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, 1998

[ ]   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:  $3,529,687.

         The aggregate market value of registrant's voting $.0001 par value
common stock held by non-affiliates of the registrant, as of March 24, 1999,
was: $12,668,189.

         The number of shares outstanding of registrant's $.0001 par value
common stock, as of March 24, 1999, was 10,340,380 shares.

<PAGE>

                                     PART I

1.       DESCRIPTION OF BUSINESS.

         Background

         Full House Resorts, Inc. ("Full House" or the "Company"), a developer
of destination resorts and entertainment, gaming and commercial centers, was
incorporated in the State of Delaware on January 5, 1987. On August 17, 1993,
Full House completed a registered public offering of units, each consisting of
three shares of its Common Stock and a warrant (the "Warrant") entitling the
holder to purchase, for $5.00, one additional share of Common Stock during the
period between August 10, 1994 and August 9, 1996 for net proceeds of
$6,742,841. The Company extended the exercise period of the Warrants until
February 10, 1997.

         In May 1994, Lee Iacocca, currently a director of the Company, brought
to the attention of Full House management certain opportunities to enter into
gaming agreements. Specifically, Mr. Iacocca advised Full House 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
Full House 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.

         On August 18, 1994, pursuant to a May 1994 letter of intent, Full House
entered into a Merger Agreement (the "Merger Agreement") with Full House
Subsidiary, Inc. ("FHS"), LAI and Omega (30% owned by William P. McComas, a
director and stockholder of Full House) whereby these entities were to merge
with FHS, a newly formed subsidiary of Full House. In exchange, the entities
were to receive 1,750,000 shares of common stock of Full House and a note from
Full House 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.

         Subsequently, the parties determined that it was in their best
interests to proceed with the merger with LAI prior to consummating the merger
with Omega. On March 23, 1995, the Merger between LAI and FHS was consummated.
As a result of the Merger, Full House obtained a 55% interest in the agreements
with the Organized Tribes and the Nottawaseppi Huron Band of Potawatomi, and a
50% interest in the agreements with the Torres Martinez Desert Cahuilla Indians
and the Delaware State Fair.

         The merger with Omega was effected on November 20, 1995. In exchange,
the shareholders of Omega received an aggregate of 500,000 shares of Full House
Common Stock and a promissory note of Full House in the principal amount of
$375,000. The principal amount of this promissory note accrued interest, payable
quarterly, at a rate equal to the "prime" rate and such principal amount,
together with all accrued interest, was due and payable in full upon demand by
the holder(s) of this note, but in no event before August 31, 1996. 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. As a result of such merger, Full House obtained the
remaining 45% interests in the agreements with the Organized Tribes and the
Nottawaseppi Huron Band of Potawatomi and the remaining 50% interests in the
agreements with the Torres Martinez Desert Cahuilla Indians and the Delaware
State Fair.

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

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         GTECH Relationship

         Effective April 1, 1995, Full House 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 existing (except the Deadwood
Gulch Resort) and future gaming opportunities. Pursuant to the agreements, joint
venture companies equally owned by Dreamport, Inc., the gaming and entertainment
subsidiary of GTECH, and Full House have been formed. Full House contributed its
rights (as described below) 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.

         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. Full House agreed to guarantee one-half of the
obligations of the joint venture companies to GTECH under these loans and at
December 31, 1998 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 Full House for its portion of
the financing of projects if Full House 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 venture companies. GTECH has also loaned Full House $3 million. Although
the loan was convertible into 600,000 shares of Full House's Common Stock in
January 1998, the loan conversion clause expired without exercise. As part of
the GTECH relationship, Allen E. Paulson, William P. McComas and Lee Iacocca
have granted to GTECH an option to purchase their shares should they propose to
transfer the same. In March 1997, Full House and GTECH modified their agreement
to no longer require each party to present prospective business opportunities to
the other.

         Set forth below is a brief description of each of the gaming
opportunities which have been transferred to the joint venture companies which
are equally owned by Full House and Dreamport.

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, 1998, there were 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 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.

         On July 19, 1995, an addendum to the agreement with the Coquille Indian
Tribe was signed by Full House and Dreamport, which reduced the obligations of
the joint venture company to provide financing to $10.4 million, extended the
date when repayments begin and modified 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 million
participation in that new loan, half of which is guaranteed by Full House. 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
will receive 13% of Gross Gaming Revenue. The monthly percentage rental will be
reduced to 12% from October 8, 1999 until October 8, 2000 when it will reduce 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; provided,
however, in the event 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.

                                      -3-
<PAGE>

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 seven Indian casinos presently operating in
Oregon. The closest competing casino is located approximately 90 miles from
North Bend and operates 700 devices, a card room, bingo and keno. The other
casinos are located approximately 140, 160, 200, 265 and 435 miles from North
Bend. The two facilities which are 140 and 160 miles from North Bend are located
closer to Portland, Oregon. Full House believes that there are other Indian
casinos presently being contemplated in Oregon.

MIDWAY SLOTS AND SIMULCAST-HARRINGTON, DELAWARE. On August 20,1996 Midway Slots
and Simulcast, owned by Harrington Raceway, Inc., was opened. The 35,000 square
foot facility located near Dover, Delaware, was developed, financed and is
managed by a Full House-Dreamport joint venture company. The facility employs
approximately 270 people, and features 702 gaming devices and a 150-seat
simulcast parlor. Individual screens for players broadcast horse racing from
harness and thoroughbred tracks around the world. The facility also features a
150-seat Las Vegas-style buffet, lounge, and gift shop. 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 development
loan was paid in full in February 1998.

         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 approximately 20 miles from
Harrington and currently operates 1,000 devices with plans to add an additional
500 devices in 1999. The other facility is located approximately 60 miles from
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 developed and constructed
the gaming facility and provided financing through a capital lease arrangement.
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 the number of gaming devices in the facility was increased by 122.
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.

NOTTAWASEPPI HURON BAND OF POTAWATOMI-BATTLE CREEK, MICHIGAN. Full House 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 Class II and Class III
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. The Tribe intends
to apply 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
joint venture company owned by Full House and Dreamport 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 won a Class III 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 and other Class III games.
Legislative ratification of the Compact occurred in December, 1998. Approval by
the U. S. Department of the Interior and National Indian Gaming Commission
remains pending. The Company is in the process of identifying a suitable site
for the Tribe's gaming operation and beginning the process of having the land
placed in trust for the Tribe.

                                      -4-
<PAGE>

         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. Construction of temporary facilities has begun with openings
projected in 1999. The Company does not believe that operation of three gaming
facilities in Detroit will materially adversely impact the proposed Huron
Potawatomi casino.

TORRES MARTINEZ BAND OF DESERT CAHUILLA INDIANS-THERMAL, CALIFORNIA. In April
1995, Full House entered into a Gaming and Development Agreement and a Gaming
Management Agreement with the Torres Martinez Desert Cahuilla Indians. The
agreements grant Full House 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 the obligation of Full House 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 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 requires legislative enactment, was approved by the
U. S. House of Representatives but not by the Senate. The bill was not
reintroduced during the 1997 session as the Tribe focused its attention upon a
settlement with the State of California under which it will also take
replacement lands in exchange for granting a right of way through its
reservation to accommodate the re-routing of a state highway.

         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. The Compact
would limit electronic gaming devices in Indian casinos to lottery-style devices
and limit the number of devices to 19,900 statewide, which would be allocated
equally among California's 100 federally recognized tribes. Tribes that do not
choose to operate their own casinos could lease their allotment of gaming
devices for up to $5,000 per device, per year. Tribal casinos would be limited
to 975 gaming devices each, including leased machines. 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
guarantees any federally recognized tribe within the state that has land
eligible for gaming, the right to operate limited forms of Class III gaming
under specific terms. However, the Act's constitutionality is pending before the
California Superior Court.

         The Tribe and the Company have not determined which course of action to
pursue, if any, in light of the continuing uncertainty of the future scope and
direction of Indian gaming in California. Therefore, the Company cannot
determine the impact on the future development of gaming operations with the
Tribe.

         THEME HOTEL/CASINO-BILOXI, MISSISSIPPI

         The Company purchased a one acre parcel of land on the gulf coast in
Biloxi, Mississippi in February 1998, 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. The Company has subsequently obtained options to purchase
and/or lease approximately six additional acres, which, together with the parcel
already acquired, will constitute the project site.

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

         These agreements provide the Company with the exclusive right to
develop a Hard Rock Casino-Hotel in the defined territory in exchange for the
payment of a $2,000,000 territory fee and a continuing fee based on gaming and
hotel revenues generated by the project. The Company has paid $1,000,000 towards
the territory fee as of December

                                      -5-
<PAGE>

31, 1998, with the balance due on March 31, 1999. The Company has formed a
management company with Hard Rock, which will serve as the manager and developer
of the project.

         The Hard Rock-Biloxi, as currently envisioned, is expected to cost
between $250 and $300 million, and the Company is exploring various financing
alternatives. Substantial additional financing will be required for the Company
to effect its business strategy, and there can be no assurance that the Company
will be able to obtain such financing on acceptable terms.

         DEADWOOD GULCH RESORT

         On May 12, 1998, the Company completed the sale of Deadwood Gulch
Resort ("DGR") for $6 million cash and the proration of certain related items.
The Company received net proceeds of $5,933,160 from the sale of DGR, which
includes the $6 million cash portion of the sales price in addition to $11,439
received from the buyer for the proration of inventory, receivables and prepaid
assets, offset by advance deposits, progressive jackpot liabilities and closing
costs of $78,279. The gain on the sale, recorded in the second quarter 1998, was
$385,225.

         The Company determined that its ownership of this facility was
inconsistent with the Company's future plans which are to focus on gaming
facilities in areas of higher population density and at locations which permit
higher stakes and more types of gambling than are allowed in Deadwood, South
Dakota. From the time of its acquisition through its sale, the Resort had a
cumulative operating deficit of approximately $3.41 million and the Company had
recognized an impairment loss of $4.15 million through such date.

         Full House operated Deadwood Gulch Resort in Deadwood, South Dakota
until its sale in May 1998. The Deadwood Gulch Resort consists of a 56-acre
complex which includes a 99-room hotel (including an outdoor pool/recreation
area) with two small casinos, a freestanding restaurant and saloon, a
freestanding 8,000 square foot conference center, a convenience store/gas mart,
a recreational vehicle park and campground and the Gulches of Fun family center.
Full House operated 96 slot machines, two blackjack tables and three video
lottery devices within the resort complex.

         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.

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         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 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 daily legal
and political developments that may impact the Company's future

                                      -7-
<PAGE>

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. In addition, several bills have been introduced in
Congress which would amend IGRA. If IGRA were amended, the amendment could
change the governmental structure and requirements within which Indian tribes
may conduct gaming.

         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 its 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 licensed are not saleable, otherwise transferable or
subject to nominee arrangements.

         EMPLOYEES

         As of March 15, 1999, the Company and its subsidiaries had six
full-time employees, three of whom are executive officers of the Company. The
Company's management believes that its relationship with its employees is good.
None of the Company's 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. See
"--Description of Business."

                                      -8-
<PAGE>

         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. See "Description of Business - GTECH Relationship."

         The Company owns a parcel of land in Biloxi, Mississippi, which is
intended to be a portion of a future gaming development site. The property was
acquired in February 1998 and comprises approximately one acre.

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 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. No action has been
taken on that matter to date. 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 financial condition.

         In January 1999, the Company was advised that the U.S. Securities and
Exchange Commission ("SEC") was conducting an informal inquiry into trading of
the Company's stock by its President, Gregg R. Giuffria, for a period beginning
prior to his association with the Company and continuing for a short period
after he became a consultant to the Company. In February 1999, the Company was
further advised that the SEC had issued a Formal Order of Investigation in the
matter. The Company is cooperating fully with the SEC in its investigation.

4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.

                                      -9-
<PAGE>

                                     PART II

5.       MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         (A)      MARKET INFORMATION

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

                                               HIGH             LOW
                                               ----             ---
YEAR ENDED DECEMBER 31, 1998

First Quarter                                  $3.88             $2.00
Second Quarter                                  3.75              1.94
Third Quarter                                   3.00              1.25
Fourth Quarter                                  3.50              1.50

YEAR ENDED DECEMBER 31, 1997

First Quarter                                  $4.38             $2.75
Second Quarter                                  3.63              2.38
Third Quarter                                   2.88              1.38
Fourth Quarter                                  3.06              1.69

         The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions. On March 24,
1999, the last sale price of the Common Stock as reported by the Nasdaq SmallCap
Market was $2.19.

         (B)      HOLDERS

         As of March 24, 1999, the Company had approximately 161 holders of
record of its Common Stock. The Company believes that there are over 2,000
beneficial owners of its Common Stock.

         (C)      DIVIDENDS

         The Company has paid no dividends on its Common Stock or Preferred
Stock since its inception. Holders of the Company's 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 the Company's 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 $.30per 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. The Company has not declared or
paid the accrued dividends on its Preferred Stock which were payable since
issuance, totaling $1,365,000 and, accordingly, is in default in regard thereto.

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

                                      -10-
<PAGE>

         The Company intends to retain future earnings to provide funds for the
operation of its business, retirement of its debt and payment of preferred stock
dividends and, accordingly, does not anticipate paying any cash dividends on its
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, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

         JOINT VENTURE INCOME. Joint venture income increased $419,822, or 13.5%
for the year ended December 31, 1998 as compared to 1997. These increases are
due to the improved operating results from the Delaware and Oregon joint
ventures.

         DELAWARE JOINT VENTURE. The Company's share of income from the Delaware
joint venture was $2,506,437 for the year ended December 31, 1998. This
represented an increase in the Company's share of income of $350,011, or 16.2%,
over 1997. The increase is attributed to a new marketing plan at the facility
and the addition of 122 video slot machines on May 22, 1998. As a result of
operating results exceeding initial projections, Midway Slots and Simulcast has
prepaid its obligation to the Delaware joint venture. The joint venture, in
turn, prepaid its obligation to the Company in February 1998.

         OREGON JOINT VENTURE. The Company's share of income from the Oregon
joint venture increased $80,662, or 8.1% for the year ended December 31, 1998 as
compared to 1997 primarily as a result of improved marketing of the casino.

         CALIFORNIA AND MICHIGAN JOINT VENTURES. The Company's share of the loss
from the California and Michigan joint ventures increased to $57,486 for the
year ended December 31, 1998 as compared to $46,634 in 1997. These joint venture
companies are still in the development stage and do not have operating revenues.

         GENERAL AND ADMINISTRATIVE EXPENSES. Non-resort expenses increased
$217,416, or 13.5% for the year ended December 31, 1998 as compared to 1997.
This increase is primarily due to the grant, on January 6, 1998 of a vested
stock option to Gregg Giuffria, who later became president and chief operating
officer of the Company, to purchase 70,001 common shares at $2.03, and an
unvested option to purchase 279,999 shares at $2.03. The value of $240,964 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.
As the vested options were granted to a then nonemployee in return for prior
services, consulting expense was recognized in the first quarter of 1998 in the
amount of $74,644, and the remaining $166,320 is being amortized over the 36
month vesting period beginning April 1998. In addition, in 1998, the Company
continued to incur costs related to the investigation, due diligence and
pre-development of various ongoing opportunities for expansion of its business
and the increase in the Company's corporate structure necessary to administer
the Company's expansion.

         INTEREST EXPENSE AND DEBT ISSUE COSTS. For the year ended December 31,
1998, interest expense and debt issue costs decreased by $98,131 as compared to
1997. This decrease is primarily due to interest on the $3 million GTECH note,
which became interest bearing in January 1998, and the bank loan used to fund
the Mississippi land acquisition, offset by the decrease in interest expense due
to the payoff of the DGR loan.

         INTEREST AND OTHER INCOME. Interest and other income increased by
$443,271 for the year ended December 31, 1998 primarily due to the $385,227 gain
on the sale of DGR and a one time reimbursement of $85,532 from the former
Chairman of the Board for costs

                                      -11-
<PAGE>

associated with the gaming opportunities presented to the Company by him,
partially offset by a reduction in interest income due to the prepayment of the
Delaware LLC note receivable.

         INCOME TAX EXPENSE. Income tax expense was $344,082 for the year ended
December 31, 1998 and primarily reflects state taxes due on joint venture
revenues. At December 31, 1998, the Company had net operating loss carryforwards
for federal income tax purposes of approximately $3,600,000, 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.

         DEADWOOD GULCH RESORT

         INCOME (LOSS) FROM OPERATIONS. The operating loss from DGR was
($345,769) for 1998 as compared to a profit of $424,815 in 1997 primarily due to
the sale of the Resort in May 1998, which was prior to the beginning of the peak
season.

         IMPAIRMENT OF LONG-LIVED ASSETS. In January 1996, the Company announced
its intent to dispose of DGR. The Company adopted the provisions of SFAS No.
121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF,
during the fourth quarter of the year ended December 31, 1995. Under SFAS No.
121, the Company reviews the carrying values of its long-lived and identifiable
intangible assets for possible impairment whenever events or changes in
circumstances indicate that the carrying amount of assets may not be
recoverable. Since the adoption of SFAS No. 121, the Company has written off
$4,154,290 related to DGR.

         GAIN ON SALE OF ASSETS HELD FOR SALE. The Company recognized a gain on
the sale of DGR of $385,227 after considering the impairment of long-lived
assets discussed above. DGR was sold on May 12, 1998. See also "Liquidity and
Capital Resources".

         YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996

         Revenues for the year ended December 31, 1997 increased $628,451 or
8.2% to $8,298,789 as compared with revenues of $7,670,338 for the year ended
December 31, 1996. The net income per share for the year ended December 31, 1997
increased $0.17 or 189% to $.08 as compared with a loss per share of $0.09 for
the year ended December 31, 1996.

         JOINT VENTURE INCOME

         Joint Venture income increased $1,000,832 or 47.5% for the year ended
December 31, 1997 as compared to 1996. This increase is due to inclusion of
income from the Delaware joint venture, which was not in operation until August
1996 for a full year in 1997, and to the improved operating results from the
Oregon joint venture. The revenues for 1996 include a one time gain of $834,370
relating to the formation of the four joint venture companies with GTECH.

         OREGON JOINT VENTURE. The Company's share of income from the Oregon
joint venture increased $172,324 or 20.8% year ended December 31, 1997, as
compared to 1996 as a result of improved marketing of and road access to the
casino.

         DELAWARE JOINT VENTURE. The Company's share of income from the Delaware
joint venture was $2,156,427 for the year ended December 31, 1997. Midway Slots
and Simulcast began operations in August of 1996. As reported by the Delaware
Lottery Board, Midway Slots & Simulcast had a net win of $58.2 million for the
year ended December 31, 1997. As a result of operating results exceeding initial
projections, Midway Slots and Simulcast has prepaid a portion of its obligation
to the Delaware joint venture. The joint venture, in turn, prepaid a portion of
the obligation to the Company. The outstanding principal balance of the
obligation to the Company was $544,911 at December 31, 1997, which was paid in
full in February 1998.

                                      -12-
<PAGE>

         CALIFORNIA AND MICHIGAN JOINT VENTURES. As compared to 1996, the
Company's share of the loss from the California and Michigan joint ventures
declined by $25,563 during 1997. These joint venture companies are still in the
development stage and do not have operating revenues.

         DEADWOOD GULCH RESORT

         The annual report of the South Dakota Commission on Gaming, which was
released during the second quarter of 1997, announced that gaming revenues in
Deadwood had declined by 6.4% in 1996 and that only 40% of the gaming businesses
were profitable in 1996 versus 58% in 1995. This trend has continued during the
first nine months of 1997 with a further decline in gaming revenues. The Company
believes that the decline is attributable in part to decreased attendance at
regional national parks (Mount Rushmore, Badlands National Park and Yellowstone
National Park).

         These factors have significantly impacted the operating results of
Deadwood Gulch Resort. However, as a result of management programs, Resort
income from operations for 1997 increased by $72,700 despite a decline in
revenues of $372,381.

         CASINO OPERATIONS. Revenues decreased 12.0% Or $173,909 to $1,271,413
for the year ended December 31, 1997 as compared to 1996. Although departmental
expenses decreased 13.9% in 1997, department profit decreased $25,783.
Management attributes the decline in revenues to the general decline in the
market area explained above and aggressive giveaways by other casinos.

         HOTEL/RV RESORT. Hotel/RV Resort revenues increased 3.7% or $56,918, to
$1,580,340 for the year ended December 31, 1997 as compared to 1996. Hotel/RV
Resort departmental profit increased $119,817 or 13.0%. Management attributes
the improvements to marketing and cost-reduction measures in both the Hotel and
RV Resort.

         RETAIL. For the year ended December 31, 1997, revenues decreased 7.8%
or $99,671 to $1,171,001 and departmental profits decreased 40.8% or $46,568 to
$67,600 as compared to the same period in 1996. Department profit was lower than
the prior year period due to a decline in sales as a result of lower tourism and
increased pricing competition.

         FOOD AND BEVERAGE. Revenues for the year ended December 31, 1997
decreased 1.4% or $10,821 to $755,621 (which includes $139,646 of promotional
allowances) as compared to $766,422 (which includes $132,292 of promotional
allowances). The departmental income after subtracting promotional allowances
increased $14,688 over the year ended December 31, 1996. Management attributes
the improvement to continued management of cost of sales and reduced
departmental expenses.

         GULCHES OF FUN FAMILY CENTER. Although revenues decreased 19.8% or
$139,250 to $564,958 for the year ended December 31, 1997, departmental profits
increased 13.8% or $27,517 to $226,734 as compared to 1996, due to a change in
staffing of the facility and other cost-reduction measures.

         SALES AND MARKETING EXPENSES. Sales and Marketing expenses increased
10.2% or $26,396 to $286,195 as compared to the same period in 1996. Management
attributes the increase to efforts to increase or maintain market share.

         GENERAL AND ADMINISTRATIVE EXPENSES - RESORT. For the year ended
December 31, 1997, expenses decreased 0.5% or $3,094 to $580,220 as compared to
1996.

         DEPRECIATION AND AMORTIZATION

         Depreciation and amortization increased 2.4% or $12,465 to $524,049 for
the year ended December 31, 1997 as compared to 1996.

                                      -13-
<PAGE>

         IMPAIRMENT OF LONG-LIVED ASSETS

         In January 1996, the Company announced its intent to dispose of the
Deadwood Gulch Resort. The Company adopted the provisions of SFAS No. 121,
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO
BE DISPOSED OF, during the fourth quarter of the year ended December 31, 1995.
Under SFAS No. 121, the Company reviews the carrying values of its long-lived
and identifiable intangible assets for possible impairment whenever events or
changes in circumstances indicate that the carrying amount of assets may not be
recoverable. Further analysis of the estimated realizable value of the Deadwood
Gulch Resort assets resulted in an additional impairment loss of $1,051,070
recorded during the year ended December 31, 1996 and $3,220 for the year ended
December 31, 1997. Pursuant to SFAS No. 121, the Company has suspended recording
depreciation of the assets of the Deadwood Gulch Resort.

         GENERAL AND ADMINISTRATION EXPENSES

         Non-Resort expenses for the year ended December 31, 1997 totaled
$1,614,677, an increase of $95,577 over the prior year, reflecting savings
resulting from the consolidation of the Company's executive offices in 1996
offset by increases in 1997 expenditures related to the investigation, due
diligence and pre-development of various ongoing opportunities for expansion of
its business and the increase in the Company's corporate structure necessary to
administer the Company's expansion.

         INTEREST EXPENSE AND DEBT ISSUE COSTS

         For the year ended December 31, 1997, interest expense and debt issue
cost decreased by $122,813 as compared to 1996, as a result of reduced levels of
debt.

         INTEREST AND OTHER INCOME

         Interest and other income decreased by $113,113 during the year ended
December 31, 1997 compared to 1996 due to a reduction of notes receivables from
the Delaware joint venture.

         INCOME TAX EXPENSE

         Federal and state income tax expense was $275,641 for the year ended
December 31, 1997 and -0- for the same period in 1996. At December 31, 1997, the
Company had net operating loss carryforwards for federal income tax purposes of
approximately $2,620,000, which may be carried forward to offset future taxable
income. The loss carryforwards expire in 2007 through 2014. The availability of
the loss carryforwards may be limited in the event of a significant change in
ownership of the Company or its subsidiaries.

         EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTIZATION

         Earnings before interest, taxes, depreciation and amortization
(EBITDA), for the year ended December 31, 1997 improved by $977,955 over 1996
after exclusion of the impairment of long-lived assets (sale of Deadwood Gulch
Resort) to $2,341,136 for the year ended December 31, 1997. EBITDA should not be
construed as an indication of the Company's operating performance, or as an
alternative to cash flows from operating activities as a measure of liquidity.
The Company has presented EBITDA solely as supplemental disclosure because the
Company believes that it enhances the understanding of the financial performance
of companies with substantial depreciation and amortization.

         LIQUIDITY AND CAPITAL RESOURCES

         The Company held cash and cash equivalents of $1,092,178 as of December
31, 1998. Net cash provided by operating activities was $2,446,719 as compared
to $2,116,766 in the comparable prior year period. Net cash provided by
investing activities of $144,074 and net cash used in financing activities of
$3,921,499 were the result of two significant transactions described below.

                                      -14-
<PAGE>

         On May 12, 1998, the Company completed the sale of DGR for $6 million
cash and the proration of certain related items. The Company received net
proceeds of $5,933,160 from the sale of DGR, which includes the $6 million cash
portion of the sales price in addition to $11,439 received from the buyer for
the proration of inventory, receivables and prepaid assets, offset by advance
deposits, progressive jackpot liabilities and closing costs of $78,279. On May
31, 1995, DGR had borrowed $5 million, secured by its real property. The Company
repaid the remaining $3,165,861 due under this note from the proceeds from the
sale. The Company also used approximately $200,000 of the sale proceeds to
payoff the remaining current liabilities of DGR.

         On February 23, 1998, the Company completed the purchase of a portion
of a proposed gaming site in Biloxi, Mississippi. The Company acquired the site
for $4,155,000 and the payment of certain related costs. The Company utilized
cash on hand of $2,155,000 and obtained a $2 million bank loan in connection
with the purchase. The bank loan was repaid on June 3, 1998 using proceeds from
the sale of DGR. The Company has spent an additional $450,000 on deposits and
purchase options for additional parcels of land in Mississippi.

         Upon the payoff of the bank loan, the Company negotiated a $2 million
line of credit with the same bank. The line bears interest adjustable daily at
one percent above prime, requires interest payments monthly on the outstanding
balance, and all principal and accrued interest is due at maturity on February
25, 1999. No amounts have been drawn on the line through December 31, 1998. In
February 1999, the Company received a one year extension on the line and the
interest rate was reduced to prime, plus 1/2%.

         In November 1998, the Company 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 has 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.

         In September 1998, the Company and Allen Paulson formed a limited
liability company, equally owned, for the purpose of developing this project.
Mr. Paulson agreed to contribute a gaming vessel (the former Treasure Bay barge
in Tunica, Mississippi) and the Company agreed to contribute its 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 for the Company to
effect its business strategy and no assurance can be given that such financing
will be available upon commercially reasonable terms, or at all.

         On November 20, 1995, Full House merged a wholly-owned subsidiary into
Omega Properties Inc. (30% owned by William P. McComas, a director/stockholder
of the Company). In exchange, the shareholders of Omega received an aggregate of
500,000 shares of Full House Common Stock and a promissory note of Full House in
the principal amount of $375,000. The principal amount of this promissory note
accrued interest, payable quarterly, at a rate equal to the "prime" rate, and
such principal amount, together with all accrued interest, was due and payable
in full upon demand by the holder of this note. William P. McComas received the
note and Mr. Fugazy, the other stockholder of Omega, received the shares in
exchange for their interests as shareholders of Omega. The note was paid in full
in 1998.

         Full House is 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 has 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 has contributed cash and other intangible assets
and has agreed to loan the joint venture entities up to $16.4 million to
complete the North Bend, Oregon and Delaware facilities. Full House has 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 has also loaned
Full House $3 million, which loan was convertible, until January 1998 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 have granted to GTECH an
option 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.

         The Company advanced funds to the Delaware joint venture company
totaling $1,886,498, of which $544,911 was outstanding as of December 31, 1997.
The note was paid in full as of February 1998.

                                      -15-
<PAGE>

         As a result of its agreements with GTECH, receipt by Full House of
revenues from the operations of projects (other than the Deadwood Gulch Resort)
is governed by the terms of the joint venture agreements applicable to such
projects. These contracts provide 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, with the sale
of DGR, the Company's continuing cash flow is dependent on the operating
performance of its joint ventures, and the ability to receive monthly
distributions.

         As of December 31, 1998, Full House had cumulative undeclared and
unpaid dividends in the amount of $1,365,000 on the 700,000 outstanding shares
of its 1992-1 Preferred Stock. Such dividends are cumulative whether or not
declared, and are currently in arrears.

         On May 31, 1995, DGR borrowed $5 million, secured by its real property.
The note accrued interest at prime plus 2-1/4%, and payments were due in monthly
installments of principal and interest based on a ten-year amortization with the
remaining balance due on May 31, 2002. A portion of the loan was guaranteed by
Messrs. McComas and Paulson and a former director of the Company. This note was
paid in full from the proceeds of the sale of the Resort in 1998.

         YEAR 2000 ISSUES

         The Company has implemented a Year 2000 program to ensure that its
computer systems and applications will function properly beyond 1999. The
Company believes that it has allocated adequate resources for this purpose and
expects its Year 2000 date conversion program to be completed successfully on a
timely basis. Although the ability of third parties with whom the Company
transacts business to address their Year 2000 issues is outside the Company's
control, the Company is discussing with its joint venture partners, significant
vendors and customers the possibility of any interface difficulties which may
affect the Company.

         The Company has analyzed all of its internal hardware and software
applications and has incurred approximately $10,000 to replace or upgrade the
deficient components. Based upon a comprehensive review, the Company does not
anticipate incurring any material additional costs to resolve its internal Year
2000 issues.

         The Company continues to monitor the progress of its joint venture
partners and vendors in their efforts to address this issue and provide
assurances concerning their state of readiness.

         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, 1999. Management has not completed its determination of this new
statement's impact on the consolidated financial statements of the Company.

         RECENT ACCOUNTING PRONOUNCEMENTS - 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" (the "SOP"). The SOP requires the costs of start-up
activities that had been previously capitalized be expensed as incurred. The
Company is required to adopt the provisions of the SOP in the fiscal year
beginning January 1, 1999. Accordingly, the Company will expense approximately
$824,000, in the first quarter of 1999, as a cumulative effect accounting
change, which results from the Company's Joint Venture investments.

7.       FINANCIAL STATEMENTS.

         The following financial statements are filed as part of this Report

         /bullet/  Independent Auditors' Report

         /bullet/  Consolidated Balance Sheets as of December 31, 1998 and 1997

         /bullet/  Consolidated Statements of Income for the years ended
                   December 31, 1998 and 1997

                                      -16-
<PAGE>

         /bullet/  Consolidated Statements of Stockholders' Equity for the
                   Years Ended December 31, 1998 and 1997

         /bullet/  Consolidated Statements of Cash Flows for the
                   Years Ended December 31, 1998 and 1997

         /bullet/  Notes to Consolidated Financial Statements

8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.

         None.

                                      -17-
<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 the
Company's directors is incorporated by reference to the information in the Proxy
Statement for the 1999 Annual Meeting of Stockholders of the Company.

         (B)      EXECUTIVE OFFICERS OF THE COMPANY

                  The executive officers of the Company and their ages as of
March 21, 1998 are as follows:

<TABLE>
<CAPTION>
                  NAME                          AGE                             POSITIONS                          
             ---------------------              ---                ------------------------------------------------
             <S>                                 <C>                                                
             William P. McComas                  72                Chairman, Chief Executive Officer

             Gregg R. Giuffria                   47                 President, Chief Operating Officer and Director

             Michael P. Shaunnessy               45                Executive Vice President-Finance

             Megan G. McIntosh                   43                Secretary
</TABLE>

         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.

         GREGG R. GIUFFRIA joined the Company as President, Chief Operating
Officer and Director in April 1998. Mr. Giuffria has been involved in the gaming
industry since 1991, following nearly 20 years in the music, film, and
publishing business. From 1995 to 1996 he was with Casino Data Systems, Inc. as
the head of corporate development with responsibility for design and development
of innovative technology for casino gaming. From 1993 to 1995 he was Vice
President of MEC American Leisure Technology. Since 1997 he has owned American
Laser Cutting, Inc., which provides specialty items to the gaming industry,
among others.

         MICHAEL P. SHAUNNESSY joined the Company as Executive Vice
President-Finance 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-Finance 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.

         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 1999
Annual Meeting of Stockholders of the Company.

                                      -18-
<PAGE>


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 1999
Annual Meeting of Stockholders of the Company.

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 1999
Annual Meeting of Stockholders of the Company.

13. EXHIBITS AND REPORTS ON FORM 8-K.

         (A)      EXHIBITS

                  2.1 Letter of Intent (Incorporated by reference to Exhibit 2.1
         to the Company's Amended Registration Statement on Form 10)

                  2.2 Stock Acquisition Agreement Among Full House Resorts,
         Inc., Deadwood Gulch Resort and Gaming Corp. and the Stockholders
         thereof, dated November 6, 1992 (Incorporated by reference to Exhibit
         2.2 to the Company's Amended Registration Statement on Form 10)

                  2.3 Agreement Among Joint Venturers of Deadwood Hotel Joint
         Venture, dated June 30, 1992 (Incorporated by reference to Exhibit 2.3
         to the Company's Amended Registration Statement on Form 10)

                  2.4 Agreement for Transfer of Property to Corporation Pursuant
         to Section 351 of the Internal Revenue Code, dated June 30, 1992
         (Incorporated by reference to Exhibit 2.4 to the Company's Amended
         Registration Statement on Form 10 )

                  3.1 Certificate of Incorporation of Full House Resorts, Inc.
         (Incorporated by reference to Exhibit 3.1 to the Company's Amended
         Registration Statement on Form 10)

                  3.2 Bylaws of Full House Resorts, Inc. (Incorporated by
         reference to Exhibit 3.2 to the Company's Amended Registration
         Statement on Form 10)

                  4.1 Certificate of Designation of Series 1992-1 Preferred
         Stock of Full House Resorts, Inc., dated November 6, 1992 (Incorporated
         by reference to Exhibit 4.1 to the Company's Amended Registration
         Statement on Form 10)

                  4.2 Form of Underwriter's Warrant (incorporated by reference
         to Exhibit (4)(c) to the Registration Statement on Form S-8 (No.
         33-15292-NY) of Full House Resorts, Inc. (Incorporated by reference to
         Exhibit 4.2 to the Company's Amended Registration Statement on Form 10)

                  10.1 1992 Non-Employee Director Stock Plan of Full House
         Resorts, Inc. (Incorporated by reference to Exhibit 10.1 to the
         Company's Amended Registration Statement on Form 10)

                  10.2 1992 Incentive Plan of Full House Resorts, Inc.
         (Incorporated by reference to Exhibit 10.2 to the Company's Amended
         Registration Statement on Form 10)

                  10.3 Mortgage-180 Day Redemption, dated August 30, 1991,
         Between Deadwood Hotel Joint Venture and Eugene V. Gatti (Incorporated
         by reference to Exhibit 10.3 to the Company's Amended Registration
         Statement on Form 10)


                                      -19-
<PAGE>

                  10.4 Mortgage-180 Day Redemption, dated January 27, 1992,
         Among Deadwood Hotel Joint Venture, Eugene V. Gatti, William P.
         McComas, Hotel Properties, Inc. and Kober Corporation (Incorporated by
         reference to Exhibit 10.4 to the Company's Amended Registration
         Statement on Form 10)

                  10.5 Debt Reduction Agreement, dated July 27, 1991, among
         Westdak Limited Partnership, Gatti & McComas, Inc., Eugene V. Gatti,
         William P. McComas, James E. Hosch, William J. Durst, and James E.
         Hosch as Trustee of the Interest of William J. Durst in Westdak Limited
         Partnership (Incorporated by reference to Exhibit 10.5 to the Company's
         Amended Registration Statement on Form 10)

                  10.6 Deadwood Hotel Joint Venture Standard Route Operation
         Agreement, dated June 30, 1992, Between Deadwood Hotel Joint Venture
         and Lucky 8 Gaming Hall (Incorporated by reference to Exhibit 10.6 to
         the Company's Amended Registration Statement on Form 10)

                  10.7 Management and Operating Agreement between Trimark Hotel
         Corporation and Deadwood Hotel Joint Venture, dated February 23, 1990
         (Incorporated by reference to Exhibit 10.7 to the Company's Amended
         Registration Statement on Form 10)

                  10.8 Franchise Agreement Between Park Inns International, Inc.
         and Deadwood Hotel Joint Venture, dated February 28, 1990 (Incorporated
         by reference to Exhibit 10.8 to the Company's Amended Registration
         Statement on Form 10)

                  10.9 Dealer Gasoline and Franchise Agreement, dated June 8,
         1992, between M.G. Oil Company and Deadwood Gulch Resort (Incorporated
         by reference to Exhibit 10.9 to the Company's Amended Registration
         Statement on Form 10)

                  10.10 Common Stock Purchase Warrant of Full House Resorts,
         Inc. issued to Generation Capital Associates, dated November 20, 1992
         (Incorporated by reference to Exhibit 10.10 to the Company's Amended
         Registration Statement on Form 10)

                  10.11 Promissory Note of Full House Resorts, Inc. in the
         amount of $90,000, dated November 10, 1992, payable to Bearer
         (Incorporated by reference to Exhibit 10.11 to the Company's Amended
         Registration Statement on Form 10)

                  10.12 Employment Agreement between Full House Resorts, Inc.
         and David K. Cantley, dated December 1, 1992 (Incorporated by reference
         to Exhibit 10.12 to the Company's Amended Registration Statement on
         Form 10)

                  10.13 Letter of Intent between Full House Resorts, Inc. and
         Stuart, Coleman & Co., Inc., dated February 23, 1993 (Incorporated by
         reference to Exhibit 10.13 to the Company's Amended Registration
         Statement on Form 10)

                  10.14 Agreement to Provide and Accept Commitment to
         Restructure First and Second Mortgage Loans Among Full House Resorts,
         Inc., Deadwood Gulch Resort and Gaming Corp., Eugene V. Gatti, William
         P. McComas, H. Joe Frazier and Kober Corporation, dated March 15, 1993
         (Incorporated by reference to Exhibit 10.14 to the Company's Amended
         Registration Statement on Form 10)

                  10.15 $1,000,000 Term Life Insurance Policy, dated March 19,
         1993, on the life of David K. Cantley, issued by Federal Kemper Life
         Assurance Company (Incorporated by reference to the Company's Annual
         Report on Form 10-KSB for the year ended December 31, 1992)

                  10.16 Agreement dated February 11, 1994 and Amendment to
         Agreement dated March 13, 1994 among the Company, H. Joe Frazier,
         William P. McComas and Allan Paulson (Incorporated by reference to the
         Company's Annual Report on Form 10-KSB for the year ended December 31,
         1993)

                                      -20-
<PAGE>

                  10.17 Debt Reduction Agreement, dated April 16, 1993, among
         the Company, Deadwood Gulch Resort and Gaming Corp., Eugene V. Gatti,
         William P. McComas and H. Joe Frazier (Incorporated by reference to the
         Company's Registration Statement on Form SB-2, No. 33-61580 as filed
         with the Securities and Exchange Commission)

                  10.18 Letter Agreement, dated May 17, 1993, between the
         Company and H. Joe Frazier, extending mortgage commitment expiration
         date to July 7, 1993 (Incorporated by reference to the Company's
         Registration Statement on Form SB-2, No.
         33-61580 as filed with the  Securities and Exchange Commission)

                  10.19 Letter Agreement, dated May 17, 1993, between the
         Company and Eugene V. Gatti, extending mortgage commitment expiration
         date to July 7, 1993 (Incorporated by reference to the Company's
         Registration Statement on Form SB-2, No. 33-61580 as filed with the
         Securities and Exchange Commission)

                  10.20 General Release and Covenant Not to Sue, dated June 7,
         1993, among the Company, Deadwood Gulch Resort and Gaming Corp.,
         Trimark Hotel Corporation and Park Inns International, Inc.
         Incorporated by reference to the Company's Registration Statement on
         Form SB-2, No. 33-61580 as filed with the Securities and Exchange
         Commission)

                  10.21 Letter Agreement, dated July 23, 1993, between the
         Company and H. Joe Frazier, extending mortgage commitment expiration
         date to August 7, 1993 (Incorporated by reference to the Company's
         Registration Statement on Form SB-2, No. 33-61580 as filed with the
         Securities and Exchange Commission)

                  10.22 Letter Agreement, dated July 2, 1993, between the
         Company and Eugene V. Gatti, extending mortgage commitment expiration
         date to August 7, 1993 (Incorporated by reference to the Company's
         Registration Statement on Form SB-2, No. 33-61580 as filed with the
         Securities and Exchange Commission)

                  10.23 Lock-Up Agreement, dated June 16, 1993, among the
         Company, David K. Cantley, Thomas M. Blair, James E. Hosch, H. Joe
         Frazier, Eugene V. Gatti, Kober Corporation, William P. McComas,
         Richard M. Gawlik, George M. Bashara and the Director of the South
         Dakota Division of Securities (Incorporated by reference to the
         Company's Registration Statement on Form SB-2, No. 33-61580 as filed
         with the Securities and Exchange Commission)

                  10.24 Stock Purchase Agreement, dated July 20, 1993, among
         Kober Corporation, H. Joe Frazier, William P. McComas, James E. Hosch
         and Peter N. Bowinski (Incorporated by reference to the Company's
         Registration Statement on Form SB-2, No. 33-61580 as filed with the
         Securities and Exchange Commission)

                  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)

                                      -21-
<PAGE>

                  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)

                  10.32 Purchase Agreement between the Company and William P.
         McComas dated August 18, 1994 (Incorporated by reference to the
         Company's Annual Report on Form 10-KSB for the fiscal year ended
         December 31, 1994)

                  10.33 Agreement among the Company, Hannahville Indian
         Community, Lac Vieux Desert Band of Lake Superior Chippewa Indians,
         Grand Traverse Band of Ohawa and Chippewa Indians and Keweenah Bay
         Indian Community dated September 10, 1994 (Incorporated by reference to
         the Company's Annual Report on Form 10-KSB for the fiscal year ended
         December 31, 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 (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)

                                      -22-
<PAGE>

                  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)

                  10.42 Option Agreement dated as of December 29, 1995 by and
         among GTECH Corporation, the Company, Lee Iacocca, William P. McComas
         and Allen E. Paulson (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, L.L.C. 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),
         L.L.C. 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)

                  10.46 Loan Agreement dated as of May 31, 1995 between Deadwood
         Gulch Resort and Gaming Corp. and Miller & Schroeder Investment
         Corporation; Guaranty dated as of May 31, 1995 by Allen E. Paulson, H.
         Joe Frazier and William P. McComas; Subordination Agreement dated as of
         May 31, 1995 among Miller & Schroeder Investment Corporation, Deadwood
         Gulch Resort and Gaming Corp. and the Corporation; Waiver of Breach of
         Covenants and Amendment Number 1 to Loan Agreement dated March 28,
         1996; and Guaranty dated March 28, 1996 by the Company (Incorporated by
         reference to the Company's Annual Report on Form 10-KSB for the fiscal
         year ended December 31, 1995)

                  10.47 Subordination and Participation Agreement dated as of
         October 8, 1996 between Gaming Entertainment L.L.C. 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 L.L.C. 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 L.L.C. 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) L.L.C. 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) L.L.C. (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.*

                                      -23-
<PAGE>

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

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

                  23.1     Consent of Deloitte & Touche LLP*

                  27.1     Financial Data Schedule*
------------------

*   Filed herewith.

         (B)      REPORTS ON FORM 8-K.

                  None.

                                      -24-
<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, 1999                             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, 1999
-------------------------------------------------
William P. McComas, Chairman of the Board and
Chief Executive Officer


/s/ GREGG R. GIUFFRIA                                             March 29, 1999
-------------------------------------------------
Gregg R. Giuffria, President , Chief Operating
Officer and Director


/s/ RONALD K. RICHEY                                              March 29, 1999
-------------------------------------------------
Ronald K. Richey, Director


/s/ LEE A. IACOCCA                                                March 29, 1999
-------------------------------------------------
Lee A. Iacocca, Director


/s/ JAMES C. GILSTRAP                                             March 29, 1999
-------------------------------------------------
James C. Gilstrap, Director


/s/ MICHAEL P. SHAUNNESSY                                         March 29, 1999
-------------------------------------------------
Michael P. Shaunnessy, Executive Vice President-
Finance (Principal Financial and Accounting Officer)

                                      -25-
<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, 1998 and 1997,
and the related consolidated statements of income, 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 generally accepted auditing
standards. 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, 1998 and 1997, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.

DELOITTE & TOUCHE LLP

Reno, Nevada
February 19, 1999

                                      F-1

<PAGE>
<TABLE>
<CAPTION>
FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
-----------------------------------------------------------------------------------------------------------------

ASSETS                                                                              1998                 1997
                                                                                    ----                 ----
<S>                                                                              <C>                  <C>

CURRENT ASSETS:
  Cash and cash equivalents                                                      $ 1,092,178          $ 2,422,884
  Note receivable - joint venture, current-portion                                   -                    544,911
  Restricted cash                                                                    -                    530,881
  Accounts receivable                                                                -                     10,210
  Receivable from director                                                           -                    106,760
  Inventories                                                                        -                     89,437
  Income tax refund receivable                                                        35,871              -
  Receivable from joint ventures                                                     216,188              343,200
  Prepaid expenses                                                                    88,018              286,126
                                                                                 -----------          -----------   
    Total current assets                                                           1,432,255            4,334,409

LAND HELD FOR DEVELOPMENT                                                          4,621,670               -
ASSETS HELD FOR SALE - net                                                           -                  5,542,078
INVESTMENTS IN JOINT VENTURES                                                      5,017,470            5,025,379
GOODWILL - net                                                                     1,392,249            1,898,517
NOTE RECEIVABLE - JOINT VENTURE                                                      232,421               23,748
DEPOSITS AND OTHER ASSETS                                                          2,777,199              922,612
                                                                                 -----------          -----------   
TOTAL                                                                            $15,473,264          $17,746,743
                                                                                 ===========          ===========   
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term debt                                              $   -                $   697,100
  Accounts payable                                                                    33,566               93,504
  Income taxes payable                                                               -                     16,862
  Accrued expenses                                                                 1,111,158              526,297
                                                                                 -----------          -----------   
    Total current liabilities                                                      1,144,724            1,333,763
                                                                                 -----------          -----------   
LONG-TERM DEBT, net of current portion                                             3,000,000            6,190,562
                                                                                 -----------          -----------   
DEFERRED INCOME TAXES                                                                121,235              -      
                                                                                 -----------          -----------   
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
  Cumulative, preferred stock, par value $.0001, 5,000,000
    shares authorized; 700,000 shares issued and outstanding; aggregate
    liquidation preference of $3,465,000                                                  70                   70
  Common stock, par value $.0001, 25,000,000 shares authorized;
    10,340,380 shares issued and outstanding                                           1,034                1,034
  Additional paid in capital                                                      17,218,065           16,957,487
  Accumulated deficit                                                             (6,011,864)          (6,736,173)
                                                                                 -----------          -----------   
    Total stockholders' equity                                                    11,207,305           10,222,418
                                                                                 -----------          -----------   
TOTAL                                                                            $15,473,264          $17,746,743
                                                                                 ===========          ===========   
</TABLE>

See notes to consolidated financial statements.

                                      F-2
<PAGE>
<TABLE>
<CAPTION>
FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
-----------------------------------------------------------------------------------------------------------------

                                                          1998           1997    
                                                       -----------   -----------
<S>                                                    <C>           <C>
OPERATING REVENUES:
  Casino                                               $   281,796   $ 1,271,413
  Hotel/RV park                                            320,313     1,580,340
  Retail                                                   303,713     1,171,001
  Food and beverage                                        230,659       755,621
  Fun park                                                   3,985       564,958
  Joint ventures                                         3,529,687     3,109,865
                                                       -----------   -----------
                                                         4,670,153     8,453,198
  Less: promotional allowances                             (64,226)     (154,409)
                                                       -----------   -----------
    Net operating revenues                               4,605,927     8,298,789
                                                       -----------   -----------
OPERATING COSTS AND EXPENSS:
  Casino                                                   286,134       916,783
  Hotel/RV park                                            172,675       539,031
  Retail                                                   304,032     1,103,401
  Food and beverage                                        176,409       579,122
  Fun park                                                  18,680       338,224
  Sales and marketing                                       95,154       286,195
  General and administrative                             1,957,346     2,194,897
  Depreciation and amortization                            517,081       524,049
  Impairment of long-lived assets                               --         3,220
                                                       -----------   -----------
    Total operating costs and expenses                   3,527,511     6,484,922
                                                       -----------   -----------
INCOME FROM OPERATIONS                                   1,078,416     1,813,867

OTHER INCOME (EXPENSE):
Interest expense and debt issue costs
  (including $11,702 and $31,567 to related parties)      (597,921)     (696,052)
Interest and other income                                  587,896       144,625
                                                       -----------   -----------
INCOME BEFORE INCOME TAXES                               1,068,391     1,262,440

INCOME TAX PROVISION                                      (344,082)     (275,641)
                                                       -----------   -----------

NET INCOME                                                 724,309       986,799

Less, undeclared dividends
  on cummulative preferred stock                          (210,000)     (210,000)
                                                       -----------   -----------
NET INCOME APPLICABLE TO
  COMMON SHARES                                        $   514,309   $   776,799
                                                       ===========   ===========
INCOME PER COMMON SHARE, BASIC AND DILUTED             $      0.05   $      0.08
                                                       ===========   ===========
WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                             10,340,380    10,340,284
                                                       ===========   ===========
</TABLE>

See notes to consolidated financial statements.

                                      F-3
<PAGE>
<TABLE>
<CAPTION>
FULL HOUSE RESORTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
-----------------------------------------------------------------------------------------------------------------------

                                                                             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, 1997             700,000   $    70    10,339,549   $ 1,034     $16,853,042     $ (7,722,972)   $ 9,131,174

Net income                    -             -          -         -               -               986,799        986,799

Amortization of deferred
  compensation expense        -             -          -         -              100,945           -             100,945

Proceeds from exercise
  of warrants                 -             -             831    -                3,500           -               3,500 
                              -------   -------    ----------   -------     -----------     ------------    -----------

BALANCE
  DECEMBER 31, 1997           700,000        70    10,340,380     1,034      16,957,487       (6,736,173)    10,222,418

Net income                    -            -           -         -               -               724,309        724,309

Amortization of deferred
  compensation expense        -            -           -         -              260,578           -             260,578
                              -------   -------    ----------   -------     -----------     ------------    -----------
BALANCE
  DECEMBER 31, 1998           700,000   $    70    10,340,380   $ 1,034     $17,218,065     $ (6,011,864)   $11,207,305
                              =======   =======    ==========   =======     ===========     ============    ===========
</TABLE>

See notes to consolidated financial statements.

                                      F-4
<PAGE>
<TABLE>
<CAPTION>
FULL HOUSE RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
--------------------------------------------------------------------------------------------------------------

                                                                               1998                  1997     
                                                                          --------------         -------------
<S>                                                                       <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                              $      724,309         $     986,799
  Adjustments to reconcile net income to net
    cash provided by operating activities:
    Depreciation and amortization                                                517,081               524,049
    Debt issue costs and debt discount                                           33,840                257,112
    Amortization of deferred compensation expense                                260,578               100,945
    Impairment of long-lived assets                                               -                      3,220
    Gain on disposition of assets                                               (385,227)                 (274)
    Equity in earnings of joint ventures                                      (3,529,687)           (3,109,865)
    Distributions from joint ventures                                          3,537,597             3,445,000
    Investments in joint ventures                                                 -                   (177,060)
    Changes in assets and liabilities:
      Decrease in restricted cash                                                530,881                55,053
      (Increase) decrease in accounts receivable                                 125,671               (96,481)
      Decrease in inventories                                                      8,297                 3,141
      Decrease in prepaid expenses                                               171,734                31,598
      Increase in other assets                                                  (229,151)               (1,479)
      Increase (decrease) in federal income taxes payable                        (52,733)               16,862
      Increase in deferred taxes                                                 121,235                 -
      Increase in accounts payable
         and accrued expenses                                                    612,294                78,146
                                                                          --------------       ---------------
         Net cash provided by operating activities                             2,446,719             2,116,766
                                                                          --------------       ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of assets held for sale                                               (5,855)              (67,962)
  Proceeds from disposal of assets held for sale                               5,933,160                43,660
  Proceeds from sale of current assets and liabilities                            11,439                 -
  Decrease in notes receivable                                                    -                  1,236,708
  Acquisition of land for development                                         (4,007,920)                -
  (Increase) decrease in receivables from
    GTECH and joint ventures                                                     463,250              (778,856)
  Deposits on purchase option                                                 (2,250,000)             (890,000)
                                                                          --------------       ---------------
         Net cash (used in) provided by investing activities                     144,074              (456,450)
                                                                          --------------       ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of debt                                               2,000,000                 -
  Repayment of debt                                                           (5,921,499)             (290,115)
  Proceeds from exercise of warrants                                             -                       3,500
                                                                          --------------       ---------------
         Net cash used in financing activities                                (3,921,499)             (286,615)
                                                                          --------------       ---------------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                                        (1,330,706)            1,373,701
CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                                                            2,422,884             1,049,183
                                                                          --------------       ---------------
CASH AND CASH EQUIVALENTS,
  END OF YEAR                                                             $    1,092,178       $     2,422,884
                                                                          ==============       ===============
</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") 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
         the joint ventures, which interest is 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.

         Through its subsidiary, Deadwood Gulch Resort and Gaming Corp. ("DGR"),
         FHRI operated a 99-room hotel, a recreational vehicle park and
         campground, conference center, convenience store/gas mart, restaurant,
         lounge, family entertainment facility and two small casinos in
         Deadwood, South Dakota. During January 1996, the Company announced its
         intent to dispose of DGR, and in May 1998 consummated a sale. The
         Company has classified DGR as assets held for sale.

         The consolidated financial statements include the accounts and
         operations of FHRI and its wholly owned and majority owned subsidiaries
         (the "Company"). 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 are 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.

         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 1998 and 1997 totaled $506,268.

         IMPAIRMENT OF LONG-LIVED ASSETS - The Company has adopted Statement of
         Financial Accounting Standards ("SFAS") No. 121, "ACCOUNTING FOR THE
         IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE
         DISPOSED OF." SFAS No. 121 establishes accounting standards for the
         impairment of long-lived assets, certain identifiable intangibles, and
         goodwill related to those assets to be held and used and for long-lived
         assets and certain identifiable intangibles to be disposed of. The
         Company reviews the carrying values of its long-lived and


                                       F-6
<PAGE>

         identifiable intangible assets for possible impairment whenever events
         or changes in circumstances indicate that the carrying amount of assets
         may not be recoverable.

         FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of the
         Company's cash and cash equivalents, restricted cash, 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, 1998.

         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 (LOSS) PER COMMON SHARE - Statement of Financial Accounting
         Standards ("SFAS") No. 128, "EARNINGS PER SHARE," was issued by the
         Financial Accounting Standards Board ("FASB") in February 1997. SFAS
         128 replaced the presentation of primary and fully diluted earnings per
         share ("EPS") with a presentation of basic and diluted EPS. Unlike
         primary EPS, basic EPS excludes any dilutive effects of options,
         warrants and convertible securities. Diluted EPS is similar to the
         previously reported fully diluted EPS. The Company adopted the
         provisions of SFAS No. 128 during the fourth quarter of the year ended
         December 31, 1997. Earnings per common share is computed based upon the
         weighted average number of common and common equivalent shares
         outstanding during the year.

         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. (See Note 13.)

         SEGMENT INFORMATION - The Company adopted FASB statement No. 131,
         "DISCLOSURE ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION,"
         for its annual report as of December 31, 1998. The Company operated one
         hotel/casino property in Deadwood, South Dakota which was sold during
         May 1998, and has investments in four joint venture companies which
         have developed or are developing gaming opportunities through
         management contracts in the states of California, Delaware, Michigan
         and Oregon.

         Footnote 6 to the financial statements contains information as to the
         operations of the joint venture companies which are accounted for under
         the equity method. The statements of income of the Company contain the
         information as to the operations of the Deadwood property. The Company
         evaluates performance on several factors, of which the primary
         financial measure is business segment operating income. The accounting
         policies of the business segments are the same as those described in
         the summary of significant accounting policies (Note 2).

         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, 1999. Management has not completed its
         determination of this new statement's impact on the consolidated
         financial statements of the Company.

         RECENT ACCOUNTING PRONOUNCEMENTS - 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" (the "SOP"). The SOP requires the costs
         of start-up activities that had been previously capitalized be expensed
         as incurred. The Company is required to adopt the provisions of the SOP
         in the fiscal year beginning January 1, 1999. Accordingly, the Company
         will expense approximately $824,000, in the first quarter of 1999, as a
         cumulative effect accounting change, which results from the Company's
         Joint Venture investments.

                                       F-7
<PAGE>


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

         USE OF ESTIMATES - The preparation of financial statements in
         conformity with generally accepted accounting principles requires
         management to make estimates and assumptions that affect the reported
         amounts of assets and liabilities at the date of the financial
         statements and the reported amounts of revenues and expenses during the
         reporting period. Actual results could differ from those estimates.

3.       LAND HELD FOR DEVELOPMENT

         On February 23, 1998, the Company purchased a parcel of land for
         $4,621,670 which represents a portion of a proposed gaming site in
         Biloxi, Mississippi. The Company has options to acquire the necessary
         additional six acres.

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 is
         due in March 1999 (included in "Accrued Expenses"). The Company has
         also expended $450,000 for options and deposits on a number of parcels
         of land contiguous to the parcel it acquired in February 1998.

5.       ASSETS HELD FOR SALE 

         Because of the Company's intent to dispose of DGR, the Company
         previously reclassified certain assets of DGR to other assets - assets
         held for sale. The Company previously determined that the carrying
         amount of the assets held for sale were not recoverable and therefore
         recorded an allowance for impairment as of December 31, 1997 of
         $4,154,290. The allowance was calculated using available information
         which indicated the estimated loss which would be incurred upon
         disposition, based on estimated fair value of the assets, less costs of
         disposition.

         In May 1998, the Company sold all of the assets and operations of DGR
         for $6,000,000 cash and the proration of certain related items, and
         recorded a gain on the transaction of $385,227. This gain represented
         the proceeds in excess of the carrying value, which had been reduced by
         the impairment loss estimate.

         The operations of DGR prior to its sale resulted in an operating loss
         of $345,769 in 1998 and operating income of $424,815 for 1997.

6.       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, equally owned by Dreamport, Inc.
         ("Dreamport"), a subsidiary of GTECH, and the Company were formed:
         Gaming Entertainment L.L.C. ("GELLC"), Gaming Entertainment (Delaware)
         L.L.C. ("GEDLLC"), Gaming Entertainment (Michigan) L.L.C. ("GEMLLC"),
         and Gaming Entertainment (California) L.L.C. ("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

                                       F-8
<PAGE>

         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.

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

         In March 1997, the Company and GTECH modified their agreement to no
         longer require each party to present prospective business opportunities
         to the other.

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

         GELLC

         GELLC leases approximately 12.5 acres of Tribal Trust Lands from an
         entity owned by the Coquilla 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.

         GEDLLC

         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.

         Through December 31, 1997, the Company had advanced funds to GEDLLC
         totaling $544,890 evidenced by an interest bearing note at prime, plus
         1% (9. 5% at December 31, 1997), and payable from available operating
         cash flows. The note was secured by a similar receivable from Midway
         Slots and Simulcast, a division of Harrington Raceway, Inc., with the
         same terms and interest rate. The note was paid in full in March 1998.

         GEMLLC

         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.

         On December 18, 1998, the Michigan legislature approved a gaming
         compact that had been negotiated between the Tribe and the Governor of
         Michigan. The Company is in the process of identifying a suitable site
         for the
                                       F-9
<PAGE>

         Tribe's gaming operation and beginning the process of having
         the land placed in trust for the Tribe. GEMLLC is a development stage
         company as of December 31, 1998.

         GECLLC

         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, 1998.

         The following is a summary of condensed financial information for the
         joint ventures as of December 31, 1998 and 1997 and for the years then
         ended:
<TABLE>
<CAPTION>

1998
CONDENSED BALANCE SHEETS

                                    GELLC            GEMLLC            GEDLLC            GECLLC            TOTAL
                               -------------    -------------      --------------     -----------      -------------
<S>                            <C>              <C>                <C>                <C>              <C>          

Total assets                   $     550,624    $   5,490,350      $      516,194     $   265,954      $   6,823,122

Long term debt                 $     -          $      49,130      $        -         $    -           $      49,130

Members' capital               $     333,650    $   5,236,275      $      263,781     $    45,962      $   5,879,668


CONDENSED STATEMENTS OF OPERATIONS

Revenues                       $   2,236,903    $   -              $   12,152,631     $    -           $  14,389,534

Operating income (loss)        $   2,159,382    $    (34,371)      $    4,870,523     $   (80,602)     $   6,914,932

Interest expense               $   -            $   -              $       45,478     $   -            $      45,478

Net income (loss)              $   2,161,470    $    (34,371)      $    5,012,876     $   (80,602)     $   7,059,373

Company's equity
   in net income (loss)        $   1,080,735    $    (17,185)      $    2,506,438     $   (40,301)     $   3,529,687
                               =============    =============      ==============     ===========      =============
</TABLE>

                                      F-10
<PAGE>
<TABLE>
<CAPTION>
1997
CONDENSED BALANCE SHEETS

                                    GELLC            GEMLLC            GEDLLC            GECLLC            TOTAL
                               -------------    -------------      --------------     -----------      -------------
<S>                            <C>              <C>                <C>                <C>              <C>          

Total assets                   $     550,624    $   5,490,350      $      516,194     $   265,954      $   6,823,122
Total assets                   $     561,679    $   5,488,694      $    4,403,546     $   265,911      $  10,719,830

Long term debt                 $      -         $      47,499      $    3,303,416     $      -         $   3,350,915

Member's capital               $     365,694    $   5,270,646      $      132,643     $   126,564      $   5,895,547


CONDENSED STATEMENTS OF OPERATIONS

Revenues                       $   2,062,212    $      -           $   11,242,145     $      -         $  13,304,357

Operating income (loss)        $   1,987,691    $     (19,424)     $    4,307,605     $   (73,843)     $   6,202,029

Interest expense               $      -         $      -           $      218,836     $      -         $     218,836

Net income (loss)              $   2,000,145    $     (19,424)     $    4,312,854     $   (73,843)     $   6,219,732

Company's equity
   in net income (loss)        $   1,000,073    $      (9,712)     $    2,156,426     $   (36,922)     $   3,109,865
                               =============    =============      ==============     ===========      =============
</TABLE>

<TABLE>
<CAPTION>
7.       DEBT

         Debt consists of the following at December 31, 1998 and 1997:                       1998              1997    
                                                                                         ------------      -----------
         <S>                                                                             <C>               <C>
         Note payable, secured by a first mortgage on all real property of
         DGR (included in assets held for sale) and partially secured by the
         guarantee of FHRI, and the personal guarantee of certain stockholders;
         interest at prime plus 21/4%, paid in full during 1998.                         $     -           $ 3,530,983

         Convertible, unsecured note payable to GTECH Corporation; original
         principal amount of $3,000,000, no payments or accrued interest until
         January 25, 1998 when interest began to accrue at the lesser of the
         maximum lawful rate of interest, or the prime rate (7 3/4% at December
         31, 1998); interest due monthly beginning February 1, 1998 through
         January 25, 2001, at which time all unpaid principal and interest will
         be due. The note was convertible, subject to regulatory approval, at
         the holder's option in whole or part at any time prior to January 25,
         1998 into common stock of the Company at a conversion price of five
         dollars principal amount of the note for one share of stock, recorded
         net of unamortized discount at December 31, 1997 of $18,321 based on imputed
         interest rate of 8.25%.  On January 25, 1998, the conversion option expired.       3,000,000        2,981,679

         Note payable to stockholder; interest at prime payable quarterly
         commencing on January 31, 1996; principal payable on demand,
         paid in full during 1998.                                                               -               375,000
                                                                                         ------------      -----------
                                                                                         
           Total                                                                            3,000,000        6,887,662
           Less current portion                                                                -               697,100
                                                                                         ------------      -----------

           Long-term portion                                                             $  3,000,000      $ 6,190,562
                                                                                         ============      ===========
</TABLE>

                                      F-11

<PAGE>


         The Company obtained a $2,000,000 line of credit from the bank that
         provided the initial loan for its acquisition of land in Biloxi,
         Mississippi. The line bears interest at prime, plus 1%, requires
         interest payments monthly, and all principal and accrued interest is
         due at maturity on February 25, 1999. As of December 31, 1998, there
         was no amount outstanding. In February 1999, the line was extended for
         an additional one year period, and the interest rate was reduced to
         prime, plus 1/2%.

         The scheduled maturities of debt are as follows:

                  YEAR ENDING
                  DECEMBER 31,
                  ------------
                         1998                        $     -
                         1999                              -
                         2000                              -
                         2001                           3,000,000
                                                     ------------
                         Total                       $  3,000,000
                                                     ============
8.       STOCKHOLDERS' EQUITY

         As part of a public offering in August 1993, the Company sold to the
         underwriters warrants at $.01 per warrant to acquire 80,000 units, each
         unit consisting of three shares of the Company's common stock and a
         warrant to purchase additional shares of the Company's common stock.
         The exercise price of warrants to purchase the units and the exercise
         price and number of shares issuable per warrant for the warrants
         issuable upon purchase of the unit are based upon a dilution agreement.
         As of January 1, 1997, 57,500 warrants to purchase 68,393 shares of
         common stock at $4.20 per share were exercisable through, and expired
         on February 10, 1997. As of January 1, 1998, warrants to purchase
         22,500 units at $13.17 per unit were exercisable through, and expired
         on, August 9, 1998.

         Also part of the public offering, warrants to purchase shares of the
         Company's common stock were issued. The exercise price of the warrants
         and the number of shares issuable per warrant were based on a dilution
         agreement and, as of January 1, 1997, 778,534, warrants to purchase
         925,988 shares of common stock at $4.20 per share were exercisable
         through February 10, 1997. In February 1997, 700 warrants were
         exercised for 831 common shares of the Company, with net proceeds of
         $3,500. The remaining warrants expired on February 10, 1997.

         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,
         all of which were exercisable at December 31, 1998. 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, 1998.

         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 nonemployee in return for services, consulting expense
         is being be 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 two years.

                                      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 $1,365,000 and $1,155,000 at December 31, 1998 and 1997,
         respectively. Through December 31, 1998, no dividends have been
         declared or paid.

9.       INCOME TAX PROVISION

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

<TABLE>
<CAPTION>
                                                                                   1998                  1997      
                                                                                ------------         -------------
         <S>                                                                    <C>                  <C>          

         Current:  Federal                                                      $         --         $     (16,862)
                   State                                                            (222,847)             (258,779)
                                                                                ------------         -------------
                            Total current                                           (222,847)             (275,641)
                                                                                ------------         -------------

         Deferred:  Federal                                                          132,495               -
                    State                                                           (253,730)              -      
                                                                                ------------         -------------
                             Total deferred                                         (121,235)              -      
                                                                                ------------         -------------

         Total Provision                                                        $   (344,082)        $    (275,641)
                                                                                ============         =============
</TABLE>


         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:

<TABLE>
<CAPTION>
                                                                                    1998                  1997      
                                                                                ------------         -------------
         <S>                                                                    <C>                  <C>           
         Tax provision at U.S. statutory rate                                   $   (363,253)        $    (429,230)
         State taxes                                                                (314,541)             (170,794)
         Change in valuation allowance                                               507,315               493,249
         Goodwill amortization                                                      (172,131)             (172,131)
         Other                                                                        (1,472)                3,265
                                                                                ------------         -------------

         Total                                                                  $   (344,082)        $    (275,641)
                                                                                ============         =============
</TABLE>

         The Company's deferred tax items as of December 31, 1998 and 1997 are
         as follows:

<TABLE>
<CAPTION>
                                                                                    1998                  1997      
                                                                                ------------         -------------
         <S>                                                                    <C>                  <C>
         Deferred tax assets:
            Net operating loss carryforward                                     $  1,225,606         $     890,765
            Tax credit carryforwards                                                  23,416                24,414
            Difference between book and tax
               basis of assets held for sale                                          -                  1,380,700
             Intangibles                                                              21,497               -
            Accrued expenses                                                           6,437                22,123
            State taxes                                                              115,548               -      
            Stock option plans                                                       109,443               -
                                                                                ------------         -------------
         Total deferred tax assets                                                 1,501,947             2,318,002
                                                                                ------------         -------------
</TABLE>

                                      F-13
<PAGE>
<TABLE>


         <S>                                                                    <C>                  <C>
         Deferred tax liabilities:
            Difference between book and tax basis
               of gaming rights                                                   (1,618,339)           (2,008,915)
            Other                                                                     (4,843)               (2,025)
                                                                                ------------         -------------
         Total deferred tax liabilities                                           (1,623,182)           (2,010,940)
         Valuation allowance                                                         -                    (307,062)
                                                                                ------------         -------------

         Net                                                                    $   (121,235)        $     -      
                                                                                ============         =============
</TABLE>

         At December 31, 1998, the Company had net operating loss carryforwards
         for income tax purposes of approximately $3,600,000, which may be
         carried forward to offset future taxable income. The loss carryforwards
         expire in 2007 through 2018. 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.      RELATED PARTY TRANSACTIONS

         At December 31, 1997, the Company held a note receivable of $106,760
         from a director of the Company. This note was paid in full in 1998.

         Total interest expense charged to operations in 1998 and 1997 related
         to the note payable to a stockholder were $11,702 and $31,567,
         respectively.

         See Note 6 for discussion of transactions with joint ventures.

         See Note 7 for a discussion of a note payable to stockholder.

11.      SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

         Cash payments for interest for the years ended December 31, 1998 and
         1997 were $518,187 and $440,612, respectively.

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

         During the year ended December 31, 1997, the Company purchased property
         with a fair value of $24,047, in exchange for property with a net book
         value of $11,005 which approximated its fair value, and cash payment of
         $13,042.

         During the year ended December 31, 1997, the Company transferred
         computer equipment with a net book value of $16,530 from assets held
         for sale to other assets.

         During the year ended December 31, 1998, additional paid-in capital
         increased by $260,578 as a result of granting and repricing stock
         options issued to non-employees for consulting services.

         During the year ended December 31, 1998, the Company applied purchase
         option deposits of $613,750 towards the acquisition of land held for
         development.

12.      COMMITMENTS AND CONTINGENCIES

         The Company is party to legal proceedings arising in the normal conduct
         of business. Management believes that the final outcome of these
         matters, will not have a material adverse effect upon the Company's
         consolidated financial position, results of operations or cash flows.

                                      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. No action has been taken on
         that matter to date. 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 financial condition.

         See notes 3, 4 and 6 for additional information.

13.      STOCK-BASED COMPENSATION PLANS

         At December 31, 1998, the Company had three stock-based compensation
         plans which 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 Nonemployee 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 and income per common share would have been
         restated to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                                    1998                  1997      
                                                                                -------------        -------------
         <S>                                              <C>                   <C>                  <C>
         Net income                                       As reported           $     724,309        $     986,799
                                                          Pro forma             $     568,250        $     113,181


         Income (loss) per common share,
            basic and diluted                             As reported           $        0.05        $        0.08
                                                          Pro forma             $        0.03        $       (0.01)
</TABLE>

         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 1998 and 1997: expected volatility of 95% and 80%, risk-free
         interest rate of 5.1 percent and 6.2 percent, and expected life of 3.6
         years and 3.5 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 1998, and
         10,000 options in 1997.

         The Company has reserved 1,000,000 shares of its common stock for
         issuance under the 1992 Incentive Plan. On September 24, 1998, the
         Board approved an increase of an additional 500,000 shares, subject to
         shareholder approval. 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.

                                      F-15

<PAGE>

         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 business
         day of 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, 1998 and 1997 were 1,236,000 and
         510,000, respectively. The total options outstanding under the
         Nonemployee Director Stock Plan at December 31, 1998 and 1997 were
         30,000 and 10,000, respectively. The total options outstanding under
         the Director Stock Plan at December 31, 1998 and 1997 were 575,000 and
         750,000, respectively.

         A summary of the status of the Company's stock option plans, including
         consultant options, as of December 31, 1998 and 1997, and changes
         during the years then ended is presented below:

<TABLE>
<CAPTION>
                                                            1998                                   1997          
                                               --------------------------------      ---------------------------------
                                                                  WEIGHTED -                             WEIGHTED -
                                                                   AVERAGE                                AVERAGE
                                               SHARES            EXERCISE PRICE      SHARES             EXERCISE PRICE
                                               ------            --------------      ------             --------------
         <S>                                   <C>               <C>                   <C>              <C>
         Outstanding at beginning
            of year                            1,420,000         $    3.45             660,000          $   3.54
         Granted                               1,081,000         $    2.11             760,000          $   3.38
         Exercised                               -                    -                -                    -
         Forfeited                               510,000         $    3.34                                  -
                                               ---------                             ---------
         Outstanding at end of year            1,991,000         $    2.36           1,420,000          $   3.45
                                               =========                             =========
         Options exercisable at year-end         835,000         $    2.68             890,000          $   3.50

         Weighted-average fair value of
         options granted during the year                         $    1.53                              $   1.97
</TABLE>

         As of December 31, 1998, the 1,991,000 options outstanding have
         exercise prices ranging between $2.00 and $3.69, and a weighted average
         remaining contractual life of 7 years. The options exercisable of
         835,000 also have exercise prices ranging between $2.00 and $3.69, and
         their weighted average remaining contractual life is 7.7 years.

                                      F-16

<PAGE>

                                                     EXHIBIT INDEX

EXHIBIT           DESCRIPTION
-------           -----------

    10.52         License Agreement by and 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

    21            List of Subsidiaries of Full House Resorts, Inc.

    23.1          Consent of Deloitte & Touche LLP

    27.1          Financial Data Schedule