounts receivable, net
    
    
    299,437
    
    
    
    319,865Prepaid expenses
    
    
    407,614
    
    
    
    351,658Deposits and other current assets
    
    
    175,451
    
    
    
    172,120Current portion of notes receivable from tribal governments
    
    
    9,254,793
    
    
    
    Assets held for sale
    
    
    
    
    
    
    6,960,76217,336,360
    
    
    
    15,780,265Property and equipment, net of accumulated depreciation
    
    
    9,237,634
    
    
    
    9,227,113Long-term assets related to tribal casino projectsNotes receivable, net of current portion
    
    
    4,864,579
    
    
    
    12,178,481Contract rights, net of accumulated amortization
    
    
    14,752,161
    
    
    
    14,761,13319,616,740
    
    
    
    26,939,614Other long-term assetsGoodwill
    
    
    10,308,520
    
    
    
    10,308,520Deposits and other
    
    
    878,290
    
    
    
    868,26511,186,810
    
    
    
    11,176,785$
    57,377,544
    
    
    $
    63,123,777LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    9,663,038
    
    
    $
    259,124Accounts payable
    
    
    386,925
    
    
    
    274,411Accrued expenses
    
    
    1,014,273
    
    
    
    1,364,293Income tax payable
    
    
    170,388
    
    
    
    11,234,624
    
    
    
    1,897,828Long-term debt to joint venture affiliate
    
    
    1,382,978
    
    
    
    1,255,478Other long-term debt, net of current portion
    
    
    4,188,044
    
    
    
    21,693,314Deferred income tax liability
    
    
    613,957
    
    
    
    359,023Other long-term liabilities
    
    
    43,391
    
    
    
    17,23117,462,994
    
    
    
    25,222,874Noncontrolling interest in consolidated joint venture
    
    
    4,996,456
    
    
    
    4,232,775Stockholders equityCommon stock, $.0001 par value, 25,000,000 shares
authorized; 19,342,276 shares issued and outstanding
    
    
    1,934
    
    
    
    1,934Additional paid-in capital
    
    
    42,702,372
    
    
    
    42,702,372Deferred compensation
    
    
    (934,253
    )
    
    
    (1,145,329
    )Deficit
    
    
    (6,851,959
    )
    
    
    (7,890,849
    )34,918,094
    
    
    
    33,668,128$
    57,377,544
    
    
    $
    63,123,777
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three monthsended March 31,2008
    
    
    2007RevenuesCasino
    
    $
    1,965,049
    
    
    $
    1,348,790Food and beverage
    
    
    583,986
    
    
    
    320,802Other operating income
    
    
    20,589
    
    
    
    2,569,624
    
    
    
    1,669,592Operating costs and expensesCasino
    
    
    599,786
    
    
    
    390,043Food and beverage
    
    
    600,273
    
    
    
    314,166Project development costs
    
    
    34,792
    
    
    
    185,181Selling, general and administrative
    
    
    1,594,621
    
    
    
    1,752,254Depreciation and amortization
    
    
    270,542
    
    
    
    283,5803,100,014
    
    
    
    2,925,224Operating gainsEquity in net income of unconsolidated joint venture and
management fee income
    
    
    1,162,737
    
    
    
    1,047,487Unrealized gains on notes receivable, tribal governments
    
    
    1,898,524
    
    
    
    404,5333,061,261
    
    
    
    1,452,020Income from continuing operations before other income
(expense)
    
    
    2,530,871
    
    
    
    196,388Other income (expense)Interest and other income
    
    
    58,748
    
    
    
    185,501Interest expense
    
    
    (179,894
    )
    
    
    (260,839
    )Income from continuing operations before noncontrolling
interest in net income of consolidated joint venture and
income taxes
    
    
    2,409,725
    
    
    
    121,050Noncontrolling interest in net income of
consolidated joint venture
    
    
    (763,681
    )
    
    
    (7,926
    )Income from continuing operations before income taxes
    
    
    1,646,044
    
    
    
    113,124Income taxes
    
    
    (645,295
    )
    
    
    (74,571
    )Income from continuing operations
    
    
    1,000,749
    
    
    
    38,553Income from discontinued operations, net of tax
    
    
    38,141
    
    
    
    52,418Net income
    
    $
    1,038,890
    
    
    $
    90,971Income from continuing operations per common shareBasic and diluted
    
    $
    0.05
    
    
    $
    0.00Income from discontinued operations per common shareBasic and diluted
    
    $
    0.00
    
    
    $
    0.00Net income per common shareBasic and diluted
    
    $
    0.05
    
    
    $
    0.00Weighted-average number of common shares outstandingBasic and diluted
    
    
    19,342,276
    
    
    
    19,207,176
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three monthsended March 31,2008
    
    
    2007Net cash provided by operating activities:
    
    $
    572,541
    
    
    $
    77,494Investing activities:Deposits and other cash costs of the Stockmans Casino
acquisition, net of cash acquired of $1,020,824
    
    
    
    
    
    
    (8,217,493
    )Acquisition of contract rights and other assets
    
    
    (10,180
    )
    
    
    (105,792
    )Purchase of property and equipment
    
    
    (282,733
    )
    
    
    Advances to tribal governments, net of $2,125 and $33,217 expensed
    
    
    (42,367
    )
    
    
    (161,613
    )Proceeds from sale of hotel
    
    
    6,961,720
    
    
    
    Other
    
    
    (1,920
    )Net cash provided by (used in) investing activities
    
    
    6,624,520
    
    
    
    (8,484,898
    )Financing activities:Dividends paid
    
    
    
    
    
    
    (3,042,084
    )Payments on long-term debt
    
    
    (8,101,356
    )
    
    
    Proceeds
from borrowings from joint venture affiliate
    
    
    127,500
    
    
    
    Offering costs
    
    
    
    
    
    
    (34,542
    )Net cash used in financing activities
    
    
    (7,973,856
    )
    
    
    (3,076,626
    )Net decrease in cash
    
    
    (776,795
    )
    
    
    (11,484,030
    )Cash, beginning of period
    
    
    7,975,860
    
    
    
    22,117,482Cash, end of period
    
    $
    7,199,065
    
    
    $
    10,633,452
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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. 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
annual 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 the Companys Annual Report on Form 10-KSB/A for the year ended December 31,
2007, from which the balance sheet information as of that date was derived. Certain minor
reclassifications to amounts previously reported have been made to conform to the current
period presentation, none of which affected previously reported net income or earnings per
share. The results of operations for the period ended March 31, 2008, are not necessarily
indicative of the results to be expected for the year ending December 31, 2008.The condensed consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries, including Stockmans Casino (Stockmans), which included the
Holiday Inn Express when it was acquired on January 31, 2007 that was subsequently sold in
February 2008. Gaming Entertainment (Michigan), LLC (GEM), a 50%-owned investee of the
Company that is jointly owned with RAM Entertainment, LLC (RAM), has been consolidated
pursuant to the guidance in Financial Accounting Standards Board (FASB) Interpretation No.
46R, Consolidation of Variable Interest Entities. The Company accounts for its investment in
Gaming Entertainment (Delaware), LLC (GED) (Note 3) using the equity method of accounting.
All material intercompany accounts and transactions have been eliminated.2.
    
    SHARE-BASED COMPENSATIONFor the three months ended March 31, 2008 and 2007, the Company recognized share-based
compensation expense of $211,076 and $368,311, respectively, related to the amortization of
restricted stock grants, which is included in selling, general and administrative expenses.
At March 31, 2008, the Company has recorded deferred share-based compensation of $934,253,
which is expected to be amortized through February 2010 using the straight-line method.3.
    
    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. (HRI).
GED has a management agreement with Harrington Raceway and Casino (formerly known as Midway
Slots and Simulcast), which is located in Harrington, Delaware. GED has no non-operating
income or expenses, is treated as a partnership for income tax purposes and consequently
recognizes no federal or state income tax provision. As a result, income from operations
for GED is equal to net income for each period presented, and there are no material
differences between its income for financial and tax reporting purposes.On June 18, 2007, the Company restructured its joint venture agreement with HRI to allow HRI
greater flexibility in GEDs management of the facility while providing the Company with
guaranteed growth in its share of GEDs management fee for the remaining term of the
management contract. Under the terms of the restructured joint venture agreement, the
Company is to receive the greater of its share of GEDs management
fees as prescribed in the original joint venture agreement, or an 8% increase in its share
of GEDs management fees beginning in 2008, which takes into account the expansion at
Harrington that was completed in February 2008. The guaranteed growth factor reverts to 5%
in 2009 through the expiration of the GED management contract in 2011.
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Unaudited summary information for GEDs operations is as follows:
 Three monthsended March 31,2008
    
    
    2007Management fee revenues
    
    $
    2,284,483
    
    
    $
    2,223,131Net income
    
    
    2,180,531
    
    
    
    2,094,954
 4.
    
    FAIR VALUE MEASUREMENTSOn January 1, 2008, the Company adopted the methods of fair value accounting as described in
Statement of Financial Accounting Standards No. 157, Fair Value Measurements(SFAS No.
157), to value its financial assets. The adoption of SFAS No. 157 in the first quarter of
2008 did not impact net income.The Companys financial instruments that are measured at estimated fair value use inputs
from among the three levels of the fair value hierarchy set forth in SFAS No. 157 as
follows:
 Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or
liabilities, which prices are available at the measurement date.Level 2 inputs: Include quoted prices for similar assets and liabilities in active
markets, quoted prices for identical or similar assets and liabilities in markets that
are not active, inputs other than quoted prices that are observable for the asset or
liability (i.e.interest rates, yield curves, etc.) and inputs that are derived
principally from or corroborated by observable market data by correlation or other means
(marked corroborated inputs).Level 3 inputs: Unobservable inputs that reflect managements estimates about the
assumptions that market participants would use in pricing the asset or liability.
Management develops these inputs based on the best information available, including
internally-developed data.
 In estimating fair value, the Company utilizes valuation techniques that maximize the use of
observable inputs and minimize the use of unobservable inputs to the extent possible.
However, as discussed below, none of the Companys financial assets are measured using level 1 or 2 inputs.Due to the absence of observable market quotes on the Companys notes receivable from tribal
governments, the Company utilizes valuation models that rely exclusively on Level 3 inputs,
including those that are based on managements estimates of expected cash flow streams,
future interest rates, casino opening dates and discount rates. The estimated casino opening
dates used in the valuations take into account project-specific circumstances such as
ongoing litigation, the status of required regulatory approvals, construction periods and
other factors. Factors considered in the determination of an appropriate discount rate
include discount rates typically used by gaming industry investors and appraisers to value
individual casino properties outside of Nevada, and discount rates produced by the
widely-accepted Capital Asset Pricing Model (CAPM). The following key assumptions are used
in the CAPM:
 
    
    S&P 500, average benchmark investment returns (medium-term horizon risk
premiums);
 
    
    Risk free investment return equal to the rolling 10-year average for 90-day
treasury bills
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
    
    Investment beta factor equal to the average of a peer group of similar entities
in the hotel and gaming industry;
 
    
    Project-specific adjustments based on the status of the project (i.e.
litigation, regulatory approvals, tribal politics, etc.), and typical size premiums
for micro-cap and low-cap companies
 See Note 5 for a tabular
summary of the current period activity related to notes receivable
from tribal governments, the fair value of which is estimated utilizing Level 3 inputs.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 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, 2008 and December 31, 2007, the Company has advances receivable from tribal
governments as follows:
 March 31,
    
    
    December 31,2008
    
    
    2007Contractual (stated) amount
(including interest):Firekeepers
Development
Authority
    
    $
    14,254,793
    
    
    $
    14,250,815Other
    
    
    1,390,747
    
    
    
    1,308,859$
    15,645,540
    
    
    $
    15,559,674Estimated fair value of notes
receivable related to tribal
casino projects:Firekeepers
Development
Authority
    
    $
    13,053,578
    
    
    $
    11,189,359Other
    
    
    1,065,794
    
    
    
    989,122$
    14,119,372
    
    
    $
    12,178,481
 Contractual amounts as of December 31, 2007, have been revised to conform to the current
year presentation, and now include accrued interest of $1,475,574. However, the inclusion
of interest for comparability did not result in any change in previously recorded net income
since the related notes receivable are presented at their estimated fair values.In March 2008, the Company formally decided to no longer pursue the Nambé Pueblo project.
However, the Pueblo has affirmed its responsibility to repay reimbursable development
advances of approximately $662,000 out of any future gaming revenues. Management currently
believes that the Nambé Pueblo intend to develop a slot machine parlor with approximately
200 devices, which would be attached to a travel center currently under development, and
would provide the Nambé Pueblo the financial wherewithal to repay the amounts owed to the
Company.As of March 31, 2008, $9.3 million of tribal notes receivable, which was collected in May
2008, are classified as current assets in the accompanying balance sheet. See also Note 10.
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The following table summarizes the changes in fair market value of notes receivable from
tribal governments, determined using Level 3 fair value inputs, from January 1, 2008 to
March 31, 2008:
 Total
    
    
    Michigan Tribe
    
    
    Other tribesBalances, January 1, 2008
    
    $
    12,178,481
    
    
    $
    11,189,359
    
    
    $
    989,122Total advances
    
    
    50,423
    
    
    
    
    
    
    
    50,423Advances allocated to contract rights
    
    
    (10,180
    )
    
    
    
    
    
    
    (10,180
    )Advances expensed as period costs
    
    
    2,124
    
    
    
    2,124
    
    
    
    Unrealized
gains included in earnings
    
    
    1,898,524
    
    
    
    1,862,095
    
    
    
    36,429Balances, March 31, 2008
    
    $
    14,119,372
    
    
    $
    13,053,578
    
    
    $
    1,065,794
 6.
    
    CONTRACT RIGHTSContract rights are comprised of the following as of:
 AccumulatedMarch 31, 2008
    
    Cost
    
    
    Amortization
    
    
    NetMichigan project, initial cost
    
    $
    4,155,213
    
    
    $
    
    
    
    $
    4,155,213Michigan project, additional
    
    
    11,141,683
    
    
    
    (690,079
    )
    
    
    10,451,604Other projects
    
    
    145,344
    
    
    
    
    
    
    
    145,344$
    15,442,240
    
    
    $
    (690,079
    )
    
    $
    14,752,161
 AccumulatedDecember 31, 2007
    
    Cost
    
    
    Amortization
    
    
    NetMichigan project, initial cost
    
    $
    4,155,213
    
    
    $
    
    
    
    $
    4,155,213Michigan project, additional
    
    
    11,141,683
    
    
    
    (670,927
    )
    
    
    10,470,756Other projects
    
    
    135,164
    
    
    
    
    
    
    
    135,164$
    15,432,060
    
    
    $
    (670,927
    )
    
    $
    14,761,133
 In the fourth quarter of 2007, the Company recorded impairment write-downs of $200,000 and
$207,534 related to the Navajo Nation (Manuelito) and Nambé Pueblo projects, respectively,
based on information obtained during the fourth quarter of 2007 and the first quarter of
2008, indicating that these projects would not be developed.7.
    
    LONG-TERM DEBTAt March 31, 2008 and December 31, 2007, long-term debt consists of the following:
 March 31,
    
    
    December 31,2008
    
    
    2007Long-term debt, joint venture affiliate:Promissory note, expected to mature in
2011, interest at 1% above the prime
rate (6.25% at March 31, 2008 and
8.25% at December 31, 2007)
    
    $
    1,382,978
    
    
    $
    1,255,478Long-term debt, other: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 (7.41% at March
31, 2008 and December 31, 2007)
    
    $
    3,405,275
    
    
    $
    11,401,000Long-term obligation related to the
acquisition of additional contract
rights related to the Michigan project,
payable in full within 30 days after
Michigan project financing is obtained
    
    
    9,450,000
    
    
    
    9,500,000Promissory note, $1.25 million on
January 31, 2007, due February 1, 2012,
interest at a fixed annual rate of
7.44%
    
    
    995,807
    
    
    
    1,051,43813,851,082
    
    
    
    21,952,438Less current portion
    
    
    (9,663,038
    )
    
    
    (259,124
    )$
    4,188,044
    
    
    $
    21,693,314
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Reducing Revolving Loan.The maximum amount permitted to be outstanding under the reducing
revolving loan decreases $312,000 semiannually on January 1 and July 1 of each year and any
outstanding amounts above such reduced maximum must be repaid on each such date. The
reducing revolving loan is payable over 15 years at a variable interest rate based on the
five year LIBOR/Swap rate plus 2.1%. This rate adjusts annually based on the funded debt to
EBITDA ratio of Stockmans with adjustments based on the five-year LIBOR/Swap rates.
Stockmans assets are pledged as collateral for the loan. The loan agreement also contains
certain customary financial representations and warranties and requires that Stockmans
maintain specified financial covenants, including a fixed charge coverage ratio, a funded
debt to EBITDA ratio and a minimum tangible net worth. In addition, the loan agreement
provides restrictions on certain distributions and capital expenditures by Stockmans, and
also provides for customary events of default including payment defaults and covenant
defaults. Management is not aware of any covenant violations through the date of preparation
of these financial statements. Net proceeds from the sale of the Holiday Inn Express were
applied to the Companys revolving loan. The balance on the loan was reduced from $10.9
million to $3.9 million and the Companys availability under the facility increased to
approximately $4.8 million. In addition, periodic payment requirements were reduced on a
pro-rata basis, with no required principal payments due on the facility until January 2016.Peters Family Trust Promissory Note.The promissory note in the amount of $1.25 million,
payable to the seller of Stockmans, is payable in 60 monthly installments of principal and
interest and is secured by a second interest in the real estate of Stockmans.Green Acres.Effective May 15, 2007, GEM entered into an agreement with Green Acres Casino
Management, Inc. (Green Acres) whereby GEM acquired all of Green Acres interests in the
Nottawaseppi Huron Band of Potawatomi casino project in Michigan for $10 million. GEMs
members equally funded an initial deposit of $500,000. The remaining obligation of $9.5
million, although unsecured, was recorded as a long-term liability once the management
agreement between GEM and the FireKeepers Development Authority (the Authority) was
approved in December 2007. As of March 31, 2008, the remaining balance is classified as a
current liability, which was repaid in full in May 2008. See also Note 10.As reflected in the schedule below, there are no scheduled maturities in 2013, as the
Peters promissory note will be paid in full in 2012 and there are no required principal
payments due on the reducing revolver until January 2016. Scheduled maturities of long-term
debt (including obligations to joint venture affiliate) are as follows:
 Annual periods ending March 31,2009
    
    $
    9,663,0382010
    
    
    249,5342011
    
    
    1,651,7242012
    
    
    264,4892013
    
    
    Thereafter
    
    
    3,405,275$
    15,234,060
  10




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8.
    
    INCOME TAXESFASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes(FIN 48), was adopted
by the Company in the first quarter of 2007. Based on managements assessment of its tax
positions in accordance
with FIN 48, there was no impact on its opening retained earnings or the current periods
results of operations as a result of the adoption of FIN 48.For the periods ended March 31, 2008 and 2007, the difference between the Companys
estimated effective and the federal statutory tax rate was primarily due to a state tax
provision applicable to GED, net of the federal benefit, as well as the treatment of
share-based compensation.9.
    
    SEGMENT REPORTINGSince the acquisition of Stockmans in January 2007, the Company is comprised of three
primary business segments. The operations segment includes Stockmans casino operation in
Fallon, Nevada. The hotel was sold in February 2008. Accordingly, the operating results of
the hotel are included in discontinued operations in all periods presented, and are
therefore not included in the table below. The development/management segment includes costs
associated with our tribal casino projects and our Delaware joint venture. The Corporate
segment includes administrative expenses of the Company.The following tables reflect selected segment information for the three months ended March
31, 2008 and 2007.
  Development/2008
    
    Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedRevenues
    
    $
    2,569,601
    
    
    $
    
    
    
    $
    23
    
    
    $
    2,569,624Selling, general and administrative
    
    
    388,014
    
    
    
    22,493
    
    
    
    1,184,114
    
    
    
    1,594,621Depreciation and amortization
    
    
    243,877
    
    
    
    19,152
    
    
    
    7,513
    
    
    
    270,542Operating gains
    
    
    
    
    
    
    3,061,261
    
    
    
    
    
    
    
    3,061,261Income(loss) from continuing
operations before other
income(expense)
    
    
    737,651
    
    
    
    2,985,616
    
    
    
    (1,192,396
    )
    
    
    2,530,871Income(loss) from continuing operations
    
    
    785,012
    
    
    
    2,346,594
    
    
    
    (2,130,857
    )
    
    
    1,000,749
 Development/2007
    
    Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedRevenues
    
    $
    1,669,592
    
    
    $
    
    
    
    $
    
    
    
    $
    1,669,592Selling, general and administrative
    
    
    273,853
    
    
    
    60,501
    
    
    
    1,417,900
    
    
    
    1,752,254Depreciation and amortization
    
    
    264,545
    
    
    
    16,650
    
    
    
    2,385
    
    
    
    283,580Operating gains
    
    
    
    
    
    
    1,452,020
    
    
    
    
    
    
    
    1,452,020Income(loss) from continuing operations
before other income(expense)
    
    
    442,060
    
    
    
    1,198,681
    
    
    
    (1,444,353
    )
    
    
    196,388Income(loss) from continuing operations
    
    
    475,432
    
    
    
    1,128,917
    
    
    
    (1,565,796
    )
    
    
    38,553
  11




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##### Table of Contents



Development/2008
    
    Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedAssets
    
    $
    10,811,256
    
    
    $
    28,129,574
    
    
    $
    18,436,714
    
    
    $
    57,377,544Property and equipment, net
    
    
    9,014,736
    
    
    
    
    
    
    
    222,898
    
    
    
    9,237,634Goodwill
    
    
    
    
    
    
    
    
    
    
    10,308,520
    
    
    
    10,308,520Liabilities
    
    
    602,253
    
    
    
    10,927,360
    
    
    
    5,933,381
    
    
    
    17,462,994
 Development/2007
    
    Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedAssets
    
    $
    18,956,201
    
    
    $
    13,445,678
    
    
    $
    25,482,310
    
    
    $
    57,884,189Property and equipment, net
    
    
    9,654,456
    
    
    
    
    
    
    
    12,400
    
    
    
    9,666,856Goodwill
    
    
    
    
    
    
    
    
    
    
    12,041,669
    
    
    
    12,041,669Liabilities
    
    
    389,201
    
    
    
    77,171
    
    
    
    23,795,815
    
    
    
    24,262,187
 10.
    
    SUBSEQUENT EVENTSProject financing for Michigan casino.On May 6, 2008, the Authority closed on the sale of
$340 million of Senior Secured Notes and a $35 million equipment financing facility to fund
the development and construction of the tribes FireKeepers Casino in Michigan. On the same
date, GEM received a payment of $9.3 million on its notes receivable from the Authority,
with the remaining $5.0 million to be paid 180 days following the opening of the casino,
subject to there being adequate funds remaining in the construction disbursement account. If
there are insufficient funds to repay the remaining balance, the Authority will be obligated
to repay the balance in 60 monthly installments, plus interest at prime plus 1%.In connection with the Michigan project financing and substantial repayment on the notes
receivable, the estimated fair value of the notes receivable from the Authority has been
adjusted as of March 31, 2008, to reflect the amount received in May 2008. As a result, a
gain on the receivable valuation in the amount of $1,862,095 was realized in the first
quarter of 2008.Payment of the Green Acres obligation.On May 6, 2008, in conjunction with the above
discussed financing of the FireKeepers Casino, the Company applied the proceeds of the $9.3 million
tribal receivable reimbursement to pay off the remaining balance of the $9.5 million Green Acres
liability.
  12




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##### Table of Contents



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




---



##### Table of Contents



Critical accounting estimates and policies
   Assets related to tribal casino projects
 Recognition of Interest
Income and Balance Sheet Classification of Structured Notes
    14




---



##### 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
  15




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##### Table of Contents



Contract rights
  Summary of assets related to tribal casino projects
  March 31
    
    
    December 31,2008
    
    
    2007Michigan project:Notes receivable, tribal governments
    
    $
    13,053,578
    
    
    $
    11,189,359Contract rights, net
    
    
    14,606,817
    
    
    
    14,625,96927,660,395
    
    
    
    25,815,328Other projects:Notes receivable, tribal governments
    
    
    1,065,794
    
    
    
    989,122Contract rights, net
    
    
    145,344
    
    
    
    135,1641,211,138
    
    
    
    1,124,286$
    28,871,533
    
    
    $
    26,939,614
   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 NIGC has approved the management agreement;
    
    the BIA issued a record of decision approving the final environmental impact statement in
September 2006;
    
    project financing was obtained in May 2008;
    
    construction has commenced, with an anticipated construction period of approximately 15
months; and
    
    we expect the casino to open in the summer of 2009.
   March 31, 2008
    
    
    December 31, 2007
    
    Discount rate increases 2.5%
    
    $
    (137,984
    )
    
    $
    (347,790
    )
    
    Discount rate decreases 2.5%
    
    
    146,337
    
    
    
    366,793
    
    Forecasted opening date delayed one quarter
    
    
    (146,217
    )
    
    
    (442,085
    )
    
    Forecasted opening date accelerated one quarter
    
    
    152,071
    
    
    
    460,273
   17




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##### Table of Contents



March 31, 2008
    
    
    December 31, 2007Aggregate face amount of the notes
receivable (including interest)
    
    $
    15,645,540
    
    
    $
    15,559,674Estimated years until opening of
casino:Michigan
    
    
    1.25
    
    
    
    1.50Montana
    
    
    1.50
    
    
    
    1.75Discount rate:Michigan
    
    
    17.0
    %
    
    
    17.5
    %Montana
    
    
    22.0
    %
    
    
    22.5
    %Estimated probability rate of casino
opening:Michigan
    
    
    96
    %
    
    
    96
    %Montana
    
    
    74
    %
    
    
    80
    %
    
    
    S&P 500, 10 and 15-year average benchmark investment returns (medium-term horizon risk
premiums);
 
    
    Risk-free investment return equal to the rolling 10-year average for 90-day Treasury
Bills;
 
    
    Investment beta factor equal to the unlevered 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, and the status of outstanding required
regulatory approvals and/or litigation, if any.
   18




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##### Table of Contents



March 31, 2008
    
    Michigan
    
    
    New Mexico
    
    
    Montana
    
    
    TotalNotes receivable
    
    $
    13,053,578
    
    
    $
    508,500
    
    
    $
    557,294
    
    
    $
    14,119,372Contract rights
    
    
    14,606,817
    
    
    
    
    
    
    
    145,344
    
    
    
    14,752,161Total
    
    $
    27,660,395
    
    
    $
    508,500
    
    
    $
    702,638
    
    
    $
    28,871,533
 December 31, 2007
    
    Michigan
    
    
    New Mexico
    
    
    Montana
    
    
    TotalNotes receivable
    
    $
    11,189,359
    
    
    $
    487,270
    
    
    $
    501,852
    
    
    $
    12,178,481Contract rights
    
    
    14,625,969
    
    
    
    
    
    
    
    135,164
    
    
    
    14,761,133Total
    
    $
    25,815,328
    
    
    $
    487,270
    
    
    $
    637,016
    
    
    $
    26,939,614
  Consolidation of Variable Interest Entities
 Recently issued accounting pronouncements
 Noncontrolling Interests in Consolidated
Financial Statements-an amendment of ARB No. 51 (SFAS No. 160),
 Business Combinations
 Disclosures about Derivative Instruments and Hedging Activities
-an amendment of SFAS 133
  19




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##### Table of Contents



Results of continuing operations
 Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007
 Operating revenues.
 Operating costs and expenses from continuing operations.
 Project development costs.
 Selling, general and administrative expense.
 Operating gains.
 Other income (expense).
 Income taxes.
 Liquidity and capital resources
    20




---



##### Table of Contents



Michigan project
     21




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##### Table of Contents



Other projects
        22




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##### Table of Contents



Item 3. Quantitative and qualitative disclosures about market risk
   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 4(T). Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
 Changes in Internal Control Over Financial Reporting
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 6. Exhibits
 10.1
    
    Third Amended and Restated Management Agreement between the
Notawaseppi Huron Band of Potawatomi Indians, FireKeepers Development
Authority and Gaming Entertainment (Michigan), LLC*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 2002*31.2
    
    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 2002*32.1
    
    Certification of principal executive officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*32.2
    
    Certification of principal financial officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*
 
 *
    
    Filed herewith  24




---



##### Table of Contents



SIGNATURES
  FULL HOUSE RESORTS, INC.Date:  May 14, 2008
    By:
    /s/ MARK MILLERMark MillerChief Financial Officer
(on behalf of the Registrant and
as principal financial officer)  25




---



##### Table of Contents



EXHIBIT INDEX
 10.1
    
    Third Amended and Restated Management Agreement between the
Notawaseppi Huron Band of Potawatomi Indians, FireKeepers Development
Authority and Gaming Entertainment (Michigan), LLC*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 2002*31.2
    
    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 2002*32.1
    
    Certification of principal executive officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*32.2
    
    Certification of principal financial officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*
 
 *
    
    Filed herewith  26