U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

[X]      Annual Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 [Fee Required]

                  For the fiscal year ended: December 31, 2000

[ ]      Transition Report Pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 [No Fee Required]

                         Commission file number 0-20630

                            FULL HOUSE RESORTS, INC.
                            ------------------------
                 (Name of Small Business Issuer in Its Charter)

               Delaware                                   13-3391527
               --------                                   ----------
    (State or Other Jurisdiction of                    (I.R.S. Employer
     Incorporation or Organization)                   Identification No.)

      2300 West Sahara Avenue, Suite 450 - Box 23, Las Vegas, Nevada 89102
      --------------------------------------------------------------------
              (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:

            None                                            None
            ----                                            ----
    (Title of Each Class)                          (Name of Each Exchange
                                                    on Which Registered)

         Securities registered under Section 12(g) of the Exchange Act:

                         Common Stock, $.0001 per Share
                         ------------------------------
                                (Title of class)

         Check whether the registrant: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[X] No [ ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         State issuer's revenues for its most recent fiscal year: $3,923,329.

         The aggregate market value of registrant's voting $.0001 par value
common stock held by non-affiliates of the registrant, as of March 19, 2001 was:
$3,611,004.

         The number of shares outstanding of registrant's $.0001 par value
common stock, as of March 19, 2001,was 10,340,380 shares.

<PAGE>

                                     PART I

1.       Description of Business.

         BACKGROUND

         We are a developer of destination resorts and entertainment, gaming and
commercial centers. We were incorporated in the State of Delaware on January 5,
1987.

         In May 1994, Lee Iacocca, currently one of our directors, brought to
our attention certain opportunities to enter into gaming agreements.
Specifically, Mr. Iacocca advised us of his negotiations, together with Omega
Properties, Inc. ("Omega"), with certain Indian Tribes (the "Organized Tribes")
regarding the development of a gaming operation in the Detroit, Michigan
metropolitan area. Mr. Iacocca also advised us of the ongoing discussions with a
second Indian tribe in Michigan (the Nottawaseppi Huron Band of Potawatomi), a
tribe in southern California (the Torres Martinez Desert Cahuilla Indians) and a
project at the Delaware State Fairgrounds. In each case, the other parties had
entered into discussions with Mr. Iacocca based upon their perception of his
integrity and ability to facilitate completion of the proposed transactions. Mr.
Iacocca had conducted these negotiations through LAI Associates, Inc. ("LAI"), a
corporation owned by him.

         In 1994, we entered into a Merger Agreement with LAI and Omega (30%
owned by William P. McComas, a director and stockholder of Full House) whereby
these entities were to merge with one of our subsidiaries. In exchange, the
entities were to receive 1,750,000 shares of our common stock and our note for
$375,000 bearing interest at the "prime rate" of Bank of America, N.A. and due
on demand, but in no event prior to August 31, 1996. Although Full House also
entered into a Purchase Agreement with Mr. McComas on the same date to purchase
a portion of the assets originally included in the May 1994 letter of intent in
exchange for a $625,000 note from Full House, this portion of the transaction
was not consummated and the note was not issued.

         The transaction was completed in 1995. As a result, we obtained a 100%
interest in the agreements with the Organized Tribes and the Nottawaseppi Huron
Band of Potawatomi, and a 100% interest in the agreements with the Torres
Martinez Desert Cahuilla Indians and the Delaware State Fair. The shareholders
of Omega received an aggregate of 500,000 shares of our common stock and our
promissory note in the principal amount of $375,000. William P. McComas received
the note and the other stockholder of Omega received the shares in exchange for
their interests as shareholders of Omega. The promissory note was paid in full
in 1998.


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<PAGE>

         Our executive offices are located at 2300 West Sahara Avenue, Suite 450
- Box 23, Las Vegas, Nevada 89102, telephone (702) 221-7800.

         GTECH RELATIONSHIP

         In April 1995, we entered into a series of agreements with GTECH
Corporation, a wholly-owned subsidiary of GTECH Holdings Corporation, a leading
supplier of computerized on-line lottery systems and services for
government-authorized lotteries, to jointly pursue gaming opportunities.
Excluded from these agreements was the Deadwood Gulch Resort, which we then
owned. Pursuant to the agreements, joint venture companies equally owned by
Dreamport, Inc., the gaming and entertainment subsidiary of GTECH, and Full
House were formed. We contributed our rights (as described below) to the North
Bend, Oregon facility and our rights to develop the Torres Martinez,
Nottawaseppi Huron Band of Potawatomi and Delaware State Fair projects to the
joint venture companies.

         In payment for its interest in the joint venture companies, GTECH
contributed cash and other intangible assets to the companies and committed to
loan the joint venture companies up to $16.4 million to complete the North Bend,
Oregon and Delaware facilities. We agreed to guarantee one-half of the
obligations of the joint venture companies to GTECH under these loans and at
December 31, 2000 had guaranteed to GTECH one-half of a loan to the Oregon Tribe
with a balance of $2 million. The Delaware venture loan was paid in full during
February 1998. GTECH also agreed to make loans to us for our portion of the
financing of projects if we were unable to otherwise obtain financing. GTECH
provided project management, technology and other expertise to analyze and
develop/manage the implementation of opportunities developed by the joint
venture companies. GTECH has also loaned us $3.0 million, with interest payable
monthly at prime, and the principal balance originally due in January 2001.
Although the loan was convertible into 600,000 shares of our common stock, the
loan conversion clause expired without exercise. As part of the GTECH
relationship, Allen E. Paulson, William P. McComas and Lee Iacocca granted to
GTECH an option, which expired on December 29, 2000, to purchase their shares
should they propose to transfer the same. In March 1997, we modified our
agreement with GTECH to no longer require each party to present prospective
business opportunities to the other.

         GTECH Acquisition

         On March 30, 2001, we acquired GTECH's 50% interest in three joint
venture projects that had been equally owned by the two companies: Gaming
Entertainment, LLC, owner of an agreement continuing through August 2002 with
the Coquille Tribe, which conducts gaming at The Mill Casino in North Bend,
Oregon; Gaming Entertainment (Michigan), LLC, owner of a management agreement
with the Nottawaseppi Huron Band of Potawatomi to develop and manage a gaming
facility near Battle Creek, Michigan; and Gaming Entertainment (California),
LLC, owner of a management agreement with the Torres Martinez Band of Desert
Cahuilla Indians to manage a gaming facility near Palm Springs, California. The
purchase price was $1.8 million, and was funded through the our existing credit
facility.

         This transaction did not include our other joint venture with GTECH,
Gaming Entertainment (Delaware), LLC, owner of a management agreement,
continuing through 2011, to manage Midway Slots & Simulcast in Harrington,
Delaware. This joint venture continues to be equally owned by us and GTECH.

         As part of this transaction, GTECH has extended the due date of our
$3.0 million promissory note until January 25, 2002, with interest at prime.
Also, as part of this transaction, GTECH is no longer required to provide the
necessary financing for the two development projects (Michigan and California).
Since Full House does not have the financial resources to fund these projects
alone, we are actively pursuing alternative means of financing these
developments. No assurance can be given that satisfactory financing will be
available.

         Set forth below is a brief description of each of the gaming
opportunities that were transferred to the joint venture companies.

         The Mill Casino-North Bend, Oregon

         On May 19, 1995, the first phase of the facility known as the "Mill"
was opened with 250 video lottery terminals, nine blackjack tables, three poker
tables, a restaurant and buffet, a saloon, a bingo hall, a gift shop and a snack
bar on Tribal Trust Lands of the Coquille Indian Tribe in North Bend, Oregon (as
of December 31, 2000, there were approximately 350 video lottery terminals, 10
blackjack tables and nine poker tables). A Full House - Dreamport joint venture
entity leases approximately 12.5 acres of Tribal Trust Lands from an entity
owned by the Coquille Indian

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Tribe on which the Mill is located and subleases a portion of the land on which
the casino is located back to the same entity. The sublease expires in 2002.

         The joint venture modified its agreement with the Coquille Indian Tribe
on July 19, 1995 reducing the obligations of the joint venture company to
provide financing to $10.4 million, extending the date when repayments began and
modifying the method of computing participating rents and loan repayments. Lease
and debt payments commenced on August 19, 1995 and September 19, 1995,
respectively. In October 1996, the Tribe secured a new $17.5 million loan to
refinance certain outstanding indebtedness, finance the acquisition of gaming
equipment and finance certain improvements to the gaming facility. The joint
venture company was repaid 100% of its original development loan from the
refinancing. GTECH Corporation purchased a $2.0 million participation in that
new loan, half of which is guaranteed by us. As part of the loan, the joint
venture company subordinated its rights to receive a percentage of gross gaming
revenues. As rental under the sublease to the Tribal entity, from October 8,
1996 through October 7, 1999, the joint venture company received 13% of gross
gaming revenue. The monthly percentage rental was reduced to 12% from October 8,
1999 until October 8, 2000 when it reduced to 11% until October 8, 2001.
Thereafter, it will be 10% of gross gaming revenue. No Annual Percentage Rental
will be paid after August 19, 2002; but if gross gaming revenue for any
twelve-month period exceeds $20,000,000, 10% of amounts in excess of such
threshold will be paid as rent under the sublease.

         The Mill is located in North Bend, Oregon on the Port of Coos Bay. The
Coos County population, which includes the Bay area, is approximately 65,000.
The Bay area's economy is primarily based on forestry and fishing. Oregon's Coos
Bay area is located on the Pacific Coast midway between San Francisco,
California and Seattle, Washington. The communities of Coos Bay, North Bend and
Charleston are approximately 115 miles from Eugene, Oregon's second largest
city. The North Bend Municipal Airport is Southwestern Oregon's regional air
terminal that provides commercial air service to and from Portland.

         The Mill Casino is one of several Indian casinos presently operating in
Oregon. The closest competing casino is located approximately 90 miles from
North Bend and operates approximately 700 devices, a card room, bingo and keno.
Two other facilities, which are 140 and 160 miles from North Bend, are located
closer to Portland, Oregon.

         Midway Slots and Simulcast-Harrington, Delaware

         On August 20, 1996 Midway Slots and Simulcast, owned by Harrington
Raceway, Inc., was opened. The original 35,000 square foot facility located near
Dover, Delaware, was developed, financed and is managed by a Full
House-Dreamport joint venture company. The joint venture provided over $11
million in financing, developed the project and acts as manager of the gaming
facility pursuant to a 15-year contract. The facility opened with 500 gaming
devices, a simulcast parlor and a small buffet.

         During 1998, the 150-seat simulcast parlor was moved to the Harrington
Raceway Grandstand, the food and beverage operation in the Grandstand was
improved and expanded, and additional gaming devices were added to the facility
bringing the total to 742. Harrington Raceway, Inc. secured a bank loan to pay
for these and other improvements and pay off the development loan from the joint
venture company.

         In May 2000, the facility was expanded by an additional 35,000 square
feet, which allowed for the addition of 400 gaming devices, the expansion of the
food service offerings to include a 450-seat buffet and a 50-seat diner, and an
entertainment lounge area. The total cost of approximately $6.5 million was
funded by the owner.

         Midway Slots and Simulcast is located in Harrington, Delaware on Route
13, south of Dover, Delaware between Philadelphia and Baltimore/Washington, D.C.
Midway Slots and Simulcast is one of three facilities presently operating in
Delaware. The closest competing casino is located in Dover, approximately 20
miles north of Harrington, and currently operates 2,000 devices, which is the
maximum number allowed in Delaware. The other facility is located approximately
60 miles north of Harrington.

         Under the 15-year management agreement with the joint venture company,
the venture receives a percentage of Gross Revenues and Operating Profits, as
defined in the agreements. The joint venture company modified its

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management fee structure for revenues and operating profits in excess of defined
amounts, in recognition of the owner providing complete financing for the May
2000 expansion.

         Nottawaseppi Huron Band of Potawatomi-Battle Creek, Michigan

         We entered into a series of agreements in January 1995 with the
Nottawaseppi Huron Band of Potawatomi, a Michigan Indian Tribe, to develop
gaming and non-gaming commercial opportunities for the Tribe and to construct
and manage gaming facilities. The Tribe's state reservation lands are located in
Southcentral Michigan. If developed, the facility will target the Ft. Wayne,
Indiana and Lansing and Detroit, Michigan metropolitan areas. In December 1999,
the Tribe applied to have its existing State reservation land as well as
additional land in its ancestral territory taken into trust by the Bureau of
Indian Affairs. A Full House-Dreamport joint venture company has the exclusive
right to provide financing and casino management expertise to the Tribe in
exchange for a defined percentage of net profits and certain other
considerations from any future gaming or related activities of the Tribe. A
third party will be paid a royalty fee in lieu of its original 15% ownership
interest in earlier contracts with the Tribe.

         The Huron Potawatomi achieved final federal recognition as a tribe in
April 1996, and obtained a Gaming Compact from Michigan's governor early in
1997, to operate an unlimited number of electronic gaming devices as well as
roulette, Keno, dice and banking card games. The Michigan Legislature ratified
the Compact by resolution in December 1998, along with compacts for three other
tribes. A suit was filed in 1999 by "Taxpayers of Michigan Against Casinos" in
Ingham County Circuit Court challenging the constitutionality of the approval
process of these gaming compacts. On January 18, 2000, Judge Peter D. Houk
issued a ruling that the compacts must be approved by a legislative bill rather
than by resolution. The State of Michigan filed an appeal to the Michigan Court
of Appeals on February 4, 2000. The joint venture company, as an intervening
defendant, joined in the appeal filing.

         We and the Tribe have continued to move forward with casino development
plans while working towards a favorable resolution of the current litigation.
The management agreements, along with the required licensing applications were
submitted to the National Indian Gaming Commission ("NIGC") in December 1999.
The parties have identified a suitable parcel of land for the gaming enterprise,
which is under option, and have submitted a Fee to Trust application to the
Bureau of Indian Affairs ("BIA").

         In December 2000, we received comments from the NIGC on the management
agreements and are currently working with the Tribe to incorporate the necessary
revisions. We have also received comments from the BIA concerning the
Fee-to-Trust application. These comments are also being addressed.

         On November 5, 1996, Michigan voters approved licenses for three gaming
facilities within the City of Detroit, approximately 100 miles from the Battle
Creek area. Two temporary facilities began operations in 1999, and the third
opened in 2000. We do not believe that operation of three gaming facilities in
Detroit will have a material adverse impact on the proposed Huron Potawatomi
casino.

         Torres Martinez Band of Desert Cahuilla Indians-Thermal, California

         In April 1995, we entered into a Gaming and Development Agreement and a
Gaming Management Agreement with the Torres Martinez Desert Cahuilla Indians.
The agreements grant us certain rights to develop, manage, and operate gaming
activities for the Tribe and the right to receive a defined percentage of the
net revenues from gaming activities subject to our obligation to arrange or
provide financing for the development. The rights to these agreements were
assigned to a Full House-Dreamport joint venture company. In 1997, a new Gaming
Management Agreement was executed, further defining the rights and obligations
of the Tribe and the Company.

         During 1996, the Tribe reached a settlement in its litigation with the
Department of Justice and two water districts, pursuant to which the Tribe will
be paid $14.0 million in compensation, and will have the right to select up to
11,200 acres of new reservation land to be taken into trust in replacement for
the same quantity of land which was flooded by the rising level of the Salton
Sea. That settlement, which required legislative enactment, was approved by the
U. S. House of Representatives and the Senate in December 2000.

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         On March 6, 1998, California Governor Pete Wilson announced that he had
reached an agreement on a compact for gaming, which was intended to be the
standard for gaming compacts with all Indian tribes in California. In November
1998, California voters passed the "Tribal Government Gaming and Economic
Self-Sufficiency Act of 1998" (the "Act"). The Act's constitutionality was
challenged and the California Superior Court upheld the challenge. On March 7,
2000, the voters approved a ballot measure to amend the constitution, which
enabled the compacted tribes to pursue gaming under the provisions of the
compacts.

         We and the Tribe are currently exploring the best manner in which to
optimize the gaming enterprise alternatives both short and long term. Compact
negotiations are continuing on the Tribe's behalf, and we are currently
evaluating, with the Tribe, appropriate land acquisitions as provided for in the
land settlement agreement. Under the agreement, the Tribe may acquire land in a
specifically defined area (generally in the Palm Springs, California area) for
purposes of conducting a gaming enterprise.

         THEME HOTEL/CASINO-BILOXI, MISSISSIPPI

         We purchased a one-acre parcel of land on the gulf coast in Biloxi,
Mississippi in February 1998, for $4,621,670 with the intent of developing a
themed casino resort. The land is located near the interchange of Beach Blvd.
and Interstate 110, and next to the recently opened Beau Rivage Resort developed
by Mirage Resorts, Inc. We subsequently entered negotiations to purchase and/or
lease approximately six additional acres, which, together with the parcel
already acquired, will constitute the project site.

         We and Allen Paulson (a principal stockholder) formed a limited
liability company, equally owned, for the purpose of owning and developing the
proposed resort. Mr. Paulson agreed to contribute a gaming vessel (the former
Treasure Bay barge in Tunica, Mississippi) and we agreed to contribute our
rights to various agreements with Hard Rock Cafe International ("Hard Rock").

         In November 1998, we executed a series of agreements with Hard Rock
related to the proposed development project in Biloxi, Mississippi. The
agreements allow us the right to develop and operate a Hard Rock Casino in
Biloxi. We agreed to pay a territory fee of $2,000,000, which has been paid. We
were to pay an annual licensing fee of 5% of net gaming revenue plus 5% of hotel
revenue upon opening the casino. Hard Rock was to be a partner with us in a
Management and Development Agreement for an ongoing management fee. In February
1999, we entered into various option agreements with several owners of the
adjacent properties needed for our project. We also began discussions with
investment bankers concerning the financing for the project, and began preparing
our offering materials. During those discussions it became apparent that the
expected capital market requirements for the project financing were not
acceptable to either Hard Rock or us.

         We jointly agreed to terminate the Management and Development Agreement
which relieves Hard Rock of its obligation to co-manage the facility. This
allows us to seek an equity partner to fill that role. Additionally, the parties
amended certain portions of the Licensing Agreement to reduce the ongoing annual
licensing fee to a flat $2,500,000 plus 3% of hotel revenue. Concurrent with the
negotiations to amend the agreements, we entered into discussions with potential
equity partners. Our substantive discussions with potential partners ended in
November 1999 without a definitive agreement. At that time we were faced with
expiring, but extendible, purchase options and deposits. After analyzing the
costs and risks of those options, we elected not to spend the necessary $600,000
for an additional 90 day extension, since there was no reasonable likelihood of
completing the transaction by the extended expiration date. As a result, the
options expired and the deposits were forfeited, resulting in a write-off of
$1,350,000. In addition, the costs incurred for preparing the draft offering
documents were also expensed.

         Although we no longer have agreements in place to control the
development site, our communications with the various landowners continue. We
are actively pursuing an equity partner to assist in the development and
management of the project. The Hard Rock-Biloxi, as currently envisioned, is
expected to cost between $250 and $300 million. No assurance can be given that
the necessary financing will be available upon acceptable terms.

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         We have completed a review of our Biloxi project's proposed cost and
ownership structure in an effort to make this opportunity more attractive to
potential investors. We have also recently been approached by third parties
inquiring about our willingness to either sell our interest in this project, or
take a minority equity position in its development. We will evaluate, and
solicit, alternatives for the project.

         In connection with the parcel of land that we acquired in Mississippi,
we also obtained rights to some outstanding litigation concerning back rents due
from a former lessee. In September 1999, that litigation was concluded and we
received proceeds of $262,767.

         In July 2000, Allen E. Paulson, our largest shareholder and a former
Director and Chairman of Full House, passed away. Mr. Paulson's holdings,
approximately 3.1 million shares, or 31% of the outstanding shares, are now held
by the Allen E. Paulson Living Trust and Estate. Our agreement with Mr. Paulson
to develop the Hard Rock- Biloxi project is also held by the estate.

         The co-executors of the estate are Michael Paulson, Mr. Paulson's son,
and Edward White, Mr. Paulson's long time financial advisor. The estate is
currently evaluating Mr. Paulson's vast holdings and has not informed us of any
definitive plans that might affect our Company.

         GOVERNMENT REGULATION

         The ownership and operation of a gaming business by Full House,
wherever conducted in the United States, will be subject to extensive and
complex governmental regulation and control under federal, state and/or local
laws and regulations.

         Indian Gaming. Gaming on Indian Lands (lands over which Indian tribes
exercise jurisdiction and which meet the definition of Indian Lands under the
Indian Gaming Regulatory Act of 1988 ("IGRA")) is extensively regulated by
federal, state and tribal governments. The current regulatory environment
regarding Indian gaming is evolving rapidly. Changes in federal, state or tribal
law or regulations may limit or otherwise affect Indian gaming or may be applied
retroactively and could therefore have a material, adverse effect on the Company
or its operations.

         The terms and conditions of management contracts and collateral
agreements, and the operation of casinos on Indian Land, are subject to IGRA,
which is implemented by the National Indian Gaming Commission (the "Gaming
Commission"), and also are subject to the provisions of statutes relating to
contracts with Indian tribes, which are overseen by the Secretary of the U.S.
Department of the Interior (the "Secretary"). IGRA is subject to interpretation
by the Secretary and the Gaming Commission and may be subject to judicial and
legislative clarification or amendment. Under IGRA, the Gaming Commission has
the power to inspect and examine certain Indian gaming facilities, to conduct
background checks on persons associated with Indian gaming, to inspect, copy and
audit all records of Indian gaming facilities, and to hold hearings, issue
subpoenas, take depositions, and adopt regulations in furtherance of its
responsibilities. IGRA authorizes the Gaming Commission to impose civil
penalties for violations of the IGRA or the regulations promulgated thereunder
(the "Regulations"), including fines, and to temporarily or permanently close
gaming facilities for violations of the law or the Regulations. The Department
of Justice may also impose federal criminal sanctions for illegal gaming on
Indian Lands and for theft from Indian gaming facilities.

         IGRA also requires that the Gaming Commission review tribal gaming
ordinances and approve such ordinances only if they meet certain requirements
relating to the ownership, security, personnel background, recordkeeping, and
auditing of the tribe's gaming enterprises; the use of the revenues from such
gaming; and the protection of the environment and the public health and safety.

         IGRA also regulates Indian gaming management contracts, requiring the
Gaming Commission to approve management contracts and collateral agreements,
which include agreements such as promissory notes, loan agreements and security
agreements. A management contract can be approved only after determination that
the contract provides for: (i) adequate accounting procedures and verifiable
financial reports, which must be furnished to the tribe; (ii) tribal access to
the daily operations of the gaming enterprise, including the right to verify
daily gross revenues and income; (iii) minimum guaranteed payments to the tribe,
which must have priority over the retirement of development and construction
costs; (iv) a ceiling on the repayment of such development and construction
costs; and (v) a contract term not exceeding five years and a management fee not
exceeding 30% of profits if the Chairman of the Gaming Commission determines
that the fee is reasonable considering the circumstances; provided that the
Gaming Commission may approve up to a seven year term and a management fee not
to exceed 40% of net revenues if the

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Gaming Commission is satisfied that the capital investment required or the
income projections for the particular gaming activity justify the larger profit
allocation and longer term.

         Under IGRA, the Company must provide the Gaming Commission with
background information on each person with management responsibility for a
management contract, each director of the Company and the ten persons who have
the greatest direct or indirect financial interest in a management contract to
which the Company is a party (an "Interested Party"), including a complete
financial statement and a description of such person's gaming experience. Such a
person must also agree to respond to questions from the Gaming Commission.

         The Gaming Commission will not approve a management company and may
void an existing management contract if a director, key employee or an
Interested Party of the management company is (i) an elected member of the
Indian tribal government that owns the facility being managed; (ii) has been or
is convicted of a felony or misdemeanor gaming offense; (iii) has knowingly and
willfully provided materially false information to the Gaming Commission or a
tribe; (iv) has refused to respond to questions from the Gaming Commission; or
(v) 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. In addition, the
Gaming Commission will not approve a management contract if the management
company or any of its agents has attempted to unduly influence any decision or
process of tribal government relating to gaming, or if the management company
has materially breached the terms of the management contract, or the tribe's
gaming ordinance, or, if a trustee, exercising the skill and diligence to which
a trustee is commonly held, would not approve such management contract.

         IGRA divides games that may be played on Indian Land into three
categories. Class I Gaming includes traditional Indian games and private social
games and is not regulated under IGRA. Class II Gaming includes bingo, pull
tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to
bingo, if those games are played at a location where bingo is played. Class III
Gaming includes all other commercial forms of gaming, such as video casino games
(e.g., video slots, video blackjack); so-called "table games" (e.g., blackjack,
craps, roulette); and other commercial gaming (e.g., sports betting and
pari-mutuel wagering).

         Class II Gaming is permitted on Indian Land if conducted in accordance
with a tribal ordinance which has been approved by the Gaming Commission and the
state in which the Indian Land is located permits such gaming for any purpose.
Class II Gaming also must comply with several other requirements, including a
requirement that key management officials and employees be licensed by the
tribe.

         Class III Gaming is permitted on Indian Land if the conditions
applicable to Class II Gaming are met and, in addition, if the gaming is
conducted in compliance with the terms of a written agreement between the tribe
and the host state. IGRA requires states to negotiate in good faith with Indian
tribes that seek to enter into tribal-state compacts, and grants Indian tribes
the right to seek a federal court order to compel such negotiations. The
negotiation and adoption of tribal-state compacts is susceptible to ongoing
legal and political developments that may impact the Company's future revenues
and securities prices. The Company cannot predict 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.

         Under IGRA, Indian tribal governments have primary regulatory authority
over gaming on Indian Land within the tribe's jurisdiction unless a tribal-state
compact has delegated this authority. Therefore, persons engaged in gaming
activities, including the Company, are subject to the provisions of tribal
ordinances and regulations on gaming.

         The Gaming Commission has determined that provisions of IGRA relating
to management agreements do not govern the current operations of Full House in
North Bend, Oregon.

         Tribal-State Compacts have been the subject of litigation in several
states, including California and Michigan. In addition, several bills have been
introduced in Congress that would amend IGRA. If IGRA were amended, the
amendment could change the governmental structure and requirements within which
Indian tribes may conduct gaming.

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         Mississippi. The ownership and operation of casino gaming facilities in
Mississippi are subject to extensive state and local regulation, but primarily
the licensing and regulatory control of the Mississippi Gaming Commission. The
Mississippi Gaming Commission has the authority to require a finding of
suitability with respect to any security holder of a licensed entity, regardless
of the percentage of ownership.

         Applicable Mississippi law requires the Company, and their respective
officers, directors, members and significant equity holders to submit to a
background regulatory review process prior to the licensing of the Hard
Rock-Biloxi. The review process includes the submission of a gaming application,
an investigation and submission of a personnel history and financial
information. In addition, employees engaged in gaming operations will have to be
separately licensed. The applicant for the gaming license has the burden of
proving its qualifications for license. Any license issued or other approval
granted is a revocable privilege, and must be renewed, as a general rule, on an
annual basis. The Mississippi gaming authorities have broad discretion to
condition, suspend, revoke, limit, restrict or deny renewal of any gaming
license at any time. Persons found unsuitable by the Mississippi gaming
authorities may be required immediately to terminate any interest in,
association or agreement with or relationship to a licensee. A finding of
unsuitability with respect to any officer, director, employee, associate, lender
or beneficial owner of a licensee or applicant also may jeopardize the
licensee's license or the applicant's license application. A license grant may
be conditioned upon the termination of any relationship with unsuitable persons.

         Unless properly licensed, no person is permitted to collect gaming
revenues. In addition, no person is permitted to act as an attorney in fact for
any licensee. Gaming licenses are not salable, otherwise transferable or subject
to nominee arrangements.

         EMPLOYEES

         As of March 19, 2001, we and our subsidiaries had five full time
employees, three of whom are our executive officers. Our joint venture
operations have approximately 380 full time employees, and management believes
that its relationship with its employees is good. None of our employees are
currently represented by a labor union, although such representation could occur
in the future.

2.       Description of Property.

         A Full House-Dreamport joint venture company leases approximately 12.5
acres of Tribal Trust Lands from an entity owned by the Coquille Indian Tribe on
which the Mill is located. The joint venture company subleases the land on which
the casino is located back to the same entity. The master lease expires in 2019
and the sublease expires in 2002 with options to renew. Pursuant to a July 19,
1995 addendum, the joint venture company receives a percentage of "Gross Gaming
Revenues" (as defined) of the casino. Payments commenced August 19, 1995.

         A Full House-Dreamport joint venture company has a lease and leaseback
agreement with Harrington Raceway, Inc. The lease encumbers the revenues of the
gaming facility. The lease is treated as a capital lease and payments commenced
on August 20, 1996.

         The Company acquired a one-acre parcel of land in Biloxi, Mississippi
in February 1998, which is intended to be a portion of a future gaming
development site.

3.       Legal Proceedings.

         In October 1994, Full House filed an action for declaratory relief in
Mississippi, seeking a determination by the court that no relationship exists
between it and Lone Star Casino Corporation regarding the potential acquisition
of a riverboat casino on the Mississippi gulf coast (Full House Resorts, Inc. v.
Lone Star Casino Corporation v. Allen E. Paulson, Second Judicial District of
the Chancery Court of Harrison County, Mississippi). Lone Star filed a
counterclaim alleging breaches of fiduciary duty, breach of contract, conspiracy
to breach contract and to breach fiduciary duty and common law fraud. The trial
court granted summary judgment in favor of all defendants on that counterclaim,
and Lone Star appealed that judgment to the Mississippi appellate court. In
April 1998, the Appeals

                                      -9-
<PAGE>

Court affirmed the dismissal of all counts against all parties, excepting Lone
Star's claim against the Company for breach of contract, which it remanded to
the trial court for additional hearing. In January 2000, LS Capital, successor
entity to Lone Star Casino Corporation, announced that it had retained counsel
to pursue the two remaining claims it had alleged against the Company which were
not already dismissed by the Mississippi appellate courts. In April 2000, the
trial judge dismissed both those counts for Lone Star's failure to prosecute its
claims for nearly twenty months after their remand from the Court of Appeals.
Lone Star appealed that ruling, briefing has been completed and we anticipate
that a decision will be rendered in the next several months.

         Allen E. Paulson, one of our major stockholders and a former Chief
Executive Officer and Board Chairman, sued Jefferies & Co., Inc. and Morgans
Waterfall, et al, in the Federal Court for the Central District of California
Western Division, for various claims arising from his individual attempt to
purchase Riviera Holdings Corp. and other gaming properties during 1996-1997. On
May 5, 2000, Jefferies filed counterclaims in that lawsuit against Mr. Paulson
and companies owned by him individually, as well as a Third party Complaint
against us. Jefferies alleges that Full House is responsible to it for the
payment of fees and expenses, which it claims it is owed as a result of several
engagement letters it executed with Mr. Paulson. Mr. Paulson's signature line
does not reflect that he executed any of these engagement letters on behalf of
Full House, but Jefferies claims that his individual signature also bound his
"affiliates". Full House vigorously contests any liabilities whatsoever to
Jefferies, and moved for dismissal of Jefferies' claim on the grounds its
assertions were insufficient as a matter of law. On July 27, 2000, the court
issued an order denying our motion. We filed our Answer and Counterclaims with
the court on August 24, 2000. We also filed claims against Mr. Paulson for
indemnification in the Jefferies litigation, among other claims. Discovery is
continuing, and trial in the matter has been scheduled for mid-2002. Management
is unable to determine the outcome of this litigation, but does not believe the
outcome will have a material adverse effect on our consolidated financial
condition.

         In January 1999, we were advised that the Securities and Exchange
Commission was conducting an inquiry into trading of our stock by our former
President, Gregg R. Giuffria, for a period beginning prior to his association
with Full House and continuing for a period after he became a consultant to Full
House. The SEC has admonished that this inquiry is not to be construed as an
indication that any violations of federal securities laws have occurred. We and
Mr. Giuffria voluntarily provided all information requested, and are cooperating
fully with the SEC in its investigation.

4.       Submission of Matters to a Vote of Security Holders.

         None.

                                      -10-
<PAGE>

                                     PART II

5.       Market for Common Equity And Related Stockholder Matters.

         (a)      Market Information

         Our Common Stock is listed on The Nasdaq SmallCap Market under the
symbol FHRI. Set forth below are the high and low sales prices of the Common
Stock as reported on the Nasdaq SmallCap Market System for the periods
indicated.

                                                High              Low
                                                ----              ---
Year Ended December 31, 2000
----------------------------
First Quarter                                  $ 1.63            $ 1.25
Second Quarter                                   2.25              1.00
Third Quarter                                    1.88              1.06
Fourth Quarter                                   1.50              0.25

Year Ended December 31, 1999
----------------------------
First Quarter                                  $ 3.00            $ 2.00
Second Quarter                                   2.69              2.00
Third Quarter                                    2.31              1.13
Fourth Quarter                                   2.00              1.00

         The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions. On March 19,
2001, the last sale price of the Common Stock as reported by the Nasdaq SmallCap
Market was $0.75.

Nasdaq has notified us that we are not in compliance with Marketplace Rule
4310(c)(4), requiring that our common stock maintain a minimum bid price of
$1.00. If we are unable to demonstrate compliance before April 17, 2001, Nasdaq
will provide us written notification that our securities will be delisted.

         (b)      Holders

         As of March 19, 2001, we had approximately 132 holders of record of our
common stock. We believe that there are over 1,500 beneficial owners.

         (c)      Dividends

         We have never paid dividends on our common stock or Preferred Stock
since its inception. Holders of common stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefor.

         Holders of our Series 1992-1 Preferred Stock are entitled to receive
dividends, when, as and if declared by the Board of Directors out of funds
legally available therefor, in the annual amount of $.30 per share, payable in
arrears semi-annually on the 15th day of December and June, in each year.
Dividends on the Series 1992-1 Preferred Stock commenced accruing on July 1,
1992 and are cumulative. We have has not declared or paid the accrued dividends
on our Preferred Stock which were payable since issuance, totaling $1,785,000
and, accordingly, are in default in regard thereto.

         Since we are in default in declaring, setting apart for payment or
paying dividends on the Preferred Stock, we are restricted from paying any
dividend or making any other distribution or redeeming any stock ranking junior
to the Preferred Stock.

                                      -11-
<PAGE>

         We intend to retain future earnings, if any, to provide funds for the
operation of our business, retirement of debt and payment of preferred stock
dividends and, accordingly, do not anticipate paying any cash dividends on our
common stock in the reasonably foreseeable future.

6.       Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

         RESULTS OF OPERATIONS

         Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

         Joint Venture Revenues. Joint venture revenues increased $318,857, or
8.8%, for the year ended December 31, 2000 as compared to 1999. This increase
was due to the improved operating results from the Delaware and Oregon joint
ventures.

         Delaware Joint Venture. Our share of operating income from the Delaware
joint venture was $2,783,643 for the year ended December 31, 2000, which
represented an increase of $308,440, or 12.5%, from 1999. This increase was
primarily due to the May 2000 expansion of the facility, which increased the
number of gaming units from 742 to 1,142.

         Oregon Joint Venture. Our share of operating income from the Oregon
joint venture was $1,139,686 for the year ended December 31, 2000, which
represented an increase of $14,996 from 1999. This increase was due to continued
market growth, which offset the reduction in the development fee.

         Joint Venture Preopening Costs. Our share of costs from the development
stage joint ventures in California and Michigan increased to $584,337 for the
year ended December 31, 2000 as compared to $515,802 in 1999. This increase is
primarily due to increased activity in Michigan.

         Michigan Joint Venture. During 2000, the joint venture incurred legal,
consulting, payroll, and land costs associated with the planned development of a
tribal casino in Battle Creek. Our share of these costs amounted to $509,488,
compared to $474,336 during 1999. In December of 1998, the Michigan legislature
ratified the tribal compact and as a result, the joint venture has significantly
increased its active pursuit of this project.

         California Joint Venture. Our share of costs associated with the
California project amounted to $74,849 for the year ended December 31, 2000 as
compared to $41,466 in 1999. This increase was due to expenses associated with
approval of the land settlement agreement.

         Development Costs. In 1999, we expensed development costs related to
the Biloxi Project of $1,644,542. These costs were primarily for land deposits
and options of $1,350,000, which expired and were either not renewed, or the
available extensions were not exercised. Our negotiations with a potential joint
venture partner broke off in November 1999, and as a result, we had no
reasonable expectation of being able to consummate the land transaction prior to
a later expiration of the available extension periods. We also expensed $294,542
in deferred legal and consulting fees that were primarily due to a postponed
debt offering for the project.

         General and Administrative Expenses. General and administrative
expenses decreased by $319,735, or 14.8% for the year ended December 31, 2000 as
compared to 1999. This decrease is primarily due to reduced legal, professional
and consulting costs related to the investigation, due diligence and
pre-development of various ongoing expansion opportunities.

         Interest Expense and Debt Issue Costs. For the year ended December 31,
2000, interest expense and debt issue costs increased by $73,424 as compared to
1999. This increase is primarily due to increased borrowing on our credit line
coupled with an increase in interest rates.

                                      -12-
<PAGE>

         Interest and Other Income. Interest and other income decreased by
$279,291 for the year ended December 31, 2000. In 1999, we received proceeds of
$262,767 from a litigation settlement in connection with the Company's land in
Mississippi.

         Income Tax Expense. Income tax expense of $490,393 for the year ended
December 31, 2000, primarily reflects state taxes due on joint venture revenues,
coupled with the change in deferred taxes. At December 31, 2000, we had net
operating loss carryforwards for federal income tax purposes of approximately
$2,327,000, which may be carried forward to offset future taxable income. The
loss carryforwards expire in 2010 through 2019. The availability of the loss
carryforwards may be limited in the event of a significant change in ownership
of the Company or our subsidiaries.

         Cumulative Effect of Change in Accounting Principle. In April 1998, the
Accounting Standards Executive Committee of the American Institute of Certified
Public Accountants issued Statement of Position 98-5, "Reporting on Costs of
Start-Up Activities." It requires that the costs of start-up activities that had
been previously capitalized, be expensed as incurred. During the first quarter
of 1999, we expensed $824,045 of such costs that had been previously incurred by
our joint venture investments, net of the related tax benefit of $280,175.

         Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

         Joint Venture Revenues. Joint venture revenues increased $17,299 for
the year ended December 31, 1999 as compared to 1998. This increase was due to
the improved operating results from the Delaware and Oregon joint ventures,
offset by a fee reduction agreement in Delaware.

         Delaware Joint Venture. The Company's share of income from the Delaware
joint venture was $2,479,782 for the year ended December 31, 1999, which
represented a decrease of $26,655, or 1.1%, from 1998. This reduction was
primarily due to a June 1998 agreement to reduce management fees by $15,000 per
month for a period of 60 months in consideration of the owner financing certain
capital improvements. Accordingly, the management fees were reduced by $180,000
in 1999, and $105,000 in 1998. The operating performance of Midway Slots and
Simulcast showed a 2.6% increase in revenue and a 7.2% increase in operating
cash flow.

         Oregon Joint Venture. The Company's share of income from the Oregon
joint venture was $1,124,690 for the year ended December 31, 1999, which
represented an increase of $43,955, or 4.1%, from 1998. This increase was due to
continued market growth, coupled with the introduction in March 1999 of
"Wide-Area Progressive" games featuring a linked jackpot.

         Joint Venture Preopening Costs. The Company's share of costs from the
development stage joint ventures in California and Michigan increased to
$515,802 for the year ended December 31, 1999 as compared to $57,486 in 1998.
This increase is primarily due to increased activity in Michigan.

         Michigan Joint Venture. During 1999, the joint venture began to incur
legal, consulting, payroll, and land costs associated with the planned
development of a tribal casino in Battle Creek. The Company's share of these
costs amounted to $474,336, compared to only $17,185 during 1998. In December of
1998, the Michigan legislature ratified the tribal compact and as a result, the
joint venture has significantly increased its active pursuit of this project.

         California Joint Venture. The Company's share of costs associated with
the California project amounted to $41,466, for the year ended December 31, 1999
as compared to compared to $40,301 in 1998. While awaiting a definitive outcome
to the status of Indian Gaming legislation in California, no significant
expenditures have been incurred.

         Development Costs. The Company expensed development costs related to
the Biloxi Project of $1,644,542. These costs were primarily for land deposits
and options of $1,350,000, which expired and were either not renewed, or the
available extensions were not exercised. The Company's negotiations with a
potential joint venture partner broke off in November 1999, and as a result, the
Company had no reasonable expectation of being able to consummate

                                      -13-
<PAGE>

the land transaction prior to a later expiration of the available extension
periods. The Company also expensed $294,542 in deferred legal and consulting
fees that were primarily due to a postponed debt offering for the project.

         General and Administrative Expenses. General and administrative
expenses increased by $208,093, or 10.6% for the year ended December 31, 1999 as
compared to 1998. This increase is due to increased payroll, legal fees, and
travel expenses related to the investigation, due diligence and pre-development
of various ongoing expansion opportunities.

         Interest Expense and Debt Issue Costs. For the year ended December 31,
1999, interest expense and debt issue costs decreased by $342,966 as compared to
1998. This decrease is primarily due to the payoff of the DGR loan in May 1998.
The interest expense for 1999 primarily reflects interest on the $3.0 million
GTECH note, which became interest bearing in January 1998.

         Interest and Other Income. Interest and other income of $290,907 for
the year ended December 31, 1999 is primarily due to proceeds of $262,767 from a
litigation settlement in connection with the Company's land in Mississippi. In
1998, the Company realized a gain on the sale of DGR of $385,227, and also
received a one time reimbursement of $85,532 from the former Chairman of the
Board for costs associated with the gaming opportunities presented to the
Company by him. Interest income on invested cash balances declined by $58,513 as
a result of a decrease in cash.

         Income Tax Expense. An income tax benefit of $257,733 for the year
ended December 31, 1999 primarily reflects state taxes due on joint venture
revenues, offset by deferred tax benefits. At December 31, 1999, the Company had
net operating loss carryforwards for federal income tax purposes of
approximately $4,455,000, which may be carried forward to offset future taxable
income. The loss carryforwards expire in 2007 through 2018. The availability of
the loss carryforwards may be limited in the event of a significant change in
ownership of the Company or its subsidiaries.

         Cumulative Effect of Change in Accounting Principle. In April 1998, the
Accounting Standards Executive Committee of the American Institute of Certified
Public Accountants issued Statement of Position 98-5, "Reporting on Costs of
Start-Up Activities." It requires that the costs of start-up activities that had
been previously capitalized, be expensed as incurred. During the first quarter
of 1999, the Company expensed $824,045 of such costs that had been previously
incurred by its joint venture investments, net of the related tax benefit of
$280,175.

         Deadwood Gulch Resort. As a result of the sale of the resort in May
1998, there were no revenues or expenses for 1999. The operating loss from DGR
was $345,769 for 1998 prior to its sale. The Company recognized a gain on the
sale of DGR of $385,227 after considering the impairment reserve of $4,154,290.

         LIQUIDITY AND CAPITAL RESOURCES

         We held cash and cash equivalents of $455,143 as of December 31, 2000.
Net cash provided by operating activities was $1,578,842 as compared to cash
used in operating activities of $1,325,793 in the comparable prior year period.
The significant change resulted from using $1,000,000 to pay the accrued Hard
Rock territory fee and approximately $1,250,000 for expenses related to the
Biloxi project during 1999, and no comparable uses in 2000. Net cash used in
investing activities was $962,499 for funding expenses and land options for the
Michigan joint venture. Net cash used in financing activities of $600,000
resulted from the repayment in the current year of borrowings in 1999 under our
credit line.

         In 1998, we obtained a $2,000,000 line of credit with Coast Community
Bank of Mississippi. The line bears interest adjustable daily at one-half
percent above prime and requires interest payments monthly on the outstanding
balance with all principal and accrued interest due at maturity on February 25,
2002. At December 31, 2000, $150,000 was outstanding on the bank line.

                                      -14-
<PAGE>

         In November 1998, we executed a series of agreements with Hard Rock
Cafe International related to its proposed development project in Biloxi,
Mississippi. Pursuant to a licensing agreement, the Company agreed to pay a
$2,000,000 territory fee with $1,000,000 paid in 1998, and the second $1,000,000
due March 31, 1999. The parties amended those agreements extending the due date
of the second installment to December 15, 1999. The Company used cash on hand
and a $750,000 draw on the bank line to make that payment.

         In September 1998, Full House and Allen Paulson formed a limited
liability company, equally owned, for the purpose of developing a themed casino
resort in Biloxi, Mississippi. Mr. Paulson agreed to contribute a gaming vessel
(the former Treasure Bay barge in Tunica, Mississippi) and we agreed to
contribute our rights to the Hard Rock agreements. The newly formed entity
expects to develop a Hard Rock-Biloxi and is currently exploring various
financing alternatives. The project, as currently envisioned, is expected to
cost between $250 and $300 million. Substantial additional financing will be
required to effect the business strategy and no assurance can be given that such
financing will be available.

         Full House was a party to a series of agreements with GTECH
Corporation, a leading supplier of computerized systems and services for
government-authorized lotteries, to jointly pursue certain gaming opportunities.
Pursuant to the agreements, joint venture companies equally owned by GTECH and
Full House have been formed. Full House contributed its rights to the North
Bend, Oregon facility and the rights to develop the Torres Martinez,
Nottawaseppi Huron Band of Potawatomi and Delaware State Fair projects to the
joint venture companies. GTECH contributed cash and other intangible assets and
agreed to loan the joint venture entities up to $16.4 million to complete the
North Bend, Oregon and Delaware facilities. Full House agreed to guarantee
one-half of the obligations of the joint venture companies to GTECH under these
loans and has guaranteed to GTECH one-half of a $2.0 million loan to the North
Bend, Oregon Indian Tribe. GTECH also provides project management, technology
and other expertise to analyze and develop/manage the implementation of
opportunities developed by the joint venture entities. GTECH also loaned Full
House $3.0 million, which loan was convertible into 600,000 shares of Full House
Common Stock. The loan conversion clause expired without exercise. In addition,
Full House has been reimbursed by one of the joint venture companies for certain
advances and expenditures made by Full House relating to the gaming development
agreements. As part of this transaction, Allen E. Paulson, William P. McComas
and Lee Iacocca granted to GTECH an option, which expired December 29, 2000, to
purchase their shares should they propose to transfer the same. The parties are
no longer required to present gaming opportunities to the other for joint
development.

         On March _____, 2001, we acquired GTECH's 50% interest in three joint
venture projects that had been equally owned by the two companies: Gaming
Entertainment, LLC, Gaming Entertainment (Michigan), LLC, and Gaming
Entertainment (California), LLC. The purchase price was $1.8 million, and was
funded through the Company's existing credit facility. As part of this
transaction, GTECH has extended the due date of our $3.0 million promissory note
until January 25, 2002, with interest at prime.

         As a result of our agreement with GTECH, receipt by Full House of
revenues from the Delaware venture is governed by the terms of the joint venture
agreement. The contract provides that net cash flow (after certain deductions)
is to be distributed monthly to Full House and GTECH. While Full House does not
believe that this arrangement will adversely impact its liquidity, our
continuing cash flow is dependent on the operating performance of this joint
venture, and the ability to receive monthly distributions.

         The Oregon venture generates approximately $2.0 million in cash flow.
The Michigan and California ventures are still in the development stage and
require additional funding. Since we do not have the financial resources to fund
these projects alone, we are actively pursuing alternative means of financing
these developments. No assurance can be given that satisfactory financing will
be available.

         As of December 31, 2000, we had cumulative undeclared and unpaid
dividends in the amount of $1,785,000 on the 700,000 outstanding shares of our
1992-1 Preferred Stock. Such dividends are cumulative whether or not declared,
and are currently in arrears.

                                      -15-
<PAGE>

RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 30, 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position, and measure those instruments at fair value, and is effective for all
fiscal quarters of the fiscal years beginning after June 15, 2000. This is a
complex accounting standard, however, the Company does not expect the adoption
of this statement to have a material impact on the consolidated financial
statements.

Certain statements contained in this report that are not historical facts are
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are subject to risks and
uncertainties that may cause the actual results or performance to be materially
different than that expressed or implied by such statements. These risks
include, but are not limited to, access to capital, regulatory approvals and
competitive environments.

7.       Financial Statements.

         The following financial statements are filed as part of this Report

         o        Independent Auditors' Report

         o        Consolidated Balance Sheets as of December 31, 2000 and 1999

         o        Consolidated Statements of Operations for the years ended
                  December 31, 2000 and 1999

         o        Consolidated Statements of Stockholders' Equity for the years
                  ended December 31, 2000 and 1999

         o        Consolidated Statements of Cash Flows for the years ended
                  December 31, 2000 and 1999

         o        Notes to Consolidated Financial Statements

8.       Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

         None.

                                      -16-
<PAGE>

                                    PART III

9.       Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.

         (a)      Directors of the Company

         The information required regarding the identification of our directors
is incorporated by reference to the information in the Proxy Statement for the
2001 Annual Meeting of Stockholders.

         (b)      Executive Officers of the Company

                  Our executive officers and their ages as of March 21, 2001
are as follows:

     Name               Age               Positions
     ----               ---               ---------
William P. McComas       74    Chairman, Chief Executive Officer

Michael P. Shaunnessy    47    Executive Vice President, Chief Financial Officer

Megan G. McIntosh        45    Secretary

         William P. McComas became Chairman of the Board and Chief Executive
Officer on March 5, 1998. Mr. McComas has been a Director of Full House since
November 1992. Mr. McComas has been President of McComas Properties, Inc., a
California real estate development company since January 1984. Mr. McComas and
companies controlled by him have developed several hotels and resorts, including
Marina Bay Resort, Fort Lauderdale, Florida; Ocean Colony Hotel and Resort, Half
Moon Bay, California; Residence Inn by Marriott, Somers Point, New Jersey; and
five Holiday Inns located in Des Moines, Iowa; San Angelo, Texas; Suffern, New
York; Niagara Falls, New York; and Fort Myers, Florida.

         Michael P. Shaunnessy became Executive Vice President and Chief
Financial Officer in July 1998. Mr. Shaunnessy has over 15 years experience in
the gaming industry. From 1995 to 1998, he was Vice President and Chief
Accounting Officer of Primadonna Resorts, Inc., the developer of New York - New
York in Las Vegas, Nevada. He was with Aztar Corporation from 1983 to 1995,
serving in senior financial positions at properties in New Jersey and Nevada,
most recently as Vice President-Finance for the Tropicana Resort in Las Vegas.

         Megan G. McIntosh has been employed by Full House since December 1,
1994 and has been the Secretary of Full House since November 20, 1995. From
April 1991 until she joined Full House, Ms. McIntosh was an administrative
assistant for a civil engineering firm located in California. Prior to that
time, Ms. McIntosh was an administrative assistant for a real estate development
firm located in Southern California.

10.      Executive Compensation.

         The information required in response to this item is incorporated by
reference to the information contained in the Proxy Statement for the 2001
Annual Meeting of Stockholders.

11.      Security Ownership of Certain Beneficial Owners and Management.

         The information required in response to this item is incorporated by
reference to the information contained in the Proxy Statement for the 2001
Annual Meeting of Stockholders.

                                      -17-
<PAGE>

12.      Certain Relationships and Related Transactions.

         The information required in response to this item is incorporated by
reference to the information contained in the Proxy Statement for the 2001
Annual Meeting of Stockholders of the Company.

13.      Exhibits and Reports on Form 8-K.

         (a)      Exhibits

                  10.25 Master Lease between Coquille Economic Development
         Corporation ("CEDC") and the Company (Incorporated by reference to the
         Company's Post Effective Amendment No. 1 to Registration Statement on
         Form SB-2, No. 33-61580 as filed with the Securities and Exchange
         Commission on July 28, 1994)

                  10.26 Participating lease between CEDC and the Company
         (Incorporated by reference to the Company's Post Effective Amendment
         No. 1 to Registration Statement on Form SB-2, No. 33-61580 as filed
         with the Securities and Exchange Commission on July 28, 1994)

                  10.27 Loan Agreement between CEDC and the Company
         (Incorporated by reference to the Company's Post Effective Amendment
         No. 1 to Registration Statement on Form SB-2, No. 33-61580 as filed
         with the Securities and Exchange Commission on July 28, 1994)

                  10.28 Promissory Note from The Coquille Indian Tribe and CEDC
         to the Company. (Incorporated by reference to the Company's Post
         Effective Amendment No. 1 to Registration Statement on Form SB-2, No.
         33-61580 as filed with the Securities and Exchange Commission on July
         28, 1994)

                  10.29 Security Agreement between The Coquille Indian Tribe,
         CEDC and the Company (Incorporated by reference to the Company's Post
         Effective Amendment No. 1 to Registration Statement on Form SB-2, No.
         33-61580 as filed with the Securities and Exchange Commission on July
         28, 1994)

                  10.30 Absolute Assignment of Rents and Leases from The
         Coquille Indian Tribe to the Company (Incorporated by reference to the
         Company's Post Effective Amendment No. 1 to Registration Statement on
         Form SB-2, No. 33-61580 as filed with the Securities and Exchange
         Commission on July 28, 1994)

                  10.31 Escrow Agreement by and among the Company, CEDC, The
         Coquille Indian Tribe, Sun Plywood, Inc. and Ticor Title Insurance
         Company of California (Incorporated by reference to the Company's Post
         Effective Amendment No. 1. to Registration Statement on Form SB-2, No.
         33-61580 as filed with the Securities and Exchange Commission on July
         28, 1994)

                  10.34 Agreement between Green Acres Casino Management Company,
         Inc. and the Company dated January 4, 1995 (Incorporated by reference
         to the Company's Annual Report on Form 10-KSB for the fiscal year ended
         December 31, 1994)

                  10.35 Agreement for Commercial Development between the
         Nottawaseppi Huron Band of Potawatomi, Green Acres Casino Management
         Company, Inc. and the Company dated January 11, 1995

                                      -18-
<PAGE>

         (Incorporated by reference to the Company's Annual Report on Form
         10-KSB for the fiscal year ended December 31, 1994)

                  10.36 Addendum to Class II and III Management Agreements among
         the Nottawaseppi Huron Band of Potawatomi, Green Acres Casino
         Management Company, Inc. and the Company dated January 12, 1995
         (Incorporated by reference to the Company's Annual Report on Form
         10-KSB for the fiscal year ended December 31, 1994)

                  10.37 Gaming and Development Agreement between the Company and
         the Torres Martinez Desert Cahuilla Indians dated March 21, 1993
         (incorporated by reference to the Company's Quarterly Report on Form
         10-QSB for the quarter ended March 31, 1995)

                  10.38 Gaming Management Agreement between the Company and the
         Torres Martinez Desert Cahuilla Indians dated April 23, 1993
         (incorporated by reference to the Company's Quarterly Report on Form
         10-QSB for the quarter ended March 31, 1995)

                  10.39 Agreement between the Company and GTECH Corporation
         dated May 20, 1995 (Incorporated by reference to the Company's Post
         Effective Amendment No. 2 to Registration Statement on Form SB-2, No.
         33-61580 as filed with the Securities and Exchange Commission on May
         26, 1995)

                  10.40 Promissory Note dated November 20, 1995 in the original
         principal amount of $375,000 from the Company to William P. McComas
         (Incorporated by reference to the Company's Annual Report on Form
         10-KSB for the fiscal year ended December 31, 1995)

                  10.41 Master Agreement dated as of December 29, 1995 by and
         between GTECH Corporation and the Company (Incorporated by reference to
         the Company's Annual Report on Form 10-KSB for the fiscal year ended
         December 31, 1995)

                  10.43 Convertible Note dated July 26, 1996 in the original
         principal amount of $3,000,000 payable by the Company to GTECH
         Corporation (Incorporated by reference to the Company's Annual Report
         on Form 10-KSB for the fiscal year ended December 31, 1995)

                  10.44 Guaranty Agreement dated as of December 29, 1995 from
         the Company to GTECH Corporation pursuant to which the Company
         guarantees 50% of the obligations of Gaming Entertainment, LLC to GTECH
         under a Promissory Note of even date therewith in the amount of
         $10,400,000 (Incorporated by reference to the Company's Annual Report
         on Form 10-KSB for the fiscal year ended December 31, 1995)

                  10.45 Guaranty Agreement dated as of December 29, 1995 from
         the Company to GTECH Corporation pursuant to which the Company
         guarantees 50% of the obligations of Gaming Entertainment (Delaware),
         LLC to GTECH in an amount not to exceed $6,000,000 (Incorporated by
         reference to the Company's Annual Report on Form 10-KSB for the fiscal
         year ended December 31, 1995)

                                      -19-
<PAGE>

                  10.47 Subordination and Participation Agreement dated as of
         October 8, 1996 between Gaming Entertainment LLC and Miller & Schroeder
         Investments Corporation (Incorporated by reference to the Company's
         Annual Report on Form 10-KSB for the fiscal year ended December 31,
         1996.)

                  10.48 First Amended and Restated Participating Lease dated as
         of October 8, 1996 between Gaming Entertainment LLC and Coquille
         Economic Development Corporation (Incorporated by reference to the
         Company's Annual Report on Form 10-KSB for the fiscal year ended
         December 31, 1996.)

                  10.49 First Amended and Restated Master Lease dated as of
         October 8, 1996 between Gaming Entertainment LLC and Coquille Economic
         Development Corporation (Incorporated by reference to the Company's
         Annual Report on Form 10-KSB for the fiscal year ended December 31,
         1996.)

                  10.50 Agreement dated as of November 18, 1996 by and among
         Green Acres Casino Management Company, GTECH Corporation, Gaming
         Entertainment (Michigan) LLC and the Company (Incorporated by reference
         to the Company's Annual Report on Form 10-KSB for the fiscal year ended
         December 31, 1996.)

                  10.51 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
         the Company's Annual Report on Form 10-KSB for the fiscal year ended
         December 31, 1996.)

                  10.52 License Agreement between Hard Rock Cafe International
         (USA), Inc. and Full House Mississippi, LLC dated November 18, 1998.

                  10.53 Management and Development Agreement by and between
         FH/HR Management, LLC and Full House Mississippi, LLC dated November
         18, 1998.

                  10.54 Amendment to License Agreement between Hard Rock Cafe
         International (USA), Inc. and Full House Mississippi, LLC dated
         November 30, 1999.

                  10.55 Termination Agreement by and among Hard Rock Cafe
         International (USA), Inc., Full House Resorts, Inc., Allen E. Paulson,
         AEP & FHR LLC, FH/HR Management, LLC .and Full House Mississippi, LLC
         dated November 30, 1999.


                  21    List of Subsidiaries of Full House Resorts, Inc.*

                  23.1  Consent of Deloitte & Touche LLP *

*   Filed herewith.

         (b)      Reports on Form 8-K.

                  None.

                                      -20-
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                           FULL HOUSE RESORTS, INC.


Date: March 29, 2001                       By: /s/ WILLIAM P. MCCOMAS
                                              ----------------------------------
                                               William P. McComas, CEO

         In accordance with the Securities Exchange Act of 1934, this Report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.

              Name and Capacity                                  Date
              -----------------                                  ----

/s/ WILLIAM P. MCCOMAS                                       March 29, 2001
-----------------------------------------------
William P. McComas, Chairman of the Board and
Chief Executive Officer


/s/ RONALD K. RICHEY                                         March 29, 2001
-----------------------------------------------
Ronald K. Richey, Director


/s/ LEE A. IACOCCA                                           March 29, 2001
-----------------------------------------------
Lee A. Iacocca, Director


/s/ MICHAEL P. SHAUNNESSY                                    March 29, 2001
-----------------------------------------------
Michael P. Shaunnessy, Executive Vice President
(Principal Financial and Accounting Officer)

                                      -21-
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
and Stockholders of Full House Resorts, Inc.:

We have audited the accompanying consolidated balance sheets of Full House
Resorts, Inc. and Subsidiaries (the "Company") as of December 31, 2000 and 1999,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Full House Resorts, Inc. and
Subsidiaries as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP


Las Vegas, Nevada
February 16, 2001, except for Note 5, as to which the date is March 30, 2001.


                                      F-1
<PAGE>

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ASSETS
                                                                               2000             1999
                                                                           ------------     ------------
<S>                                                                        <C>              <C>
CURRENT ASSETS:
  Cash and cash equivalents                                                $    455,143     $    438,800
  Income tax refund receivable                                                       --           34,057
  Prepaid expenses                                                               92,804           87,590
                                                                           ------------     ------------
    Total current assets                                                        547,947          560,447

LAND HELD FOR DEVELOPMENT                                                     4,621,670        4,621,670
FIXTURES AND EQUIPMENT, net                                                      47,202           69,413
INVESTMENTS IN JOINT VENTURES                                                 3,192,634        3,672,175
GOODWILL, net                                                                   379,713          885,981
NOTE RECEIVABLE - JOINT VENTURE                                               1,667,269          839,580
DEFERRED TAX ASSET                                                              294,900          614,083
DEPOSITS AND OTHER ASSETS                                                     2,701,344        2,620,487
                                                                           ------------     ------------
TOTAL                                                                      $ 13,452,679     $ 13,883,836
                                                                           ============     ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable                                                         $     18,106     $     19,238
  Payable to joint ventures                                                      27,831           60,077
  Accrued expenses                                                              182,024          190,332
                                                                           ------------     ------------
    Total current liabilities                                                   227,961          269,647
                                                                           ------------     ------------
LONG-TERM DEBT, net of current portion of -0-                                 3,150,000        3,750,000
                                                                           ------------     ------------
COMMITMENTS AND CONTINGENCIES (Note 11)

STOCKHOLDERS' EQUITY:
  Cumulative preferred stock, par value $.0001, 5,000,000
    shares authorized; 700,000 shares issued and outstanding; aggregate
    liquidation preference of $3,885,000 and $3,675,000, respectively                70               70
  Common stock, par value $.0001, 25,000,000 shares authorized;
    10,340,380 shares issued and outstanding                                      1,034            1,034
  Additional paid in capital                                                 17,429,889       17,374,449
  Accumulated deficit                                                        (7,356,275)      (7,511,364)
                                                                           ------------     ------------
    Total stockholders' equity                                               10,074,718        9,864,189
                                                                           ------------     ------------
TOTAL                                                                      $ 13,452,679     $ 13,883,836
                                                                           ============     ============
</TABLE>

See notes to consolidated financial statements.

                                      F-2
<PAGE>

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               2000              1999
                                                            ------------     ------------
<S>                                                         <C>              <C>
OPERATING REVENUES
  Joint ventures                                            $  3,923,329     $  3,604,472
                                                            ------------     ------------
OPERATING COSTS AND EXPENSES
  Joint venture pre-opening costs                                584,337          515,802
  Development costs                                                   --        1,644,542
  General and administrative                                   1,845,704        2,165,439
  Depreciation and amortization                                  531,043          528,004
                                                            ------------     ------------
    Total operating costs and expenses                         2,961,084        4,853,787
                                                            ------------     ------------
INCOME (LOSS) FROM OPERATIONS                                    962,245       (1,249,315)

  Interest expense and debt issue costs                         (328,379)        (254,955)
  Interest and other income                                       11,616          290,907
                                                            ------------     ------------
INCOME (LOSS) BEFORE TAXES AND CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                         645,482       (1,213,363)

INCOME TAX BENEFIT (PROVISION)                                  (490,393)         257,733
                                                            ------------     ------------
NET INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                         155,089         (955,630)

CUMULATIVE EFFECT OF ACCOUNTING CHANGE
  net of tax benefit of $280,175                                      --         (543,870)
                                                            ------------     ------------
NET INCOME ( LOSS )                                              155,089       (1,499,500)

Less, undeclared dividends on cumulative preferred stock        (210,000)        (210,000)
                                                            ------------     ------------
NET LOSS APPLICABLE TO COMMON SHARES                        $    (54,911)    $ (1,709,500)
                                                            ============     ============
LOSS PER COMMON SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE, basic and diluted              $       (.01)    $      (0.12)

CHANGE IN ACCOUNTING PRINCIPLE, basic and diluted           $         --     $      (0.05)
                                                            ------------     ------------
NET LOSS PER COMMON SHARE, basic and diluted                $       (.01)    $      (0.17)
                                                            ============     ============
WEIGHTED AVERAGE NUMBER OF COMMON
  SHARES OUTSTANDING, basic and diluted                       10,340,380       10,340,380
                                                            ============     ============
</TABLE>

See notes to consolidated financial statements.

                                      F-3
<PAGE>

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                   Additional
                               Preferred Stock               Common Stock            Paid-in     Accumulated
                             Shares        Amount        Shares        Amount        Capital       Deficit        Total
                          ------------  ------------  ------------  ------------  ------------  ------------   ------------
<S>                       <C>           <C>           <C>           <C>           <C>           <C>            <C>
BALANCE
    JANUARY 1, 1999            700,000  $         70    10,340,380  $      1,034  $ 17,218,065  $ (6,011,864)  $ 11,207,305

Net loss                            --            --            --            --            --    (1,499,500)    (1,499,500)

Amortization of deferred
  compensation expense              --            --            --            --       156,384            --        156,384
                          ------------  ------------  ------------  ------------  ------------  ------------   ------------
BALANCE
  DECEMBER 31, 1999            700,000            70    10,340,380         1,034    17,374,449    (7,511,364)     9,864,189

Net income                          --            --            --            --            --       155,089        155,089

Amortization of deferred
  compensation expense              --            --            --            --        55,440            --         55,440
                          ------------  ------------  ------------  ------------  ------------  ------------   ------------
BALANCE
    DECEMBER 31, 2000          700,000  $         70    10,340,380  $      1,034  $ 17,429,889  $ (7,356,275)  $ 10,074,718
                          ============  ============  ============  ============  ============  ============   ============
</TABLE>

See notes to consolidated financial statements.

                                      F-4
<PAGE>

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                      2000            1999
                                                                  -----------     -----------
<S>                                                               <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                             $   155,089     $(1,499,500)
    Adjustments to reconcile net income (loss) to net
      cash (used in) provided by operating activities:
      Depreciation and amortization                                   531,043         528,004
      Amortization of deferred compensation expense                    55,440         156,384
      Cumulative effect of change in accounting principle                  --         543,870
      Equity in earnings of joint ventures                         (3,338,992)     (3,088,670)
      Distributions from joint ventures                             3,818,533       3,609,919
      Changes in assets and liabilities:
        Receivables                                                    34,057           1,814
        Prepaid expenses                                               (5,214)            428
        Other assets                                                   19,141        (187,745)
        Deferred taxes                                                319,183        (455,143)
        Accounts payable and accrued expenses                          (9,438)       (935,154)
                                                                  -----------     -----------
           Net cash provided by (used in) operating activities      1,578,842      (1,325,793)
                                                                  -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchases of fixtures and equipment                              (2,564)        (46,691)
      Net advances to joint ventures                                 (859,935)       (330,894)
      (Increase) decrease in deposits                                (100,000)        300,000
                                                                  -----------     -----------
           Net cash used in investing activities                     (962,499)        (77,585)
                                                                  -----------     -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Proceeds from line of credit                                         --       1,750,000
      Repayment of debt                                              (600,000)     (1,000,000)
                                                                  -----------     -----------
           Net cash (used in) provided by financing activities       (600,000)        750,000
                                                                  -----------     -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                   16,343        (653,378)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                          438,800       1,092,178
                                                                  -----------     -----------
CASH AND CASH EQUIVALENTS, END OF YEAR                            $   455,143     $   438,800
                                                                  ===========     ===========
</TABLE>

See notes to consolidated financial statements.

                                      F-5
<PAGE>

FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.       ORGANIZATION AND NATURE OF OPERATIONS

         Full House Resorts, Inc. ("FHRI" or the "Company") was incorporated in
         the State of Delaware on January 5, 1987. FHRI is currently pursuing
         various gaming opportunities throughout North America.

         Effective December 29, 1995, FHRI entered into a series of agreements
         with GTECH Corporation ("GTECH") to jointly pursue gaming
         opportunities. Pursuant to the agreements, four limited liability
         companies ("Joint Ventures") were formed. FHRI has a 50% interest in
         each joint venture. These interests are accounted for using the equity
         method.

         FHRI and its principal stockholder entered into an agreement to jointly
         pursue development of a themed casino resort in Biloxi, Mississippi and
         formed a limited liability company for such purpose, which is 50% owned
         by each member.

         The consolidated financial statements include the accounts and
         operations of FHRI and its wholly- owned and majority-owned
         subsidiaries. All significant intercompany accounts and transactions
         have been eliminated in consolidation.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         CASH AND CASH EQUIVALENTS - Cash in excess of daily requirements is
         invested in highly liquid short-term investments with maturities of
         three months or less when purchased. Such investments are stated at
         cost, which approximates market, and are deemed to be cash equivalents
         for purposes of the consolidated statements of cash flows.

         CONCENTRATIONS OF CREDIT RISK - The Company's financial instruments
         that are exposed to concentrations of credit risk consist primarily of
         cash equivalents. A portion of the Company's cash equivalents is in
         high quality securities placed with major banks and financial
         institutions. Management does not believe that there is significant
         risk of loss associated with such investments.

         INVESTMENTS IN JOINT VENTURES - Investments in joint ventures are
         accounted for using the equity method of accounting. Under the equity
         method, original investments are recorded at cost and adjusted by the
         Company's share of earnings, losses, and distributions of the joint
         ventures.

         FIXTURES AND EQUIPMENT - Fixtures and equipment are stated at cost and
         consist primarily of office furniture and fixtures and computer
         equipment. Depreciation is computed by the straight-line method over
         periods of 3 to 7 years. Accumulated depreciation was $84,389 and
         $59,614 at December 31, 2000 and 1999, respectively.

         GOODWILL - Goodwill represents the excess cost over the net assets of
         businesses acquired during 1995. Goodwill is being amortized on the
         straight-line basis over 6 years. The Company reviews the carrying
         value of goodwill quarterly to determine whether any impairment has
         occurred. Amortization expense for both 2000 and 1999 totaled $506,268.

         IMPAIRMENT OF LONG-LIVED ASSETS - The Company reviews the carrying
         values of its long-lived and identifiable intangible assets for
         possible impairment, at least annually, or whenever events or changes
         in circumstances indicate that the carrying amount of assets may not be
         recoverable.

                                      F-6
<PAGE>

         FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of the
         Company's cash and cash equivalents, receivables and accounts payable,
         approximates fair value because of the short maturity of those
         instruments. The Company estimates the fair value of its long-term debt
         based on the current rates offered to the Company for loans of the same
         remaining maturities. The estimated fair values of the Company's
         long-term debt approximate their recorded values at December 31, 2000.

         INCOME TAXES - The Company accounts for income taxes in accordance with
         SFAS No. 109, "Accounting for Income Taxes," which requires recognition
         of deferred tax assets and liabilities for the expected future tax
         consequences of events that have been reflected in the financial
         statements or tax returns. Deferred income taxes reflect the net effect
         of (a) temporary differences between the carrying amounts of assets and
         liabilities for financial reporting purposes and the amounts used for
         income tax purposes, and (b) operating loss and tax credit
         carryforwards.

         EARNINGS PER COMMON SHARE - Basic earnings per share ("EPS") is
         computed based upon the weighted average number of common shares
         outstanding during the year. Diluted EPS is computed based upon the
         weighted average number of common and common equivalent shares plus the
         weighted average number of options outstanding if their effect upon
         exercise would have been dilutive using the treasury stock method.

         AWARDS OF STOCK-BASED COMPENSATION - The Company has adopted SFAS No.
         123, "Accounting for Awards of Stock-Based Compensation," which
         establishes financial accounting and reporting standards for
         stock-based employee compensation plans and for transactions where
         equity securities are issued for goods and services. This statement
         defines a fair value based method of accounting for an employee stock
         option or similar equity instrument and encourages all entities to
         adopt that method of accounting for all of their employee stock
         compensation plans. However, it also allows an entity to continue to
         measure compensation cost for those plans using the intrinsic value
         based method of accounting prescribed by APB Opinion No. 25,
         "Accounting for Stock Issued to Employees." The Company continues to
         apply APB Opinion No. 25 to its stock based compensation awards to
         employees and discloses the required pro forma effect on net income and
         net income per common share (Note 13).

         SEGMENT REPORTING - The Company's segments consist of its Joint
         Ventures (Note 5) and its corporate overhead department. The Company
         evaluates performance primarily based upon operating income of the
         segment. The accounting policies of the segments are the same as those
         described in this summary of significant accounting policies (Note 2).

         START-UP ACTIVITY COSTS - In April 1998, the Accounting Standards
         Executive Committee of the American Institute of Certified Public
         Accountants issued Statement of Position 98-5, "Reporting on the Costs
         of Start-Up Activities." It requires that the costs of start-up
         activities that had been previously capitalized be expensed as
         incurred. The Company adopted the provisions of this standard in the
         first quarter of 1999. Accordingly, the Company expensed $824,045 of
         such costs that had been previously incurred by its joint venture
         investments, net of the related tax benefit of $280,175.

         RECENTLY ISSUED ACCOUNTING STANDARDS - In June 30, 1998, the Financial
         Accounting Standards Board issued SFAS No. 133, "Accounting for
         Derivative Instruments and Hedging Activities." This statement
         establishes accounting and reporting standards for derivative
         instruments, including certain derivative instruments embedded in other
         contracts, and for hedging activities. It requires that an entity
         recognize all derivatives as either assets or liabilities in the
         statement of financial position, and measure those instruments at fair
         value, and is effective for all fiscal quarters of the fiscal years
         beginning after June 15, 2000. This is a complex accounting standard,
         however, the Company does not expect the adoption of this statement to
         have a material impact on the consolidated financial statements.

         USE OF ESTIMATES - The preparation of financial statements in
         conformity with accounting principles generally accepted in the United
         States of America requires management to make estimates and assumptions
         that affect the reported

                                      F-7
<PAGE>

         amounts of assets and liabilities at the date of the financial
         statements and the reported amounts of revenues and expenses during the
         reporting period. Significant estimates used by the Company include
         estimated useful lives for depreciable and amortizable assets, and
         certain accrued liabilities. Actual results could differ from those
         estimates.

         RECLASSIFICATIONS - Certain prior year amounts have been reclassified
         to conform to the current year presentation.

3.       LAND HELD FOR DEVELOPMENT

         On February 23, 1998, the Company purchased a parcel of land for
         $4,621,670 that represents a portion of a proposed gaming site in
         Biloxi, Mississippi. The Company has completed a review of the Biloxi
         project's proposed cost and ownership structure in an effort to make
         this opportunity more attractive for potential investors. The Company
         will continue to evaluate strategies for the project development.

4.       DEPOSITS AND OTHER ASSETS

         On November 18, 1998, the Company executed a series of agreements with
         Hard Rock Cafe International ("Hard Rock") for purposes of developing a
         Hard Rock Hotel & Casino on the Gulf Coast of Mississippi. The
         agreements required a Territory Fee of $2,000,000, due in two
         installments. The first was paid in November 1998, and the second in
         December 1999.

5.       INVESTMENTS IN JOINT VENTURES

         GTECH RELATIONSHIP

         The Company entered into a series of agreements with GTECH in 1995 to
         jointly pursue gaming opportunities. Pursuant to the agreements, the
         following limited liability companies, each owned 50% by Dreamport,
         Inc. ("Dreamport"), a subsidiary of GTECH, and 50% by the Company were
         formed: Gaming Entertainment, LLC ("GELLC"), Gaming Entertainment
         (Delaware), LLC ("GEDLLC"), Gaming Entertainment (Michigan), LLC
         ("GEMLLC"), and Gaming Entertainment (California), LLC ("GECLLC").

         The Company contributed to the capital of the joint ventures its rights
         to agreements with the Coquille Indian Tribe to finance and develop a
         gaming and entertainment facility in North Bend, Oregon and the rights
         to develop the Torres Martinez, Nottawaseppi Huron Band of Potawatomi
         and Delaware State Fair gaming projects. In payment for its interest in
         the joint ventures, GTECH contributed cash and other intangible assets
         and committed to loan the joint ventures up to $16.4 million to
         complete the North Bend, Oregon and Delaware facilities. The Company
         agreed to guarantee one-half of the obligations of the joint ventures
         to GTECH under these loans. At December 31, 1998, the advances to the
         joint venture had been repaid. GTECH has also agreed to make loans to
         the Company for its portion of the financing of projects if the Company
         is unable to otherwise obtain financing. GTECH will also provide
         project management, technology and other expertise to analyze and
         develop/manage the implementation of opportunities developed by the
         joint ventures.

         The Michigan and California ventures are in the development stage.
         Successful development and, ultimately, sustaining profitable
         operations is dependent on future events, including appropriate
         regulatory approvals and adequate market demand. These two ventures
         have not generated any revenues, and the costs incurred to date relate
         to pre-opening expenses such as payroll, legal and consulting.

         As part of the formation of the joint ventures, certain directors of
         the Company and a stockholder granted to GTECH an option, which expired
         December 29, 2000, to purchase their shares of the Company should they
         propose to transfer the same.

                                      F-8
<PAGE>

         On March 30, 2001, we acquired GTECH's 50% interest in three joint
         venture projects that had been equally owned by the two companies:
         Gaming Entertainment LLC, Gaming Entertainment (Michigan), LLC, and
         Gaming Entertainment (California), LLC. The purchase price was $1.8
         million, and was funded through the Company's existing credit facility.
         As part of this transaction, GTECH has extended the due date of our
         $3.0 million promissory note until January 25, 2002, with interest at
         prime.

         This transaction did not include our other joint venture with GTECH,
         Gaming Entertainment (Delaware), LLC, owner of a management agreement,
         continuing through 2011, to manage Midway Slots & Simulcast in
         Harrington, Delaware. This joint venture continues to be equally owned
         by us and GTECH.

         The following is a summary of each of the gaming opportunities and the
         material items that the Company has contributed, at book value, to
         capital of the joint ventures.

         GAMING ENTERTAINMENT, LLC

         GELLC leases approximately 12.5 acres of tribal trust lands from an
         entity owned by the Coquille Indian Tribe on which the gaming facility
         is located and subleases a portion of the land back to the same entity.
         The master lease expires in 2019 and the sublease expires in 2002 with
         options to renew. In July 1995, an addendum to the agreement with the
         Tribe was signed by the Company and Dreamport, which reduced the
         obligations of GELLC to provide financing to $10.4 million, extended
         the date when payments begin and modified the method of computing
         participating rents and loan repayments. During 1995, the facility
         began operations.

         In October 1996, the Tribe secured a new $17.5 million loan to
         refinance certain outstanding indebtedness, finance the acquisition of
         gaming equipment and finance certain improvements to the gaming
         facility. GELLC was repaid 100% of its original development loan from
         the financing. As part of the loan, the joint venture subordinated its
         rights to receive a percentage of Gross Gaming Revenues, as defined. As
         rental under the sublease to the tribal entity, GELLC will receive
         rental payments based on a schedule of percentages of Gross Gaming
         Revenues through 2002.

         GAMING ENTERTAINMENT (MICHIGAN), LLC

         In late 1996, GEMLLC renegotiated its management contract with the
         Nottawaseppi Huron Band of Potawatomi and with the 15% owner of the
         interests in the agreements. Under the new contract, the joint venture
         will finance, develop and manage gaming operations on reservation lands
         to be acquired near Battle Creek, Michigan. The 15% owner will be paid
         a royalty fee in lieu of its original 15% ownership in earlier
         contracts with the Tribe. During 1996, the assignment of the
         development rights by the Company to GEMLLC was approved by the Tribe,
         and gaming development costs of $4,372,446 were contributed to capital
         of GEMLLC by the Company. During 1997, the Company contributed
         additional gaming development costs of $160,962 and cash of $12,500 to
         capital of GEMLLC. GEMLLC is a development stage company as of December
         31, 2000.

         On December 18, 1998, the Michigan legislature approved a gaming
         compact that had been negotiated between the Tribe and the Governor of
         Michigan. A suit was filed in 1999 by "Taxpayers of Michigan Against
         Casinos" in Ingham County Circuit Court challenging the
         constitutionality of the approval process of these gaming compacts. On
         January 18, 2000 Judge Peter D. Houk issued a ruling that the compacts
         must be approved by a legislative bill rather than by resolution. The
         State of Michigan filed an appeal to the Michigan Court of Appeals on
         February 4, 2000. The joint venture company, as an intervening
         defendant, joined in the appeal filing.

         The Company and the Tribe have continued to move forward with their
         casino development plans while working towards a favorable resolution
         of the current litigation. The management agreements, along with the
         required licensing applications were submitted to the National Indian
         Gaming Commission in December

                                      F-9
<PAGE>

         1999. The parties have identified a suitable parcel of land for the
         gaming enterprise, which is under option, and have submitted a Fee to
         Trust application to the Bureau of Indian Affairs.

         GAMING ENTERTAINMENT (DELAWARE), LLC

         GEDLLC developed, constructed and equipped a gaming entertainment
         center at Harrington Raceway in Harrington, Delaware, and provided
         financing through a capital lease arrangement. GEDLLC has a 15-year
         management agreement and is compensated based upon a percentage of
         Gross Revenues and a percentage of Operating Profits, as both are
         defined. The facility began operations in August 1996.

         GAMING ENTERTAINMENT (CALIFORNIA), LLC

         GECLLC, pursuant to an agreement with the Torres Martinez Desert
         Cahuilla Indians, has certain rights to develop, manage and operate
         gaming activities for the Tribe. During 1997 and 1996, the Company
         contributed gaming development costs of $67,768 and cash of $12,500 to
         the capital of GECLLC. GECLLC is a development stage company as of
         December 31, 2000.

         On March 6, 1998, California Governor Pete Wilson announced that he had
         reached an agreement on a compact for gaming that was intended to be
         the standard for gaming compacts with all Indian tribes in California.
         In November 1998, the "Tribal Government Gaming and Economic
         Self-Sufficiency Act of 1998" (the "Act") was passed by the voters of
         California in the general election. The Act's constitutionality was
         challenged and the California Superior Court upheld the challenge.
         Numerous tribes have now reached modified compacts with Governor Gray
         Davis, and on March 7, 2000, the voters approved a ballot measure to
         amend the constitution, which now enabled the compacted tribes to
         pursue gaming under the provisions of the compacts. The Tribe and the
         Company are currently exploring the best manner in which to optimize
         the gaming enterprise alternatives.

         The following is a summary of condensed financial information for the
         joint ventures as of December 31, 2000 and 1999 and for the years then
         ended:

<TABLE>
<CAPTION>

2000
CONDENSED BALANCE SHEET INFORMATION
                                                   GELLC          GEMLLC          GEDLLC         GECLLC           TOTAL
                                                 -----------    -----------     -----------    -----------     -----------
<S>                                              <C>            <C>             <C>            <C>             <C>
Total assets                                     $   177,596    $ 4,919,876     $   713,255    $    11,610     $ 5,822,337

Total liabilities                                         --      2,912,064         248,222        439,043       3,599,329

Members' capital                                     177,596      2,007,812         465,033       (427,433)      2,223,008

CONDENSED STATEMENT OF OPERATIONS INFORMATION

Revenues                                         $ 2,311,497    $        --     $15,275,702    $        --      17,587,199

Operating income (loss)                            2,279,372     (1,018,975)      5,567,286       (149,699)      6,677,984

Net income (loss)                                  2,279,372     (1,018,975)      5,567,286       (149,699)      6,677,984

Company's equity
   in net income (loss)                            1,139,686       (509,488)      2,783,643        (74,849)      3,338,992
</TABLE>

                                      F-10
<PAGE>

<TABLE>
<CAPTION>

1999
CONDENSED BALANCE SHEET INFORMATION
                                                    GELLC            GEMLLC           GEDLLC           GECLLC            TOTAL
                                                 ------------     ------------     ------------     ------------     ------------
<S>                                              <C>              <C>              <C>              <C>              <C>
Total assets                                     $    378,525     $  4,418,222     $    729,759     $     22,957     $  5,549,463

Total liabilities                                     191,523        1,391,435          476,680          300,693        2,360,331

Member's capital                                      187,002        3,026,787          253,079         (277,736)       3,189,132

CONDENSED STATEMENT OF OPERATIONS INFORMATION

Revenues                                         $  2,297,181     $         --     $ 12,468,928     $         --     $ 14,766,109

Operating income (loss)                             2,244,726         (948,670)       4,953,559          (82,933)       6,166,682

Cumulative effect of
   Change in accounting,                             (137,351)      (1,260,818)          (9,157)        (240,765)      (1,648,091)

Net income (loss)                                   2,112,028       (2,209,488)       4,950,406         (323,698)       4,529,248

Company's equity
   in net income (loss)                             1,056,014       (1,104,744)       2,475,203         (161,849)       2,264,624
</TABLE>

   The joint venture entities are treated as partnerships for tax purposes and
  consequently, no tax provision / benefit is recognized at the venture level.

                                      F-11
<PAGE>

6.       LONG-TERM  DEBT

         Long-term debt consists of the following:
                                                     2000             1999
                                                 ------------     ------------
         Unsecured note payable to
         GTECH Corporation; interest
         at the prime rate (91/2% at
         December 31, 2000) due monthly
         through January 25, 2001, at
         which time all unpaid principal
         and interest will be due.                $ 3,000,000      $ 3,000,000

         Line of credit; interest at
         prime plus 1/2% (10% at December
         31, 2000), payable monthly,
         principal due February 25, 2002.
         Amount represents the balance
         outstanding at December 31, under
         a $2,000,000 line of credit from
         Coast Community Bank, which
         provided the initial loan for the
         acquisition of Land in Biloxi,
         Mississippi.                                 150,000          750,000
                                                 ------------     ------------
           Total                                    3,150,000        3,750,000
           Less current portion                            --               --
                                                 ------------     ------------
           Long-term portion                     $  3,150,000     $  3,750,000
                                                 ============     ============

         The scheduled maturities of debt are as follows:

                         2001                    $         --
                         2002                       3,150,000
                                                 ------------
                         Total                   $  3,150,000
                                                 ============

7.       STOCKHOLDERS' EQUITY

         Options to purchase 150,000 shares of common stock at $3.69 per share
         (market value on date of grant) were issued in 1994 to a consultant.
         These options were repriced in June 1998 at $2.25 per share (market
         value on the repricing date). The fair value of $43,410 for the options
         was estimated on the date of grant using the Black-Scholes
         option-pricing model with the following assumptions: expected
         volatility of 97 percent, risk-free interest rate of 5.0 percent, and
         expected life of 2.0 years. As the options were granted to a
         nonemployee in return for services, consulting expense of $43,410 was
         recognized in 1998, along with an equivalent increase in paid in
         capital. All of these options were exercisable at December 31, 2000.

         On December 20, 1996, a consultant, who is also a principal
         stockholder, was granted an option to purchase 250,000 common shares at
         $3.69 in return for consulting services to be provided over an
         approximate three-year period. The options vested immediately. The fair
         value of $302,826 for the options was estimated on the date of grant
         using the Black-Scholes option-pricing model with the following
         assumptions: expected volatility of 80 percent, risk-free interest rate
         of 6.0 percent, and expected life of 2.0 years. As the options were
         granted to a non-employee in return for services, consulting expense
         was recognized ratably over the three-year service period commencing in
         1997.

         Options to purchase 70,001 shares of common stock at $2.06 per share
         (market value on date of grant) were issued in 1998 to the Company's
         current President for services previously performed in a consulting
         capacity. The Company recognized consulting expense of $116,224 and
         recorded an equivalent increase in paid in capital. The fair value for
         the options was estimated on the date of grant using the Black-Scholes
         option-pricing model with the following assumptions: expected
         volatility of 95 percent, risk-free interest rate of 5.4 percent, and
         expected life of 2.0 years. These options were forfeited in 2000.

                                      F-12
<PAGE>

         The Company's preferred stock has a $.30 per share cumulative dividend
         rate, and has a liquidation preference equal to $3.00 per share plus
         all unpaid dividends. If the Company is in default in declaring or
         setting apart for payment of dividends on the preferred stock, it is
         restricted from paying any dividend, making any other distribution, or
         redeeming any stock ranking junior to the preferred stock. The
         stockholders' right to the $.30 per share cumulative dividends on the
         preferred stock commenced as of June 30, 1992 and totaled $1,785,000
         and $1,575,000 at December 31, 2000 and 1999, respectively. Through
         December 31, 2000, no dividends have been declared or paid.

8.       INTEREST AND OTHER INCOME

         In 1999, the Company received litigation settlement proceeds of
         $262,767 in connection with its land in Mississippi.

9.       INCOME TAX PROVISION

         The income tax (provision) benefit recognized in the consolidated
         financial statements consists of the following:

                                                     2000          1999
                                                  ----------    -----------
         Current:  Federal                        $       --    $        --
                   State                            (171,210)      (197,410)
                                                  ----------    -----------
                      Total current                 (171,210)      (197,410)
                                                  ----------    -----------
         Deferred: Federal                          (336,810)       493,525
                   State                              17,627        241,793
                                                  ----------    -----------
                      Total deferred                (319,183)       735,318
                                                  ----------    -----------
         Total (Provision) Benefit                $ (490,393)   $   537,908
                                                  ==========    ===========

         A reconciliation of the income tax provision with amounts determined by
         applying the statutory U.S. Federal income tax rate to consolidated
         income before income taxes is as follows:

                                                     2000          1999
                                                  ----------    -----------
         Tax (provision) benefit at
           U.S. statutory rate                    $ (219,464)   $   692,719
         State taxes                                (101,534)        29,292
         Goodwill amortization                      (172,131)      (172,131)
         Other                                        (2,736)       (11,972)
                                                  ----------    -----------
           Total                                  $ (490,393)   $   537,908
                                                  ==========    ===========

                                      F-13
<PAGE>

         The Company's deferred tax items as of December 31, 2000 and 1999 are
as follows:

                                                     2000            1999
                                                  -----------    ------------
         Deferred tax assets:

           Net operating loss carryforward        $   791,384    $  1,514,038
           Tax credit carryforwards                    27,294          26,643
           Intangibles                                763,679         294,817
           Accrued expenses                             6,034           5,364
           Stock option plans                         165,332         145,928
           State taxes                                     --              --
                                                  -----------    ------------
         Total deferred tax assets                  1,753,723       1,986,790
                                                  -----------    ------------
         Deferred tax liabilities:
           Difference between book and tax basis
             of gaming rights                      (1,454,325)     (1,369,474)
           Other                                       (4,499)         (3,233)
                                                  -----------    ------------
         Total deferred tax liabilities            (1,458,823)     (1,372,707)
                                                  -----------    ------------
         Net                                      $   294,900    $    614,083
                                                  ===========    ============

         At December 31, 2000, the Company had net operating loss carryforwards
         for income tax purposes of approximately $2,327,000, which may be
         carried forward to offset future taxable income. The loss carryforwards
         expire in 2010 through 2019. The availability of the loss carryfowards
         may be limited in the event of a significant change in ownership of the
         Company or its subsidiaries.

10.      SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

         Cash payments for interest for the years ended December 31, 2000 and
         1999 were $321,911 and $232,187, respectively.

         Income taxes paid for the years ended December 31, 2000 and 1999 were
         $174,708 and $210,738, respectively.

         The following noncash investing and financing activities are not
         reflected in the consolidated statements of cash flows:

         During the years ended December 31, 2000 and 1999, additional paid-in
         capital increased by $55,440 and $156,384, respectively, as a result of
         granting and repricing stock options issued to non-employees for
         consulting services.

11.      COMMITMENTS AND CONTINGENCIES

         The Company leases office space under a noncancellable lease expiring
         on March 31, 2002. Future minimum lease obligations are $79,920 and
         $19,980 for fiscal years 2001 and 2002, respectively. Rent expense
         pertaining to operating leases was $72,261 for the years ended December
         31, 2000 and 1999.

         In connection with the land negotiations for the Biloxi development
         project, the Company has granted an option and right of first refusal
         to an unrelated third party that owns and leases the balance of the
         necessary acreage. The option, which is exercisable through February
         15, 2001, allows the optionee to acquire the Company's one-acre parcel
         at cost plus carrying charges, as defined. The right of first refusal
         allows the optionee to match any bona fide offer the Company receives
         for its land, and desires to accept.

                                      F-14
<PAGE>

         In October 1994, Full House filed an action for declaratory relief in
         Mississippi, seeking a determination by the court that no relationship
         exists between it and Lone Star Casino Corporation regarding the
         potential acquisition of a riverboat casino on the Mississippi gulf
         coast (Full House Resorts, Inc. v. Lone Star Casino Corporation v.
         Allen E. Paulson, Second Judicial District of the Chancery Court of
         Harrison County, Mississippi). Lone Star filed a counterclaim alleging
         breaches of fiduciary duty, breach of contract, conspiracy to breach
         contract and to breach fiduciary duty and common law fraud. The trial
         court granted summary judgment in favor of all defendants on that
         counterclaim, and Lone Star appealed that judgment to the Mississippi
         appellate court. In April 1998, the Appeals Court affirmed the
         dismissal of all counts against all parties, excepting Lone Star's
         claim against the Company for breach of contract, which it remanded to
         the trial court for additional hearing. In January 2000, LS Capital,
         successor entity to Lone Star Casino Corporation, announced that it had
         retained counsel to pursue the two remaining claims it had alleged
         against the Company which were not already dismissed by the Mississippi
         appellate courts. In April 2000, the trial judge dismissed both those
         counts for Lone Star's failure to prosecute its claims for nearly
         twenty months after their remand from the Court of Appeals. Lone Star
         appealed that ruling, briefing has been completed and we anticipate
         that a decision will be rendered in the next several months.

         Allen E. Paulson, a major stockholder of the Company and its former
         Chief Executive Officer and Board Chairman, sued Jefferies & Co., Inc.
         and Morgans Waterfall, et al, in the Federal Court for the Central
         District of California Western Division, for various claims arising
         from his individual attempt to purchase Riviera Holdings Corp. and
         other gaming properties during 1996-1997. On May 5, 2000, Jefferies
         filed counterclaims in that lawsuit against Mr. Paulson and companies
         owned by him individually, as well as a Third party Complaint against
         the Company. Jefferies alleges that Full House is responsible to it for
         the payment of fees and expenses, which it claims it is owed as a
         result of several engagement letters it executed with Mr. Paulson. Mr.
         Paulson's signature line does not reflect that he executed any of these
         engagement letters on behalf of Full House, but Jefferies claims that
         his individual signature also bound his "affiliates". Full House
         vigorously contests any liabilities whatsoever to Jefferies, and moved
         for dismissal of Jefferies' claim on the grounds its assertions were
         insufficient as a matter of law. On July 27, 2000, the court issued an
         order denying our motion. We filed our Answer and Counterclaims with
         the court on August 24, 2000. We also filed claims against Mr. Paulson
         for indemnification in the Jefferies litigation, among other claims.
         Discovery is continuing, and trial in the matter has been scheduled for
         mid-2002. Management is unable to determine the outcome of this
         litigation, but does not believe the outcome will have a material
         adverse effect on the Company's consolidated financial condition.

12.      STOCK-BASED COMPENSATION PLANS

         At December 31, 2000, the Company had three stock-based compensation
         plans that are described below. The Company applies APB Opinion No. 25
         and related interpretations in accounting for these plans. Because
         options have been granted with exercise prices equal to market value on
         the grant date, no compensation cost has been recognized for options
         granted under the Non-employee Director Stock Plan, Incentive Stock
         Plan (except as disclosed below related to options granted under the
         Incentive Stock Plan to a consultant/principal shareholder) and an
         informal director stock plan. Had compensation cost for options granted
         under the Company's three stock-based compensation plans been
         determined based on the fair value at the grant dates for awards under
         those plans consistent with the method of SFAS Statement 123, the
         Company's net income (loss) and income (loss) per common share would
         have been restated to the pro forma amounts indicated below:

                                      F-15
<PAGE>

                                                     2000          1999
                                                  ----------    -----------
         Net income (loss)
           As reported                            $  155,089    $(1,499,500)
           Pro forma                              $  399,687    $(2,004,729)

         Income (loss) per common share,
           basic and diluted
           As reported                            $     (.01)   $      (.17)
           Pro forma                              $      .04    $      (.21)

         The fair value of each option grant for the pro forma disclosure was
         estimated on the date of grant using the Black-Scholes option-pricing
         model with the following weighted-average assumptions used for grants
         in 2000 and 1999: expected volatility of 88% and 95%, risk-free
         interest rate of 6.6 percent and 5.5 percent, and expected life of 2.5
         years.

         The Company has reserved 300,000 shares of its common stock for
         issuance under the Nonemployee Director Stock Plan. The Plan allows for
         options to be granted at prices not less than fair market value on the
         date of grant and are generally exercisable over a term of five years.
         The Company issued 20,000 options under the Plan during both 2000 and
         1999.

         The Company has reserved 3,000,000 shares of its common stock for
         issuance under the 1992 Incentive Plan as amended in June 1999. The
         Plan allows for the issuance of options and other forms of incentive
         awards, including qualified and non-qualified incentive stock options.
         Incentive stock options may be granted at prices not less than fair
         market value on the date of grant, while non-qualified incentive stock
         options may be granted at a price less than fair market value on the
         date of grant. The persons eligible for such plan include employees and
         officers of the Company (whether or not such officers are also
         directors of the Company) and consultants and advisors to the Company,
         who are largely responsible for the management, growth and protection
         of the business of the Company. Options issued under the Incentive Plan
         are generally exercisable over a term of ten years.

         During 2000, the departure of our former president resulted in the
         forfeiture of his options to purchase 800,000 shares. There were no
         options issued under this plan during the year.

         On March 3, 1997 ("the Grant Date"), the Board of Directors approved a
         grant of an option ("Option") to each of the Company's three directors,
         to purchase 250,000 shares of common stock at an exercise price per
         share of $3.375, the closing price of the common stock on the Grant
         Date. The Options were granted in consideration of the fact that
         services to the Company by such directors have exceeded and are
         expected to continue to exceed the duties of a typical corporate
         director. On May 12, 1997, at the Company's annual meeting, the
         stockholders ratified the Options. The Options become exercisable in
         50,000 share increments commencing April 9, 1997 and on each
         anniversary thereafter. In addition, the Options for two of the
         directors provide that a 50,000 share increment became exercisable on
         the Grant Date. In March 1998, 250,000 of these shares were forfeited,
         and in June 1998, the remaining 500,000 shares were repriced to $2.25
         per share (fair market value at repricing).

         The total options outstanding under the 1992 Incentive Plan, including
         the consulting options at December 31, 2000 and 1999 were 586,000 and
         1,386,000, respectively. The total options outstanding under the
         Nonemployee Director Stock Plan at December 31, 2000 and 1999 were
         70,000 and 50,000, respectively. The total options outstanding under
         the Director Stock Plan at December 31, 2000 and 1999 were 575,000.

                                      F-16
<PAGE>

         A summary of the status of the Company's stock option plans, including
         consultant options, as of December 31, 2000 and 1999 , and changes
         during the years then ended is presented below:
<TABLE>
<CAPTION>
                                                        2000                     1999
                                               ----------------------   ----------------------
                                                            WEIGHTED-
                                                             AVERAGE                 WEIGHTED-
                                                            EXERCISE     SHARES       AVERAGE
                                                 SHARES       PRICE       PRICE      EXERCISE
                                               ---------    ---------   ---------    ---------
         <S>                                   <C>          <C>         <C>          <C>
         Outstanding at beginning of year      2,011,000    $   2.35    1,991,000    $    2.36
         Granted                                  20,000    $   1.57       20,000    $    2.22
         Exercised                                    --          --           --           --
         Forfeited                               800,000    $   2.06           --           --
                                               ---------                ---------
         Outstanding at end of year            1,231,000    $   2.54    2,011,000    $    2.35
                                               =========                =========

         Exercisable at year-end               1,137,000    $   2.56    1,261,333    $    2.49

         Weighted-average fair value of
            options granted during the year                 $    1.32                $    1.40
</TABLE>

         As of December 31, 2000, the 1,231,000 options outstanding have
         exercise prices ranging between $1.57 and $3.69, and a weighted average
         remaining contractual life of 5 years. The options exercisable of
         1,137,000 also have exercise prices ranging between $1.57 and $3.69,
         and their weighted average remaining contractual life is 5 years.

                                      F-17
<PAGE>

13.      SEGMENT REPORTING

         The Company's primary segment consists of its joint venture investments
         (Note 5). Two of the ventures have current operations, and two are
         still in the development stage. The operating ventures are evaluated
         primarily based on operating income, while the development stage
         ventures are more subjectively assessed by reviewing the future
         prospects relative to the ongoing expenditures. The corporate segment
         reflects the administrative and development expenses of the Company's
         other business.
<TABLE>
<CAPTION>
         2000                                   Joint         Consolidated
                                               Ventures        Corporate          Total
                                             ------------     ------------     ------------
         <S>                                 <C>              <C>              <C>
         Revenues                            $  3,923,329     $         --     $  3,923,329
         Income (loss) from operations          2,787,724       (1,825,479)         962,245
         Interest expense                        (276,390)         (51,989)        (328,379)
         Other income                                  --           11,616           11,616
         Tax (expense) benefit                 (1,124,783)         634,390         (490,393)

         Net income (loss)                   $  1,386,551     $ (1,231,462)    $    155,089

         Identifiable Assets                 $  5,226,145     $  8,226,534     $ 13,452,679
<CAPTION>
         1999                                   Joint         Consolidated
                                               Ventures        Corporate           Total
                                             ------------     ------------     ------------
         <S>                                 <C>              <C>              <C>
         Revenues                            $  3,604,472     $         --     $  3,604,472
         Income (loss) from operations          2,582,402       (3,831,717)      (1,249,315)
         Interest expense                        (241,152)         (13,803)        (254,955)
         Other income                                  --          290,907          290,907
         Tax (expense) benefit                   (230,000)         487,733          257,733
         Net income (loss) before
              Cumulative effect of change
              in accounting principle           2,111,250       (3,066,880)        (955,630)
         Accounting change, net                  (543,870)              --         (543,870)

         Net income (loss)                   $  1,567,380     $ (3,066,880)    $ (1,499,500)

         Identifiable Assets                 $  5,397,736     $  8,486,100     $ 13,883,836
</TABLE>

         The assets of the corporate segment include the Company's land and
         advanced costs for its proposed development project in Biloxi,
         Mississippi.

                                      F-18
<PAGE>

                                  EXHIBIT INDEX

  EXHIBIT         DESCRIPTION
  -------         -----------
    21            List of Subsidiaries of Full House Resorts, Inc.

    23.1          Consent of Deloitte & Touche LLP