**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 ENDEDSEPTEMBER 30, 2002.**

 

**OR**

 
| **o** | **TRANSITION REPORT UNDER SECTION  13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|-----------------------------------------------------------------------------------------|

 

**FOR THE TRANSITION PERIODFROM             TO             .**

 

**Commission FileNo.  0-20630**

 

| **FULL  HOUSE RESORTS, INC.**                                          |
|------------------------------------------------------------------------|
| (Exact name of  small business issuer as specified in its charter)     |
|                                                                   |   |   |
| **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**                                                    |
| (Registrant’s  telephone number)                                  |
|                                                                   |   |   |

 

Check whether the issuer(1) filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the past 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

 

Yes ý      No o

 

**APPLICABLE ONLY TO CORPORATE ISSUERS**

 

As of November 11, 2002,Registrant had 10,340,380 shares of its $.0001 par value common stockoutstanding.

** **

 

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**FULL HOUSE RESORTS, INC**

**TABLE OFCONTENTS**

 
| PART I.  | Financial Information |
|----------|-----------------------|
|     |                  |   |
|     | Item 1.               | Condensed Consolidated  Financial Statements |
|     |                  |   |
|     |                  | Unaudited  Condensed Consolidated Balance Sheets  as of September 30, 2002 and December 31, 2001 |
|     |                  |   |
|     |                  |   |
|     |                  | Unaudited  Condensed Consolidated Statements of Operations  for the three months ended September 30, 2002 and 2001 |
|     |                  |   |
|     |                  |   |
|     |                  | Unaudited Condensed Consolidated Statements  of Operations  for the nine months ended September 30, 2002 and 2001 |
|     |                  |   |
|     |                  |   |
|     |                  | Unaudited Condensed  Consolidated Statements of Cash Flows  for the nine months ended September 30, 2002 and 2001 |
|     |                  |   |
|     |                  |   |
|     |                  | Notes  to Unaudited Condensed Consolidated Financial Statements |
|     |                  |   |
|     | Item  2.              | Management’s  Discussion and Analysis of Financial Condition and Results of Operations |
|     |                  |   |
|     |                  |   |
|     | Item  3.              | Quantitative  Disclosure About Market Risk |
|     |                  |   |
|     | Item 4.               | Controls and Procedures |
|     |                  |   |
| PART II. | Item 1.               | Legal Proceedings |
|     |                  |   |
|     | Item 3.               | Defaults Upon  Senior Securities |
|     |                  |   |
|     | Item 6.               | Exhibits and  Reports on Form 8 – K |
|     |                  |   |
|     | Signatures            |
|     |                  |   |
|     | Certifications        |
|          |                       |  |  |

 

2

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**FULL HOUSE RESORTS, INC. AND SUBSIDIARIES**

**UNAUDITEDCONDENSED CONSOLIDATED BALANCE SHEETS**

 
|                                                                                                                                                                                |   | **SEPTEMBER  30,  2002** |       | **DECEMBER  31,  2001** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|------------|-------------------------|--------|
| **ASSETS**                                                                                                                                                                          |   |                     |       |                    |   |
| CURRENT  ASSETS:                                                                                                                                                                    |   |                     |       |                    |   |
| Cash  and cash equivalents                                                                                                                                                          |   | $                        | 918,306    |                    | $      | 867,419 |   |
| Receivables                                                                                                                                                                         |   | 98,135                   |       | 209,992                 |   |
| Prepaid  expenses                                                                                                                                                                   |   | 145,791                  |       | 93,878                  |   |
| Total  current assets                                                                                                                                                               |   | 1,162,232                |       | 1,171,289               |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| LAND  HELD FOR DEVELOPMENT                                                                                                                                                          |   | 2,472,000                |       | 2,472,000               |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| FIXTURES  AND EQUIPMENT - net                                                                                                                                                       |   | 26,987                   |       | 23,374                  |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| INVESTMENTS  IN JOINT VENTURES                                                                                                                                                      |   | 335,091                  |       | —                  |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| RECEIVABLES                                                                                                                                                                         |   | 1,197,291                |       | 1,017,291               |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| GAMING  CONTRACT RIGHTS - net                                                                                                                                                       |   | 5,231,335                |       | 5,390,239               |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| DEFERRED  TAX ASSET                                                                                                                                                                 |   | 1,089,829                |       | 1,375,949               |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| DEPOSITS  AND OTHER ASSETS                                                                                                                                                          |   | 12,403                   |       | 14,782                  |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| TOTAL                                                                                                                                                                               |   | $                        | 11,527,168 |                    | $      | 11,464,924 |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                                                      |   |                     |       |                    |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| CURRENT  LIABILITIES:                                                                                                                                                               |   |                     |       |                    |   |
| Accounts  payable                                                                                                                                                                   |   | $                        | 34,155     |                    | $      | 21,468 |   |
| Payable  to joint ventures                                                                                                                                                          |   | —                   |       | 48,033                  |   |
| Current  portion of  long-term debt                                                                                                                                            |   | 2,381,260                |       | 3,000,000               |   |
| Accrued  expenses                                                                                                                                                                   |   | 412,185                  |       | 171,316                 |   |
| Total  current liabilities                                                                                                                                                          |   | 2,827,600                |       | 3,240,817               |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| LONG–TERM  DEBT, net of current portion                                                                                                                                        |   | —                   |       | 600,000                 |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| **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 $4,252,500  and $4,095,000 |   | 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                                                                                                                                                                |   | (8,731,425               | )          | (9,806,886              | )      |
| Total  stockholders’ equity                                                                                                                                                    |   | 8,699,568                |       | 7,624,107               |   |
|                                                                                                                                                                                |   |                     |       |                    |   |
| TOTAL                                                                                                                                                                               |   | $                        | 11,527,168 |                    | $      | 11,464,924 |   |

 

See notes tounaudited condensed consolidated financial statements.

 

3

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**FULLHOUSE RESORTS, INC. AND SUBSIDIARIES**

**UNAUDITEDCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

 
|                                                                     |   | **THREE  MONTHS ENDED  SEPTEMBER 30,** |    |
|--------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                     |   | **2002**                               |    | **2001** |   |
| OPERATING  REVENUES:                                                     |   |                                   |    |   |   |
| Joint  venture revenue                                                   |   | $                                      | 887,071 |   | $ | 911,025 |   |
| Management  fees                                                         |   | 384,639                                |    | 628,071 |   |
| Total  operating revenues                                                |   | 1,271,710                              |    | 1,539,096 |   |
|                                                                     |   |                                   |    |   |   |
| OPERATING  COSTS AND EXPENSES:                                           |   |                                   |    |   |   |
| Development  costs                                                       |   | 291,086                                |    | 408,586 |   |
| General  and administrative                                              |   | 392,214                                |    | 388,908 |   |
| Impairment                                                               |   | —                                 |    | 4,593,800 |   |
| Depreciation  and amortization                                           |   | 51,668                                 |    | 187,971 |   |
| Total  operating costs and expenses                                      |   | 734,968                                |    | 5,579,265 |   |
|                                                                     |   |                                   |    |   |   |
| INCOME  (LOSS) FROM OPERATIONS                                           |   | 536,742                                |    | (4,040,169 | ) |
|                                                                     |   |                                   |    |   |   |
| Interest  expense                                                        |   | (28,999                                | )       | (75,216 | ) |
| Interest  and other income                                               |   | 450                                    |    | 2,235 |   |
|                                                                     |   |                                   |    |   |   |
| INCOME  (LOSS) BEFORE INCOME TAXES                                       |   | 508,193                                |    | (4,113,150 | ) |
|                                                                     |   |                                   |    |   |   |
| INCOME  TAX (PROVISION) BENEFIT                                          |   | (210,763                               | )       | 1,349,589 |   |
|                                                                     |   |                                   |    |   |   |
| NET  INCOME (LOSS)                                                       |   | 297,430                                |    | (2,763,561 | ) |
|                                                                     |   |                                   |    |   |   |
| Less,  undeclared dividends on cumulative preferred stock                |   | 52,500                                 |    | 52,500 |   |
|                                                                     |   |                                   |    |   |   |
| NET  INCOME (LOSS) APPLICABLE TO COMMON SHARES                           |   | $                                      | 244,930 |   | $ | (2,816,061 | ) |
|                                                                     |   |                                   |    |   |   |
| NET  INCOME (LOSS) PER COMMON SHARE, Basic and Diluted                   |   | $                                      | 0.02    |   | $ | (0.27 | ) |
|                                                                     |   |                                   |    |   |   |
| WEIGHTED  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, Basic and Diluted |   | 10,340,380                             |    | 10,340,380 |   |

 

See notes to unaudited condensed consolidated financial statements.

 

4

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**FULLHOUSE RESORTS, INC. AND SUBSIDIARIES**

**UNAUDITED****CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

 
|                                                                     |   | **NINE  MONTHS ENDED  SEPTEMBER 30,** |      |
|--------------------------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                                     |   | **2002**                              |      | **2001** |   |
| OPERATING  REVENUES:                                                     |   |                                  |      |   |   |
| Joint  venture revenue                                                   |   | $                                     | 2,607,626 |   | $ | 2,717,790 |   |
| Management  fees                                                         |   | 1,529,558                             |      | 1,221,496 |   |
| Total  operating revenues                                                |   | 4,137,184                             |      | 3,939,286 |   |
|                                                                     |   |                                  |      |   |   |
| OPERATING  COSTS AND EXPENSES:                                           |   |                                  |      |   |   |
| Joint  venture pre-opening costs                                         |   | —                                |      | 122,441 |   |
| Development  costs                                                       |   | 684,131                               |      | 855,519 |   |
| General  and administrative                                              |   | 1,337,096                             |      | 1,267,827 |   |
| Impairment                                                               |   | —                                |      | 4,593,800 |   |
| Depreciation  and amortization                                           |   | 171,787                               |      | 503,369 |   |
| Total  operating costs and expenses                                      |   | 2,193,014                             |      | 7,342,956 |   |
|                                                                     |   |                                  |      |   |   |
| INCOME  (LOSS) FROM OPERATIONS                                           |   | 1,944,170                             |      | (3,406,670 | ) |
|                                                                     |   |                                  |      |   |   |
| Interest  expense                                                        |   | (119,106                              | )         | (234,900 | ) |
| Interest  and other income                                               |   | 3,884                                 |      | 8,416 |   |
|                                                                     |   |                                  |      |   |   |
| INCOME  (LOSS) BEFORE INCOME TAXES                                       |   | 1,828,948                             |      | (3,630,154 | ) |
|                                                                     |   |                                  |      |   |   |
| INCOME  TAX (PROVISION) BENEFIT                                          |   | (753,487                              | )         | 1,012,613 |   |
|                                                                     |   |                                  |      |   |   |
| NET  INCOME (LOSS)                                                       |   | 1,075,461                             |      | (2,617,541 | ) |
|                                                                     |   |                                  |      |   |   |
| Less,  undeclared dividends on cumulative preferred stock                |   | 157,500                               |      | 157,500 |   |
|                                                                     |   |                                  |      |   |   |
| NET  INCOME (LOSS) APPLICABLE TO COMMON SHARES                           |   | $                                     | 917,961   |   | $ | (2,775,041 | ) |
|                                                                     |   |                                  |      |   |   |
| NET  INCOME (LOSS) PER COMMON SHARE, Basic and Diluted                   |   | $                                     | 0.09      |   | $ | (0.27 | ) |
|                                                                     |   |                                  |      |   |   |
| WEIGHTED  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, Basic and Diluted |   | 10,340,380                            |      | 10,340,380 |   |

 

See notes to unaudited condensed consolidated financial statements.

 

5

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**FULLHOUSE RESORTS, INC. AND SUBSIDIARIES**

**UNACONDENSEDUDITED CONSOLIDATED****STATEMENTS OF CASH FLOWS**

 
|                                                                                      |   | **NINE  MONTHS ENDED  SEPTEMBER 30,** |      |
|-------------------------------------------------------------------------------------------|--------|---------------------------------------|-----------|
|                                                                                      |   | **2002**                              |      | **2001** |   |
| CASH  FLOWS FROM OPERATING ACTIVITIES:                                                    |   |                                  |      |   |   |
| Net  income (loss)                                                                        |   | $                                     | 1,075,461 |   | $ | (2,617,541 | ) |
| Adjustments  to reconcile net income (loss) to net cash provided by operating activities: |   |                                  |      |   |   |
| Depreciation  and amortization                                                            |   | 171,787                               |      | 503,369 |   |
| Impairment                                                                                |   | —                                |      | 4,593,800 |   |
| Expired  purchase option                                                                  |   | —                                |      | 250,000 |   |
| Equity  in earnings of joint ventures                                                     |   | (2,607,626                            | )         | (2,595,349 | ) |
| Distributions  from joint ventures                                                        |   | 2,224,503                             |      | 2,498,924 |   |
| Changes  in operating assets and liabilities:                                             |   |                                  |      |   |   |
| Receivables                                                                               |   | 111,857                               |      | (315,693 | ) |
| Prepaid  expenses                                                                         |   | (51,913                               | )         | (56,961 | ) |
| Deposits  and other assets                                                                |   | 2,379                                 |      | (7,567 | ) |
| Deferred  taxes                                                                           |   | 286,120                               |      | (1,197,025 | ) |
| Accounts  payable and accrued expenses                                                    |   | 253,555                               |      | (42,017 | ) |
|                                                                                      |   |                                  |      |   |   |
| Net  cash provided by operating activities                                                |   | 1,466,123                             |      | 1,013,940 |   |
|                                                                                      |   |                                  |      |   |   |
| CASH  FLOWS FROM INVESTING ACTIVITIES:                                                    |   |                                  |      |   |   |
| Purchase  of 50% joint venture interests                                                  |   | —                                |      | (1,800,000 | ) |
| Advances  on receivable                                                                   |   | (180,000                              | )         | (140,000 | ) |
| Purchase  of fixtures and equipment                                                       |   | (16,496                               | )         | — |   |
|                                                                                      |   |                                  |      |   |   |
| Net  cash used in investing activities                                                    |   | (196,496                              | )         | (1,940,000 | ) |
|                                                                                      |   |                                  |      |   |   |
| CASH  FLOWS FROM FINANCING ACTIVITIES:                                                    |   |                                  |      |   |   |
| Proceeds  from RAM note                                                                   |   | 2,381,260                             |      | — |   |
| Repayment  of  GTECH note                                                            |   | (3,000,000                            | )         | — |   |
| Proceeds  from line of credit                                                             |   | —                                |      | 1,800,000 |   |
| Repayment  of line of credit                                                              |   | (600,000                              | )         | (1,050,000 | ) |
|                                                                                      |   |                                  |      |   |   |
| Net  cash (used in) provided by financing activities                                      |   | (1,218,740                            | )         | 750,000 |   |
|                                                                                      |   |                                  |      |   |   |
| NET  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                     |   | 50,887                                |      | (176,060 | ) |
| CASH  AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                           |   | 867,419                               |      | 455,143 |   |
|                                                                                      |   |                                  |      |   |   |
| CASH  AND CASH EQUIVALENTS, END OF PERIOD                                                 |   | $                                     | 918,306   |   | $ | 279,083 |   |

 

See notes tounaudited condensed consolidated financial statements.

 

6

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**FULLHOUSE RESORTS, INC. AND SUBSIDIARIES**

** **

# **NOTES TO UNAUDITEDCONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 

**1.****                                      SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES**

 

***Interim Condensed Financial Statements -***The interim condensed consolidated financial statements of Full House Resorts,Inc. (the “Company” or “Full House”) included herein reflect all adjustmentswhich are, in the opinion of management, necessary to present fairly thefinancial position and results of operations for the interim periodspresented.  All such adjustments are ofa normal recurring nature. Certain information and note disclosures normallyincluded in financial statements prepared in accordance with accountingprinciples generally accepted in the United States of America have been omittedpursuant to the rules and regulations of the Securities and ExchangeCommission.

 

These unaudited condensedconsolidated financial statements should be read in conjunction with theconsolidated financial statements and notes thereto included in the Company’sAnnual Report on Form 10–KSB for the year ended December 31, 2001.  The results of operations for the periodsended September 30, 2002 are not necessarily indicative of the results to beexpected for the year ending December 31, 2002.

 

***Consolidation* -**The unaudited condensed consolidated financial statementsinclude the accounts of the Company and all its majority–ownedsubsidiaries. Prior toMarch 31, 2001, Full House had four joint ventures with GTECH that wereaccounted for using the equity method. On March 31, 2001 we purchased GTECH’s 50% interest in three of thesejoint ventures which are now wholly-owned subsidiaries of Full House, andaccordingly are consolidated in the accompanying financial statements.  All material intercompany accounts andtransactions have been eliminated.

 

**2.****                                      IMPAIRMENT**

 

In September 2001, the Company, in accordance with SFAS No. 121,“Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assetsto Be Disposed Of,” recorded an impairment charge of $4,593,800.

 

During the third quarter of 2001, our discussions with various potentialpartners for the development of a Hard Rock - Biloxi project concluded with noagreement.  Based upon the timingrequirements in our agreements with Hard Rock, and the conditions in thetourism industry we did not reasonably expect to be able to develop thisproject as planned.  As a result ofthese circumstances, we reviewed the carrying values of our Mississippiinvestments which included a one acre parcel of land acquired for $4,621,670,the Hard Rock license acquired for $2,000,000, and development permits andplans carried at $444,130.   We recordedan impairment provision of $4,593,800, to reduce the carrying value to$2,472,000, which represents the net realizable value of our land parcel.

 

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

 

On March 30, 2001, we acquired GTECH’s 50% interest inthree joint venture projects that had been equally owned by the two companies:Gaming Entertainment, LLC, owner of a development agreement that ended inAugust 2002, with the Coquille Indian Tribe (“Oregon Tribe”), which

 

7

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conducts gaming at The Mill Casino in Oregon; GamingEntertainment (Michigan), LLC, owner of a Management Agreement with theNottawaseppi Huron Band of Potawatomi (“Michigan Tribe”) to develop and managea gaming facility near Battle Creek; and Gaming Entertainment (California),LLC, owner of a Management Agreement with the Torres-Martinez Band of DesertCahuilla Indians (“California Tribe”) to develop and manage a gaming facilitynear Palm Springs.

 

The purchase price was $1,800,000, and was funded throughour existing credit facility.  As partof this transaction, GTECH extended the due date of our $3,000,000 promissorynote from January 25, 2001 until January 25, 2002, with interest at prime.  The note was paid in February 2002.  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.

 

In addition to the gaming contract rights, we acquired theother 50% interest in a note receivable from the Michigan Tribe in the amountof $396,146.  The excess purchase priceover the fair value of assets acquired was allocated to the gaming contractrights acquired based on the discounted present value of expected future cashflows.  The excess purchase price of$1,403,854 was allocated 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 |                   |      |   |

 

The following summary pro forma results of operationsassume that the acquisition occurred as of January 1, 2001:

 
|                                          |   | **Nine Months  Ended  September 30, 2001** |      |
|-----------------------------------------------|--------|--------------------------------------------|-----------|
| Operating  revenues                           |   | $                                          | 4,221,653 |   |
| Income  (loss) before taxes                   |   | (3,510,728                                 | )         |
| Net  income (loss)                            |   | (2,538,719                                 | )         |
| Net  income (loss)applicable to common shares |   | (2,696,219                                 | )         |
| Net  income (loss) per common share           |   | (0.26                                      | )         |
|                                               |        |                                            |           |  |

 

**4.****                                      RECEIVABLES**

** **

As part of the Michigan and California managementagreements with the tribes, the Company has advanced funds for tribaloperations and the construction of a tribal community center.  The Company has recorded receivables of$1,172,291 from Michigan and $25,000 from California, attributable to this funding.  Our Michigan agreements provide for amonthly $20,000 payment to fund tribal operations.  The repayment obligations are dependent on the future profitableoperation of the tribes’ gaming enterprises.

 

**5.****                                      GAMINGCONTRACT RIGHTS**

 

As a result of theacquisition from GTECH, the three joint ventures that had previously beenaccounted for using the equity method are now wholly owned consolidatedentities.  A substantial portion of ourinvestment in these joint ventures was comprised of Michigan gaming rights of$4,155,213 that we acquired in 1995 and contributed to the joint venture.  Now that these are

 

8

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wholly-ownedconsolidated entities, these rights are reflected in Gaming Contract Rights,along with the rights acquired in the GTECH acquisition of $1,403,854.

 
| Contributed  Michigan gaming rights                     |   | $         | 4,155,213 |   |
|---------------------------------------------------------|--------|-----------|-----------|--------|
| Acquired  gaming rights                                 |   | 1,403,854 |      |
| Less  accumulated amortization                          |   | (327,732  | )         |
| Gaming  Contract Rights, net (as of September 30, 2002) |   | $         | 5,231,335 |   |

 

The Michigan and California ventures are in the developmentstage.  Successfully developing, andultimately, sustaining profitable operations is dependent on future events,including appropriate regulatory approvals and adequate market demand.  These two ventures have not generated anyrevenues, and the costs incurred to date relate to pre-opening expenses such aspayroll, legal and consulting.  TheCompany adopted SFAS 142, “Goodwill and Other Intangible Assets” as of January1, 2002, and the adoption did not have a material impact on the Company’sconsolidated financial statements.  Inaccordance with SFAS 142, the Company amortizes acquired gaming rights over thelife of the contract.

 

**6.****                                      JOINTVENTURE INVESTMENTS**

** **

Through March 30,2001, the Company had four joint ventures with GTECH. The Investments in JointVentures on the balance sheet as of September 30, 2002 and December 31, 2001,reflects our ownership interest in only the Delaware LLC.  Furthermore, the joint venture revenue, andjoint venture pre-opening costs, in the accompanying statements of operationsincludes only the revenues and costs from the California, Michigan, and Oregonjoint ventures through March 31, 2001, the date they became wholly-ownedsubsidiaries.

 

SUMMARYINFORMATION FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30,

 
|                    |   | **Delaware** |      | **Oregon** |   | **Michigan** |   | **California** |   |
|-------------------------|--------|--------------|-----------|------------|--------|--------------|--------|----------------|--------|
| **2002**                |   |         |      |       |   |         |   |           |   |
|                    |   |         |      |       |   |         |   |           |   |
| Revenues                |   | $            | 5,196,176 |       | $      | —       |   | $              | — |   | $ | — |   |
| Income  from operations |   | 1,774,142    |      | —     |   | —       |   | —         |   |
| Net  income             |   | 1,774,142    |      | —     |   | —       |   | —         |   |
|                    |   |         |      |       |   |         |   |           |   |
| **2001**                |   |         |      |       |   |         |   |           |   |
|                    |   |         |      |       |   |         |   |           |   |
| Revenues                |   | $            | 4,855,060 |       | $      | —       |   | $              | — |   | $ | — |   |
| Income  from operations |   | 1,822,049    |      | —     |   | —       |   | —         |   |
| Net  income             |   | 1,822,049    |      | —     |   | —       |   | —         |   |

 

SUMMARY INFORMATION FOR THE NINE MONTHS ENDED SEPTEMBER 30,

 
|                           |   | **Delaware** |       | **Oregon** |   | **Michigan** |   | **California** |   |
|--------------------------------|--------|--------------|------------|------------|--------|--------------|--------|----------------|--------|
| **2002**                       |   |         |       |       |   |         |   |           |   |
|                           |   |         |       |       |   |         |   |           |   |
| Revenues                       |   | $            | 14,967,989 |       | $      | —       |   | $              | — |   | $ | — |   |
| Income  from operations        |   | 5,215,251    |       | —     |   | —       |   | —         |   |
| Net  income                    |   | 5,215,251    |       | —     |   | —       |   | —         |   |
|                           |   |         |       |       |   |         |   |           |   |
| **2001**                       |   |         |       |       |   |         |   |           |   |
|                           |   |         |       |       |   |         |   |           |   |
| Revenues                       |   | $            | 13,425,391 |       | $      | 570,137      |   | $              | — |   | $ | — |   |
| Income  (loss) from operations |   | 4,870,846    |       | 564,734    |   | (197,522     | )      | (47,360        | )      |
| Net  income (loss)             |   | 4,870,846    |       | 564,734    |   | (197,522     | )      | (47,360        | )      |

 

9

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**7.****                                      LONG– TERM DEBT**

 

On February15, 2002, we entered into an agreement with RAM Entertainment, LLC (“RAM”), aprivately held investment company, whereby RAM will acquire a 50% interest inthe California and Michigan projects upon receipt by the Huron Potawatomi Tribeof federal approvals for its proposed casino near Battle Creek, Michigan.  In addition, RAM is to provide the necessaryfunding for their development.  RAMadvanced $2,381,260 to Full House in the form of a loan which bears interestadjustable daily at prime and requires interest payments monthly.  If the required federal approvals are notreceived prior to February 15, 2003, and RAM does not waive the approvalrequirement, then the principal amount becomes due and RAM shall forfeit itsright to any interest in the projects.

 

Theproceeds of this loan, together with cash on hand, was used to repay the$3,000,000 GTECH note.

** **

**8.****                                      SEGMENTINFORMATION**

 

Since the joint venture acquisition from GTECH, we now viewour business in three primary business segments.  The Operations segment includes the performance of the Delawareand Oregon projects.  The Developmentsegment includes costs associated with our activities in Michigan, California,and Mississippi.  The Corporate segmentreflects the management and administrative expenses of the business.

 

SUMMARY INFORMATION FOR THE THREE MONTHS ENDED SEPTEMBER30,

 
|                             |   | **Operations** |      | **Development** |   | **Corporate** |   | **Consolidated** |   |
|----------------------------------|--------|----------------|-----------|-----------------|--------|---------------|--------|------------------|--------|
| **2002**                         |   |           |      |            |   |          |   |             |   |
|                             |   |           |      |            |   |          |   |             |   |
| Revenues                         |   | $              | 1,271,710 |            | $      | —        |   | $                | — |   | $ | 1,271,710 |   |
| Development costs                |   | —         |      | 291,086         |   | —        |   | 291,086          |   |
|                             |   |           |      |            |   |          |   |             |   |
| Income (loss) from operations    |   | 1,264,998      |      | (332,476        | )      | (395,780      | )      | 536,742          |   |
| Net income (loss)                |   | 820,854        |      | (262,506        | )      | (260,918      | )      | 297,430          |   |
|                             |   |           |      |            |   |          |   |             |   |
| **2001**                         |   |           |      |            |   |          |   |             |   |
|                             |   |           |      |            |   |          |   |             |   |
| Revenues                         |   | $              | 1,539,096 |            | $      | —        |   | $                | — |   | $ | 1,539,096 |   |
| Development costs and impairment |   | —         |      | 5,002,386       |   | —        |   | 5,002,386        |   |
|                             |   |           |      |            |   |          |   |             |   |
| Income (loss) from operations    |   | 1,482,897      |      | (5,128,167      | )      | (394,899      | )      | (4,040,169       | )      |
| Net income (loss)                |   | 916,565        |      | (3,418,861      | )      | (261,265      | )      | (2,763,561       | )      |

 

10

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SUMMARY INFORMATION FOR THE NINE MONTH PERIODS ENDEDSEPTEMBER 30,

 
|                             |   | **Operations** |      | **Development** |   | **Corporate** |   | **Consolidated** |   |
|----------------------------------|--------|----------------|-----------|-----------------|--------|---------------|--------|------------------|--------|
| **2002**                         |   |           |      |            |   |          |   |             |   |
|                             |   |           |      |            |   |          |   |             |   |
| Revenues                         |   | $              | 4,137,184 |            | $      | —        |   | $                | — |   | $ | 4,137,184 |   |
| Development costs                |   | —         |      | 684,131         |   | —        |   | 684,131          |   |
|                             |   |           |      |            |   |          |   |             |   |
| Income (loss) from operations    |   | 4,102,450      |      | (933,301        | )      | (1,224,979    | )      | 1,944,170        |   |
| Net income (loss)                |   | 2,568,579      |      | (687,195        | )      | (805,923      | )      | 1,075,461        |   |
|                             |   |           |      |            |   |          |   |             |   |
| **2001**                         |   |           |      |            |   |          |   |             |   |
|                             |   |           |      |            |   |          |   |             |   |
| Revenues                         |   | $              | 3,939,286 |            | $      | —        |   | $                | — |   | $ | 3,939,286 |   |
|                             |   |           |      |            |   |          |   |             |   |
| Development costs and impairment |   | —         |      | 5,571,760       |   | —        |   | 5,571,760        |   |
| Income (loss) from operations    |   | 3,784,699      |      | (5,961,946      | )      | (1,226,423    | )      | (3,403,670       | )      |
| Net income (loss)                |   | 2,165,873      |      | (3,977,391      | )      | (806,024      | )      | (2,617,541       | )      |

 

**Item2.****           Management’sDiscussion and Analysis of Financial Condition and Results of Operations.**

 

**Results of Operations****for theThree and Nine Months Ended September 30, 2002 Compared to the Three and NineMonths Ended September 30, 2001**

** **

**Revenues**.  As a result of the acquisition of GTECH’s interest in three jointventure projects (Oregon, Michigan and California), our classification ofrevenues is not directly comparable to prior periods. The revenues related toour Delaware contract continue to be reported as joint venture revenue, but asof March  31, 2001, the revenue related to the Oregon contract is reportedas management fees.

 

Totaloperating revenues decreased $267,386 for the three month period primarily dueto the August 2002 expiration of the Oregon agreement pursuant to itsterms.  Revenues for the nine month periodincreased $197,898 due to improved performance in Delaware and the acquisitionof the additional 50% interest in the Oregon joint venture.

 

***Delaware Joint Venture.*** Our share of income from the Delaware jointventure was $887,071, a decrease of $23,954 for the three month period, and$2,607,626, an increase of $172,203, for the nine month period.  The venture’s revenues for the three monthperiod increased $341,116 while expenses, primarily payroll and promotionalcosts, increased by $352,023.  For thenine month period, revenues increased $1,542,598 while costs only increased$1,198,193.

 

***Oregon.***  Our management fees from the Oregon contract were $384,639 and$1,529,558 for the

 

11

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respective three and nine month periods, compared to Oregon relatedrevenues of $628,071 and $1,503,863 in the respective prior year periods.  The increase in the nine month periodprimarily reflects the increase in our ownership percentage.  The decrease for the three month period is aresult of the contract termination on August 18, 2002, pursuant to itsterms.  There will be no furtherrevenues related to this agreement.

 

**Cost and Expenses**.  As a result of our acquisition of GTECH’s interest in three jointventure projects, our classification of expenses is not directly comparable toprior periods.  The expenses related toour California and Michigan projects, which had been reported as joint venturepre-opening costs, as of March  31, 2001, are reported as developmentcosts thereafter.

 

**Pre-opening andDevelopment**.  Total development related costs (jointventure pre-opening costs and development costs) for the California andMichigan projects were $291,086 compared to $408,586 for the three monthperiod, and $684,131 compared to $727,960 for the nine month period.  The majority of these costs were related tothe Michigan venture with the Huron Potawatomi Tribe in Battle Creek.  These costs were primarily for legal andconsulting fees to assist the Tribe in obtaining suitable land and complyingwith the requirements of the Indian Gaming Regulatory Act.

 

We expensed$250,000 in the first quarter of 2001 related to the expiration of a landpurchase option in Biloxi, Mississippi that we chose not to exercise orrenew.  This expense is included indevelopment costs in the accompanying condensed consolidated statement ofoperations.

 

**General and Administrative Expenses*.*** Generaland Administrative Expenses increased by $3,306 and $69,269 for the respectivethree and nine month periods. These increases reflect an increase in payrollexpenses resulting from staffing changes to accommodate the increased ownershipof our development projects, a litigation settlement of $125,000, and areduction in rent expense.

 

**Depreciation andAmortization**.  In 2002, amortization of Gaming ContractRights was $48,103 for the quarter and $158,903 for the nine month period.  The prior year only included thisamortization beginning April 1, 2001 as a result of the GTECH transaction andamounted to $55,413 and $105,540 for the respective comparable periods.  The prior year also included goodwillamortization of $126,567 and $379,701 for the respective three and nine monthperiods.  This goodwill was fullyamortized as of September  30, 2001. Depreciation expense was $3,564 and $12,883 for the three and nine monthperiods compared to $5,991 and $18,128 in the respective prior year periods.

 

**Interest Expense*.***  Interest expense decreased by $46,217 and$115,794 for the three and nine months ended September 30, 2002, compared tothe respective prior year periods, due to lower outstanding borrowings coupledwith a decrease in interest rates.

 

**Interest and Other Income*.***  Interest and other income was comparable tothe prior year periods and results primarily from interest on invested cashbalances.

 

**Income Tax Provision*.***   Income tax expense reflects state taxes onjoint venture earnings combined with the tax effect of non-deductibleamortization expenses.  As a result ofincreased earnings and the elimination of goodwill, the effective tax rate forthe current year is approximately 41%. The Company expects that its net operating loss carryforward will befully utilized in the current year and the Accrued expenses on the balancesheet include approximately $250,000 in taxes payable.

 

12

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**Liquidity and Capital Resources**

 

At September 30,2002, we had cash and cash equivalents of $918,306.  For the nine months ended September 30, 2002, cash of $1,466,123was provided by operating activities, as compared to $1,013,940 in the prioryear period.  This change is primarilydue to improved earnings resulting from the change in our ownership percentagein the Oregon LLC, as well as improving performance in Delaware.  Net cash used in investing activities was$196,496, primarily for $180,000 in advances to the Michigan tribe, compared tousing $1,940,000 in the prior year primarily for the GTECH acquisitiontransaction.  Financing activities used$1,218,740 during the current period reflecting the $3,000,000 repayment of theGTECH note, the receipt of a $2,381,260 advance under the RAM note, and a$600,000 reduction in bank borrowings. In the prior period, a $1,800,000 bank line draw was used to close theGTECH acquisition and $1,050,000 was repaid. There was a net increase in cash and cash equivalents of $50,887 duringthe nine month period.

 

On February15, 2002, we entered into an agreement with RAM Entertainment, LLC (“RAM”), aprivately held investment company, whereby RAM will acquire a 50% interest inthe California and Michigan projects upon receipt by the Huron Potawatomi Tribeof federal approvals for its proposed casino near Battle Creek, Michigan.  In addition, RAM is to provide the necessaryfunding for their development.  RAMadvanced $2,381,260 to Full House in the form of a loan which bears interestadjustable daily at prime (4.75% at September 30, 2002) and requires interestpayments monthly.  If the requiredfederal approvals are not received prior to February 15, 2003, and RAM does notwaive the approval requirement, then the principal amount becomes due and RAMshall forfeit its right to any interest in the projects.

 

On August9, 2002, the United State Department of Interior gave notice of their intent totake land into trust for the Huron Potawatomi project in Battle Creek,Michigan.  On August 30, 2002, CETAC(Citizens Exposing Truth About Casinos) filed a complaint in Federal DistrictCourt for the District of Columbia, seeking to prevent this land from beingtaken into trust.  The Department ofJustice is preparing its response and request for dismissal, which should befiled in early November.

 

As a resultof the agreement with RAM, development funding cash needs for the Michiganproject will be primarily provided by RAM. Therefore, our future cash needswill primarily be to fund general and administrative expenses.  The Oregon contract expired in August of2002, leaving the Delaware joint venture as our sole source of operatingcash.  We believe that adequate financialresources will be available to execute our current business plans.

 

On April 15, 2002 we announced the intent to hire aninvestment advisor to assist in enhancing shareholder value through theexploration of various strategic alternatives. Although the process is ongoing, there can be no assurance that anysubstantive results will be achieved.

 

In 1998, weobtained a $2,000,000 line of credit with Coast Community Bank of Mississippiwith an initial maturity date of February  25, 1999.  We have renewed this line on an annualbasis, and in February 2002, the renewal also reduced the availability to$1,000,000.  The line bears interestadjustable daily at one-half percent above prime (5.25% at September 30, 2002)and requires interest payments monthly on the outstanding balance with allprincipal and accrued interest due at maturity on February  25, 2003.  At September 30, 2002, there wasnothing outstanding on the bank line.

 

Full Housewas a party to a series of agreements with GTECH Corporation, a leadingsupplier of computerized systems and services for government-authorizedlotteries, to jointly pursue certain gaming opportunities.  Pursuant to the agreements, joint venturecompanies equally owned by GTECH and Full House were formed.  Full House contributed its rights to theNorth Bend, Oregon facility and the rights to

 

13

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develop the Torres Martinez,Nottawaseppi Huron Band of Potawatomi and Delaware State Fair projects to thejoint venture companies.  GTECH contributed cash and other intangibleassets and agreed to loan the joint venture entities up to $16.4 million tocomplete the North Bend, Oregon and Delaware facilities.  Full House agreed to guarantee one-half ofthe obligations of the joint venture companies to GTECH under these loans, allof which have been repaid. GTECH also provided project management, technologyand other expertise to analyze and develop/manage the implementation ofopportunities developed by the joint venture entities.  GTECH also loaned Full House $3.0 million,which loan was convertible into 600,000 shares of Full House Common Stock.  The loan conversion clause expired withoutexercise.  In addition, Full House hasbeen reimbursed by one of the joint venture companies for certain advances andexpenditures made by Full House relating to the gaming development agreements. As part of this transaction, Allen  E. Paulson, William  P.McComas and Lee Iacocca granted to GTECH an option, which expired December  29,2000, to purchase their shares should they propose to transfer them.   The parties are no longerrequired to present gaming opportunities to the other for joint development.

 

On March 30, 2001, we acquired GTECH’s 50% interest in three joint ventureprojects that had been equally owned by the two companies: GamingEntertainment, LLC, Gaming Entertainment (Michigan), LLC, and GamingEntertainment (California), LLC.  Thepurchase price was $1.8 million, and was funded through Full House’s existing creditfacility.  As part of this transaction,GTECH extended the due date of our $3.0 million promissory note until January 25, 2002, with interest at prime. This note was paid in February 2002.

 

As a resultof our agreement with GTECH, receipt by Full House of revenues from theDelaware venture is governed by the terms of the joint venture agreement.  The contract provides that net cash flow(after certain deductions) is to be distributed monthly to Full House andGTECH.  While Full House does notbelieve that this arrangement will adversely impact its liquidity, ourcontinuing cash flow is dependent on the operating performance of this jointventure, and the ability to receive monthly distributions.

 

As part ofthe Michigan and California management agreements with the tribes, we haveadvanced funds for tribal operations and the construction of a tribal communitycenter.  The Receivable is attributableto this funding, and the repayment obligation is dependent on the futureprofitable operation of the tribes’ gaming enterprises.  In August 2001, we received a notice fromthe Torres-Martinez Tribe in California purporting to sever ourrelationship.  We continue to seek anappropriate resolution of this matter that includes reimbursement for coststhat we incurred on their behalf.  TheReceivable on the balance sheet includes a $25,000 advance due fromTorres-Martinez Tribe, and Gaming Contract Rights includes approximately$150,000 attributable to this contact. We have incurred an aggregate of approximately $1 million in expenses,including interest, on behalf of Torres-Martinez Tribe.  We believe that the balance sheet amountsare recoverable based upon the expressed intentions of Torres-Martinez Tribe,as well as the contractual rights that we continue to hold.

 

In November1998, we executed a series of agreements with Hard Rock related to the proposeddevelopment project in Biloxi, Mississippi. Pursuant to a licensing agreement, Full House has the right to developand operate a Hard Rock Casino in Biloxi. We paid a territory fee of $2,000,000. In September 1998, Full House 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.

 

InSeptember 2001, our discussions with potential partners concluded with noagreements.  Based upon the timingrequirements in our agreements with Hard Rock, and the current conditions inthe tourism industry we do not reasonably expect to be able to develop thisproject as planned.  As a result ofthese

 

14

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circumstances, we reviewedthe carrying values of our Mississippi investments and recorded an Impairmentprovision of $4,593,800, in the third quarter of 2001.

** **

**ContractualObligations.**

 

The following table summarizes our contractualobligations as of September 30, 2002:

 
|             |   |      |      | **Payments  Due by Period** |   |     |   |
|------------------|--------|-----------|-----------|-----------------------------|--------|----------|--------|
|             |   | **Total** |      | **2002**                    |   | **2003** |   | **2004** |   | **Thereafter** |   |
| Long term debt   |   | $         | 2,381,260 |                        | $      |     |   | $ | 2,381,260 |   | $ | — |   | $ | — |   |
| Operating leases |   | 158,302   |      | 8,795                       |   | 35,178   |   | 35,178 |   | 79,151 |   |
| Total            |   | $         | 2,539,562 |                        | $      | 8,795    |   | $ | 2,416,438 |   | $ | 35,178 |   | $ | 79,151 |   |

 

As ofSeptember 30, 2002, we had cumulative undeclared and unpaid dividends inthe amount of $2,152,500 on the 700,000 outstanding shares of our 1992–1 Preferred Stock.  Such dividends are cumulative whether or notdeclared, and are currently in arrears.

 

**Item3.  ****Quantitative Disclosure About Market Risk**.

 

Market riskis the risk of loss from changes in market rates or prices, such as interestrates and commodity prices.  We areexposed 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.

 

Ouroutstanding variable rate debt as of September 30, 2002 is $2,381,260.  A one-percentage point change in interestrates will cause our interest expense to change approximately $24,000 annually.

 

**Item 4.   Controls and Procedures**

 

Within the 90 dayperiod prior to the filing of this report, an evaluation was carried out underthe supervision and with the participation of the Company’s management,including our Chief Executive Officer and our Chief Financial Officer, of theeffectiveness of the design and operation of our disclosure controls andprocedures (as defined in Rule 13a-14(c) and 15d-14(c) under the SecuritiesExchange Act of 1934).  Based upon thatevaluation, the Chief Executive Officer and the Chief Financial Officerconcluded that the design and operation of these disclosure controls andprocedures were effective.  Nosignificant changes were made in our internal controls or in other factors thatcould significantly affect these controls subsequent to the date of theirevaluation.

 

15

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**PARTII - OTHER INFORMATION**

 

**Item 1.   LegalProceedings**

 

 

 

**Item 3.   Defaults Upon Senior Securities**

 

As of September30, 2002, cumulative dividends were $2,152,500, which were undeclared, unpaidand were in arrears, with respect to the Company’s Series 1992–1Preferred Stock, which class ranks prior to the Company’s Common Stock withregard to dividend and liquidation rights.

 

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

 

(a)                                  Exhibits.

10.57                 ManagementAgreement by and between Gaming Entertainment (Delaware), LLC and HarringtonRaceway, Inc. dated January 31, 1996.

 

10.58                 Amendment to Management Agreement byand between Gaming Entertainment (Delaware), LLC and Harrington Raceway, Inc.dated March 18, 1998.

 

10.59                 Amendment to Management Agreement byand between Gaming Entertainment (Delaware), LLC and Harrington Raceway, Inc.dated July 1, 1999.

 

10.60                 Amendment to Management Agreement byand between Gaming Entertainment (Delaware), LLC and Harrington Raceway, Inc.dated February 4, 2002.

 

10.61                 Employment Agreement between FullHouse Resorts, Inc. and Michael P. Shaunnessy dated January 1, 2002.

 

(b)                                 Reportson Form 8–K;

None

 

**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, as amended, the Companyhas duly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

 
|                          | **FULL HOUSE RESORTS, INC.**                                         |
|-------------------------------|----------------------------------------------------------------------|
|                          |                                                                 |   |
| Date:  November 11, 2002 |                                                                 |   |
|                          |                                                                 |   |
|                          |                                                                 |   |
|                          | By:                                                                  | /s/ MICHAEL P.  SHAUNNESSY |   |
|                          | Michael P. Shaunnessy,  Executive V. P.  and Chief Financial Officer |

 

16

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**CERTIFICATION**

** **

I, William P. McComas,certify that:

 

1.               I have reviewed this quarterly report onForm 10-QSB of Full House Resorts, Inc.;

 

2.               Based on my knowledge, this quarterlyreport does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by thisquarterly report;

 

3.               Based on my knowledge, the financial statements,and other financial information included in this quarterly report, fairlypresent in all material respects the financial condition, results of operationsand cash flows of the registrant as of, and for, the periods presented in thisquarterly report;

 

4.               The registrant’s other certifyingofficers and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)for the registrant and we have:

 

a)              designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

 

b)             evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

 

c)              presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifyingofficers and I have disclosed, based upon our most recent evaluation, to theregistrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent function):

 

a)              all significant deficiencies in thedesign or operation of internal controls which could adversely affect theregistrant’s ability to record, process, summarize and report financial dataand have identified for the registrant’s auditors any material weaknesses ininternal controls; and

 

b)             any fraud, whether or not material, thatinvolves management of other employees who have a significant role in theregistrant’s internal controls; and

 

6.               The registrant’s other certifyingofficers and I have indicated in this quarterly report whether or not therewere significant changes in internal controls, or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 
| Dated: November 11, 2002 | By:    | /s/ William P. McComas                      |   |
|--------------------------|--------|---------------------------------------------|--------|
|                     |   | William P. McComas  Chief Executive Officer |
|                          |        |                                             |        |  |

 

17

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I, Michael P. Shaunnessy,certify that:

 

1.               I have reviewed this quarterly report onForm 10-QSB of Full House Resorts, Inc.;

 

2.               Based on my knowledge, this quarterlyreport does not contain any untrue statement of a material fact or omit tostate a material fact necessary to make the statements made, in light of the circumstances under which suchstatements were made, not misleading with respect to the period covered by thisquarterly report;

 

3.               Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.               The registrant’s other certifyingofficers and I are responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14)for the registrant and we have:

 

a)              designed such disclosure controls andprocedures to ensure that material information relating to the registrant,including its consolidated subsidiaries, is made known to us by others withinthose entities, particularly during the period in which this quarterly reportis being prepared;

 

b)             evaluated the effectiveness of theregistrant’s disclosure controls and procedures as of a date within 90 daysprior to the filing date of this quarterly report (the “Evaluation Date”); and

 

c)              presented in this quarterly report ourconclusions about the effectiveness of the disclosure controls and proceduresbased on our evaluation as of the Evaluation Date;

 

5.               The registrant’s other certifyingofficers and I have disclosed, based upon our most recent evaluation, to theregistrant’s auditors and the audit committee of the registrant’s board ofdirectors (or persons performing the equivalent function):

 

a)              all significant deficiencies in thedesign or operation of internal controls which could adversely affect theregistrant’s ability to record, process, summarize and report financial dataand have identified for the registrant’s auditors any material weaknesses ininternal controls; and

 

b)             any fraud, whether or not material, thatinvolves management of other employees who have a significant role in theregistrant’s internal controls; and

 

6.               The registrant’s other certifyingofficers and I have indicated in this quarterly report whether or not therewere significant changes in internal controls, or in other factors that couldsignificantly affect internal controls subsequent to the date of our mostrecent evaluation, including any corrective actions with regard to significantdeficiencies and material weaknesses.

 

 
| Dated: November 11, 2002 | By:    | /s/ Michael P. Shaunnessy                      |   |
|--------------------------|--------|------------------------------------------------|--------|
|                     |   | Michael P. Shaunnessy  Chief Financial Officer |
|                          |        |                                                |        |  |

 

 

18

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CERTIFICATION OFPRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C.SECTION 1350

 

 

In connection with theQuarterly Report on Form 10–Q of Full House Resorts, Inc. for the quarterended September 30, 2002 as filed with the Securities and ExchangeCommission (the “Report’), I, William P. McComas, Chairman of the Boardand Chief Executive Officer of Full House Resorts, Inc., hereby certifypursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002, that:

 

(1)           The Report fullycomplies with the requirements of section 13(a) or 15(d) of the SecuritiesExchange Act of 1934; and

 

(2)           The information contained in theReport fairly presents, in all material respects, the financial condition andresults of operations of Full House Resorts, Inc.

 

 
| Dated: November 11, 2002 | By:                                               | /s/ William P. McComas |
|--------------------------|---------------------------------------------------|------------------------|
|                     | William P. McComas                                |
|                     | Chairman of the Board and Chief Executive Officer |

 

 

 

 

CERTIFICATION OFPRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C.SECTION 1350

 

 

In connection with theQuarterly Report on Form 10–Q of Full House Resorts, Inc. for the quarterended September 30, 2002 as filed with the Securities and ExchangeCommission (the “Report”) I, Michael P. Shaunnessy, Executive VicePresident and Chief Financial Officer of Full House Resorts, Inc., herebycertify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906of the Sarbanes-Oxley Act of 2002, that:

 

(1)           TheReport fully complies with the requirements of section 13(a) or 15(d) of theSecurities Exchange Act of 1934; and

 

(2)           The information contained in theReport fairly presents, in all material respects, the financial condition andresults of operations of Full House Resorts, Inc.

 

 
| Dated: November 11, 2002 | By:                                                  | /s/ Michael P. Shaunnessy |
|--------------------------|------------------------------------------------------|---------------------------|
|                     | Michael P. Shaunnessy                                |
|                     | Executive Vice President and Chief Financial Officer |

 

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