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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, 2011
 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. 190Las Vegas, Nevada
    
    89147(Address of principal executive offices)
    
    (Zip Code)
 (702) 221-7800  (Registrants telephone number, including area code)
 þ o
 o o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non Accelerated Filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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FULL HOUSE RESORTS, INC.
INDEX
 PagePART I. Financial InformationItem 1. Consolidated Financial StatementsConsolidated Balance Sheets as of March 31, 2011 (Unaudited),
and December 31, 2010
    
    
    3Unaudited Consolidated Statements of Operations
for the three months ended March 31, 2011 and 2010
    
    
    4Unaudited Consolidated Statements of Stockholders Equity
for the three months ended March 31, 2011 and 2010
    
    
    5Unaudited Consolidated Statements of Cash Flows
for the three months ended March 31, 2011 and 2010
    
    
    6Notes to Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 4. Controls and Procedures
    
    
    22PART II. Other InformationItem 6. Exhibits
    
    
    23Signatures
    
    
    24Exhibit 3.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 
 
 CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2011
    
    
    2010(Unaudited)ASSETSCurrent assetsCash and equivalents
    
    $
    11,398,358
    
    
    $
    13,294,496Accounts receivable, net of allowance for doubtful accounts of $480 and $0
    
    
    3,243,039
    
    
    
    2,276,422Income taxes receivable
    
    
    
    
    
    
    598,886Prepaid expenses
    
    
    400,726
    
    
    
    796,858Deferred tax asset
    
    
    65,389
    
    
    
    101,417Deposits and other
    
    
    95,785
    
    
    
    106,81015,203,297
    
    
    
    17,174,889Property and equipment, net of accumulated depreciation of $7,145,618 and $6,888,958
    
    
    7,133,115
    
    
    
    7,372,251Long-term assets related to tribal casino projectsNotes receivable
    
    
    452,142
    
    
    
    427,567Contract rights, net of accumulated amortization of $4,713,827 and $4,120,775
    
    
    12,651,759
    
    
    
    13,244,81113,103,901
    
    
    
    13,672,378Other long-term assetsGoodwill
    
    
    10,308,520
    
    
    
    10,308,520Long-term deposit  Grand Victoria acquisition
    
    
    42,789,943
    
    
    
    5,000,000Other deposits
    
    
    235,697
    
    
    
    166,112Loan fees, net of accumulated amortization of $225,061 and $96,087
    
    
    2,605,672
    
    
    
    2,088,104Other assets
    
    
    796,240
    
    
    
    668,532$
    56,736,072
    
    
    
    18,231,268$
    92,176,385
    
    
    $
    56,450,786LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    6,600,000
    
    
    $
    Accounts payable
    
    
    116,909
    
    
    
    181,604Income tax payable
    
    
    805,464
    
    
    
    384,333Accrued payroll and related
    
    
    649,591
    
    
    
    750,346Other accrued expenses
    
    
    1,118,116
    
    
    
    229,3239,290,080
    
    
    
    1,545,606Long-term debt, net of current portion
    
    
    26,400,000
    
    
    
    Deferred tax liability
    
    
    1,913,885
    
    
    
    2,110,33337,603,965
    
    
    
    3,655,939Stockholders equityCommon stock, $.0001 par value, 25,000,000 shares authorized; 19,364,276 shares issued
    
    
    1,936
    
    
    
    1,936Additional paid-in capital
    
    
    42,699,533
    
    
    
    42,699,533Treasury stock, 1,356,595 common shares
    
    
    (1,654,075
    )
    
    
    (1,654,075
    )Retained earnings
    
    
    7,772,371
    
    
    
    6,164,92748,819,765
    
    
    
    47,212,321Non-controlling interest in consolidated joint venture
    
    
    5,752,655
    
    
    
    5,582,52654,572,420
    
    
    
    52,794,847$
    92,176,385
    
    
    $
    56,450,786
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 UNAUDITED

CONSOLIDATED STATEMENTS OF OPERATIONS
 Three monthsended March 31,2011
    
    
    2010RevenuesCasino
    
    $
    1,541,052
    
    
    $
    1,712,012Food and beverage
    
    
    412,583
    
    
    
    417,191Management fees
    
    
    6,364,242
    
    
    
    6,162,107Other
    
    
    26,350
    
    
    
    19,9218,344,227
    
    
    
    8,311,231Operating costs and expensesCasino
    
    
    522,456
    
    
    
    535,907Food and beverage
    
    
    472,773
    
    
    
    487,025Project development and acquisition costs
    
    
    531,809
    
    
    
    67,677Selling, general and administrative
    
    
    1,653,708
    
    
    
    1,765,733Depreciation and amortization
    
    
    851,744
    
    
    
    861,3434,032,490
    
    
    
    3,717,685Operating gains (losses)Equity in net income of unconsolidated joint venture and related guaranteed payments
    
    
    1,495,322
    
    
    
    1,442,116Unrealized gains (losses) on notes receivable, tribal governments
    
    
    24,575
    
    
    
    (10,764
    )1,519,897
    
    
    
    1,431,352Operating income
    
    
    5,831,634
    
    
    
    6,024,898Other income (expense)Interest and other income
    
    
    387
    
    
    
    112,841Interest expense, including amortization of debt costs of $128,974 and $3,655
    
    
    (210,635
    )
    
    
    (3,655
    )Income before income taxes
    
    
    5,621,386
    
    
    
    6,134,084Income taxes
    
    
    (1,406,863
    )
    
    
    (1,538,649
    )Net income
    
    
    4,214,523
    
    
    
    4,595,435Income attributable to non-controlling interest in consolidated joint venture
    
    
    (2,607,079
    )
    
    
    (2,586,818
    )Net income attributable to the Company
    
    $
    1,607,444
    
    
    $
    2,008,617Net income attributable to the Company per common share
    
    $
    0.09
    
    
    $
    0.11Weighted-average number of common shares outstanding
    
    
    18,007,681
    
    
    
    18,001,681
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 UNAUDITED

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalThree months ended
    
    Common stock
    
    
    paid-in
    
    
    Treasury stock
    
    
    Retained
    
    
    Non-controlling
    
    
    stockholdersMarch 31, 2011
    
    Shares
    
    
    Dollars
    
    
    capital
    
    
    Shares
    
    
    Dollars
    
    
    earnings
    
    
    interest
    
    
    equityBeginning balances
    
    
    19,364,276
    
    
    $
    1,936
    
    
    $
    42,699,533
    
    
    
    1,356,595
    
    
    $
    (1,654,075
    )
    
    $
    6,164,927
    
    
    $
    5,582,526
    
    
    $
    52,794,847Distribution to non-controlling interest in consolidated joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,436,950
    )
    
    
    (2,436,950
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,607,444
    
    
    
    2,607,079
    
    
    
    4,214,523Ending balances
    
    
    19,364,276
    
    
    $
    1,936
    
    
    $
    42,699,533
    
    
    
    1,356,595
    
    
    $
    (1,654,075
    )
    
    $
    7,772,371
    
    
    $
    5,752,655
    
    
    $
    54,572,420Additional
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    
    
    
    
    TotalThree months ended
    
    Common stock
    
    
    paid-in
    
    
    Treasury stock
    
    
    earnings
    
    
    Non-controlling
    
    
    stockholdersMarch 31, 2010
    
    Shares
    
    
    Dollars
    
    
    capital
    
    
    Shares
    
    
    Dollars
    
    
    (deficit)
    
    
    interest
    
    
    equityBeginning balances
    
    
    19,358,276
    
    
    $
    1,936
    
    
    $
    42,665,390
    
    
    
    1,356,595
    
    
    $
    (1,654,075
    )
    
    $
    (1,504,320
    )
    
    $
    5,447,995
    
    
    $
    44,956,926Previously deferred share-based compensation recognized
    
    
    
    
    
    
    
    
    
    
    16,683
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,683Distribution to non-controlling interest in consolidated joint venture
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,978,715
    )
    
    
    (2,978,715
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,008,617
    
    
    
    2,586,818
    
    
    
    4,595,435Ending balances
    
    
    19,358,276
    
    
    $
    1,936
    
    
    $
    42,682,073
    
    
    
    1,356,595
    
    
    $
    (1,654,075
    )
    
    $
    504,297
    
    
    $
    5,056,098
    
    
    $
    46,590,329
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 UNAUDITED

CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three monthsended March, 31,2011
    
    
    2010Net cash provided by operating activities
    
    $
    5,430,993
    
    
    $
    2,623,917Cash flows from investing activities:Purchase of property and equipment
    
    
    (28,172
    )
    
    
    (74,742
    )Other deposits
    
    
    (50,061
    )
    
    
    Deposits and other costs of Grand Victoria acquisition
    
    
    (19,909,899
    )
    
    
    Proceeds from repayment of tribal advances
    
    
    
    
    
    
    5,000,000Net cash provided by (used in) investing activities
    
    
    (19,988,132
    )
    
    
    4,925,258Cash flows from financing activities:Payments on long-term debt to joint venture affiliate
    
    
    
    
    
    
    (1,450,086
    )Proceeds from borrowing
    
    
    15,103,891
    
    
    
    Distributions to non-controlling interest in consolidated joint venture
    
    
    (2,436,950
    )
    
    
    (2,978,715
    )Other
    
    
    (5,940
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    12,661,001
    
    
    
    (4,428,801
    )Net increase (decrease) in cash and equivalents
    
    
    (1,896,138
    )
    
    
    3,120,374Cash and equivalents, beginning of period
    
    
    13,294,496
    
    
    
    9,198,399Cash and equivalents, end of period
    
    $
    11,398,358
    
    
    $
    12,318,7732011
    
    
    2010SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for interest
    
    $
    10,446
    
    
    $
    Cash paid for income taxes
    
    $
    759,000
    
    
    $
    2,512,000NON-CASH INVESTING AND FINANCING ACTIVITIES:Purchases of property and equipment financed with prior year deposit
    
    $
    
    
    
    $
    94,185Deposit and other costs of Grand Victoria acquisition made through term loan
    
    $
    17,896,109
    
    
    $
    Loan Fees
    
    $
    646,542
    
    
    $
    
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FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 1.
    
    BASIS OF PRESENTATION
 The interim consolidated financial statements of Full House Resorts, Inc. and subsidiaries
(collectively, FHR or the Company) included herein reflect all adjustments (consisting
of normal recurring 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 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-K filed March 7, 2011, for the year ended December 31,
2010, 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 attributable to the Company. The results of operations for the period ended March 31,
2011, are not necessarily indicative of results to be expected for the year ending December
31, 2011.
 The consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries, including Stockmans Casino (Stockmans) and Gaming
Entertainment (Michigan), LLC (GEM), a 50%-owned investee of the Company that is jointly
owned by RAM Entertainment, LLC (RAM), has been consolidated pursuant to the relevant
portions of Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Topic 810, Consolidation. The Company accounts for its investment in Gaming
Entertainment (Delaware), LLC (GED) (Note 2) using the equity method of accounting. All
material intercompany accounts and transactions have been eliminated.
 2.
    
    VARIABLE INTEREST ENTITIES
 GED.
 As of the balance sheet dates presented, the Companys assets and liabilities related to its
investment in GED consisted of an amount due from HRI included in accounts receivable of
$0.8 million as of March 31, 2011 and $0.7 as of December 31, 2010. The investment in GED
was $0.3 million and $0.2 million as of March 31, 2011, and December 31, 2010, respectively,
included in other assets. In addition to FHRs share of GEDs net income, FHR also received
$0.8 million and $0.7 million as part of the Management Reorganization Agreements
guaranteed payments for the periods ending March 31, 2011 and 2010, respectively.
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GED has no non-operating income or expenses, is treated as a partnership for income tax
reporting purposes and consequently recognizes no federal or state income tax provision. As
a result, income from operations for
GED is equal to its net income for each period presented, and there are no material
differences between GEDs income for financial and tax reporting purposes. An unaudited
summary for GEDs operations follows:
 GED CONDENSED BALANCE SHEET INFORMATION
 March 31,
    
    
    December 31,2011
    
    
    2010Total assets
    
    $
    617,352
    
    
    $
    426,449Total liabilities
    
    
    48,929
    
    
    
    41,487Members capital
    
    
    568,423
    
    
    
    384,962
 GED CONDENSED STATEMENT OF INCOME INFORMATION
 March 31,
    
    
    March 31,2011
    
    
    2010Revenues
    
    $
    8,144,849
    
    
    $
    5,832,688Net income
    
    
    1,422,429
    
    
    
    1,610,105
 GEM. The Company directs the day to day operational activities of GEM that significantly
impact GEMs economic performance and therefore, considers itself to be the primary
beneficiary. As such, the joint venture is a variable interest entity that is consolidated
in our financial statements.
 Management believes the maximum exposure to loss from the Companys investment in GEM is
$9.4 million (before tax impact), which is composed of contract rights and the Companys
equity investment that is eliminated in consolidation. GEM has no debt or long-term
liabilities. GEMs current assets include the FireKeepers management fee receivable for
both dates presented. Long-term assets include $9.2 million and $9.6 million in contract
rights as of March 31, 2011 and December 31, 2010, respectively.
 An unaudited summary of GEMs operations follows:
 GEM CONDENSED BALANCE SHEET INFORMATION
 March 31,
    
    
    December 31,2011
    
    
    2010Current assets
    
    $
    2,613,266
    
    
    $
    1,985,419Long-term assets
    
    
    9,195,288
    
    
    
    9,626,458Current liabilities
    
    
    303,243
    
    
    
    446,825
 GEM CONDENSED STATEMENT OF INCOME INFORMATION
 March 31,
    
    
    March 31,2011
    
    
    2010Revenues
    
    $
    6,364,242
    
    
    $
    6,162,107Net income
    
    
    5,214,159
    
    
    
    5,173,633
 3.
    
    FAIR VALUE MEASUREMENTS
 The carrying value of the Companys cash and cash equivalents and accounts payable
approximate fair value because of the short maturity of those instruments. The estimated
fair values of the Companys debt approximate their recorded values as of the balance sheet
dates presented, based on level 2 inputs consisting of interest rates offered to the Company
for loans of the same or similar remaining maturities and bearing similar risks.
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Due to the absence of observable market quotes on the Companys notes receivable from tribal
governments (Note 4), tribal notes receivable are recorded and subsequently re-measured and
adjusted periodically to estimated fair value based only on level 3 inputs as defined in ASC
Topic 820. These level 3 inputs are based primarily on managements estimates of expected
cash flow streams, based on factors such as 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 in the appropriate regions, 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 trailing 10-year average for 90-day
treasury bills;
 
    
    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.
 4.
    
    NOTES RECEIVABLE, TRIBAL GOVERNMENTS
 The Company has a note receivable related to advances made to, or on behalf of, the tribe to
fund tribal operations and development expenses related to a potential casino project.
Repayment of this note is conditioned upon the development of the project, and ultimately,
the successful operation of the casino. Subject to such condition, the Companys agreements
with the Pueblo provide for the reimbursement of these advances plus applicable interest, if
any, either from the proceeds of any outside financing of the development, and the actual
operation itself.
 As of March 31, 2011, and December 31, 2010, note receivable from tribal governments were as
follows:
 March 31,
    
    
    December 31,2011
    
    
    2010Contractual (stated) amount of Nambé Pueblo note receivable
    
    $
    661,600
    
    
    $
    661,600Estimated fair value of Nambé Pueblo note receivable
    
    $
    452,142
    
    
    $
    427,567
 In the first quarter of 2008, the Company received notice that the Nambé tribal council had
effectively terminated the business relationship with Full House. The development agreement
between the Company and the Nambé Pueblo provides that the Company is entitled to recoup its
advances from future gaming development, even if the Company does not ultimately develop the
project. The Company is in discussions with the Nambé Pueblo and the developer to determine
the method and timing of the reimbursement of our advances to date of $0.7 million.
Management is currently engaged in assisting the Nambé Pueblo in the process of obtaining
financing to develop a small casino or slot parlor addition to their existing travel center
which will likely have the ability to repay the advances from future cash flows of the
project once open. Funding is expected during the second quarter of 2011 with the expected
facility opening during the fourth quarter of 2011. There can be no assurance that a
facility will ever open or that the Company will receive all or any reimbursement. With due
consideration to the foregoing factors, management has estimated the fair value of the note
receivable from the Nambé Pueblo at $0.5 million as of March 31, 2011.
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The following table summarizes changes in the estimated fair value of notes receivable from
tribal governments, determined using level 3 estimated fair value inputs, from January 1,
2011 to March 31, 2011:
 Nambé PuebloBalances, January 1, 2011
    
    $
    427,567Unrealized gains
    
    
    24,575Balances, March 31, 2011
    
    $
    452,142
 5.
    
    GOODWILL
 Goodwill represents the excess of the purchase price over fair market value of net assets
acquired in connection with the Stockmans casino operation. The Companys review of
goodwill as of March 31, 2011, resulted in approximately a 3% excess estimated fair value
over the carrying amount of Stockmans goodwill and related assets using a market approach
considering an earnings multiple of 6.5 times. The calculation, which is subject to change
as a result of future economic uncertainty, contemplates changes for both current year and
future year estimates in earnings and the impact of these changes to the fair value of
Stockmans, although there is always some uncertainty in key assumptions including projected
future earnings growth. Management believes Stockmans could sustain a minimal decline in
projected earnings or earnings growth without impairment.
 6.
    
    LONG-TERM DEBT
 At March 31, 2011 and 2010, long-term debt consists of the following:
 2011
    
    
    2010Long-term debt, net of current portion:Term loan
    
    $
    33,000,000
    
    
    $
    Less current portion
    
    
    (6,600,000
    )
    
    
    $
    26,400,000
    
    
    $
    
 Nevada State Bank Reducing revolving loan (the Revolver). The covenants in the Wells Fargo
Credit Agreement (described below) required the Company to terminate the Revolver at least
two business days prior to the loan initial funding date of the Credit Agreement, and
therefore, the Revolver was terminated on March 23, 2011. Until the termination, the Company
had the ability to make draws on the Revolver which was payable over 15 years at a variable
interest rate based on the five year LIBOR/Swap rate plus 2.1%. The rate adjusted 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 were pledged as collateral for the loan.
 Credit Agreement with Wells Fargo Bank.In 2010, the Company, as borrower, entered into a
Credit Agreement, as amended, (the Credit Agreement) with the financial institutions
listed therein (the Lenders) and Wells Fargo Bank, National Association as administrative
agent for the Lenders, as collateral agent for the Secured Parties (as defined in the Credit
Agreement), as security trustee for the Lenders, as Letters of Credit Issuer and as Swing
Line Lender. The funds available under the Credit Agreement as of March 31, 2011 were $38.0
million, consisting of a $33.0 million term loan and a revolving line of credit of $5.0
million.
 The initial funding date of the Credit Agreement occurred March 31, 2011, when the Company
borrowed $33.0 million on the term loan which was used to fund the Companys previously
announced acquisition of the
Grand Victoria Casino & Resort in Rising Sun, Indiana (Grand Victoria), which became
effective April 1, 2011. The final maturity of the Credit Agreement is March 31, 2016.
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The revolving line of credit has no outstanding balance of as of March 31, 2011 and
therefore, the Company had $5.0 million available and unused. The availability of the line
decreases every three months by $250,000 until maturity on March 31, 2016.
 The Company pays interest under the Credit Agreement at either the Base Rate or the LIBOR
Rate set forth in the Credit Agreement which calculates a rate and then applies an
applicable margin based on a leverage ratio. The leverage ratio is defined as the ratio of
total funded debt as of such date to adjusted EBITDA for the four consecutive fiscal quarter
periods most recently ended for which Financial Statements are available. The Base Rate
means, on any day, the greatest of (a) Wells Fargos prime rate in effect on such day, (b)
the Federal Funds Rate in effect on the business day prior to such day plus one and one half
percent (1.50%) and (c) the One Month LIBOR Rate for such day (determined on a daily basis
as set forth in the Credit Agreement) plus one and one-half percent (1.50%). The applicable
margin on the Base Rate calculation ranges from 3.5% to 4.5%. LIBOR Rate means a rate per
annum equal to the quotient (rounded upward if necessary to the nearest 1/16 of one percent)
of (a) the greater of (1) 1.50% and (2) the rate per annum referred to as the BBA (British
Bankers Association) LIBOR RATE divided by (b) one minus the reserve requirement set forth
in the Credit Agreement for such loan in effect from time to time. The applicable margin on
the LIBOR Rate calculation ranges from 4.5% to 5.5%. The Company has elected to use the
LIBOR rate and at March 31, 2011 the rate charged was 7.0%.
 The Company is also required to pay a commitment fee on the last business day of each March,
June, September and December. This is calculated as a percentage of all indebtedness of or
attributable to the Company which ranges from 0.5% to 0.75% based on the leverage ratio. At
March 31, 2011 the rate charged was 0.5%. The Credit Agreement is secured by substantially
all of the Companys assets. The Companys wholly-owned subsidiaries, including Stockmans
Casino, guarantee the obligations of the Company under the Credit Agreement.
 The Credit Agreement contains customary negative covenants for transactions of this type,
including, but not limited to, restrictions on the Companys and its subsidiaries ability
to: incur indebtedness, grant liens, pay dividends and make other restricted payments, make
investments, make fundamental changes, dispose of assets, and change the nature of their
business. The negative covenants are subject to certain exceptions as specified in the
Credit Agreement. The Credit Agreement requires that the Company maintain specified
financial covenants, including a total leverage ratio, a fixed charge coverage ratio and a
minimum adjusted EBITDA. The Credit Agreement also includes customary events of default,
including, among other things: non-payment, breach of covenant, breach of representation or
warranty, cross-default under certain other indebtedness or guarantees, commencement of
insolvency proceedings, inability to pay debts, entry of certain material judgments against
the Company or its subsidiaries, occurrence of certain ERISA events and certain changes of
control.
 The Company has the ability to make optional prepayments under the term loan but may not
re-borrow the principal of the term loan after payment. The Company is also required to make
mandatory prepayments under the Credit Facility if certain events occur. These include: GEM
receives any buy-out, termination fee or similar payment related to FireKeepers; or the
Company sells or otherwise disposes of certain prohibited assets in any single transaction
or series of related transactions and the net proceeds of such sale or other disposition
which exceed $100,000; the Company issues or incurs any indebtedness for borrowed money,
including indebtedness evidenced by notes, bonds, debentures or other similar instruments,
issues or sells any equity securities or receives any capital contribution from any other
source; or the Company receives any net insurance proceeds or net condemnation proceeds
which exceed $250,000. The mandatory repayments are subject to certain exceptions as
specified in the Credit Agreement.
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Scheduled maturities of long-term debt as of the most recent balance sheet presented are as
follows:
 Year one
    
    $
    6,600,000Year two
    
    
    6,600,000Year three
    
    
    6,600,000Year four
    
    
    6,600,000Year five
    
    
    6,600,000
 The Company is subject to interest rate risk to the extent we borrow against credit
facilities with variable interest rates as described above. The Company has potential
interest rate exposure with respect to the $33.0 million outstanding balance on our variable
rate term loan as of March 31, 2011. During January 2011, the Company reduced its exposure
to changes in interest rates by entering into an interest rate swap agreement (Swap) with
Wells Fargo Bank, N.A. The Swap contract exchanges a floating rate for fixed interest
payments periodically over the life of the swap agreement without exchange of the underlying
$20.0 million notional amount. The interest payments under the Swap will be settled on a
net basis. The notional amount of the swap is used to measure interest to be paid or
received and does not represent the amount of exposure to credit loss. Our credit risk
related to the Swap is considered low because the swap agreement is with a creditworthy
financial institution. The Company does not hold or issue derivative financial instruments
for trading purposes.
 The Swap became effective April 1, 2011 and continues through April 1, 2016. The Company
will pay interest at a fixed rate of 1.9% on the notional amount of $20.0 million, which
will be reduced by $1.0 million quarterly in July, October, January and April of each year.
The terms of the interest rate swap agreement also require Wells Fargo Bank to pay based
upon the variable LIBOR rate. The net interest payments, based on the notional amount, will
match the timing of the related liabilities. The Swap is designated as a cash flow hedge
beginning April 1, 2011, under ASC Topic 815, Derivatives and Hedgingand the Company
expects to account for this interest rate swap agreement at its fair value, beginning April
1, 2011.
 7.
    
    SEGMENT REPORTING
 The Companys operations are composed of three primary business segments. The following
tables reflect selected segment information for the three months ended March 31, 2011 and
2010. The casino operations segment includes the Stockmans Casino operation in Fallon,
Nevada. The development/management segment includes costs associated with tribal casino
development and management projects and the Michigan and Delaware joint ventures. The
Corporate segment includes general and administrative expenses of the Company.
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Selected statement of operations data for the three months ended March 31:
 Development/Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    Consolidated2011Revenues
    
    $
    1,979,985
    
    
    $
    6,364,242
    
    
    $
    
    
    
    $
    8,344,227Selling, general and administrative expense
    
    
    461,963
    
    
    
    152,240
    
    
    
    1,039,505
    
    
    
    1,653,708Depreciation and amortization
    
    
    238,815
    
    
    
    593,196
    
    
    
    19,733
    
    
    
    851,744Operating gains
    
    
    
    
    
    
    1,519,897
    
    
    
    
    
    
    
    1,519,897Operating income (loss)
    
    
    283,978
    
    
    
    7,138,702
    
    
    
    (1,591,046
    )
    
    
    5,831,634Net income (loss) attributable to Company
    
    
    187,507
    
    
    
    2,608,873
    
    
    
    (1,188,936
    )
    
    
    1,607,4442010Revenues
    
    $
    2,149,124
    
    
    $
    6,162,107
    
    
    $
    
    
    
    $
    8,311,231Selling, general and administrative expense
    
    
    446,277
    
    
    
    245,410
    
    
    
    1,074,046
    
    
    
    1,765,733Depreciation and amortization
    
    
    245,083
    
    
    
    593,195
    
    
    
    23,065
    
    
    
    861,343Operating gains
    
    
    
    
    
    
    1,431,352
    
    
    
    
    
    
    
    1,431,352Operating income (loss)
    
    
    434,833
    
    
    
    6,754,456
    
    
    
    (1,164,391
    )
    
    
    6,024,898Net income (loss) attributable to Company
    
    
    287,114
    
    
    
    2,486,120
    
    
    
    (764,617
    )
    
    
    2,008,617
 Selected balance sheet data as of March 31, 2011 and December 31, 2010:
 Development/Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    Consolidated2011Total assets
    
    $
    19,251,720
    
    
    $
    16,819,389
    
    
    $
    56,105,276
    
    
    $
    92,176,385Property and equipment, net
    
    
    7,106,594
    
    
    
    96
    
    
    
    26,425
    
    
    
    7,133,115Goodwill
    
    
    10,308,520
    
    
    
    
    
    
    
    
    
    
    
    10,308,520Liabilities
    
    
    1,347,355
    
    
    
    1,441,869
    
    
    
    34,814,741
    
    
    
    37,603,9652010Total assets
    
    $
    19,949,159
    
    
    $
    16,705,051
    
    
    $
    19,796,576
    
    
    $
    56,450,786Property and equipment, net
    
    
    7,325,852
    
    
    
    241
    
    
    
    46,158
    
    
    
    7,372,251Goodwill
    
    
    10,308,520
    
    
    
    
    
    
    
    
    
    
    
    10,308,520Liabilities
    
    
    1,319,064
    
    
    
    1,621,394
    
    
    
    715,481
    
    
    
    3,655,939
 8.
    
    ACQUISITION OF GRAND VICTORIA CASINO
 On September 10, 2010, the Company entered into definitive agreements with Grand Victoria
Casino and Resort L.P. to acquire all of the operating assets of the property, located in
Rising Sun, Indiana on the Ohio River. The purchase price was $43.0 million, exclusive of
working capital adjustment, property cash and fees, as of March 31, 2011. The Company
entered into the Credit Agreement with Wells Fargo Bank on October 29, 2010, as discussed in
Note 6, and regulatory approvals were obtained to accommodate a closing effective April 1,
2011.
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Through March 31, 2011 and December 31, 2010, the Company had incurred $0.5 million and $0.2
million in acquisition related expenses, respectively, which are included in project
development and acquisition expense.
In conjunction with closing on the financing commitment, the Company has incurred $2.6
million in financing related fees.
 The initial accounting for this purchase is incomplete. The amounts below are provisional
amounts based on drafts of valuations for these assets and estimated purchase adjustments.
The purchase price is expected to be allocated in the second quarter of 2011 as follows (in
millions):
 Land and land improvements
    
    $
    8.1Buildings and building improvements
    
    
    16.8Equipment and boat related assets
    
    
    5.9Gaming license
    
    
    9.9Player loyalty program
    
    
    1.7Goodwill
    
    
    2.4Working capital estimate
    
    
    (2.0
    )$
    42.8
 The fair values of these acquired identifiable assets are expected to be finalized upon
receipt of the final valuations and adjustments. The goodwill is the excess purchase price
over the assets purchased and includes the assembled workforce of the Grand Victoria. The
valuation above estimates a negative net working capital amount of $2.0 million, although
the purchase agreement states the purchaser will have up to 60 days to review the closing
net working capital and therefore, changes in the working capital may be made.
 The following unaudited, condensed consolidated pro forma data summarizes the Companys
results of operations for the periods indicated as if the acquisition had occurred as of
January 1, 2010. This unaudited pro forma consolidated financial information is not
necessarily indicative of what the Companys actual results would have been had the
acquisition been completed on that date, or of future financial results.
 Three months ended March 31,2011
    
    
    2010Net revenues
    
    $
    30,902,425
    
    
    $
    30,848,010Depreciation and amortization
    
    
    2,353,301
    
    
    
    2,684,290Operating income
    
    
    7,110,598
    
    
    
    6,504,156Net income attributable to the Company
    
    
    2,132,238
    
    
    
    2,043,050Net income per share
    
    $
    0.12
    
    
    $
    0.11
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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 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 and credit, 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;
 
    
    ability to obtain and maintain gaming and other governmental licenses
 
    
    regulatory approvals;
 
    
    competitive environment, including increased competition in our target market
areas;
 
    
    risks, uncertainties and other factors described from time to time in this and
our other SEC filings and reports.
  Overview
   15




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Critical accounting estimates and policies
       16




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ssets related to tribal casino projects
 Accounting Standards Codification 
 Notes receivable
     ,
 ,
  17




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Contract rights
   Results of continuing operations
  Three Months Ended March 31, 2011, Compared to Three Months Ended March 31, 2010
 Operating revenues.
 Operating costs and expenses.
 Project development and acquisition costs
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##### Table of Contents



Selling, general and administrative expense.
 Operating gains (losses).
 Other income (expense).
 Income taxes.
 Noncontrolling interest.
 Liquidity and capital resources
 Economic conditions and related risks and uncertainties
     19




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Grand Victoria Acquisition
       20




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®
  FireKeepers project
  Other projects
   21




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Seasonality
  Regulation and taxes
   Off-balance sheet arrangements
  
 Item 4.
    
    Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
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Changes in Internal Control Over Financial Reporting
 
 PART II  OTHER INFORMATION
 
 Item 6.
    
    Exhibits
 3.1
    
    
    Amended and Restated Certificate of Incorporation of Full House Resorts, Inc., as amended*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  23




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SIGNATURES
  FULL HOUSE RESORTS, INC.Date:  May 6, 2011
    By:
    /s/ MARK MILLERMark MillerChief Financial Officer and Chief Operating Officer
(on behalf of the Registrant and
as principal financial officer)  24