##### Table of Contents



U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-KSB
 
 þ
    
    Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended: December 31, 2007
 o
    
    Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
 Commission file number 1-32583
 
 FULL HOUSE RESORTS, INC.
 (Name of Small Business Issuer in Its Charter)
 
 Delaware
    
    13-3391527(State or Other Jurisdiction
    
    (I.R.S. Employerof Incorporation or Organization)
    
    Identification No.)
 4670 S. Fort Apache Rd., Suite 190, Las Vegas, Nevada 89147
(Address and zip code of principal executive offices)
 (702) 221-7800
(Issuers Telephone Number, Including Area Code)
 Securities registered under Section 12(b) of the Exchange Act:
 Common Stock, $.0001 per Share
    
    American Stock Exchange(Title of Each Class)
    
    (Name of Each Exchange on Which Registered)
 Securities registered under Section 12(g) of the Exchange Act:
 None
(Title of class)
 
 o
 þ o
 o
 Yes
o No
þ
 .
   Documents Incorporated By Reference
  o þ




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##### 



TABLE OF CONTENTS
 PART IItem 1. Description of Business
    
    
    3Item 2. Description of Property
    
    
    19Item 3. Legal Proceedings
    
    
    19Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
    
    
    20Item 6. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 7. Financial Statements
    
    
    31Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    31Item 8A. Controls and Procedures
    
    
    32Item 8B. Other Information
    
    
    32PART IIIItem 9. Directors, Executive Officers and Corporate Governance
    
    
    32Item 10. Executive Compensation
    
    
    32Item 11. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    32Item 12. Certain Relationships and Related Transactions, and Director Independence
    
    
    32Item 13. Exhibits
    
    
    33Item 14. Principal Accountants Fees and Services
    
    
    36Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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PART I
 
 Item 1. Description of Business.
 BACKGROUND
    Project Currently Operating
 Harrington Raceway and Casino, formerly Midway Slots and SimulcastHarrington, Delaware
      3




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Stockmans Casino
    Projects in Development
 Nottawaseppi Huron Band of PotawatomiBattle Creek, Michigan
      4




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Northern Cheyenne TribeDecker, Montana
   5




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Discontinued Projects
 Nambé Pueblo Indian TribeSanta Fe, New Mexico
  Hard Rock Casino, Biloxi, Mississippi
  Navajo NationNew Mexico
  Government Regulation
     6




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Delaware Regulatory Matters
   
    
    type and number of games permitted;
    
    pricing of games;
    
    numbers and sizes of prizes;
    
    manner of payment;
    
    value of bills, coins or tokens needed to play;
    
    requirements for licensing agents and service providers;
    
    standards for advertising, marketing and promotional materials used by licensed
agents;
    
    procedures for accounting and reporting;
    
    registration, kind, type, number and location of video lottery (slot) machines on
a licensed agents premises;
    
    security arrangements for the video lottery system; and
    
    reporting and auditing of financial information of licensed agents.
     7




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##### Table of Contents



Nevada Regulatory Matters
   
    
    the character of persons having any direct or indirect involvement with gaming to
prevent unsavory or unsuitable persons from having a direct or indirect involvement with
gaming at any time or in any capacity;
    
    application of appropriate accounting practices and procedures;
    
    maintenance of effective control over the financial practices and financial
stability of licensees, including procedures for internal controls and the safeguarding
of assets and revenues;
    
    record-keeping and reporting to the Nevada gaming authorities;
    
    fair operation of games; and
    
    the raising of revenues through taxation and licensing fees.
     8




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
    
    pay that person any dividend or interest upon our voting securities;
    
    allow that person to exercise, directly or indirectly, any voting right conferred
through securities held by that person; or
    
    give remuneration in any form to that person.
   
    
    pay to the unsuitable person any dividends, interest or any distribution
whatsoever;
    
    recognize any voting right by such unsuitable person in connection with such
securities;
    
    pay the unsuitable person remuneration in any form; or
    
    make any payment to the unsuitable person by way of principal, redemption,
conversion; exchange, liquidation or similar transaction.
    
    
    assure the financial stability of corporate gaming licensees and their
affiliates;
    
    preserve the beneficial aspects of conducting business in the corporate form; and
    
    promote a neutral environment for the orderly governance of corporate affairs.
   9




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
    
    knowingly violates any laws of the foreign jurisdiction pertaining to the foreign
gaming operation;
    
    fails to conduct the foreign gaming operation in accordance with the standards of
honesty and integrity required of Nevada gaming operations;
    
    engages in any activity or enters into any association that is unsuitable because
it poses an unreasonable threat to the control of gaming in Nevada, reflects or tends to
reflect, discredit or disrepute upon the State of Nevada or gaming in Nevada, or is
contrary to the gaming policies of Nevada;
    
    engages in activities or enters into associations that are harmful to the State
of Nevada or its ability to collect gaming taxes and fees; or
    
    employs, contracts with or associates with a person in the foreign operation who
has been denied a license or a finding of suitability in Nevada on the ground of
unsuitability.
  Indian Gaming
    
    
    inspect and examine certain Indian gaming facilities;
    
    perform background checks on persons associated with Indian gaming;
    
    inspect, copy and audit all records of Indian gaming facilities;
    
    hold hearings, issue subpoenas, take depositions, and adopt regulations; and
    
    penalize violators of the Regulatory Act.
   
    
    ownership;
    
    security;
    
    personnel background;
    
    record keeping and auditing of the tribes gaming enterprises;
    
    use of the revenues from gaming; and
    
    protection of the environment and the public health and safety.
  10




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
    
    adequate accounting procedures and verifiable financial reports, copies of which
must be furnished to the tribe;
 
    
    tribal access to the daily operations of the gaming enterprise, including the
right to verify gross revenues and income;
    
    minimum guaranteed payments to the tribe, which must have priority over the
retirement of development and construction costs;
    
    a ceiling on the repayment of such development and construction costs; and
    
    a contract term not exceeding five years and a management fee not exceeding 30%
of profits and a determination by the chairman of the NIGC that the fee is reasonable
considering the circumstances; provided that the NIGC may approve up to a seven year
term and a management fee not to exceed 40% of net revenues if the NIGC is satisfied
that the capital investment required or the income projections for the particular gaming
activity justify the larger profit allocation and longer term.
  
    
    each person with management responsibility for a management agreement;
    
    each of our directors; and
    
    the ten persons who have the greatest direct or indirect financial interest in a
management agreement to which we are a party.
  
    
    is an elected member of the Indian tribal government that owns the facility being
managed;
    
    has been or is convicted of a felony or misdemeanor gaming offense;
    
    has knowingly and willfully provided materially false information to the NIGC or
a tribe;
    
    has refused to respond to questions from the NIGC;
    
    is a person whose prior history, reputation and associations pose a threat to the
public interest or to effective gaming regulation and control, or create or enhance the
chance of unsuitable, unfair or illegal activities in gaming or the business and
financial arrangements incidental thereto; or
    
    has tried to influence any decision or process of tribal government relating to
gaming.
  
    
    the management company has materially breached the terms of the management
agreement, or the tribes gaming ordinance; or
    
    a trustee, exercising the skill and diligence to which a trustee is commonly
held, would not approve such management agreement.
     11




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
    
    which additional states, if any, will approve casino gaming on Indian Land;
    
    the timing of any such approval;
    
    the types of gaming permitted by each tribal-state compact;
    
    any limits on the number of gaming machines allowed per facility; or
    
    whether states will attempt to renegotiate or take other steps that may affect
existing compacts.
   th
 Costs and Effects of Compliance with Environmental Laws
    COMPETITION
   12




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FACTORS THAT MAY AFFECT OUR FUTURE PERFORMANCE
  Development of new casinos is subject to many risks, some of which we may not be able to
control 
  
    
    shortages of materials or skilled labor;
    
    unforeseen engineering, environmental and/or geological problems;
    
    work stoppages;
    
    weather interference;
    
    unanticipated cost increases; and
    
    unavailability of construction equipment.
  13




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We have a limited base of operations 
 We will need additional capital to fund development projects and pursue additional gaming
opportunities 
 We have limited recourse against tribal assets 
 The Indian tribes have sovereign powers and we may be unable therefore to enforce remedies
against them 
 The waiver of sovereign immunity and jurisdiction provisions in our agreements may not be
enforceable and thus we may be further limited in recourse with respect to Indian tribes and their
assets 
  14




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We are dependent on our key employees and may not find suitable replacements if our key
personnel are no longer available to us 
 The gaming industry is subject to many risks, including adverse economic and political
conditions and changes in the legislative and land use regulatory climate 
 
    
    competition in the form of other gaming facilities and entertainment
opportunities;
    
    changes in regional and local population and disposable income;
    
    unanticipated increases in operating costs;
    
    restrictive changes in zoning and similar land use laws and regulations, or in
health, safety and environmental laws, rules and regulations;
    
    risks inherent in owning, financing and developing real estate as part of our
casino operations;
    
    the inability to secure property and liability insurance to fully protect against
all losses, or to obtain such insurance at reasonable costs;
    
    inability to hire trained and knowledgeable managers and supervisors;
    
    inability to hire a sufficient number of employees to maintain our desired level
of operations;
    
    seasonality;
    
    changes or cancellations in local tourist, recreational or cultural events; and
    
    changes in travel patterns or preferences (which may be affected by increases in
gasoline prices, changes in airline schedules and fares, strikes, weather patterns or
relocation or construction of highways).
  15




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Our management agreements for gaming facilities are of limited duration 
 We may be unable to successfully compete with other gaming activities 
 We have pledged some of our assets as collateral
 Our current and future credit agreements impose restrictions on us which may prevent us from
engaging in transactions that might benefit us, including responding to changing business and
economic conditions or securing additional financing, if needed 
 
    
    making investments in excess of specified amounts;
    
    incurring additional indebtedness in excess of a specified amount;
    
    paying cash dividends;
    
    making capital expenditures in excess of a specified amount;
    
    creating certain liens;
    
    prepaying our other indebtedness;
    
    engaging in certain mergers or combinations; and
    
    engaging in transactions that would result in a change of control of our company.
  Adverse changes in discretionary consumer spending would decrease our gaming revenues 
 Naval Air Station Fallon is a significant part of the economy of Fallon, Nevada, the site of
Stockmans Casino 
  16




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We will need to make substantial financial and manpower investments in order to assess our
internal controls over financial reporting, and our internal controls over financial reporting may
be found to be deficient 
  Inability to obtain and maintain necessary approvals from various gaming regulators will limit
our expansion and our operations 
  The proposed site for the Northern Cheyenne Tribe project requires approvals before
development on the land can begin 
 Our management agreements with the various tribes are subject to governmental or regulatory
modification 
  17




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The rate of taxation on gaming profits may not be predictable 
 Our controlling stockholder has significant influence over management 
 We have the right under our amended and restated charter to redeem our capital stock under
certain circumstances 
 There are trading risks for low priced stocks 
  Our stock price may be volatile because of factors beyond our control and you may lose all or
a part of your investment 
 
    
    our failure to meet financial analysts performance expectations;
    
    changes in earnings estimates and recommendations by financial analysts;
    
    actual or anticipated variations in our quarterly results of operations;
    
    changes in market valuations of similar companies;
    
    announcements by us or our competitors of significant contracts, acquisitions,
renovations, joint ventures or capital commitments;
    
    regulatory action or changes; or
    
    general market, political and economic conditions.
 Our common stock is thinly-traded 
  18




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EMPLOYEES
  
 Item 2. Description of Property.
     
 Item 3. Legal Proceedings.
     
 Item 4. Submission of Matters to a Vote of Security Holders.
   19




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PART II
 
 Item 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Small Business
Issuer Purchases of Equity Securities.
 (a) Market Information
 
 High
    
    
    LowYear Ended December 31, 2007First Quarter
    
    $
    4.70
    
    
    $
    3.40Second Quarter
    
    
    4.10
    
    
    
    3.35Third Quarter
    
    
    4.00
    
    
    
    2.75Fourth Quarter
    
    
    3.21
    
    
    
    2.00Year Ended December 31, 2006First Quarter
    
    $
    3.70
    
    
    $
    2.55Second Quarter
    
    
    3.60
    
    
    
    3.10Third Quarter
    
    
    3.92
    
    
    
    3.05Fourth Quarter
    
    
    3.86
    
    
    
    3.10
  (b) Holders
  (c) Dividends
   (d) Securities authorized for issuance under equity compensation plans
 EQUITY COMPENSATION PLAN INFORMATION
  Equity Compensation Plan InformationNumber of securities
    
    
    
    
    
    
    Number of securitiesto be issued upon
    
    
    Weighted-average
    
    
    remaining availableexercise of outstanding
    
    
    exercise price of
    
    
    for future issuanceoptions, warrants and
    
    
    outstanding options,
    
    
    under equityrights
    
    
    warrants and rights
    
    
    compensation plans75,000
    
    
    $
    2.25
    
    
    
    2,000
  20




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Item 6. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Forward Looking Statements
   
    
    our growth strategies;
    
    our development and potential acquisition of new facilities;
    
    risks related to development and construction activities;
    
    anticipated trends in the gaming industries;
    
    patron demographics;
    
    general market and economic conditions;
    
    access to capital, including our ability to finance future business requirements;
    
    the availability of adequate levels of insurance;
    
    changes in federal, state, and local laws and regulations, including
environmental and gaming license legislation and regulations;
    
    regulatory approvals;
    
    competitive environment;
    
    risks, uncertainties and other factors described from time to time in this and
our other SEC filings and reports.
  Overview
    21




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Critical Accounting Estimates and Policies
   Long-term assets related to Indian casino projects
 ,
Recognition of Interest Income and Balance Sheet Classification of Structure Notes
   22




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
    
    the federal Bureau of Indian Affairs, or BIA, recognizes the tribe;
    
    the tribe has the right to acquire land to be used as a casino site;
    
    the Department of the Interior has put the land into trust as a casino site;
    
    the tribe has a gaming compact with the state government;
    
    the National Indian Gaming Commission has approved a proposed management
agreement; and
    
    other legal or political obstacles exist or are likely to occur.
  
    
    a certain minimum monthly priority payment to the tribe;
    
    repayment of various senior debt associated with construction and equipping of
the casino with interest accrued thereon;
    
    repayment of various debt with interest accrued thereon, if any, due to us;
    
    management fee to us;
    
    other obligations; and
    
    the remaining funds distributed to the tribe.
 Notes receivable
    23




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Accounting by Creditors for Impairment of a
Loan,
 Contract rights
   Summary of long-term assets related to Indian casino projects
  2007
    
    
    2006Michigan project:Notes receivable, tribal governments
    
    $
    11,189,359
    
    
    $
    10,258,202Contract rights, net
    
    
    14,625,969
    
    
    
    4,687,99725,815,328
    
    
    
    14,946,199Other projects:Notes receivable, tribal governments
    
    $
    989,122
    
    
    $
    737,580Contract rights, net
    
    
    135,164
    
    
    
    472,188Land held for development
    
    
    
    
    
    
    130,0001,124,286
    
    
    
    1,339,768$
    26,939,614
    
    
    $
    16,285,967
   24




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
    
    the tribe is federally recognized;
    
    adequate land for the proposed casino resort has been placed in trust;
    
    the tribe has a valid gaming compact with the State of Michigan;
    
    the National Indian Gaming Commission has approved the management agreement;
    
    the Bureau of Indian Affairs issued a record of decision approving the final
environmental impact statement in September 2006; and
    
    proposals for approximately $330 million of construction financing have been
obtained and the completion of financing documentation is expected in mid 2008.
     2007
    
    
    2006Aggregate face amount of the notes receivable
    
    $
    14,084,100
    
    
    $
    13,652,328Estimated years until opening of casino:Michigan
    
    
    1.50
    
    
    
    1.75Montana
    
    
    1.75
    
    
    
    1.75Discount rate:Michigan
    
    
    17.5
    %
    
    
    20.0
    %Montana
    
    
    22.5
    %
    
    
    20.0
    %Estimated probability rate of casino opening:Michigan
    
    
    96
    %
    
    
    90
    %Montana
    
    
    80
    %
    
    
    90
    %
  25




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
    
    S&P 500, average benchmark investment returns (medium-term horizon risk
premiums);
    
    Risk-free investment return equal to the 10-year average for 90-day Treasury
Bills;
    
    Investment beta factor equal to the average of a peer group of similar entities
in the hotel and gaming industry; and
    
    Project specific adjustments based on typical size premiums for micro-cap and
low-cap companies.
   2007
    
    
    2006 Discount rate increases 2.5%
    
    $
    (347,790
    )
    
    $
    (363,556
    ) Discount rate decreases 2.5%
    
    
    366,793
    
    
    
    384,996 Forecasted opening date delayed one quarter
    
    
    (442,085
    )
    
    
    (446,848
    ) Forecasted opening date accelerated one quarter
    
    
    460,273
    
    
    
    467,687 Forecasted opening date delayed one year
    
    
    (1,666,260
    )
    
    
    (1,709,700
    )
   December 31, 2007
    
    Michigan
    
    
    New Mexico
    
    
    Montana
    
    
    Other
    
    
    TotalNotes receivable
    
    $
    11,189,359
    
    
    $
    487,270
    
    
    $
    501,852
    
    
    $
    
    
    
    $
    12,178,481Contract rights
    
    
    14,625,969
    
    
    
    
    
    
    
    135,164
    
    
    
    
    
    
    
    14,761,133Land held for development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    25,815,328
    
    
    $
    487,270
    
    
    $
    637,016
    
    
    $
    
    
    
    $
    26,939,614
  26




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Recently Issued Accounting Pronouncements
 Noncontrolling Interests in Consolidated Financial
Statements-an amendment of ARB No. 51,
  Fair Value Measurements The Fair Value Option for
Financial Assets and Financial Liabilities  Including an amendment of FASB Statement No. 115
 Results of Operations
 Year Ended December 31, 2007 Compared to Year Ended December 31, 2006
 Operating revenues from continuing operations.
 Operating costs and expenses from continuing operations.
 Project development costs.
 Selling, general and administrative expense.
 Depreciation and amortization.
  27




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Operating gains (losses).
 Other income (expense).
 Income taxes.
 Income from discontinued operations.
 Liquidity and Capital Resources
       28




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Indian casino projects
    29




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30




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Other
   Quantitative and Qualitative Disclosures about Market Risk
   Contractual Obligations.
 Payments Due by PeriodTotal
    
    
    Less than 1
    
    
    1 to 3 years
    
    
    3 to 5 years
    
    
    ThereafterOperating leases
    
    $
    482,921
    
    
    $
    139,815
    
    
    $
    299,458
    
    
    $
    43,648
    
    
    $
    Service contracts
    
    
    66,936
    
    
    
    57,672
    
    
    
    9,264
    
    
    
    
    
    
    
    Total
    
    $
    549,857
    
    
    $
    197,487
    
    
    $
    308,722
    
    
    $
    43,648
    
    
    $
    
  
 Item 7. Financial Statements.
  
    
    Report of Independent Registered Public Accounting Firm;
    
    Consolidated Balance Sheets as of December 31, 2007 and 2006;
    
    Consolidated Statements of Operations for the years ended December 31, 2007 and
2006;
    
    Consolidated Statements of Stockholders Equity for the years ended December 31,
2007 and 2006;
    
    Consolidated Statements of Cash Flows for the years ended December 31, 2007 and
2006;
    
    Notes to Consolidated Financial Statements.
 
 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
   31




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Item 8A(T). Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures 
 Evaluation of Internal Control Over Financial Reporting 
   Changes in Internal Control Over Financial Reporting 
 
 Item 8B. Other Information.
  
 PART III
 
 Item 9.
    
    Directors, Executive Officers and Corporate Governance; Compliance with Section 16(a) of
the Exchange Act.
  
 Item 10. Executive Compensation.
  
 Item 11.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
  
 Item 12. Certain Relationships and Related Transactions, and Director Independence.
   32




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Item 13. Exhibits.
 2.1
    
    
    Assignment and Sale Agreement dated March 30, 2001 by and among GTECH
Corporation, Dreamport, Inc., GTECH Gaming Subsidiary 2 Corporation,
Full House Resorts, Inc., and Full House Subsidiary, Inc.
(Incorporated by reference to Full Houses Current Report on Form 8-K
as filed with the Securities and Exchange Commission on April 12,
2001)2.2
    
    
Stock Purchase Agreement, dated April 6, 2006, between Full House
Resorts, Inc. and the James R. Peters Family Trust. (Incorporated by
reference to Exhibit 2.1 to Full Houses Current Report on Form 8-K as
filed with the Securities and Exchange Commission on April 10, 2006)3.1
    
    
Certificate of Incorporation as amended to date (Incorporated by
reference to Exhibit 3.1 to Full Houses registration statement on
Form SB-2 (#333-136341) filed on August 4, 2006)3.2
    
    
Certificate of Designation of Series 1992-1 Preferred Stock of Full
House Resorts, Inc. (Incorporated by reference to Exhibit 3.2 to Full
Houses Annual Report on Form 10-KSB for the fiscal ended
December 31, 2005)3.3
    
    
Bylaws of Full House Resorts Inc. (As amended by Resolutions dated
July 28, 1995, September 29, 1995, and November 24, 1997)
(Incorporated by reference to Exhibit 3.3 to Full Houses Annual
Report on Form 10-KSB for the fiscal ended December 31, 2005)10.1
    
    
Agreement dated as of November 18, 1996 by and among Green Acres
Casino Management Company, GTECH Corporation, Gaming Entertainment
(Michigan) LLC and Full House (Incorporated by reference to Full
Houses Annual Report on Form 10-KSB for the fiscal ended December
31, 1996)10.2
    
    
Amended and Restated Class III Management Agreement dated
November 18, 1996 between Nottawaseppi Huron Band of Potawatomi and
Gaming Entertainment (Michigan) LLC (Incorporated by reference to
Full Houses Annual Report on Form 10-KSB for the fiscal ended
December 31, 1996)10.3
    
    
Investor Agreement by and between Full House Resorts, Inc. and RAM
Entertainment, LLC, dated February 15, 2002 (Incorporated by
reference to Full Houses Quarterly Report on Form 10-QSB for the
quarter ended March 31, 2002)10.4
    
    
Management Agreement by and between Gaming Entertainment (Delaware),
LLC and Harrington Raceway, Inc. dated January 31,1996 (Incorporated
by reference to Full Houses Quarterly Report on Form 10-QSB for the
quarter ended September 30, 2002)10.5
    
    
Amendment to Management Agreement by and between Gaming
Entertainment (Delaware), LLC and Harrington Raceway, Inc. dated
March 18, 1998 (Incorporated by reference to Full Houses Quarterly
Report on Form 10-QSB for the quarter ended September 30, 2002)10.6
    
    
Amendment to Management Agreement by and between Gaming
Entertainment (Delaware), LLC and Harrington Raceway, Inc. dated
July 1, 1999 (Incorporated by reference to Full Houses Quarterly
Report on Form 10-QSB for the quarter ended September 30, 2002)10.7
    
    
Amendment to Management Agreement by and between Gaming
Entertainment (Delaware), LLC and Harrington Raceway, Inc. dated
February 4, 2002 (Incorporated by reference to Full Houses
Quarterly Report on Form 10-QSB for the quarter ended September 30,
2002)10.8
    
    
Forbearance Agreement dated December 29, 2004 entered into between
Full House and RAM Entertainment, LLC (Incorporated by reference to
Full Houses Current Report on Form 8-K as filed with the Securities
and Exchange Commission on January 3, 2005)10.9
    
    
Amendment to Investor Agreement by and between Full House Resorts,
Inc. and RAM Entertainment, LLC, dated May 31, 2005 (Incorporated by
reference to Exhibit 10.62 to Full Houses Annual Report on Form
10-KSB for the fiscal ended December 31, 2005)10.10
    
    
Economic Development Agreement between Full House Resorts, Inc. and
Northern Cheyenne Tribe dated May 24, 2005 (Incorporated by
reference to Exhibit 10.63 to Full Houses Annual Report on Form
10-KSB for the fiscal ended December 31, 2005)
  33




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##### Table of Contents



10.11
    
    
    Development Agreement by and among Pueblo of Nambé, Nambé Pueblo
Gaming Enterprise Board and Gaming Entertainment (Santa Fe), LLC
dated as of September 20, 2005 (Incorporated by reference to
Exhibit 10.64 to Full Houses Annual Report on Form 10-KSB for the
fiscal ended December 31, 2005)10.12
    
    
    Security and Reimbursement Agreement by and among the Nambé Pueblo
Gaming Enterprise Board, Gaming Entertainment (Santa Fe), LLC and
the Pueblo of Nambé dated as of September 20, 2005 (Incorporated by
reference to Exhibit 10.65 to Full Houses Annual Report on Form
10-KSB for the fiscal ended December 31, 2005)10.13
    
    
    Revised and Restated Class III Gaming Management Agreement by and
among, Pueblo of Nambé, Nambé Pueblo Gaming Enterprise Board and
Gaming Entertainment (Santa Fe), LLC, dated as of December 10, 2005
(Incorporated by reference to Exhibit 10.66 to Full Houses
Amendment No. 2 to Registration Statement on Form SB-2
(#333-136341) filed on October 27, 2006)10.14
    
    
    Class III Gaming Management Agreement between the Northern Cheyenne
Tribe and Gaming Entertainment (Montana), LLC dated January 20,
2006 2005 (Incorporated by reference to Exhibit 10.67 to Full
Houses Annual Report on Form 10-KSB for the fiscal ended December
31, 2005)10.15
    
    
    Development Agreement by and between the Northern Cheyenne Tribe
and Full House Resorts, Inc. dated May 24, 2005. (Incorporated by
reference to Exhibit 10.68 to Full Houses Quarterly Report on
Form 10-QSB for the quarter ended March 31, 2006)10.16
    
    
    Security and Reimbursement Agreement by and between the Northern
Cheyenne Tribe and Full House Resorts, Inc. dated August 23, 2005.
(Incorporated by reference to Exhibit 10.69 to Full Houses
Quarterly Report on Form 10-QSB for the quarter ended March 31,
2006)10.17
    
    
    Management Agreement between Nottawaseppi Huron Band of Potawatomi
and Gaming Entertainment (Michigan), LLC dated June 12, 2006.
(Incorporated by reference to Exhibit 10.70 to Full Houses Current
Report on Form 8-K as filed with the Securities and Exchange
Commission on June 16, 2006)10.18
    
    
    Loan Agreement between Nottawaseppi Huron Band of Potawatomi and
Gaming Entertainment (Michigan), LLC dated November 3, 2002.
(Incorporated by reference to Exhibit 10.71 to Full Houses
Registration Statement on Form SB-2 (#333-136341) filed on August
4, 2006)10.19
    
    
    Security Agreement between Nottawaseppi Huron Band of Potawatomi
and Gaming Entertainment (Michigan), LLC dated November 3, 2002.
(Incorporated by reference to Exhibit 10.72 to Full Houses
Registration Statement on Form SB-2 (#333-136341) filed on August
4, 2006)10.20
    
    
    Promissory Note by the Nottawaseppi Huron Band of Potawatomi dated
November 3, 2002. (Incorporated by reference to Exhibit 10.73 to
Full Houses Registration Statement on Form SB-2 (#333-136341)
filed on August 4, 2006)10.21+
    
    
    2006 Incentive Compensation Plan (Incorporated by reference to
Appendix E to Full Houses Definitive Proxy Statement as filed with
the Securities and Exchange Commission on May 1, 2006)10.22+
    
    
    Form of Restricted Stock Agreement. (Incorporated by reference to
Exhibit 10.75 to Full Houses Quarterly Report on Form 10-QSB as
filed with the Commission on August 14, 2006)10.23
    
    
    Consulting Agreement dated September 25, 2006 between Full House
and Lee Iacocca. (Incorporated by reference to Exhibit 10.66 to
Full Houses Amendment No. 1 to Registration Statement on Form SB-2
(#333-136341) filed on September 27, 2006)10.24
    
    
    Letter Agreement dated May 19, 2006 with Joe Frazier. (Incorporated
by reference to Exhibit 10.77 to Full Houses Amendment No. 2 to
Registration Statement on Form SB-2 (#333-136341) filed on October
27, 2006)
  34




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##### Table of Contents



10.25
    
    

Letter Agreement dated September 29, 2006 with William P. McComas.
(Incorporated by reference to Exhibit 10.78 to Full Houses
Amendment No. 2 to Registration Statement on Form SB-2
(#333-136341) filed on October 27, 2006)10.26
    
    
    Amendment to Letter Agreement with William P. McComas dated
November 15, 2006. (Incorporated by reference to Exhibit 10.66 to
Full Houses Amendment No. 3 to Registration Statement on Form SB-2
(#333-136341) filed on November 22, 2006)10.27
    
    
    Reducing Revolving Loan Agreement, dated January 31, 2007 between
Full House Resorts, Inc. and Nevada State Bank. (Incorporated by
reference to Exhibit 10.80 to Full Houses Current Report on
Form 8-K as filed with the Securities and Exchange Commission on
February 5, 2007)10.28
    
    
    Reducing Revolving Promissory Note, dated January 31, 2007 by Full
House Resorts in favor of Nevada State Bank. (Incorporated by
reference to Exhibit 10.81 to Full Houses Current Report on
Form 8-K as filed with the Securities and Exchange Commission on
February 5, 2007)10.29
    
    
    Promissory Note, dated January 31, 2007 by Full House Resorts in
favor of The James R. Peters Family Trust Dated October 18, 2002.
(Incorporated by reference to Exhibit 10.82 to Full Houses Current
Report on Form 8-K as filed with the Securities and Exchange
Commission on February 5, 2007)10.30
    
    
    Purchase and Sale Agreement, dated May 15, 2007, between Gaming
Entertainment (Michigan), LLC (GEM) and Green Acres Casino
Management, Inc. (Incorporated by reference to Exhibit 10.1 to
Full Houses Current Report on Form 8-K as filed with the
Securities and Exchange Commission on May 31, 2007)10.31
    
    
    Termination of Consulting Agreement, dated June 4, 2007, between
Full House Resort, Inc., (Consultant) and Hard Rock Cafe
International (USA), Inc. (Incorporated by reference to Exhibit
10.2 to Full Houses Current Report on Form 8-K as filed with the
Securities and Exchange Commission on May 31, 2007)10.32
    
    
    Management Reorganization Agreement, dated June 18, 2007 by Gaming
Entertainment (Delaware), LLC (GED) and Harrington Raceway, Inc.
(Incorporated by reference to Exhibit 10.1 to Full Houses Current
Report on Form 8-K as filed with the Securities and Exchange
Commission on June 21, 2007)10.33
    
    
    Employment Agreement, dated July 17, 2007, between Full House
Resorts, Inc. and Andre Hilliou (Executive). (Incorporated by
reference to Exhibit 10.1 to Full Houses Current Report on
Form 8-K as filed with the Securities and Exchange Commission on
July 20, 2007)10.34
    
    
    Employment Agreement, dated July 17, 2007, between Full House
Resorts, Inc. and Mark J. Miller (Executive). (Incorporated by
reference to Exhibit 10.2 to Full Houses Current Report on
Form 8-K as filed with the Securities and Exchange Commission on
July 20, 2007)10.35
    
    
    Agreement of Sale and Purchase, dated October 1, 2007 between
Stockmans Casino, Inc. (Seller) and Dhillon Hospitality
Management Inc. (Purchaser). (Incorporated by reference to
Exhibit 10.1 to Full Houses Current Report on Form 8-K as filed
with the Securities and Exchange Commission on October 5,
2007)21
    
    
    List of Subsidiaries of Full House Resorts, Inc. *23
    
    
    Consent of Piercy Bowler Taylor & Kern, Certified Public
Accountants and Business Advisors a Professional Corporation
*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 and financial officers
pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 *
 
 *
    
    Filed herewith.+
    
    Executive compensation plan or arrangement  35




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##### Table of Contents



Item 14. Principal Accountants Fees and Services.
   36




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##### Table of Contents



SIGNATURES
  FULL HOUSE RESORTS, INC.Date: March 26, 2008
    By:
    /s/ ANDRE M. HILLIOUAndre M. Hilliou, Chief Executive Officer 
 Name and Capacity
    
    Date/s/ J. MICHAEL PAULSON
J. Michael Paulson,
    
    March 26, 2008Chairman of the Board/s/ ANDRE M. HILLIOU
Andre M. Hilliou, Chief
    
    March 26, 2008Executive Officer and 
Director(Principal Executive Officer)/s/ LEE A. IACOCCA
Lee A. Iacocca, Director
    
    March 26, 2008/s/ KEN ADAMS
Ken Adams, Director
    
    March 26, 2008/s/ CARL G. BRAUNLICH
Carl G. Braunlich, Director
    
    March 26, 2008/s/ KATHLEEN CARACCIOLO
Kathleen Caracciolo,
    
    March 26, 2008Director/s/ MARK J. MILLER
Mark J. Miller, Chief
    
    March 26, 2008Financial Officer(Principal Financial andAccounting Officer)
  37




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
   F-1




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##### Table of Contents



FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2007 AND 2006
 2007
    
    
    2006ASSETSCurrent assetsCash and equivalents
    
    $
    7,975,860
    
    
    $
    22,117,482Accounts receivable, net of allowance of $20,000 in 2007
    
    
    319,865
    
    
    
    Prepaid expenses
    
    
    351,658
    
    
    
    76,204Deposits and other current assets
    
    
    172,120
    
    
    
    115,000Assets held for sale
    
    
    6,960,762
    
    
    
    15,780,265
    
    
    
    22,308,686Property and equipment, net of accumulated depreciation
    
    
    9,227,113
    
    
    
    7,401Long-term assets related to tribal casino projectsNotes receivable
    
    
    12,178,481
    
    
    
    10,995,782Contract rights, net of accumulated amortization
    
    
    14,761,133
    
    
    
    5,160,185Land held for development
    
    
    
    
    
    
    130,00026,939,614
    
    
    
    16,285,967Other long-term assetsGoodwill
    
    
    10,308,520
    
    
    
    Deferred income tax assets
    
    
    
    
    
    
    159,054Deposits and other
    
    
    868,265
    
    
    
    1,395,01211,176,785
    
    
    
    1,554,066$
    63,123,777
    
    
    $
    40,156,120LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesCurrent portion of long-term debt
    
    $
    259,124
    
    
    $
    2,381,260Accounts payable
    
    
    274,411
    
    
    
    153,330Accrued interest
    
    
    72,544
    
    
    
    428,051Other accrued expenses
    
    
    1,291,749
    
    
    
    486,841Dividend payable
    
    
    
    
    
    
    3,042,084Income tax payable
    
    
    
    
    
    
    237,623Other
    
    
    
    
    
    
    272,1371,897,828
    
    
    
    7,001,326Long-term debt, net of current portion
    
    
    22,948,792
    
    
    
    Deferred income tax liability
    
    
    359,023
    
    
    
    Other long-term liabilities
    
    
    17,231
    
    
    
    25,222,874
    
    
    
    7,001,326Non-controlling interest in consolidated joint venture
    
    
    4,232,775
    
    
    
    2,035,041Stockholders equityCumulative preferred stock, $.0001par value, 5,000,000 shares
Shares authorized; 700,000 shares issued and outstanding in 2006;
    
    
    
    
    
    
    70Common stock, $.0001 par value, 25,000,000 shares authorized;
19,342,276 and 18,408,380 shares issued and outstanding
    
    
    1,934
    
    
    
    1,841Additional paid-in capital
    
    
    42,702,372
    
    
    
    42,195,263Deferred compensation
    
    
    (1,145,329
    )
    
    
    (2,245,981
    )Deficit
    
    
    (7,890,849
    )
    
    
    (8,831,440
    )33,668,128
    
    
    
    31,119,753$
    63,123,777
    
    
    $
    40,156,120
   F-2




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##### Table of Contents



FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 2007
    
    
    2006RevenuesCasino
    
    $
    7,228,181
    
    
    $
    Food and beverage
    
    
    1,810,047
    
    
    
    Other operating income
    
    
    526,183
    
    
    
    9,564,411
    
    
    
    Operating costs and expensesCasino
    
    
    2,312,587
    
    
    
    Food and beverage
    
    
    1,876,532
    
    
    
    Project development costs
    
    
    431,437
    
    
    
    513,181Selling, general and administrative
    
    
    6,811,321
    
    
    
    3,795,542Depreciation and amortization
    
    
    1,016,494
    
    
    
    75,08012,448,371
    
    
    
    4,383,803Operating gains (losses)Equity in net income of unconsolidated joint venture
and management fee income
    
    
    4,270,000
    
    
    
    3,860,293Unrealized gains on notes receivable, tribal governments
    
    
    839,749
    
    
    
    1,678,030Impairment of contract rights
    
    
    (407,534
    )
    
    
    4,702,215
    
    
    
    5,538,323Income from continuing operations before other income
(expense)
    
    
    1,818,255
    
    
    
    1,154,520Other income (expense)Interest and other income
    
    
    745,656
    
    
    
    88,329Interest expense
    
    
    (1,270,857
    )
    
    
    (189,539
    )Income from continuing operations before non-controlling
interest in net loss of consolidated joint venture and
income taxes
    
    
    1,293,054
    
    
    
    1,053,310Non-controlling interest in net (gain)/loss of
consolidated joint venture
    
    
    (197,733
    )
    
    
    123,586Income from continuing operations before income taxes
    
    
    1,095,321
    
    
    
    1,176,896Income taxes
    
    
    (441,024
    )
    
    
    (537,221
    )Income from continuing operations
    
    
    654,297
    
    
    
    639,675Income from discontinued operations, net of tax
    
    
    286,294
    
    
    
    Net Income
    
    
    940,591
    
    
    
    639,675Less undeclared dividends on cumulative preferred stock
    
    
    
    
    
    
    (204,750
    )Net income available to common stockholders
    
    $
    940,591
    
    
    $
    434,925Income from continuing operations per common shareBasic and diluted
    
    $
    0.03
    
    
    $
    0.04Income from discontinued operations per common shareBasic and diluted
    
    $
    0.02Net income per common shareBasic and diluted
    
    $
    0.05
    
    
    $
    0.04Weighted-average
number of common shares outstandingBasic
    
    
    19,304,251
    
    
    
    10,911,207Diluted
    
    
    19,304,251
    
    
    
    11,651,200
   F-3




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##### Table of Contents



FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 Additional
    
    
    
    
    
    
    Deferred
    
    
    TotalPreferred stock
    
    
    Common stock
    
    
    paid-In
    
    
    
    
    
    
    share-based
    
    
    stockholders2007
    
    Shares
    
    
    Dollars
    
    
    Shares
    
    
    Dollars
    
    
    capital
    
    
    Deficit
    
    
    compensation
    
    
    equityBeginning balance
    
    
    700,000
    
    
    $
    70
    
    
    
    18,408,380
    
    
    $
    1,841
    
    
    $
    42,195,263
    
    
    $
    (8,831,440
    )
    
    $
    (2,245,981
    )
    
    $
    31,119,753Conversion
of
preferred
stock
    
    
    (700,000
    )
    
    
    (70
    )
    
    
    700,000
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of
restricted
stock
grants
    
    
    
    
    
    
    
    
    
    
    130,000
    
    
    
    13
    
    
    
    475,987
    
    
    
    
    
    
    
    (476,000
    )
    
    
    Issuance of
stock on
options
exercised
    
    
    
    
    
    
    
    
    
    
    103,896
    
    
    
    10
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    Previously
deferred share-based
compensation
recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,576,652
    
    
    
    1,576,652Income tax
benefit share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,132
    
    
    
    
    
    
    
    
    
    
    
    31,132Net
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    940,591
    
    
    
    
    
    
    
    940,591Ending Balance
    
    
    
    
    
    
    
    
    
    
    19,342,276
    
    
    $
    1,934
    
    
    $
    42,702,372
    
    
    $
    (7,890,849
    )
    
    $
    (1,145,329
    )
    
    $
    33,668,128
 Additional
    
    
    
    
    
    
    Deferred
    
    
    TotalPreferred stock
    
    
    Common stock
    
    
    paid-in
    
    
    
    
    
    
    share-based
    
    
    stockholders2006
    
    Shares
    
    
    Dollars
    
    
    Shares
    
    
    Dollars
    
    
    capital
    
    
    Deficit
    
    
    compensation
    
    
    equityBeginning
balance
    
    
    700,000
    
    
    $
    70
    
    
    
    10,340,380
    
    
    $
    1,034
    
    
    $
    17,429,889
    
    
    $
    (6,429,031
    )
    
    $
    
    
    
    $
    11,001,962Issuance of
restricted
stock
grants
    
    
    
    
    
    
    
    
    
    
    968,000
    
    
    
    97
    
    
    
    3,289,903
    
    
    
    
    
    
    
    (3,290,000
    )
    
    
    Previously
deferred share-based
compensation
recognized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,044,019
    
    
    
    1,044,019Issuance of
common
stock
    
    
    
    
    
    
    
    
    
    
    7,100,000
    
    
    
    710
    
    
    
    21,475,471
    
    
    
    
    
    
    
    
    
    
    
    21,476,181Declaration
of
preferred
stock
dividend
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,042,084
    )
    
    
    
    
    
    
    (3,042,084
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    639,675
    
    
    
    
    
    
    
    639,675Ending balance
    
    
    700,000
    
    
    $
    70
    
    
    
    18,408,380
    
    
    $
    1,841
    
    
    $
    42,195,263
    
    
    $
    (8,831,440
    )
    
    $
    (2,245,981
    )
    
    $
    31,119,753
   F-4




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##### Table of Contents



FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006
 2007
    
    
    2006Cash flows from operating activities:Net income
    
    $
    940,591
    
    
    $
    639,675Adjustments to reconcile income from continuing operations to net cash provided by
(used in) operating activities:Equity in net income of unconsolidated investee and management fees
    
    
    (4,270,000
    )
    
    
    (3,860,293
    )Non-controlling interest in consolidated joint venture
    
    
    197,733
    
    
    
    (63,587
    )Bad debt
expense
    
    
    20,000
    
    
    
    Distributions from unconsolidated investee and management fees
    
    
    4,096,698
    
    
    
    3,955,875Unrealized gain on notes receivable, tribal governments
    
    
    (839,749
    )
    
    
    (1,678,030
    )Depreciation,
including $250,957 related to discontinued operations in 2007
    
    
    1,204,268
    
    
    
    8,480Amortization,
including $3,977 related to discontinued operations in 2007
    
    
    66,005
    
    
    
    66,600Deferred income taxes
    
    
    171,133
    
    
    
    (283,861
    )Impairment
of contract rights
    
    
    407,534
    
    
    
    Share-based compensation
    
    
    1,576,653
    
    
    
    1,044,019Increase in allowance for doubtful accounts
    
    
    
    
    
    
    125,000Increases in operating (assets) and liabilities:Receivables
    
    
    (113,498
    )
    
    
    Prepaids
    
    
    (46,042
    )
    
    
    Other assets
    
    
    229,741
    
    
    
    (109,609
    )Accounts payable and accrued expenses
    
    
    362,106
    
    
    
    126,564Income taxes payable
    
    
    109,321
    
    
    
    (83,489
    )Net cash provided by (used in) operating activities
    
    
    4,112,494
    
    
    
    (113,656
    )Cash flows from investing activities:Advances to tribal governments, excluding $18,312 and $491,281 expensed
    
    
    (342,950
    )
    
    
    (1,190,391
    )Deposits and other costs of the Stockmans Casino acquisition, net
    
    
    (9,262,274
    )
    
    
    (1,283,456
    )Repayment by co-venturer
    
    
    
    
    
    
    37,215Acquisition of contract rights and other assets
    
    
    (320,510
    )
    
    
    (139,033
    )Purchase of property and equipment
    
    
    (412,218
    )
    
    
    Other
    
    
    (92,202
    )
    
    
    Net cash used in investing activities
    
    
    (10,430,154
    )
    
    
    (2,575,665
    )Cash flows from financing activities:Proceeds from issuance of common stock, net of offering costs of $1,543,467
    
    
    
    
    
    
    21,531,533Repayment of long-term debt
    
    
    (4,794,378
    )
    
    
    Preferred dividend
    
    
    (3,042,084
    )
    
    
    Other borrowings
    
    
    12,500
    
    
    
    Net cash
provided by (used in) financing activities
    
    
    (7,823,962
    )
    
    
    21,531,533Net
increase (decrease) in cash and equivalents
    
    
    (14,141,622
    )
    
    
    18,842,212Cash and equivalents, beginning of year
    
    
    22,117,482
    
    
    
    3,275,270Cash and equivalents, end of year
    
    $
    7,975,860
    
    
    $
    22,117,482
 2007
    
    
    2006SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid for interest
    
    $
    959,546
    
    
    $
    Cash paid for income taxes
    
    $
    680,777
    
    
    $
    439,344SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:Capital
expenditures financed with accounts payable
    
    $
    157,751
    
    
    $
    Capitalized share-based compensation costs
    
    $
    476,000
    
    
    $
    2,171,000Contract
rights acquired with long-term debt
    
    $
    9,500,000
    
    
    $
    Conversion
of long-term debt to capital contribution in consolidated joint
venture
    
    $
    2,000,000
    
    
    $
    Transfer of land previously held for development to other assets
    
    $
    130,000
    
    
    $
    Transfer of land, property, equipment and goodwill, net to assets held for sale
    
    $
    6,960,762
    
    
    $
    Acquisition of Stockmans Casino:Net cash paid (including capitalized loan costs of $214,295 and cash
incentive of $730,812)
    
    $
    9,262,274
    
    
    $
    Fair value of non-cash assets acquired
    
    $
    17,806,346
    
    
    $
    Liabilities assumed
    
    $
    407,071
    
    
    $
    
   F-5




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##### Table of Contents



FULL HOUSE RESORTS, INC. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION, NATURE AND HISTORY OF OPERATIONS
 Nature of Operations
    History and status of the Huron Band (Michigan) project.
    F-6




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##### Table of Contents



Relationship with RAM Entertainment, LLC.
  History and status of the Northern Cheyenne Tribe (Montana) project.
  F-7




---



##### Table of Contents



Discontinued Projects.
   2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation. Consolidation of Variable Interest Entities
 Cash Equivalents.
 Concentrations.
 Long-Term Assets Related to Indian
Casino Projects
 Discontinued Operations and Assets Held for Sale.
  F-8




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##### Table of Contents



Property and Equipment.
 Debt Issuance Costs.
 Investment in unconsolidated joint venture.
 Long-Term Assets Related to Indian Casino Projects.
 Recognition of Interest Income and Balance Sheet
Classification of Structured Notes
  Accounting by Creditors for Impairment of a Loan.
  Goodwill and Other Intangible Assets.
  F-9




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##### Table of Contents



Fair Value of Financial Instruments.
 Revenue Recognition and Promotional Allowances.
 Accounting for Consideration Given by a Vendor to a Customer
(Including a Reseller of the Vendors Products.)
   2007Room
    
    $
    558Food and beverage
    
    
    164,272Cash incentives
    
    
    577,615Other incentives
    
    
    16,865Total
    
    $
    759,310
 Share-Based Compensation. Share-Based Payment
 Legal Defense Costs.
 Discontinued Operations.
  F-10




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##### Table of Contents



Earnings per Common Share.
 Use of Estimates.
 Reclassifications.
 3. ACQUISITION OF STOCKMANS CASINO
    Land
    
    $
    2,723,406Improvements
    
    
    9,960,000Personal Property
    
    
    3,980,000Goodwill
    
    
    10,331,128Other
    
    
    1,142,940$
    28,137,474
  Years ended December 31,2007
    
    
    2006Net revenues
    
    $
    17,608,642
    
    
    $
    12,913,799Net income
    
    
    1,004,410
    
    
    
    1,569,185Earnings per share, basic
    
    
    .06
    
    
    
    0.15Earnings per share, diluted
    
    
    .06
    
    
    
    0.14
  F-11




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##### Table of Contents



4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
    CONDENSED BALANCE SHEET INFORMATION
 2007
    
    
    2006Total assets
    
    $
    665,493
    
    
    $
    804,409Total liabilities
    
    
    877,704
    
    
    
    1,015,886Members capital (deficiency)
    
    
    (212,211
    )
    
    
    (211,477
    )
 CONDENSED STATEMENT OF INCOME INFORMATION
 2007
    
    
    2006Revenues
    
    $
    23,131,588
    
    
    $
    22,766,151Net income
    
    
    7,944,170
    
    
    
    7,720,585
 5. NOTES RECEIVABLE, TRIBAL GOVERNMENTS
   2007
    
    
    2006Contractual (stated) amount (not including interest)Michigan tribe
    
    $
    12,857,593
    
    
    $
    12,728,428Others
    
    
    1,226,507
    
    
    
    923,900$
    14,084,100
    
    
    $
    13,652,328Estimated fair value of notes receivable related to Indian casino projectsMichigan tribe
    
    $
    11,189,359
    
    
    $
    10,258,202Others
    
    
    989,122
    
    
    
    737,580$
    12,178,481
    
    
    $
    10,995,782
  F-12




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##### Table of Contents



2007Total
    
    
    Michigan tribe
    
    
    Other tribesBalances, January 1, 2007
    
    $
    10,995,782
    
    
    $
    10,258,202
    
    
    $
    737,580Total advances
    
    
    431,772
    
    
    
    129,164
    
    
    
    302,608Advances allocated to contract rights
    
    
    (70,510
    )
    
    
    
    
    
    
    (70,510
    )Advances expensed as period costs
    
    
    (18,312
    )
    
    
    (18,312
    )
    
    
    Unrealized gains
    
    
    839,749
    
    
    
    820,304
    
    
    
    19,445Balances, December 31, 2007
    
    $
    12,178,481
    
    
    $
    11,189,358
    
    
    $
    989,123
 2006Total
    
    
    Michigan tribe
    
    
    Other tribesBalances, January 1, 2006
    
    $
    4,268,529
    
    
    $
    4,038,427
    
    
    $
    230,102Total advances
    
    
    5,679,536
    
    
    
    5,090,272
    
    
    
    589,264Advances allocated to contract rights
    
    
    (139,032
    )
    
    
    
    
    
    
    (139,032
    )Advances expensed as period costs
    
    
    (491,281
    )
    
    
    (491,281
    )
    
    
    Unrealized gains
    
    
    1,678,030
    
    
    
    1,620,784
    
    
    
    57,246Balances, December 31, 2006
    
    $
    10,995,782
    
    
    $
    10,258,202
    
    
    $
    737,580
  6. CONTRACT RIGHTS
  Accumulated2007
    
    Cost
    
    
    Amortization
    
    
    NetMichigan project, initial cost
    
    $
    4,155,213
    
    
    $
    
    
    
    $
    4,155,213Michigan project, additional
    
    
    11,141,683
    
    
    
    (670,927
    )
    
    
    10,470,756Other projects
    
    
    135,164
    
    
    
    
    
    
    
    135,164$
    15,432,060
    
    
    $
    (670,927
    )
    
    $
    14,761,133
 Accumulated2006
    
    Cost
    
    
    Amortization
    
    
    NetMichigan project, initial cost
    
    $
    4,155,213
    
    
    $
    
    
    
    $
    4,155,213Michigan project, additional
    
    
    1,141,683
    
    
    
    (608,899
    )
    
    
    532,784Other projects
    
    
    472,188
    
    
    
    
    
    
    
    472,188$
    5,769,084
    
    
    $
    (608,899
    )
    
    $
    5,160,185
    F-13




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##### Table of Contents



7. ASSETS HELD FOR SALE
   Land
    
    $
    1,078,661Buildings and improvements
    
    
    6,414,273Furniture and equipment
    
    
    1,848,712Goodwill
    
    
    22,608Other
    
    
    89,500Total
    
    
    9,453,754Less accumulated depreciation
    
    
    (2,492,992
    )Assets held for sale, net
    
    $
    6,960,762
 8. PROPERTY AND EQUIPMENT
  AverageLife
    
    
    2007
    
    
    2006Land
    
    
    
    
    
    $
    1,885,400
    
    
    $
    Buildings and improvements
    
    
    10-39
    
    
    
    5,543,233
    
    
    
    Furniture and equipment
    
    
    5-7
    
    
    
    5,518,197
    
    
    
    115,175Construction in progress
    
    
    
    
    
    
    128,722
    
    
    
    13,075,552
    
    
    
    115,175Less accumulated depreciation
    
    
    
    
    
    
    (3,848,439
    )
    
    
    (107,774
    )$
    9,227,113
    
    
    $
    7,401
  F-14




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##### Table of Contents



9. LONG-TERM DEBT
  2007
    
    
    2006Long-term debt, related party (due to RAM):Promissory note,
$2.38 million on February 15, 2002,
originally due March 15, 2003, and was
extended to December 2007, interest
based on Bank of America New
York prime rate
    
    
    
    
    
    $
    2,381,260Promissory note,
$0.3 million on
May 31, 2007,
expected to be due
in 2011, interest
at 1% above the
prime rate (8.25%
at December 31,
2007)
    
    $
    262,500
    
    
    
    Promissory note,
$2.38 million on
February 15, 2002,
originally due
March 15, 2003, and
was extended to
December 2007,
interest based on
Bank of America New
York prime rate.
Note converted on
December 14, 2007
according to
Investor Agreement
with $2.0 converted
to capital
contribution and
the $0.4 million and $0.6 million
in interest
converted to long-term debt; expected
to be due in 2011,
interest at 1%
above the prime
rate (8.35% at
December 31, 2007)
    
    
    992,978
    
    
    
    1,255,478
    
    
    
    2,381,260Other long-term debt:Reducing revolving
loan agreement,
$16.0 million limit
on January 31,
2007, due January
31, 2022, interest
at 2.1% above the
five year
LIBOR/Swap rate,
adjusted annually
(7.39% at December
31, 2007)
    
    
    11,401,000
    
    
    
    Long-term
obligation related
to the acquisition
of additional
contract rights
related to the
Michigan project,
payable in full
within 30 days
after Michigan
project financing
is obtained
    
    
    9,500,000
    
    
    
    Promissory note,
$1.25 million on
January 31, 2007,
due February 1,
2012, interest at a
fixed annual rate
of 7.44%
    
    
    1,051,438
    
    
    
    21,952,438
    
    
    
    23,207,916
    
    
    
    2,381,260Less current portion
    
    
    (259,124
    )
    
    
    (2,381,260
    )$
    22,948,792
    
    
    $
    
 Reducing Revolving Loan.
 Peters Family Trust Promissory Note.
  F-15




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##### Table of Contents



RAM Debt Conversion.
 Green Acres.
  Annual periods ending December 31,2008
    
    $
    259,1242009
    
    
    9,694,9502010
    
    
    263,8092011
    
    
    1,539,5972012
    
    
    49,436Thereafter
    
    
    11,401,000$
    23,207,916
 10. STOCKHOLDERS EQUITY
   11. INCOME TAXES
  2007
    
    
    2006Current:
    
    Federal
    
    $
    (202,801
    )
    
    $
    567,126State
    
    
    273,368
    
    
    
    253,957Total current provision
    
    
    70,657
    
    
    
    821,083Deferred:
    
    Federal
    
    
    517,941
    
    
    
    (265,830
    )State
    
    
    
    
    
    
    (18,032
    )Total deferred provision
    
    
    517,941
    
    
    
    (283,862
    )Total provision
    
    
    588,508
    
    
    
    537,221Less:
    
    Discontinued operations
    
    
    (147,484
    )
    
    
    Continuing operations
    
    $
    441,024
    
    
    $
    537,221
  F-16




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##### Table of Contents



2007
    
    
    2006Tax provision at U.S. statutory rate
    
    $
    519,894
    
    
    $
    400,145State taxes, net of federal benefit
    
    
    181,065
    
    
    
    167,611Other
    
    
    (112,451
    )
    
    
    (30,535
    )$
    588,508
    
    
    $
    537,221
  2007
    
    
    2006Deferred tax assets:Deferred compensation
    
    $
    233,339
    
    
    $
    194,188Accrued bonuses
    
    
    57,850
    
    
    
    55,250Allowance for doubtful accounts
    
    
    49,300
    
    
    
    42,500Other
    
    
    
    
    
    
    10,200Total deferred tax assets
    
    
    340,489
    
    
    
    302,138Deferred tax liabilities:Income related to Indian casino projects
    
    
    (572,025
    )
    
    
    (124,827
    )Depreciation
    
    
    87,171
    
    
    
    (883
    )Other
    
    
    (214,658
    )
    
    
    (17,374
    )Total deferred tax liabilities
    
    
    (699,512
    )
    
    
    (143,084
    )Net deferred tax asset (liability)
    
    $
    (359,023
    )
    
    $
    159,054
 12. COMMITMENTS
 Operating leases.
  2008
    
    $
    139,8202009
    
    
    142,4222010
    
    
    91,5672011
    
    
    65,4722012
    
    
    43,648Total:
    
    $
    482,929
 Service/maintenance agreements.
 Financing of Indian gaming projects.
  F-17




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##### Table of Contents



GEM distributions to member.
 Employment
agreements .
 13. SHARE-BASED COMPENSATION PLANS
     F-18




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##### Table of Contents



2007
    
    
    2006Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageGrant Date
    
    
    
    
    
    
    Grant DateValue (per
    
    
    
    
    
    
    Value (perShares
    
    
    Share)
    
    
    Shares
    
    
    Share)Unvested at beginning of year
    
    
    822,500
    
    
    $
    3.43
    
    
    
    
    
    
    $
    3.43Granted
    
    
    130,000
    
    
    
    3.66
    
    
    
    968,000
    
    
    
    3.40Vested
    
    
    (438,331
    )
    
    
    3.38
    
    
    
    (145,500
    )
    
    
    3.25Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unvested at end of year
    
    
    514,169
    
    
    $
    3.52
    
    
    
    822,500
    
    
    $
    3.43
  2007
    
    
    2006WEIGHTED-AVERAGE
    
    
    WEIGHTED-AVERAGEEXERCISE
    
    
    EXERCISEOPTIONS
    
    
    PRICE
    
    
    OPTIONS
    
    
    PRICEOutstanding at beginning of year
    
    
    325,000
    
    
    $
    2.25
    
    
    
    575,000
    
    
    $
    2 .88Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (250,000
    )
    
    
    2.25
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    (250,000
    )
    
    
    3.69Outstanding at end of year
    
    
    75,000
    
    
    
    2.25
    
    
    
    325,000
    
    
    
    2.25Exercisable at year-end
    
    
    75,000
    
    
    $
    2.25
    
    
    
    325,000
    
    
    $
    2.25
  14. RELATED PARTY TRANSACTION
   F-19




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##### Table of Contents



15. SUMMARY FINANCIAL INFORMATION FOR DISCONTINUED OPERATIONS
  2007Net revenues
    
    $
    1,938,532Operating expenses
    
    
    (1,249,819
    )Depreciation and amortization
    
    
    (254,935
    )Income taxes
    
    
    (147,484
    )Income from discontinued operations
    
    $
    286,294
 16. SEGMENT REPORTING
   Development/2007
    
    Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedRevenues
    
    $
    9,280,857
    
    
    $
    
    
    
    $
    283,554
    
    
    $
    9,564,411Selling, general and administrative
    
    
    1,562,807
    
    
    
    22,700
    
    
    
    5,225,814
    
    
    
    6,811,321Depreciation and amortization
    
    
    946,253
    
    
    
    62,028
    
    
    
    8,213
    
    
    
    1,016,494Operating gains
    
    
    
    
    
    
    4,702,215
    
    
    
    
    
    
    
    4,702,215Income
(loss) from continuing operations before other income (expense)
    
    
    2,582,677
    
    
    
    4,499,104
    
    
    
    (5,263,526
    )
    
    
    1,818,255Income
(loss)  from continuing operations
    
    
    2,755,644
    
    
    
    4,243,321
    
    
    
    (6,344,667
    )
    
    
    654,298
 Development/2006
    
    Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedRevenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Selling, general and administrative
    
    
    
    
    
    
    213,950
    
    
    
    3,581,592
    
    
    
    3,795,542Depreciation and amortization
    
    
    
    
    
    
    66,600
    
    
    
    8,480
    
    
    
    75,080Operating gains
    
    
    
    
    
    
    5,538,323
    
    
    
    
    
    
    
    5,538,323Income
(loss) from continuing operations before other income (expense)
    
    
    
    
    
    
    4,712,898
    
    
    
    (3,558,378
    )
    
    
    1,154,520Income
(loss) from continuing operations
    
    
    
    
    
    
    4,581,712
    
    
    
    (3,942,037
    )
    
    
    639,675
  Development/2007
    
    Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedTotal assets
    
    $
    10,916,777
    
    
    $
    27,200,296
    
    
    $
    18,045,942
    
    
    $
    56,163,015Property and equipment, net
    
    
    9,081,356
    
    
    
    
    
    
    
    145,757
    
    
    
    9,227,113Goodwill
    
    
    10,308,520
    
    
    
    
    
    
    
    
    
    
    
    10,308,520Total liabilities
    
    
    631,425
    
    
    
    13,178,507
    
    
    
    11,412,942
    
    
    
    25,222,874
  F-20




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##### Table of Contents



Development/2006
    
    Casino Operations
    
    
    Management
    
    
    Corporate
    
    
    ConsolidatedTotal assets
    
    $
    
    
    
    $
    15,904,757
    
    
    $
    24,251,363
    
    
    $
    40,156,120Property and equipment, net
    
    
    
    
    
    
    
    
    
    
    7,401
    
    
    
    7,401Goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
    
    
    
    
    
    
    387,644
    
    
    
    6,613,682
    
    
    
    7,001,326
 17. SUBSEQUENT EVENTS
 Nambé 
 Repayment
of long-term debt.
  F-21




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##### Table of Contents



EXHIBIT INDEX
 EXHIBIT
    
    DESCRIPTION21
    
    List of Subsidiaries of Full House Resorts, Inc.23
    
    Consent of Piercy Bowler Taylor & Kern31.1
    
    Certification of principal executive officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of principal financial officer pursuant to 18 U.S.C.
section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of principal executive and financial officers
pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002