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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended: September 30, 2009



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission File Number: 1-9481

ARCHON CORPORATION

(Exact name of registrant as specified in its charter)



|                                                               |  |                                        
|-------------------------------------------------------------- |  | ---------------------------------------
|Nevada                                                         |  | 88-0304348                             
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification Number)

4336 Losee Road, Suite 5, North Las Vegas, NV 89030

(Address of
principal executive office and zip code)

(702) 732-9120

(Registrants telephone number, including area code)



| |  |                                                                                    |  | 
| |  | ---------------------------------------------------------------------------------- |  | 
| |  |                                                                                    |  | 
| |  | (Former name, former address and former fiscal year, if changed since last report) |  | 



|                                        |  |                                
|--------------------------------------- |  | -------------------------------
|Common Stock, par value $.01 per share  |  | Over the Counter Bulletin Board
|(Title of Class)                        |  |                                
|                                        | 
|Exchangeable Redeemable Preferred Stock |  | Over the Counter Bulletin Board
|(Title of Class)                        |  |                                

Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S.

Indicate by a check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of large accelerated filer, accelerated filer and small reporting company in Rule 12b-2 of
the Exchange Act.



|                            |  |                       |  |                           |  |                           
|--------------------------- |  | --------------------- |  | ------------------------- |  | --------------------------
|Large accelerated filer:   ̈ |  | Accelerated filer:   ̈ |  | Non-accelerated filer:   ̈ |  | Small reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

The aggregate market value of the common stock held by non-affiliates of the registrant was approximately $14,452,425. The market value was
computed by reference to the closing price of the common stock as of March 31, 2009.

APPLICABLE ONLY TO ISSUERS
INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    YES   ̈    NO   ̈

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuers
classes of common stock, as of the latest practicable date.

6,017,944 as of February 19, 2010

DOCUMENTS INCORPORATED BY REFERENCE

None

Indicate by checkmark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not 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-K or any amendment to this Form 10-K).    YES  x









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##### Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL

YEAR ENDED SEPTEMBER 30, 2009

TABLE OF CONTENTS



|         |  |                                                                                       |  |         
|-------- |  | ------------------------------------------------------------------------------------- |  | --------
|         |  |                                                                                       |  | Page No.
|PART I   |  |                                                                                       |  |         
|Item 1.  |  | Business                                                                              |  | 1       
|         |  | General                                                                               |  | 1       
|         |  | Hotel and Casino Operations                                                           |  | 1       
|         |  | Property Held for Sale                                                                |  | 2       
|         |  | Rental Properties Held for Investment                                                 |  | 3       
|         |  | Nevada Regulations and Licensing                                                      |  | 4       
|Item 1A. |  | Risk Factors                                                                          |  | 7       
|Item 2.  |  | Properties                                                                            |  | 9       
|Item 3.  |  | Legal Proceedings                                                                     |  | 10      
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 11      
|         |  |                                                                                      
|PART II  |  |                                                                                       |  |         
|Item 5.  |  | Market for the Registrants Common Stock and Related Security Holders Matters         |  | 11      
|Item 6.  |  | Selected Financial Data                                                               |  | 13      
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 14      
|Item 7A. |  | Market Risk Disclosure                                                                |  | 24      
|Item 8.  |  | Financial Statements                                                                  |  | 25      
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 62      
|Item 9A. |  | Controls and Procedures                                                               |  | 62      
|         |  |                                                                                      
|PART III |  |                                                                                       |  |         
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 63      
|Item 11. |  | Executive Compensation                                                                |  | 66      
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 70      
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 71      
|Item 14. |  | Principal Accountants Fees and Services                                              |  | 72      
|         |  |                                                                                      
|PART IV  |  |                                                                                       |  |         
|Item 15. |  | Exhibits                                                                              |  | 72      



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PART I



|Item 1. | BUSINESS
|------- | --------

General

Archon Corporation, (the Company or Archon), is a Nevada corporation. The
Companys primary business operations are conducted through a wholly-owned subsidiary corporation, Pioneer Hotel Inc. (PHI), which operates the Pioneer Hotel & Gambling Hall (the Pioneer) in Laughlin, Nevada. In
addition, the Company owns real estate on Las Vegas Boulevard South (the Strip) in Las Vegas, Nevada, and properties in Dorchester, Massachusetts and Gaithersburg, Maryland. (See Rental Properties Held for Investment)

Through the Securities and Exchange Commissions (SEC) website, at http://www.sec.gov/ the Companys annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchanges Act, are made available free of charge, as soon
as reasonably practical after such information has been filed or furnished to the SEC.

The principal executive office of the
Company is located at 4336 Losee Road, Suite 5, North Las Vegas, Nevada, 89030, and the telephone number is (702) 732-9120.

Hotel and Casino Operations

The Pioneer

The Pioneer, built in 1982, features a classical western architecture style, and is located in Laughlin, Nevada, an
unincorporated town on the Colorado River bordering Arizona. The Pioneer is located on approximately 12 acres of land, with Colorado River frontage of approximately 770 feet, and is situated near the center of Laughlins Casino Drive.
Approximately 61/2acres of the 12 acres are leased
pursuant to a 99-year ground lease (the Ground Lease) which, by its terms, is scheduled to terminate in December 2078. The leased land lies between and separates the remaining two parcels of land that are held in fee simple. The Pioneer
is comprised of four buildings. One of the three motel buildings together with a portion of both the Pioneers casino building and a second motel building are located on land subject to the Ground Lease. The casino is located in the main
building, totaling approximately 50,000 square feet, of which approximately 21,500 square feet house the casino. The first floor includes the casino, two bars, snack bar and gift shop, as well as a twenty-four hour restaurant, kitchen, special
events area, restrooms and storage areas. The first floor also includes a Luckys Sports Book operated by Brandywine Bookmaking, a tenant. A partial second floor houses a gourmet restaurant, administrative offices and banquet rooms. The three
motel buildings were built in 1984 and comprise approximately 66,000, 54,000 and 30,000 square feet, respectively. A total of 416 motel rooms are housed in the three buildings with improvements including a swimming pool and spa.



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Revenues. The primary source of revenues to the Companys hotel-casino
operations is gaming, which represented approximately 79% and 80% in 2009 and 2008, respectively, of total revenues. The Pioneer contributed 100% in fiscal 2009 and 2008 to total gaming revenues. As of September 30, 2009, the Pioneer had
approximately 716 slot machines, six blackjack tables (21), one craps table, one roulette wheel and five other gaming tables. In addition, the Pioneer offered keno in fiscal 2009 and 2008, but has subsequently ceased offering keno as of
November 30, 2009.

Market. The Pioneer targets primarily mature, out-of-town customers residing in Central
Arizona and Southern California; retirees who reside in the Northeast and Midwest United States and Canada and travel to the Southwest United States during the winter months and local residents who reside in Laughlin, Nevada, and in Bullhead City,
Kingman and Lake Havasu, Arizona, and in Needles, California. The average occupancy rates at the Pioneer were approximately 35% and 43% in fiscal years 2009 and 2008, respectively.

Business Strategy. The Pioneer attempts to attract and retain customers by offering slot and video poker machine payouts that
compare favorably to the competition. A visible means used by the Pioneer to accomplish this marketing program is to offer what management believes to be a large number of quarter video poker machines with liberal theoretical pay outs, compared to
other casinos in Laughlin. The Pioneer periodically sponsors detailed product research of its competitors to categorize the number and type of video poker games by payouts and monitors changes in game products to assist it in developing competitive
products.

The Pioneer has a program called the Round-Up Club (the Club) established to encourage
repeat business from frequent and active slot and table game customers. A member of the Club accumulates points in the members account for play on slot machines and table games that can be redeemed for cash, free gifts, food and beverages and
additional points redeemable for free play. Pioneer management also uses the Club membership list for direct mail marketing.

Management
and Personnel

As of December 9, 2009 the Company employed 12 executive and administrative personnel and the Pioneer
employed approximately 353 persons.

Competition

In addition to competing with the hotel-casinos in Laughlin, the Pioneer also competes with the hotel-casinos in Las Vegas and those situated on Interstate-15 (the principal highway between Las Vegas and
Southern California) near the California-Nevada state line. In March 2000, California voters approved an amendment to the California constitution that permits compacts allowing Native American tribes to operate in excess of 100,000 slot machines in
addition to banked card games and lotteries. Management believes that Native American casinos in Southern California, Arizona and New Mexico have had an adverse impact on the Laughlin market, including the Pioneer, by drawing visitors away from the
market.

Property Held for Sale

On May 28, 2009, the Company, through its wholly owned subsidiary SFHI, LLC (SFHI), entered into a Purchase and Sale
Agreement (the Agreement) with Montgomery County, Maryland (the County) whereby the County will purchase SFHIs 51.57 acre parcel of land together with an approximately 341,693 square feet office building erected thereon
(the Property), located at 100 Edison Park Drive in Gaithersburg, Maryland. The purchase price for the Property will be seventy-six million three hundred forty thousand dollars ($76,340,000). The Agreement provided the County with a
90-day feasibility period during which the County determined that the Property is suitable for its intended use, and the County will now proceed to close escrow by notifying the Company of the closing date, which date may be no sooner than 90 days
from the date of notice and no later than April 30, 2014.



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The property in Gaithersburg, Maryland is located on 51 acres and includes one building with
approximately 342,000 square feet of commercial office space. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage
indebtedness. The property is under a net lease through 2014 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the property. The Gaithersburg,
Maryland, property is under contract to be sold. See Notes to Consolidated Financial Statements, Note 6, Sale of Gaithersburg Property.

See also Item 2., Properties

Rental Properties Held for Investment

The Company acquired rental properties in
Dorchester, Massachusetts and Gaithersburg, Maryland in March 2001. The Dorchester, Massachusetts property is located on 12 acres and includes several buildings with approximately 425,000 square feet of commercial office space. The property was
acquired for approximately $82.4 million plus $0.5 million in debt issuance costs. The Company paid $5.6 million in cash and assumed $77.3 million in nonrecourse debt associated with the property. The property is under a net lease through 2020 with
a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all obligations related to the property.

See also Item 2., Properties

The Company owns, through
its wholly owned subsidiary, Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of land (the Property) located on the east side of Las Vegas Boulevard South, just south of Sahara Avenue. The Company presently
leases the Property to three different lessees for an aggregate amount of $35,000 per month. The leases may be terminated in the event the property is sold or developed by the Company.

On December 22, 2008, SLVC, entered into an Option Agreement with Las Vegas Towers, LLC (LVT), a Delaware limited liability
company, in which SLVC granted LVT an option to purchase SLVCs approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las Vegas, Nevada.

The Option Agreement designated the purchase price to acquire the land at $618.0 million.

Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant (the Warrant) to Purchase Series A Preferred Stock (the Preferred Stock), entitling LVT to purchase 60,000 shares of Series
A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and amount of the Preferred Stock as well as the powers, preferences and relative, participating, optional and other special rights of the shares of the
series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set forth in the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock also dated December 22, 2008. Had LVT exercised
the Warrant prior to its expiration on April 1, 2009, the Option Agreement would have remained valid until March 31, 2010. LVT failed to exercise the Warrant before its expiration, thus the Option Agreement terminated on March 31,
2009.



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See also Item 2., Properties

The Company has provided financial segment information in the Notes to Consolidated Financial Statements, Note 18. Segment
Information.

Nevada Regulations and Licensing

The Company and PHI (collectively, the Archon Group) are subject to extensive state and local regulation by the Nevada Gaming
Commission (the Commission), the Nevada State Gaming Control Board (the Board) and in the case of PHI, the Clark County Liquor and Gaming Licensing Board (collectively the Nevada Gaming Authorities).

The laws, regulations and supervisory procedures of the Nevada Gaming Authorities seek (i) to prevent unsavory or unsuitable persons
from having any direct or indirect involvement with gaming at any time or in any capacity, (ii) to establish and maintain responsible accounting practices and procedures, (iii) to maintain effective control over the financial practices of
licensees, including establishing minimum procedures for internal fiscal affairs and the safeguarding of assets and revenues, providing reliable record-keeping and making periodic reports to the Nevada Gaming Authorities, (iv) to prevent
cheating and fraudulent practices and (v) to provide a source of state and local revenues through taxation and licensing fees. Changes in such laws, regulations and procedures could have an adverse effect on any or all of the members of the
Archon Group. Management believes the Archon Group is in compliance with regulations promulgated by the Nevada Gaming Authorities.

Licensing and Registration. PHI holds Nevada State gaming licenses to operate the Pioneer. The Company has been approved by the Nevada Gaming Authorities to own, directly or indirectly, a beneficial interest in PHI.

The licenses held by members of the Archon Group are not transferable. Each issuing agency may at any time revoke, suspend,
condition, limit or restrict licenses or approvals to own a beneficial interest in PHI for any cause deemed reasonable by such agency. Any failure to retain a valid license or approval would have a material adverse effect on all members of the
Archon Group.

If it is determined that PHI or, when applicable, new members of the Archon Group, have violated the Nevada
laws or regulations relating to gaming, PHI or, when applicable, new members of the Archon Group, could, under certain circumstances, be fined and the licenses of PHI or, when applicable, new members of the Archon Group, could also be limited,
conditioned, revoked or suspended. A violation under any of the licenses held by the Company, or PHI or, when applicable, new members of the Archon Group, may be deemed a violation of all the other licenses held by the Company and PHI or, when
applicable, new members of the Archon Group. If the Commission does petition for a supervisor to manage the affected casino and hotel facilities, the suspended or former licensees shall not receive any earnings of the gaming establishment until
approved by the court, and after deductions for the costs of the supervisors operation and expenses and amounts necessary to establish a reserve fund to facilitate continued operation in light of any pending litigation, disputed claims, taxes,
fees and other contingencies known to the supervisor which may require payment. The supervisor is authorized to offer the gaming establishment for sale if requested by the suspended or former licensee, or without such a request after six months
after the date the license was suspended, revoked or not renewed.



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Individual Licensing. Certain stockholders, directors, officers and key
employees of corporate gaming licensees must be licensed by the Nevada Gaming Authorities. An application for licensing of an individual may be denied for any cause deemed reasonable by the issuing agency. Changes in licensed positions must be
reported to the Nevada Gaming Authorities. In addition to its authority to deny an application for an individual license, the Nevada Gaming Authorities have jurisdiction to disapprove a change in corporate position. If the Nevada Gaming Authorities
were to find any such person unsuitable for licensing or unsuitable to continue to have a relationship with a corporate licensee, such licensee would have to suspend, dismiss and sever all relationships with such person. Such corporate licensee
would have similar obligations with regard to any person who refuses to file appropriate applications, who is denied licensing following the filing of an application or whose license is revoked. Each gaming employee must obtain a work permit which
may be revoked upon the occurrence of certain specified events.

Any individual who is found to have a material relationship
or a material involvement with a gaming licensee may be investigated to be found suitable or to be licensed. The finding of suitability is comparable to licensing and requires submission of detailed financial information and a full investigation.
Key employees, controlling persons or others who exercise significant influence upon the management or affairs of a gaming licensee may be deemed to have such a relationship or involvement.

Beneficial owners of more than 10% of the voting securities of a corporation or partner interests of a partnership registered with the
Nevada Gaming Authorities that is publicly traded (a Registered Entity) must be found suitable by the Nevada Gaming Authorities, and any person who acquires more than 5% of the voting securities or partner interests, as the
case may be, of a Registered Entity must report the acquisition to the Nevada Gaming Authorities in a filing similar to the beneficial ownership filings required by the Federal securities laws. Under certain circumstances an institutional investor,
as such term is defined in the Nevada Gaming Control Act and the regulations of the Commission and Board (collectively, the Nevada Gaming Regulations), that acquires more than 10% of the Companys voting securities may apply to the
Commission for a waiver of such finding of suitability requirement. If the stockholder who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information including a list of beneficial
owners. Any beneficial owner of equity or debt securities of a Registered Entity (whether or not a controlling stockholder) may be required to be found suitable if the relevant Nevada Gaming Authorities have reason to believe that such ownership
would be inconsistent with the declared policy of the State of Nevada. If the beneficial owner who must be found suitable is a corporation, partnership or trust, it must submit detailed business and financial information, including a list of its
securities.

Any stockholder found unsuitable and who beneficially owns, directly or indirectly, any securities or partner
interests of a Registered Entity beyond such period of time as may be prescribed by the Nevada Gaming Authorities may be guilty of a gross misdemeanor. Any person who fails or refuses to apply for a finding of suitability or a license within 30 days
after being ordered to do so may be found unsuitable. A Registered Entity is subject to disciplinary action if, after it receives notice that a person is unsuitable to be a security holder or partner, as the case may be, or to have any other
relationship with it, such Registered Entity (i) pays the unsuitable person any dividends or property upon any voting securities or partner interests or makes any payments or distributions of any kind whatsoever to such person;
(ii) recognizes the exercise, directly or indirectly, of any voting rights in its securities or partner interests by the unsuitable person; (iii) pays the unsuitable person any remuneration in any form for services rendered or otherwise,
except in certain and specific circumstances or; (iv) fails to pursue all lawful efforts to require the unsuitable person to divest himself of his voting securities, including, if necessary, the immediate purchase of the voting securities for
cash at fair market value.

Registered Entities must maintain current stock ledgers in the State of Nevada that may be
examined by the Nevada Gaming Authorities at any time. If any securities or partner interests are held in trust by an agent or by a nominee, the record holder may be required to disclose the identity of the beneficial owner to the Nevada Gaming
Authorities. A failure to make such disclosure may be grounds for finding the record owner unsuitable. Record owners are required to conform to all applicable rules and regulations of the Nevada Gaming Authorities. Licensees also are required to
render maximum assistance in determining the identity of a beneficial owner.



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The Nevada Gaming Authorities have the power to require that certificates representing
voting securities of a corporate licensee bear a legend to the effect that such voting securities or partner interests are subject to the Nevada Gaming Regulations. The Nevada Gaming Authorities, through the power to regulate licensees, have the
power to impose additional restrictions on the holders of such voting securities at any time.

Financial Responsibility.The Company and PHI are required to submit detailed financial and operating reports to the Nevada Gaming Authorities. Substantially all loans, leases, sales of securities and other financial transactions entered into by the Company or PHI
must be reported to and, in some cases, approved by the Nevada Gaming Authorities.

Certain Transactions. None
of the Archon Group may make a public offering of its securities without the approval of the Commission if the proceeds therefrom are intended to be used to construct, acquire or finance gaming facilities in Nevada, or retire or extend obligations
incurred for such purposes. Such approval, if given, will not constitute a recommendation or approval of the investment merits of the securities offered. Any public offering requires the approval of the Commission.

Changes in control of the Company through merger, consolidation, acquisition of assets, management or consulting agreements or any form of
takeover cannot occur without the prior investigation of the Board and approval of the Commission. The Commission may require controlling stockholders, partners, officers, directors and other persons who have a material relationship or involvement
in the transaction to be licensed.

The Nevada legislature has declared that some corporate acquisitions opposed by
management, repurchases of voting securities and other corporate defense tactics that affect corporate gaming licensees in Nevada, and corporations whose securities are publicly traded that are affiliated with those operations, may be injurious to
stable and productive corporate gaming. The Commission has established a regulatory scheme to ameliorate the potentially adverse effects of these business practices upon Nevadas gaming industry and to further Nevadas policy to
(i) assure the financial stability of corporate or partnership gaming operators and their affiliates; (ii) preserve the beneficial aspects of conducting business in the corporate form; and (iii) promote a neutral environment for the
orderly governance of corporate or partnership affairs. Approvals are, in certain circumstances, required from the Commission before the Company can make exceptional repurchases of voting securities above the current market price thereof (commonly
referred to as greenmail) and before an acquisition opposed by management can be consummated. Nevadas gaming regulations also require prior approval by the Commission if the Company were to adopt a plan of recapitalization proposed
by the Companys Board of Directors in opposition to a tender offer made directly to the stockholders for the purpose of acquiring control of the Company.

Miscellaneous. The Company and its Nevada-based affiliates, including subsidiaries, may engage in gaming activities outside the State of Nevada without seeking the approval of the Nevada
Gaming Authorities provided that such activities are lawful in the jurisdiction where they are to be conducted and that certain information regarding the foreign operation is provided to the Board on a periodic basis. The Company and its
Nevada-based affiliates may be disciplined by the Commission if any of them violates any laws of the foreign jurisdiction pertaining to the foreign gaming operation, fails to conduct the foreign gaming operation in accordance with the standards of
honesty and integrity required of Nevada gaming operations, engages in activities that are harmful to the State of Nevada or its ability to collect gaming taxes and fees, or employs a person in the foreign operation who had been denied a license or
finding of suitability in Nevada on the ground of personal unsuitability.

License fees and taxes, computed in various ways
depending on the type of gaming involved, are payable to the State of Nevada and to the counties and cities in which the Company and PHI conduct their respective operations. Depending upon the particular fee or tax involved, these fees and taxes are
payable either monthly, quarterly or annually and are based upon: (i) a percentage of the gross gaming revenues received by the casino operation; (ii) the number of slot machines operated by the casino; or (iii) the number of table
games operated by the casino. A casino entertainment tax is also paid by the licensee where entertainment is furnished in connection with the selling of food or refreshments.



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Finally, the Nevada Gaming Authorities may require that lenders to licensees be investigated
to determine if they are suitable and, if found unsuitable, may require that they dispose of their loans.



|Item 1A. | RISK FACTORS
|-------- | ------------

The
following are currently known and material risks. Other material risks may develop in the future; provided, however, as they remain unidentified they cannot be disclosed. You are encouraged to review the following discussion of specific known
material risks and uncertainties that could affect our business. These include, but are not limited to, the following:

Our Business is Vulnerable to Changing Economic Conditions. Unfavorable changes in general economic conditions including recession, economic slowdown, or higher fuel or other transportation costs, may reduce disposable income
of casino patrons or result in fewer patrons visiting casinos. Our operating results may be negatively impacted by an increase in interest rates causing an increase in interest expense.

Our Laughlin Property is Vulnerable to Existing and New Competitors and Their Capital Investments. Recent acquisition by
competitors of casino/hotel properties in Laughlin could produce unfavorable operating results if the investments by competitors are successful in capturing market share from the Companys Laughlin property. These new competitors may have
greater capital resources and liquidity than the Company.

Redemption of the Companys Preferred Stock and
Redemption Price Disputes.The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and
unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of February 2, 2010, the holders of 4,259,878 shares
of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while 156,699 shares have yet to be surrendered and still have the right to receive their payment due without interest.

On August 27, 2007, a group of institutional investors filed an action, in Nevada, against the registrant. The Complaint
was subsequently amended to add an additional party plaintiff (collectively, the Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the Companys Certificate
of Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the Companys breach of
the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full
compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of
the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs attorneys fees, expenses and costs
incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.



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The Plaintiffs, thereafter, filed a motion for partial summary judgment, seeking a ruling
from the court that the Company breached its obligations under the Certificate of Designation by calculating the redemption price as it did. The Court granted that motion on August 8, 2008, finding the language of the Certificate of Designation
to be unambiguous and that the redemption price should have been calculated differently. The Court has not yet issued a monetary judgment against the Company. Subsequent to the Courts ruling on the motion for partial summary judgment,
Plaintiffs filed a motion for entry of final judgment, seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. At the same time, the Company filed a request for certification asking the Court to
certify its partial summary judgment order for immediate interlocutory appeal. The Court granted the request for certification and denied the request for entry of final judgment without prejudice. The Company filed a Petition for Permission to
Appeal with the Ninth Circuit Court of Appeals and the Ninth Circuit declined to accept the matter for interlocutory review at this time.

The Company has initiated proceedings against a third-party firm concerning that firms potential liability related to the drafting of the Certificate of Designation. This third-party action has
subsequently been removed by the firm to Federal Court in April, 2009 and is at an early stage of resolution. The third-party has moved to compel arbitration of the dispute. The Magistrate Judge issued an order that the matter be referred to
arbitration and the District Court confirmed that order. The Company intends to pursue its claims against the firm in arbitration. The Company is also considering rights and remedies it may have with regard to other parties who participated in the
issuance of the Preferred Stock in the event that the Company does not prevail on its interpretation of the Certificate of Designation.

Also, two other holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the first complaint related to the case set forth immediately above. If
the plaintiffs in these two additional actions are correct, the redemption price as of August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated by the Company. If applied to all the then outstanding shares of
Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, valuation of the redemption price at $8.69 per share would increase the redemption price in excess of $15.2 million.

Management is unable to estimate the minimum liability that may be incurred, if any, as a result of the outcome of each of these matters
and, therefore, has made no provision in the financial statements for liability related to these cases.

A Significant
Decline in Real Estate Values may have an Adverse Impact on the Companys Financial Condition. The Company owns real estate on the Strip and on the East Coast of the United States. Although the Company is presently not dependent on cash
flows from these properties, a significant decline in real estate values in these markets could have an impact on the Companys ability to readily generate cash flow from the real estate.

Our Outstanding Debt Obligations Subject us to Additional Risks. The Companys wholly owned subsidiary, SLVC, secured and
maintains a $15.0 million line of credit loan granted by a Nevada bank. The loan and promissory note, secured by deed of trust on SLVCs approximate 27 acre parcel of land on Las Vegas Boulevard South (the Property), are for a
period of one year commencing November 15, 2009, and ending November 14, 2010. The line of credit loan is revolving and is subject to additional lending requirements. The line of credit loan is current and only partially utilized at this
time. The initial advance under the line of credit loan was used to pay in full the previous line of credit loan secured by the Property. The SLVC line of credit loan is guaranteed by SLVC and the Company, as well as, personally guaranteed by Paul
W. Lowden, President of SLVC, and Suzanne Lowden, Secretary/Treasurer of SLVC.



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##### Table of Contents

|Item 2. | PROPERTIES
|------- | ----------

The
Pioneer is located on approximately 12 acres of land, with Colorado River frontage of approximately 770 feet, and is situated near the center of Laughlins Casino Drive. See Item 1., Business  Hotel and Casino
Operations for more detailed information regarding the Pioneer.

The Companys rental property in Dorchester,
Massachusetts is located on 12 acres and includes several buildings with approximately 425,000 square feet of commercial office space. The property was acquired for approximately $82.4 million plus $0.5 million in debt issuance costs. The Company
paid $5.6 million in cash and assumed $77.3 million in nonrecourse debt associated with the property. The property is under a net lease through 2020 with a single tenant with an investment grade credit rating. Under the lease, the tenant is
responsible for substantially all obligations related to the property.

The Companys property held for sale in
Gaithersburg, Maryland is located on 51 acres and includes one building with approximately 342,000 square feet of commercial office space. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9
million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness. The property is under a net lease through 2014 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for
substantially all obligations related to the property. The Gaithersburg, Maryland, property is under contract to be sold. See Notes to Consolidated Financial Statements, Note 6, Sale of Gaithersburg Property

The Company owns, through its wholly owned subsidiary, SLVC, an approximately 27-acre parcel of land (the Property) located on
the east side of Las Vegas Boulevard South, just south of Sahara Avenue. The Company presently leases the Property to three different lessees for an aggregate amount of $35,000 per month. The leases may be terminated in the event the property is
sold or developed by the Company.

On December 22, 2008, SLVC, entered into an Option Agreement with Las Vegas Towers,
LLC (LVT), a Delaware limited liability company, in which SLVC granted LVT an option to purchase SLVCs approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las Vegas, Nevada.

The Option Agreement designated the purchase price to acquire the land at $618.0 million.

Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant (the Warrant) to Purchase Series A
Preferred Stock (the Preferred Stock), entitling LVT to purchase 60,000 shares of Series A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and amount of the Preferred Stock as well as the
powers, preferences and relative, participating, optional and other special rights of the shares of the series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set forth in the Certificate of Designation,
Preferences and Rights of the Series A Preferred Stock also dated December 22, 2008. Had LVT exercised the Warrant prior to its expiration on April 1, 2009, the Option Agreement would have remained valid until March 31, 2010. LVT
failed to exercise the Warrant before its expiration, thus the Option Agreement terminated on March 31, 2009.



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|Item 3. | LEGAL PROCEEDINGS
|------- | -----------------

Mercury Real Estate Securities Fund, LP and Mercury Real Estate Securities Offshore Limited v. Archon Corporation

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at a redemption price of $5.241 per share, which sum included
accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue dividends. As of February 2, 2010, the holders of
4,259,878 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while 156,699 shares have yet to be surrendered and still have the right to receive their payment due without
interest.

On August 27, 2007, a group of institutional investors filed an action, in Nevada, against the registrant. The
Complaint was subsequently amended to add an additional party plaintiff (collectively, the Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the Companys
Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the
Companys breach of the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding
the Plaintiffs full compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded
per the terms of the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs attorneys fees,
expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.

The Plaintiffs, thereafter, filed a motion for partial summary judgment, seeking a ruling from the court that the Company breached its obligations under the Certificate of Designation by calculating the
redemption price as it did. The Court granted that motion on August 8, 2008, finding the language of the Certificate of Designation to be unambiguous and that the redemption price should have been calculated differently. The Court has not yet
issued a monetary judgment against the Company. Subsequent to the Courts ruling on the motion for partial summary judgment, Plaintiffs filed a motion for entry of final judgment, seeking entry of judgment that the redemption price for the
preferred shares should have been $8.69 per share. At the same time, the Company filed a request for certification asking the Court to certify its partial summary judgment order for immediate interlocutory appeal. The Court granted the request for
certification and denied the request for entry of final judgment without prejudice The Company filed a Petition for Permission to Appeal with the Ninth Circuit Court of Appeals and the Ninth Circuit declined to accept the matter for interlocutory
review at this time.

The Company has initiated proceedings against a third-party firm concerning that firms potential
liability related to the drafting of the Certificate of Designation. This third-party action has subsequently been removed by the firm to Federal Court in April, 2009 and is at an early stage of resolution. The third-party has moved to compel
arbitration of the dispute. The Magistrate Judge issued an order that the matter be referred to arbitration and the District Court confirmed that order. The Company intends to pursue its claims against the firm in arbitration. The Company is also
considering rights and remedies it may have with regard to other parties who participated in the issuance of the Preferred Stock in the event that the Company does not prevail on its interpretation of the Certificate of Designation.

Also, two other holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the
first complaint related to the case set forth immediately above. If the plaintiffs in these two additional actions are correct, the redemption price as of August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated
by the Company. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, valuation of the redemption price at $8.69 per share would increase the
redemption price in excess of $15.2 million.



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Management is unable to estimate the minimum liability that may be incurred, if any, as a
result of the outcome of each of these matters and, therefore, has made no provision in the financial statements for liability related to these cases.



|Item 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

None

PART II



|Item 5. | MARKET FOR THE REGISTRANTS COMMON STOCK AND RELATED SECURITY HOLDERS MATTERS
|------- | -----------------------------------------------------------------------------

The Companys common stock is traded on the Over the Counter Bulletin Board (the OTCBB) under the symbol ARHNE.
As the Company did not file its Form 10-K by the extended due date of January 13, 2010, the Companys stock has been delisted until such time that the Form 10-K is filed with the SEC.

The closing price of the Common Stock on February 19, 2010 was $19.00 per share. The tables below set forth the high and low closing
prices by quarter for the fiscal years ended September 30, 2009 and 2008 of the common stock, as reported by the OTCBB.



|            |  |               |       |               |   |              |  |               |       |  |   |      
|----------- |  | ------------- | ----- | ------------- | - | ------------ |  | ------------- | ----- |  | - | -----
|            |  | First Quarter |       | SecondQuarter |   | ThirdQuarter |  | FourthQuarter
|Fiscal 2009 |  |               |       |               |   |              |  |               |       |  |   |      
|High        |  | $             | 32.00 |               | $ | 23.00        |  | $             | 14.25 |  | $ | 14.25
|Low         |  |               | 12.00 |               |   | 14.25        |  |               | 12.50 |  |   | 13.00
|Fiscal 2008 |  |               |       |               |   |              |  |               |       |  |   |      
|High        |  | $             | 51.75 |               | $ | 50.00        |  | $             | 40.75 |  | $ | 39.00
|Low         |  |               | 43.85 |               |   | 33.25        |  |               | 34.50 |  |   | 31.00

The Company has never
paid cash dividends on its Common Stock, nor does it anticipate paying such dividends in the foreseeable future. There were approximately 400 common stockholders of record as of February 2, 2010.



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##### Table of Contents

Performance Graph

The following graph compares the cumulative total return on the Companys common stock with the cumulative total return of the
Standard & Poors 500, the Dow Jones US Gambling index for the five-year period ended September 30, 2009. The graph assumes that the value of the investment in the Company and in each index was $100 on September 30, 2004 and
assumes that all dividends were reinvested.

LOGO



|                      |  |         |        |         |   |         |  |         |        |         |   |         |  |   |        |  |   |       
|--------------------- |  | ------- | ------ | ------- | - | ------- |  | ------- | ------ | ------- | - | ------- |  | - | ------ |  | - | ------
|                      |  | 9/30/04 |        | 9/30/05 |   | 9/30/06 |  | 9/30/07 |        | 9/30/08 |   | 9/30/09
|Archon Corporation    |  | $       | 100.00 |         | $ | 539.43  |  | $       | 470.00 |         | $ | 675.00  |  | $ | 443.57 |  | $ | 203.57
|S&P 500               |  |         | 100.00 |         |   | 112.25  |  |         | 124.37 |         |   | 144.81  |  |   | 112.99 |  |   | 105.18
|Dow Jones US Gambling |  |         | 100.00 |         |   | 107.91  |  |         | 136.21 |         |   | 207.80  |  |   | 90.64  |  |   | 91.31 



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##### Table of Contents

|Item 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

The table below sets forth a summary of selected financial data of the Company and its subsidiaries for the years ended September 30, 2009 and 2008:



|                                                 |  |                                                                                  |         |   |      |   |        
|------------------------------------------------ |  | -------------------------------------------------------------------------------- | ------- | - | ---- | - | -------
|                                                 |  | 2009                                                                             |         |   | 2008
|                                                 |  | Not covered by auditors report (dollars in thousands, except per share amounts)
|Net operating revenues, continuing operations(1) |  | $                                                                                | 31,973  |   |      | $ | 37,784 
|Discontinued operations, net                     |  |                                                                                  | 961     |   |      |   | 896    
|Net income (loss)                                |  |                                                                                  | (1,535  | ) |      |   | 58,802 
|Net income (loss) applicable to common shares    |  |                                                                                  | (1,535  | ) |      |   | 58,802 
|Net income (loss) per common share               |  |                                                                                  | (0.24   | ) |      |   | 9.27   
|Total assets                                     |  |                                                                                  | 196,984 |   |      |   | 210,307
|Long-term debt, less current portion             |  |                                                                                  | 31,199  |   |      |   | 31,119 
|Long-term debt- on asset held for sale           |  |                                                                                  | 37,115  |   |      |   | 40,3001
|Exchangeable redeemable preferred stock(2)       |  |                                                                                  | 821     |   |      |   | 834    



|(1) | Net operating revenues for fiscal years 2008 through 2009 are derived primarily from operations at the Pioneer and revenues from the rental properties.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | The Companys Board of Directors had not declared dividends on its preferred stock since fiscal 1996. The Company redeemed its outstanding
exchangeable redeemable preferred stock at $5.241 per share. As of February 2, 2010, the Company had repurchased and retired 4,259,878 shares of exchangeable redeemable preferred stock. The legal proceeding set forth in Item 3 relates to
the exchangeable redeemable preferred stock.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|Item 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

GENERAL

Overview of Business
Operations and Trends

The Company, historically, has owned, managed and operated hotel/casino properties through a
number of acquisitions or developments, and it has divested itself of certain of these properties. Presently, the Company operates the Pioneer in Laughlin, Nevada.

The Pioneer has experienced a flattening and, to a certain extent, a decline of its revenues over the last few years after experiencing strong revenue and profit growth in the early 1990s.
Management believes the growth of casino properties on Native American lands in such locations as California and Arizona within the last several years caused revenue declines and caused the Company to focus on market definition and development in
the local Laughlin area to maintain profitability. Harsh economic conditions impacting customers, including high fuel costs, has significantly reduced disposable income, and limited customer travel and gaming practices. Management believes Laughlin
is a mature market with marginal growth forecasted for the next few years based on its current plans. Management believes the recent revenue and expense trends in its Laughlin hotel/casino property may not change significantly over the next few
years, or until the current economic conditions and trends begin to reverse.

The Company also owns rental properties on the
East Coast and Las Vegas Strip, but revenues from these rental properties are used to meet their related mortgages and thus do not contribute significant net cash flow to the Company.

Property Held for Sale

During fiscal year 2001, the Company
acquired certain properties as part of an IRS Section 1031 exchange. The property held for sale is located in Gaithersburg, Maryland. The Company acquired the property and nonrecourse debt associated with the property which is subject to a
long-term lease. A tenant remits payment to the bank according to the terms of the lease and note. The payments are used to liquidate the nonrecourse debt obligations. Rental income is recorded by the Company on a straight-line basis and totals
approximately $5.6 million annually and will remain at this level until approximately 2014 or until the asset is sold, otherwise disposed of or becomes impaired. The buildings are also being depreciated on a straight-line basis and the depreciation
expense is approximately $0.9 million annually and will remain at this level until approximately 2041 or until the asset is sold, otherwise disposed of or becomes impaired. Interest expense is also recorded based on the outstanding nonrecourse debt
remaining to be paid based on unamortized loan issue costs and remaining debt amortization timetables. At any time during the life of the lease and debt amortization, the fair market value of the property may be different from its book values.
Interest is presently being expensed at approximately $2.9 million annually and will decrease in relation to debt principal reductions through 2014 or until the asset is sold, otherwise disposed of or becomes impaired.

On May 28, 2009, the Company, through its wholly owned subsidiary SFHI, LLC (SFHI), entered into a Purchase and Sale
Agreement (the Agreement) with Montgomery County, Maryland (the County) whereby the County will purchase SFHIs 51.57 acre parcel of land together with an approximately 341,693 square feet office building erected thereon
(the Property), located at 100 Edison Park Drive in Gaithersburg, Maryland. The purchase price for the Property will be seventy-six million three hundred forty thousand dollars ($76,340,000). The Agreement provided the County with a
90-day feasibility period during which the County determined that the Property is suitable for its intended use, and the County will now proceed to close escrow by notifying the Company of the closing date, which date may be no sooner than 90 days
from the date of notice and no later than April 30, 2014.



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Simultaneous with the execution of the Purchase and Sale Agreement, the County entered into
a sublease with the existing tenant of SFHI at this location, GXS, Inc., whereby the County, as of October 1, 2009, leased and occupied the entire Property until the earlier of (i) completion of its purchase of the Property or
(ii) April 30, 2014. Pursuant to the applicable provisions of the existing lease with GXS, Inc., SFHI consented to the sublease. In addition, GXS, Inc. agreed to pay SFHI the sum of $2,125,000, $1,725,000 of which was paid on
October 1, 2009, with the balance of $400,000 payable on or before July 1, 2010. Due to the pending sale of this property, the related results of operations have been reported as discontinued operations. See Notes to Consolidated
Financial Statements, Note 6, Sale of Gaithersburg Property

Rental Properties Held for Investment

During fiscal year 2001, the Company acquired certain rental property as part of an IRS Section 1031 exchange. The rental property is
located in Dorchester, Massachusetts. The Company acquired the property and nonrecourse debt associated with the property which is subject to a long-term lease. A tenant remits payments to a bank according to the terms of the lease and note. The
payments are used to liquidate the nonrecourse debt obligations. Rental income is recorded by the Company on a straight-line basis and totals approximately $6.7 million annually and will remain at this level until approximately 2020 or until the
asset is sold, otherwise disposed of or becomes impaired. The buildings are also being depreciated on a straight-line basis and the depreciation expense is approximately $1.7 million annually and will remain at this level until approximately 2041 or
until the asset is sold, otherwise disposed of or becomes impaired. Interest expense is also recorded based on the outstanding nonrecourse debt remaining to be paid based on unamortized loan issue costs and remaining debt amortization timetables. At
any time during the life of the lease and debt amortization, the fair market values of the property may be different from its book value. Interest is presently being expensed at approximately $4.5 million annually and will decrease in relation to
debt principal reductions through 2020 or until the asset is sold, otherwise disposed of or becomes impaired.

The Company
owns, through its wholly owned subsidiary, Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of land (the Property) located on the east side of Las Vegas Boulevard South, just south of Sahara Avenue. The Company
presently leases the Property to three different lessees for an aggregate amount of $35,000 per month. The leases may be terminated in the event the property is sold or developed by the Company.

On December 22, 2008, SLVC, entered into an Option Agreement with Las Vegas Towers, LLC (LVT), a Delaware limited liability
company, in which SLVC granted LVT an option to purchase SLVCs approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las Vegas, Nevada.

The Option Agreement designated the purchase price to acquire the land at $618.0 million.

Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant (the Warrant) to Purchase Series A Preferred Stock (the Preferred Stock), entitling LVT to purchase 60,000 shares of Series
A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and amount of the Preferred Stock as well as the powers, preferences and relative, participating, optional and other special rights of the shares of the
series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set forth in the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock also dated December 22, 2008. Had LVT exercised
the Warrant prior to its expiration on April 1, 2009, the Option Agreement would have remained valid until March 31, 2010. LVT failed to exercise the Warrant before its expiration, thus the Option Agreement terminated on March 31,
2009.



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##### Table of Contents

Critical Accounting Policies and Estimates

The preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management
evaluates its estimates and judgments, including those related to customer incentives, bad debts, inventories, investments, estimated useful lives for depreciable and amortizable assets, valuation reserves and estimated cash flows in assessing the
recoverability of long-lived assets, estimated liabilities for slot club bonus point programs, income taxes, contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

Management believes the following critical accounting policies, among
others, affects its more significant judgments and estimates used in the preparation of its consolidated financial statements:

Allowance for Doubtful Accounts. The Company allows for an estimated amount of receivables that may not be collected. The Company estimates its allowance for doubtful accounts using a specific formula applied to aged
receivables as well as a specific review of large balances. Historical experience is considered, as are customer relationships, in determining specific reserves.

Long-Lived Assets. The Company has a significant investment in long-lived property and equipment. Management reviews useful lives and obsolescence and assesses commercial viability of these
assets periodically, at least annually. Based on these reviews, management estimates that the undiscounted future cash flows expected to result from the use of these assets exceeds the current carrying value of these assets. Any adverse change in
the estimate of these undiscounted future cash flows could necessitate an impairment charge that would adversely affect operating results. Management also estimates useful lives for its assets based on historical experience, estimates of
assets commercial lives, and the likelihood of technological obsolescence. Should the actual useful life of a class of assets differ from the estimated useful life, the Company would record an impairment charge. We review useful lives and
obsolescence and we assess commercial viability of these assets periodically.

Income Taxes. The Company has
recorded deferred tax assets related to net operating losses as the Company is able to offset these assets with deferred tax liabilities. Realization of the net deferred tax assets is dependent on the Companys ability to generate profits from
operations or from the sale of long-lived assets that would reverse the temporary differences which established the deferred tax liabilities. There can be no assurance that the Company will generate profits from operations or sell those assets or
will generate profits from sales if they were to occur in the future. In the event the Company does generate profits from sales of long-lived assets in the future a valuation allowance may need to be recorded, which would impact the Companys
future results of operations. Annualized effective income tax rates for calculating interim period provisions and benefits have been estimated to be not significantly different than the estimated annual effective rate and the statutory rate.
Although Financial Accounting Standards Board, Accounting Standard Codification (FASB ASC) 740-10, Income Taxes, became effective for the year ending September 30, 2008, based on its evaluation, management determined that FASB ASC 740-10
did not have a material effect on the financial statements or the net operating loss carryovers or the related deferred tax assets or valuation allowance.

Revenue Recognition. Casino revenue is recorded as gaming wins less losses. Hotel, food and beverage, entertainment and other operating revenues are recognized as services are performed.
Casino revenues are recognized net of certain sales incentives in accordance FASB ASC 605-50 Revenue Recognition, Customer Payments and Incentives. Accordingly, cash incentives to customers for gambling, and the cash value of points and
coupons earned by the slot club members totaling $0.2 million and $0.4 million for the years ended September 30, 2009 and 2008, have been recognized as a direct reduction of casino revenue.

Advance deposits on rooms, if any, are recorded as deferred revenue until services are provided to the customer. Hotel, food and beverage
revenues are recognized as services are performed.

Rental revenue from rental properties is recognized as earned on a
straight-line basis over the term of the lease. When rental payments received exceed rents earned and recognized, the difference is recorded as deferred rental income in the current liabilities section of the balance sheet, and conversely, when
rents earned and recognized exceed rental payments received, the difference is recorded as other assets.



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##### Table of Contents

RESULTS OF OPERATIONS  FISCAL 2009 COMPARED TO FISCAL 2008

General

During fiscal 2009, the Companys consolidated net operating revenues decreased approximately $5.8 million, and operating expenses decreased approximately $16.8 million, resulting in an increase of approximately $11.0 million in
operating income. These results were achieved in part through aggressive cost cutting measures. The increase in operating results was due to decreases in all of the operating expenses including a $7.5 million reduction in the loss incurred on the
impairment of Pioneer assets.

Consolidated

Net Operating Revenues.Consolidated net operating revenues for the year ended September 30, 2009 decreased by approximately $5.8 million from the year ended September 30, 2008.
Revenues from the rental properties decreased approximately $0.5 million during fiscal 2009 as compared to the 2008 fiscal year. Net revenues decreased approximately $5.3 million during fiscal 2009 at the Pioneer compared to the 2008 fiscal year, as
a result of a marketwide declining trend of gaming revenues in Laughlin discussed in greater detail below. Other net revenues decreased during fiscal 2009, by $0.1 million as compared to the 2008 fiscal year.

In fiscal 2009, 63% of the Companys net revenues were derived from the Pioneer and 34% from rental properties held for investment. The
Companys business strategy at the Pioneer emphasizes slot and video poker machine play. For fiscal 2009, approximately 79% of the Pioneers net revenues were derived from casino operations. Approximately 90% of gaming revenues at the
Pioneer were derived from slot and video poker machines, while 8% of such revenues were from table games and 2% was from other gaming activities such as keno.

Operating Expenses.Total operating expenses decreased approximately $16.8 million, or 35%, to $31.7 million for the year ended September 30, 2009, from $48.6 million for the year ended
September 30, 2008. Total operating expenses as a percentage of net revenues decreased to 99% for the year ended September 30, 2009 from 129% for the year ended September 30, 2008. All of the operating expenses decreased in the year
ended September 30, 2009 from the prior year. The decrease in operating expenses was principally the result of declining business levels. Casino, hotel, food and beverage, and other operating expenses declined a total of $3.6 million; combined
with $1.1 million in legal and approximately $2.4 million in stock-based compensation expense. Other reductions included $0.8 million in utilities and property expenses and a $7.5 million decrease in the loss on the impairment of Pioneer assets.

Interest Expense. Consolidated interest expense for the year ended September 30, 2009 was $5.3 million, a
$0.4 million increase compared to $4.9 million for the year ended September 30, 2008, primarily due to a $0.7 million non-recurring adjustment in the interest expense associated with the nonrecourse debt of the rental properties held for
investment and an offsetting decrease in interest expense of $0.3 million due to a decrease in the amount of debt associated with the interest expense.

Gain on Termination of Land Sale Option. During the year ended September 30, 2008, the Company realized income of $67.1 million from nonrefundable deposits associated with a terminated
land sale option, on an owned rental property.

Gain from Settlement of Liabilities. During the year ended
September 30, 2008, the Company realized a gain of approximately $1.1 million, from the settlement of a debt associated with the Pioneer.

Interest and Other Income. Interest and other income for the year ended September 30, 2009 was approximately $1.2 million, a decrease of $0.2 million from $1.4 million for the year
ended September 30, 2008. The decrease in interest and other income is a result of decreased cash flows.



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##### Table of Contents

Loss on Sale of Marketable Securities. The loss on marketable securities for
the year ended September 30, 2009 was approximately $1.0 million, a decrease of $3.2 million from a gain of $2.2 million for the year ended September 30, 2008. The decrease is due to realized losses in available for sale of marketable
securities.

Income Tax.The Company recorded a federal income tax benefit, combined with a tax expense
associated with the discontinued operations, totaling approximately $1.9 million (an approximate 55% rate) for the year ended September 30, 2009, a change of $0.6 million from a $1.3 million tax benefit (an approximate 2% rate) for the year
ended September 30, 2008. The benefit consisted primarily of the NOL carryforward from prior years.

Discontinued
Operations, Net of Tax. The discontinued operations associated with the property held for sale during the year ended September 30, 2009 was $1.0 million, an increase of $0.1 million from $0.9 million for the year ended
September 30, 2008.

Pioneer

General. Casino, hotel and food/beverage revenues and expenses at the Pioneer comprise the majority of consolidated casino, hotel, and food/beverage revenues and expenses included in the
Companys consolidated statements of operations and are discussed separately below.

Net Operating
Revenues. Net revenues at the Pioneer decreased $5.3 million, or approximately 21%, to $20.3 million for the year ended September 30, 2009 from $25.6 million for the year ended September 30, 2008.

Gross casino revenues decreased approximately $4.4 million, or 21%, to $16.0 million for the year ended September 30, 2009 from $20.4
million for the year ended September 30, 2008. Slot and video poker revenues decreased approximately $4.0 million, or 22%, to $14.4 million for the year ended September 30, 2009 from $18.4 million for the year ended September 30,
2008. Other gross gaming revenues, including table games, decreased approximately $0.4 million, or 18%, to $1.6 million for the year ended September 30, 2009 compared to approximately $2.0 million for the 2008 year. Management believes this
decrease was a result of declining market trends in the local area. Casino promotional allowances decreased approximately $1.6 million, or 29%, to approximately $4.0 million in year ended September 30, 2009 compared to $5.6 million for year
ended September 30, 2008 primarily due to the aforementioned decline in the local gaming market.

Hotel revenues
decreased $0.5 million, or 23%, to $1.7 million for the year ended September 30, 2009 from $2.2 million in fiscal 2008 due to a decrease in the number of rooms occupied. Food and beverage revenues decreased $1.4 million, or 19%, to $5.8 million
for the year ended September 30, 2009 from $7.2 million for the year ended September 30, 2008. Other revenues decreased $0.7 million, or 48%, to $0.7 million for the year ended September 30, 2009 from $1.4 million for the year ended
September 30, 2008 due to decreased retail sales.

Operating Expenses.Operating expenses decreased $13.3
million, or 34%, to $26.3 million for the year ended September 30, 2009 from approximately $39.6 million for the year ended September 30, 2008, as a result of a decline of $7.5 million related to the impairment of assets, combined with a
$5.8 million reduction in expenses associated with reduced customer activity since many such expenses vary with related revenues and for other reasons noted below. Operating expenses as a percentage of net revenues decreased to 130% in fiscal 2009
from 155% in fiscal 2008.

Casino expenses decreased $2.5 million, or 20%, to $9.8 million for the year ended
September 30, 2009 from $12.3 million for the year ended September 30, 2008, primarily related to a decrease in casino promotional allowances, and lower gaming volumes. Casino expenses as a percentage of casino revenues increased to 61%
for the year ended September 30, 2009 from 60% for the year ended September 30, 2008.



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##### Table of Contents

Hotel expenses decreased $0.3 million, or 26%, to $0.7 million for the year ended
September 30, 2009, compared to $1.0 million for the year ended September 30, 2008, primarily due to a reduction in the number of hotel rooms rented. Hotel expenses as a percentage of hotel revenues decreased to 45% for the 2009 year from
47% for the 2008 year. Food and beverage expenses decreased $0.4 million, or 10%, to $3.9 million for the year ended September 30, 2009, compared to $4.3 million for the year ended September 30, 2008. Food and beverage expenses as a
percentage of revenues increased to 67% for the 2009 year from 60% for the 2008 year. Other expenses decreased $0.4 million, or 40%, to $0.6 million for the year ended September 30, 2009 compared to $1.0 million for the year ended
September 30, 2008 due to the decrease in retail revenues. Other expenses as a percentage of other revenues increased to 82% for the 2009 year from 71% for the 2008 year.

Selling, general and administrative expenses decreased $0.6 million, or 14%, to $3.8 million for the year ended September 30, 2009
compared to $4.4 million for the year ended September 30, 2008. Selling, general and administrative expenses as a percentage of revenues increased to 19% for the 2009 year from 17% for the 2008 year. The decrease in selling, general and
administrative expenses was a result of lower business levels. These expenses increased as a percentage of revenues due to fixed costs associated with service contracts. Pioneers selling, general and administrative expenses are greater than
the consolidated total due to the elimination of intercompany transactions in consolidation. Utilities and property expenses decreased $0.8 million, or 20%, to $3.3 million in fiscal year 2009 compared to $4.1 million for the year ended
September 30, 2008. Utilities and property expenses as a percentage of revenues remained the same at 16% for 2009 and 2008. Energy consumption decreased as a result of lower business levels and energy efficient lighting and signage changes, but
were offset by energy rate increases. Depreciation expenses decreased $0.8 million, or 51%, to approximately $0.7 million in the year ended September 30, 2009, from $1.5 million in the year ended September 30, 2008.

Interest Expense. Interest expense decreased $0.4 million, or 30%, to $0.9 million for the year ended September 30, 2009
compared to $1.3 million for the year ended September 30, 2008.

LIQUIDITY AND CAPITAL RESOURCES; TRENDS AND FACTORS RELEVANT TO
FUTURE OPERATIONS

The United States has been experiencing a recession that has resulted in highly curtailed economic
activity including, among other things, reduced casino gaming and declining real estate values, both nationwide and particularly in the Southern Nevada local market. The effects and duration of these developments and related uncertainties on the
Companys future operations and cash flows cannot be estimated at this time but may likely be significant.



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##### Table of Contents

Contractual Obligations and Commitments

The following table summarizes the Companys fiscal year contractual obligations and commitments as of September 30, 2009 for the
fiscal years ending September 30, 2010, 2011, 2012, 2013, 2014, 2015 and thereafter:



|                            |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|--------------------------- |  | ---------------------- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ------------------ |  | ----- | ------ |  | - | ------ |  | - | ------
|                            |  | Payments Due By Period
|                            |  | 2010                   |       | 2011 |   | 2012  |  | 2013 |       | 2014 |   | 2015 andThereafter |  | Total
|                            |  | (Amounts in Thousands)
|Continuing Operations       |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Nonrecourse debt:           |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Dorchester                  |  | $                      | 0     |      | $ | 0     |  | $    | 0     |      | $ | 0                  |  | $     | 0      |  | $ | 31,199 |  | $ | 31,199
|Long-term debt:             |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Mortgage obligation         |  |                        | 7,867 |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0      |  |   | 0      |  |   | 7,867 
|Operating leases:           |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Ground lease                |  |                        | 383   |      |   | 383   |  |      | 383   |      |   | 383                |  |       | 383    |  |   | 24,530 |  |   | 26,445
|Corporate offices           |  |                        | 55    |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0      |  |   | 0      |  |   | 55    
|                            |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Total Continuing Operations |  | $                      | 8,305 |      | $ | 383   |  | $    | 383   |      | $ | 383                |  | $     | 383    |  | $ | 55,729 |  | $ | 65,566
|                            |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Discontinued Operations     |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       
|Gaithersburg                |  | $                      | 3,187 |      | $ | 3,573 |  | $    | 3,987 |      | $ | 4,448              |  | $     | 28,107 |  | $ | 0      |  | $ | 40,302
|                            |  |                        |       |      |   |       |  |      |       |      |   |                    |  |       |        |  |   |        |  |   |       

The Company is required to make the following cash
interest payments related to the above debt obligations: (i) Nonrecourse debt$3.8 million (2010), $3.8 million (2011), $3.8 million (2012), $3.8 million (2013), $3.8 million (2014) and $21.8 million (2015 and thereafter);
(ii) Long-term debt$0.5 million (2010), $0.0 million (2011), $0.0 million (2012), $0.0 million (2013) $0.0 million (2014), and $0.0 million (2015 and thereafter); (iii) Discontinued operations$2.8 million (2010), $2.5
million (2011), $2.3 million (2012), $2.0 million (2013) $1.0 million (2014), and $0.0 million (2015 and thereafter).

The Companys ability to service its contractual obligations and commitments, other than the nonrecourse debt, will be dependent on the future performance of the Pioneer, which will be affected by, among other things, prevailing
economic conditions and financial, business and other factors, including competitive pressure from the expansion of Native American gaming facilities in the southwest United States, certain of which are beyond the Companys control. In
addition, the Company will be dependent on the continued ability of the tenants in the rental properties in Gaithersburg, Maryland and Dorchester, Massachusetts to make payments pursuant to the leases with the Company. The payments under the leases
are contractually committed to be used to make payments on the Companys nonrecourse debt obligations related to the properties.

Liquidity and Capital Resources

Mortgage Note Obligation. The Companys
wholly owned subsidiary, SLVC, secured and maintains a $15.0 million line of credit loan granted by a Nevada bank. The loan and promissory note, secured by deed of trust on SLVCs approximate 27 acre parcel of land on Las Vegas Boulevard South
(the Property), are for a period of one year commencing November 15, 2009, and ending November 14, 2010. The line of credit loan is revolving and is subject to additional lending requirements. The line of credit loan in the
amount of $7.9 million at the end of the fiscal year is reported as a current liability. The initial advance under the line of credit loan was used to pay in full the previous line of credit loan secured by the Property. The SLVC line of credit loan
is guaranteed by SLVC and the Company, as well as, personally guaranteed by Paul W. Lowden, President of SLVC, and Suzanne Lowden, Secretary/Treasurer of SLVC.



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As of September 30, 2009, the Company held cash and cash equivalents of $31.6 million
compared to $37.9 million at September 30, 2008. In addition, the Company had $6.0 million in investment in marketable securities at September 30, 2009 compared to $5.7 million at September 30, 2008. Management believes that cash flow
generated through its casino operations and its short and long-term investments, the Company will have sufficient available cash and cash resources to meet its cash requirements through the twelve-month period ending September 30, 2010. The
rental properties were structured such that future tenants payments cover future required mortgage payments.

Cash
Flows from Operating Activities. The Companys cash provided by operations decreased $4.0 million in the year ended September 30, 2009 compared to the year ended September 30, 2008.

Cash Flows from Investing Activities. Cash provided by investing activities decreased $14.7 million during the year ended
September 30, 2009, compared to the year ended September 30, 2008. This decrease is primarily related to the nonrefundable option payment of approximately $17.4 million received during the year ended September 30, 2008.

Cash Flows from Financing Activities.Cash used in financing activities decreased $2.0 million during the year ended
September 30, 2009 compared to the year ended September 30, 2008. During fiscal 2009, the Company paid $1.9 million in long term debt, $.08 million on debt and nonrecourse debt, and $0.2 million common stock. During fiscal 2008, the
Company received $9.6 million in loan proceeds, paid $2.6 million for common stock purchased and retired, $0.2 million for redeemable preferred stock, and $11.1 million on debt and nonrecourse debt.

The Companys primary source of operating cash is from the Pioneer operations, from interest income on available cash and cash
equivalents and investments in marketable securities and, to a lesser extent, from net cash generated from the leasing of certain land owned on the Las Vegas strip. Rental income from the Companys two rental properties is contractually
committed to reducing the nonrecourse indebtedness issued or assumed in connection with the acquisition of the rental properties. Under the two leases, the tenants are responsible for substantially all obligations related to the property.

The Company owns, through its wholly owned subsidiary, Sahara Las Vegas Corp. (SLVC), an approximately 27-acre
parcel of land (the Property) located on the east side of Las Vegas Boulevard South, just south of Sahara Avenue. The Company presently leases the Property to three different lessees for an aggregate amount of $35,000 per month. The
leases may be terminated in the event the property is sold or developed by the Company.

Pioneer

Pioneers principal uses of cash are for ground lease rent and capital expenditures to maintain the facility. The Company has
implemented changes in personnel and promotional programs and installed new slot equipment to address the decreases in revenues and operating income. Managements main focuses is to recapture market share in the Laughlin market, and continue to
reduce expenses. Management, however, can give no assurance that market share will be recaptured in its Laughlin market as its competition in the market typically has greater capital resources than does the Pioneer.

Property Held for Sale

The property in Gaithersburg, Maryland is located on 51 acres and includes one building with approximately 342,000 square feet of commercial office space. The property was acquired for $62.6 million, plus
debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness. The property is under a net lease through 2014 with a single tenant with an investment grade credit
rating. Under the lease, the tenant is responsible for substantially all obligations related to the property. The Gaithersburg, Maryland, property is under contract to be sold. See Notes to Consolidated Financial Statements, Note 6, Sale of
Gaithersburg Property



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##### Table of Contents

Rental Properties Held for Investment

The Company acquired rental property in Dorchester, Massachusetts in March 2001. The Dorchester, Massachusetts property is located on 12
acres and includes several buildings with approximately 425,000 square feet of commercial office space. The property was acquired for approximately $82.4 million plus $0.5 million in debt issuance costs. The Company paid $5.6 million in cash and
assumed $77.3 million in nonrecourse debt associated with the property. The property is under a net lease through 2020 with a single tenant with an investment grade credit rating. Under the lease, the tenant is responsible for substantially all
obligations related to the property.

Termination of Option to Purchase Las Vegas Boulevard Land

On December 22, 2008, SLVC, a wholly owned subsidiary of Archon Corporation, entered into an Option Agreement with Las Vegas Towers, LLC
(LVT), a Delaware limited liability company, in which SLVC granted LVT an option to purchase SLVCs approximately 27-acre parcel of land located at 2600 Las Vegas Boulevard South, Las Vegas, Nevada.

The Option Agreement designated the purchase price to acquire the land at $618.0 million.

Simultaneous with the execution of the Option Agreement, SLVC executed a Contingent Warrant (the Warrant) to Purchase Series A
Preferred Stock (the Preferred Stock), entitling LVT to purchase 60,000 shares of Series A Preferred Stock of SLVC upon terms and conditions set forth in the Warrant. The designation and amount of the Preferred Stock as well as the
powers, preferences and relative, participating, optional and other special rights of the shares of the series of this Preferred Stock and the qualifications, limitations or restrictions thereof are set forth in the Certificate of Designation,
Preferences and Rights of the Series A Preferred Stock (the Certificate) also dated December 22, 2008. Had LVT exercised the Warrant prior to its expiration on April 1, 2009, the Option Agreement would have remained valid until
March 31, 2010. LVT failed to exercise the Warrant before its expiration, thus the Option Agreement terminated on March 31, 2009.

Dukes Casino

Prior to the years presented, the Company had loaned approximately $1.4
million to Dukes  Sparks (Dukes), a Nevada limited-liability company. The Company, through its wholly-owned subsidiary, Archon Sparks Management Company, operated Dukes casino. Christopher Lowden, son of Paul W.
Lowden, was a limited partner in the company that was a managing member of Dukes. The Company also acquired a $100,000 Class B member interest in Dukes. In December 2003, Dukes closed its casino operations.

Throughout the latter half of calendar 2004 through June 30, 2006, the Company financed certain legal costs totaling approximately $0.8
million associated with certain arbitration between Dukes LLC and a general contractor. The Company had previously written-off its investment in and receivables from Dukes LLC, related to the operation of Dukes Casino, of
approximately $1.5 million in the fiscal year ended September 30, 2003. In January 2005, the American Arbitration Association awarded Dukes LLC approximately $4.9 million against the general contractor for a casino renovation at
Dukes Casino. The Company has an agreement with Dukes LLC whereby the Company is to be reimbursed for legal and certain other costs related to the arbitration as well as recovery of amounts previously written-off, which in total may
exceed $3 million. However, due to various contingencies surrounding the enforcement, collection or settlements with Dukes LLC and the general contractor, management can give no assurance of the timing or the amount it will ultimately receive.
During the year ended September 30, 2007, the Company received approximately $0.7 million from Dukes LLC. The Company has negotiated with Dukes-Sparks, LLC and obtained an assignment of all future payments under the judgment and
settlement with the general contractor for the casino project. The general contractor has been notified of the assignment and will be making all future payments due under the settlement with Dukes-Sparks, LLC to the Company directly according with
the terms of the settlement agreement. Since September 2007, the Company has received timely payments under the terms of the settlement agreement with Dukes LLC from the general contractor responsible for the judgment.



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##### Table of Contents

Redemption of the Companys Preferred Stock and Redemption Price Disputes.

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as
of August 31, 2007, at a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to
be outstanding and to accrue dividends. As of February 2, 2010, the holders of 4,259,878 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while 156,699 shares have
yet to be surrendered and still have the right to receive their payment due without interest.

On August 27, 2007, a
group of institutional investors filed an action, in Nevada, against the registrant. The Complaint was subsequently amended to add an additional party plaintiff (collectively, the Plaintiffs). The Amended Complaint: (i) seeks a
finding by the Court that the Company has breached its obligations under the Companys Certificate of Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Plaintiffs full compensation
of any and all available damages suffered by the Plaintiffs as a result of the Companys breach of the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an improper redemption
price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii) seeks
a declaration by the Court that the dividends be properly calculated and compounded per the terms of the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court
calling for the Company to reimburse the Plaintiffs attorneys fees, expenses and costs incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.

The Plaintiffs, thereafter, filed a motion for partial summary judgment, seeking a ruling from the court that the Company breached its
obligations under the Certificate of Designation by calculating the redemption price as it did. The Court granted that motion on August 8, 2008, finding the language of the Certificate of Designation to be unambiguous and that the redemption
price should have been calculated differently. The Court has not yet issued a monetary judgment against the Company. Subsequent to the Courts ruling on the motion for partial summary judgment, Plaintiffs filed a motion for entry of final
judgment, seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share. At the same time, the Company filed a request for certification asking the Court to certify its partial summary judgment order
for immediate interlocutory appeal. The Court granted the request for certification and denied the request for entry of final judgment without prejudice The Company filed a Petition for Permission to Appeal with the Ninth Circuit Court of Appeals
and the Ninth Circuit declined to accept the matter for interlocutory review at this time.

The Company has initiated
proceedings against a third-party firm concerning that firms potential liability related to the drafting of the Certificate of Designation. This third-party action has subsequently been removed by the firm to Federal Court in April, 2009 and
is at an early stage of resolution. The third-party has moved to compel arbitration of the dispute. The Magistrate Judge issued an order that the matter be referred to arbitration and the District Court confirmed that order. The Company intends to
pursue its claims against the firm in arbitration. The Company is also considering rights and remedies it may have with regard to other parties who participated in the issuance of the Preferred Stock in the event that the Company does not prevail on
its interpretation of the Certificate of Designation.



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##### Table of Contents

Also, two other holders of the Exchangeable Redeemable Preferred Stock filed Complaints,
both alleging essentially the same claim as the first complaint related to the case set forth immediately above. If the plaintiffs in these two additional actions are correct, the redemption price as of August 31, 2007 should have been $8.69
per share and not $5.241 per share as calculated by the Company. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, valuation of the
redemption price at $8.69 per share would increase the redemption price in excess of $15.2 million.

Management is unable to
estimate the minimum liability that may be incurred, if any, as a result of the outcome of each of these matters and, therefore, has made no provision in the financial statements for liability related to these cases.

Effects of Inflation

The Company has been generally successful in recovering costs associated with inflation through price adjustments in its hotel room rates. Expenses of operating the Companys rental properties are generally borne by the tenants.
Primarily due to competitive market and other economic pressures any such future increases in costs associated with casino operations and maintenance of properties may not be completely recovered by the Company.

Private Securities Litigation Reform Act

Certain statements in this Annual Report on Form 10-K which are not historical facts are forward-looking statements, such as statements relating to future operating results, existing and expected
competition, financing and refinancing sources and availability and plans for future development, expansion or sale activities, capital expenditures, expansion of business operations into new areas and the payment of certain obligations by third
parties. Such forward-looking statements involve a number of risks and uncertainties that may significantly affect the Companys liquidity and operating results in the future and, accordingly, actual results may differ materially from those
expressed in any forward-looking statements. Such risks and uncertainties include, but are not limited to, those related to effects of competition, leverage and debt service, general economic conditions, changes in gaming laws or regulations
(including the legalization of gaming in various jurisdictions) and risks related to development activities and the startup of non-gaming operations.



|Item 7A. | MARKET RISK DISCLOSURE
|-------- | ----------------------

Market risk is the risk of loss arising from changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Excluding its nonrecourse debt, the Company has total interest-bearing debt of
approximately $7.9 million, which bears interest at a variable rate (6.25% at September 30, 2009). Therefore, the Company maintains certain market rate risk related to this debt. A change in the interest rates of 1% would cause an approximate
$79,000 change in the amount of interest the Company would incur based on the amount of variable debt outstanding at September 30, 2010. Any future borrowings with variable interest rate terms will be exposed to this same market rate risk.

The Company holds investments in various available-for-sale securities; however, exposure to price risk arising from the
ownership of these investments is not material to the Companys consolidated financial position, results of operations or cash flow as historically price fluctuations of these securities have not been material.



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##### Table of Contents

|Item 8. | FINANCIAL STATEMENTS
|------- | --------------------

INDEX

TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2009 and 2008



|                                                                                                            |  |         
|----------------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                            |  | Page No.
|Report of Independent Registered Public Accounting Firm                                                     |  | 26      
|Report of Independent Registered Public Accounting Firm                                                     |  | 27      
|Consolidated Balance Sheets as of September 30, 2009 and 2008 (Restated)                                    |  | 28      
|Consolidated Statements of Operations for the Years Ended September 30, 2009 and 2008                       |  | 30      
|Consolidated Statements of Comprehensive Income (Loss) for the Years Ended September 30, 2009 and 2008      |  | 32      
|Consolidated Statements of Stockholders Equity for the Years Ended September 
30, 2009 and 2008 (Restated) |  | 33      
|Consolidated Statements of Cash Flows for the Years Ended September 30, 2009 and 2008                       |  | 34      
|Notes to Consolidated Financial Statements                                                                  |  | 35      



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##### Table of Contents

LOGO

Report of Independent Registered Public Accounting Firm

To The Board of Directors and Stockholders

Archon
Corporation

Las Vegas, NV 89030

We
have audited the accompanying consolidated balance sheet of Archon Corporation and Subsidiaries (the Company) as of September 30, 2009, and the related consolidated statements of operations, comprehensive income (loss),
stockholders equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on the consolidated financial statements
based on our audit. We did not audit the consolidated financial statements of the Company for the year ended September 30, 2008. Those statements were audited by other auditors.

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as
of September 30, 2009, and the results of their operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.

De Joya Griffith & Company, LLC

/s/ De Joya Griffith & Company, LLC

Henderson, Nevada

February 22,
2010



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of Archon Corporation:

We have audited the accompanying consolidated balance sheet of Archon Corporation and Subsidiaries (the Company) as of September 30, 2008, and the related consolidated statements of
operations, stockholders equity and cash flows for the year 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
audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over
financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as
of September 30, 2008, and the consolidated results of its operations and cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

As discussed in Note 2 to the financial statements, under the heading, Restatements and Reclassifications, the Companys balance
sheet and statement of stockholders equity as of and for the year ended September 30, 2008, have been restated.

Las Vegas, Nevada

January 12, 2009

Las Vegas,
Nevada

January 12, 2009, except for the portion of Note 2 presented under the heading. Restatements and Reclassifications,
as to which the date is February 22, 2010

/s/ Piercy Bowler Taylor & Kern

Certified Public Accountants



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets

as of September 30,



|                                         |  |      |             |                |   |            
|---------------------------------------- |  | ---- | ----------- | -------------- | - | -----------
|                                         |  | 2009 |             | 2008(Restated)
|ASSETS                                   |  |      |             |                |   |            
|Current assets:                          |  |      |             |                |   |            
|Cash and equivalents                     |  | $    | 31,646,498  |                | $ | 37,973,564 
|Investment in marketable securities      |  |      | 5,995,289   |                |   | 5,731,337  
|Accounts receivable, net                 |  |      | 170,935     |                |   | 144,810    
|Inventories                              |  |      | 231,689     |                |   | 342,379    
|Prepaid expenses and other               |  |      | 945,167     |                |   | 1,371,281  
|Deferred tax assets                      |  |      | 512,695     |                |   | 332,341    
|                                         |  |      |             |                |   |            
|Total current assets                     |  |      | 39,502,273  |                |   | 45,895,712 
|                                         |  |      |             |                |   |            
|Property held for sale                   |  |      | 55,357,905  |                |   | 0          
|                                         |  |      |             |                |   |            
|Property and equipment:                  |  |      |             |                |   |            
|Rental property held for investment, net |  |      | 89,511,868  |                |   | 143,858,578
|Casino property and equipment, net       |  |      | 9,837,578   |                |   | 12,910,336 
|                                         |  |      |             |                |   |            
|Property and equipment, net              |  |      | 99,349,446  |                |   | 156,768,914
|Other assets                             |  |      | 2,774,685   |                |   | 7,641,889  
|                                         |  |      |             |                |   |            
|Total assets                             |  | $    | 196,984,309 |                | $ | 210,306,515
|                                         |  |      |             |                |   |            

The accompanying notes are an integral part of these
consolidated financial statements.



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets  (continued)

as of September 30,



|                                                                                                                                                          |  |      |             |   |                |   |             |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | -------------- | - | ----------- | -
|                                                                                                                                                          |  | 2009 |             |   | 2008(Restated) |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                      |  |      |             |   |                |   |             |  
|Current liabilities:                                                                                                                                      |  |      |             |   |                |   |             |  
|Line of credit                                                                                                                                            |  | $    | 7,866,659   |   |                | $ | 9,843,691   |  
|Accounts payable                                                                                                                                          |  |      | 2,099,581   |   |                |   | 2,848,701   |  
|Interest payable                                                                                                                                          |  |      | 0           |   |                |   | 219,233     |  
|Other accrued expenses                                                                                                                                    |  |      | 2,722,690   |   |                |   | 4,474,276   |  
|Exchangeable redeemable preferred stock - unredeemed                                                                                                      |  |      | 821,259     |   |                |   | 834,346     |  
|Current liabilities - assets held for sale                                                                                                                |  |      | 3,342,837   |   |                |   | 0           |  
|Current portion of debt - nonrecourse debt                                                                                                                |  |      | 0           |   |                |   | 2,828,304   |  
|Current portion of debt                                                                                                                                   |  |      | 0           |   |                |   | 82,057      |  
|                                                                                                                                                          |  |      |             |   |                |   |             |  
|Total current liabilities                                                                                                                                 |  |      | 16,853,026  |   |                |   | 21,130,608  |  
|Debt - less current portion                                                                                                                               |  |      | 0           |   |                |   | 441         |  
|Long term liabilities - assets held for sale                                                                                                              |  |      | 37,114,921  |   |                |   | 0           |  
|Nonrecourse debt - less current portion                                                                                                                   |  |      | 31,199,288  |   |                |   | 71,500,098  |  
|Deferred tax liabilities                                                                                                                                  |  |      | 21,828,674  |   |                |   | 23,575,205  |  
|Deferred rent income                                                                                                                                      |  |      | 36,836,466  |   |                |   | 39,112,665  |  
|                                                                                                                                                          |  |      |             |   |                |   |             |  
|Total liabilities                                                                                                                                         |  |      | 143,832,375 |   |                |   | 155,319,017 |  
|                                                                                                                                                          |  |      |             |   |                |   |             |  
|Stockholders equity:                                                                                                                                     |  |      |             |   |                |   |             |  
|Preferred stock, exchangeable, redeemable 16.0% cumulative $2.14 per share liquidation value,
authorized  10,000,000 shares; none issued and outstanding |  |      | 0           |   |                |   | 0           |  
|Common stock, $.01 par value; authorized  100,000,000 shares; issued and outstanding  6,316,576 and
6,329,177 shares                                    |  |      | 63,166      |   |                |   | 63,292      |  
|Additional paid-in capital                                                                                                                                |  |      | 62,982,941  |   |                |   | 63,300,848  |  
|Accumulated deficit                                                                                                                                       |  |      | (8,737,568  | ) |                |   | (7,202,168  | )
|Accumulated other comprehensive income (loss)                                                                                                             |  |      | (1,044,883  | ) |                |   | (974,978    | )
|                                                                                                                                                          |  |      |             |   |                |   |             |  
|                                                                                                                                                          |  |      | 53,263,656  |   |                |   | 55,186,994  |  
|Less notes receivable from principal stockholders                                                                                                         |  |      | (111,722    | ) |                |   | (111,722    | )
|Less treasury common stock  0 and 4,875 shares, at cost                                                                                                  |  |      | 0           |   |                |   | (87,774     | )
|                                                                                                                                                          |  |      |             |   |                |   |             |  
|Total stockholders equity                                                                                                                                |  |      | 53,151,934  |   |                |   | 54,987,498  |  
|                                                                                                                                                          |  |      |             |   |                |   |             |  
|Total liabilities and stockholders equity                                                                                                                |  | $    | 196,984,309 |   |                | $ | 210,306,515 |  
|                                                                                                                                                          |  |      |             |   |                |   |             |  

The accompanying notes are an integral part of these consolidated financial statements.



29



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Archon Corporation and Subsidiaries

Consolidated Statements of Operations

For the Years Ended September 30,



|                                                                                        |  |      |            |   |      |   |             |  
|--------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------- | -
|                                                                                        |  | 2009 |            |   | 2008 |  
|Revenues:                                                                               |  |      |            |   |      |   |             |  
|Casino                                                                                  |  | $    | 16,031,670 |   |      | $ | 20,398,198  |  
|Hotel                                                                                   |  |      | 1,692,351  |   |      |   | 2,207,771   |  
|Food and beverage                                                                       |  |      | 5,796,852  |   |      |   | 7,192,525   |  
|Rental properties                                                                       |  |      | 10,712,624 |   |      |   | 11,137,524  |  
|Other                                                                                   |  |      | 1,701,173  |   |      |   | 2,460,622   |  
|                                                                                        |  |      |            |   |      |   |             |  
|Gross revenues                                                                          |  |      | 35,934,670 |   |      |   | 43,396,640  |  
|Less casino promotional allowances                                                      |  |      | (3,961,978 | ) |      |   | (5,612,217  | )
|                                                                                        |  |      |            |   |      |   |             |  
|Net operating revenues                                                                  |  |      | 31,972,692 |   |      |   | 37,784,423  |  
|                                                                                        |  |      |            |   |      |   |             |  
|Operating expenses:                                                                     |  |      |            |   |      |   |             |  
|Casino                                                                                  |  |      | 9,772,212  |   |      |   | 12,267,519  |  
|Hotel                                                                                   |  |      | 762,821    |   |      |   | 1,030,598   |  
|Food and beverage                                                                       |  |      | 3,894,093  |   |      |   | 4,336,752   |  
|Other                                                                                   |  |      | 631,253    |   |      |   | 1,020,767   |  
|Selling, general and administrative:                                                    |  |      |            |   |      |   |             |  
|Corporate                                                                               |  |      | 3,420,654  |   |      |   | 7,188,527   |  
|Other                                                                                   |  |      | 3,074,829  |   |      |   | 3,481,104   |  
|Utilities and property expenses                                                         |  |      | 4,113,134  |   |      |   | 4,886,664   |  
|Depreciation                                                                            |  |      | 2,584,433  |   |      |   | 3,364,169   |  
|Loss on impairment of assets                                                            |  |      | 3,500,000  |   |      |   | 11,000,000  |  
|Gain on sale / disposal of assets                                                       |  |      | (9,000     | ) |      |   | (7,628      | )
|                                                                                        |  |      |            |   |      |   |             |  
|Total operating expenses                                                                |  |      | 31,744,429 |   |      |   | 48,568,472  |  
|                                                                                        |  |      |            |   |      |   |             |  
|Operating income (loss)                                                                 |  |      | 228,263    |   |      |   | (10,784,049 | )
|Other income and (expense):                                                             |  |      |            |   |      |   |             |  
|Interest expense                                                                        |  |      | (5,260,299 | ) |      |   | (4,858,418  | )
|Gain on termination of land sale option                                                 |  |      | 0          |   |      |   | 67,130,836  |  
|Gain from settlement of liabilities                                                     |  |      | 0          |   |      |   | 1,060,576   |  
|Gain (loss) on sale of marketable securities                                            |  |      | (1,043,551 | ) |      |   | 2,185,248   |  
|Interest and other income                                                               |  |      | 1,172,533  |   |      |   | 1,427,950   |  
|                                                                                        |  |      |            |   |      |   |             |  
|Income (loss) before income tax benefit                                                 |  |      | (4,903,054 | ) |      |   | 56,162,143  |  
|Federal income tax benefit                                                              |  |      | 2,406,687  |   |      |   | 1,749,527   |  
|                                                                                        |  |      |            |   |      |   |             |  
|Income (loss) from continuing operations                                                |  |      | (2,496,367 | ) |      |   | 57,911,670  |  
|Discontinued operations gain, net of tax expense of $517,444 and $479,406, respectively |  |      | 960,968    |   |      |   | 890,324     |  
|                                                                                        |  |      |            |   |      |   |             |  
|Net income (loss)                                                                       |  | $    | (1,535,399 | ) |      | $ | 58,801,994  |  
|                                                                                        |  |      |            |   |      |   |             |  

The accompanying notes are an integral part of these consolidated financial statements.



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Archon Corporation and Subsidiaries

Consolidated Statements of Operations (continued)

For the Years Ended September 30,



|                                                          |  |      |           |   |      |   |          
|--------------------------------------------------------- |  | ---- | --------- | - | ---- | - | ---------
|                                                          |  | 2009 |           |   | 2008
|Average common shares outstanding                         |  |      | 6,360,015 |   |      |   | 6,345,264
|                                                          |  |      |           |   |      |   |          
|Average common and common equivalent shares outstanding   |  |      | 6,360,015 |   |      |   | 7,076,854
|                                                          |  |      |           |   |      |   |          
|Income (loss) from continuing operations per common share |  |      |           |   |      |   |          
|Net basic income (loss) per common share                  |  | $    | (0.39     | ) |      | $ | 9.13     
|                                                          |  |      |           |   |      |   |          
|Diluted income per common share                           |  | $    | N/A       |   |      | $ | 8.18     
|                                                          |  |      |           |   |      |   |          
|Discontinued operations per share                         |  |      |           |   |      |   |          
|Net basic income per common share                         |  | $    | 0.15      |   |      | $ | 0.14     
|                                                          |  |      |           |   |      |   |          
|Diluted income per common share                           |  | $    | N/A       |   |      | $ | 0.13     
|                                                          |  |      |           |   |      |   |          
|Income (loss) per common share                            |  |      |           |   |      |   |          
|Net basic income (loss) per common share                  |  | $    | (0.24     | ) |      | $ | 9.27     
|                                                          |  |      |           |   |      |   |          
|Diluted income per common share                           |  | $    | N/A       |   |      | $ | 8.31     
|                                                          |  |      |           |   |      |   |          

The accompanying notes are an integral part of these
consolidated financial statements.



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Archon Corporation and Subsidiaries

Consolidated Statements Comprehensive Income (Loss)

For the Years Ended September 30,



|                                                                                            |  |      |            |   |      |   |            |  
|------------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                                                                            |  | 2009 |            |   | 2008 |  
|Net income (loss)                                                                           |  | $    | (1,535,399 | ) |      | $ | 58,801,994 |  
|Unrealized loss on marketable securities, net of income taxes of $(37,642) and $(2,744,700) |  |      | (69,905    | ) |      |   | (5,097,298 | )
|                                                                                            |  |      |            |   |      |   |            |  
|Comprehensive income (loss)                                                                 |  | $    | (1,605,304 | ) |      | $ | 53,704,696 |  
|                                                                                            |  |      |            |   |      |   |            |  

The accompanying notes are an integral part of these consolidated financial statements.



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Archon Corporation and Subsidiaries

Consolidated Statement of Stockholders Equity

For the Years Ended September 30, 2009 and 2008 (Restated)



|                                         |  |                  |   |             |           |   |               |   |        |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |          |   |  |   |            |  
|---------------------------------------- |  | ---------------- | - | ----------- | --------- | - | ------------- | - | ------ | ------------------------ |  | - | ------------------ | - |  | ------------------------------------------ | ----------- | - | ------------------------------- | - | ---------- | ------------- |  | - | -------- | - |  | - | -------- | - |  | - | ---------- | -
|                                         |  | PreferredStock $ |   | CommonStock |           |   | CommonStock $ |   |        | AdditionalPaid-InCapital |  |   | AccumulatedDeficit |   |  | AccumulatedOtherComprehensiveIncome (Loss) |             |   | NotesReceivableFromStockholders |   |            | TreasuryStock |  |   | Total    |  
|Balances, October 1, 2007                |  | $                | 0 |             | 6,280,931 |   |               | $ | 62,809 |                          |  | $ | 61,482,194         |   |  | $                                          | (64,127,279 | ) |                                 | $ | 4,122,320  |               |  | $ | 0        |   |  | $ | (87,774  | ) |  | $ | 1,452,270  |  
|Net income                               |  |                  |   |             |           |   |               |   |        |                          |  |   |                    |   |  |                                            | 58,801,994  |   |                                 |   |            |               |  |   |          |   |  |   |          |   |  |   | 58,801,994 |  
|Common shares purchased and retired      |  |                  |   |             | (64,654   | ) |               |   | (646   | )                        |  |   | (704,081           | ) |  |                                            | (1,876,883  | ) |                                 |   |            |               |  |   |          |   |  |   |          |   |  |   | (2,581,610 | )
|Exercise of stock options                |  |                  |   |             | 112,900   |   |               |   | 1,129  |                          |  |   | 111,721            |   |  |                                            |             |   |                                 |   |            |               |  |   | (111,722 | ) |  |   |          |   |  |   | 1,128      |  
|Stock-based compensation expense         |  |                  |   |             |           |   |               |   |        |                          |  |   | 2,411,014          |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |          |   |  |   | 2,411,014  |  
|Unrealized loss on marketable securities |  |                  |   |             |           |   |               |   |        |                          |  |   |                    |   |  |                                            |             |   |                                 |   | (5,097,298 | )             |  |   |          |   |  |   |          |   |  |   | (5,097,298 | )
|                                         |  |                  |   |             |           |   |               |   |        |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |          |   |  |   |            |  
|Balances, September 30, 2008             |  |                  | 0 |             | 6,329,177 |   |               |   | 63,292 |                          |  |   | 63,300,848         |   |  |                                            | (7,202,168  | ) |                                 |   | (974,978   | )             |  |   | (111,722 | ) |  |   | (87,774  | ) |  |   | 54,987,498 |  
|Net loss                                 |  |                  |   |             |           |   |               |   |        |                          |  |   |                    |   |  |                                            | (1,535,399  | ) |                                 |   |            |               |  |   |          |   |  |   |          |   |  |   | (1,535,399 | )
|Purchase of treasury stock               |  |                  |   |             |           |   |               |   |        |                          |  |   | 77,451             |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   | (307,710 | ) |  |   | (230,259   | )
|Common shares retired                    |  |                  |   |             | (12,601   | ) |               |   | (126   | )                        |  |   | (395,358           | ) |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   | 395,484  |   |  |   | 0          |  
|Unrealized loss on marketable securities |  |                  |   |             |           |   |               |   |        |                          |  |   |                    |   |  |                                            |             |   |                                 |   | (69,906    | )             |  |   |          |   |  |   |          |   |  |   | (69,906    | )
|                                         |  |                  |   |             |           |   |               |   |        |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |          |   |  |   |            |  
|Balances, September 30, 2009             |  | $                | 0 |             | 6,316,576 |   |               | $ | 63,166 |                          |  | $ | 62,982,941         |   |  | $                                          | (8,737,567  | ) |                                 | $ | (1,044,884 | )             |  | $ | (111,722 | ) |  | $ | 0        |   |  | $ | 53,151,934 |  
|                                         |  |                  |   |             |           |   |               |   |        |                          |  |   |                    |   |  |                                            |             |   |                                 |   |            |               |  |   |          |   |  |   |          |   |  |   |            |  

The accompanying notes are an integral part of these consolidated financial statements



33



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended September 30,



|                                                                                         |  |      |            |   |      |   |             |  
|---------------------------------------------------------------------------------------- |  | ---- | ---------- | - | ---- | - | ----------- | -
|                                                                                         |  | 2009 |            |   | 2008 |  
|Cash flows from operating activities:                                                    |  |      |            |   |      |   |             |  
|Net income (loss)                                                                        |  | $    | (1,535,399 | ) |      | $ | 58,801,994  |  
|Discontinued operations, net of tax effect                                               |  |      | (960,968   | ) |      |   | (890,324    | )
|                                                                                         |  |      |            |   |      |   |             |  
|Net income (loss) from continuing operations                                             |  |      | (2,496,367 | ) |      |   | 57,911,670  |  
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |      |            |   |      |   |             |  
|Depreciation                                                                             |  |      | 2,584,433  |   |      |   | 3,364,169   |  
|Interest expense from amortization of debt issuance costs                                |  |      | 217,197    |   |      |   | 380,661     |  
|Stock-based compensation expense                                                         |  |      | 0          |   |      |   | 2,411,014   |  
|Gain on termination of land sale purchase option                                         |  |      | 0          |   |      |   | (67,130,836 | )
|Gain from settlement of liabilities                                                      |  |      | 0          |   |      |   | (1,060,576  | )
|Loss on impairment of assets                                                             |  |      | 3,500,000  |   |      |   | 11,000,000  |  
|Gain on sale of assets, continuing operations                                            |  |      | (9,000     | ) |      |   | (7,628      | )
|Gain or (loss) on sale of marketable securities                                          |  |      | (1,043,551 | ) |      |   | 2,185,248   |  
|Change in assets and liabilities:                                                        |  |      |            |   |      |   |             |  
|Accounts receivable                                                                      |  |      | (26,125    | ) |      |   | 909,683     |  
|Inventories                                                                              |  |      | 110,690    |   |      |   | 62,999      |  
|Prepaid expenses and other                                                               |  |      | 426,114    |   |      |   | (222,612    | )
|Deferred income taxes                                                                    |  |      | (2,406,687 | ) |      |   | (5,406,437  | )
|Other assets                                                                             |  |      | 570,216    |   |      |   | (153,202    | )
|Accounts payable                                                                         |  |      | (749,120   | ) |      |   | (99,477     | )
|Interest payable                                                                         |  |      | (51,269    | ) |      |   | (1,309,823  | )
|Other accrued expenses                                                                   |  |      | (1,751,586 | ) |      |   | 762,395     |  
|Deferred rent income                                                                     |  |      | (2,276,199 | ) |      |   | (2,969,451  | )
|                                                                                         |  |      |            |   |      |   |             |  
|Net cash provided by (used in) operating activities                                      |  |      | (3,401,254 | ) |      |   | 627,797     |  
|                                                                                         |  |      |            |   |      |   |             |  
|Cash flows from investing activities:                                                    |  |      |            |   |      |   |             |  
|Proceeds from sale of assets                                                             |  |      | 9,000      |   |      |   | 20,035      |  
|Payments received on sale or extension of land purchase option                           |  |      | 0          |   |      |   | 17,379,169  |  
|Capital expenditures                                                                     |  |      | (1,326,215 | ) |      |   | (775,978    | )
|Marketable securities purchased                                                          |  |      | (7,661,316 | ) |      |   | (12,831,498 | )
|Marketable securities sold or redeemed                                                   |  |      | 8,333,368  |   |      |   | 10,230,709  |  
|                                                                                         |  |      |            |   |      |   |             |  
|Net cash provided by investing activities                                                |  |      | (645,163   | ) |      |   | 14,022,437  |  
|                                                                                         |  |      |            |   |      |   |             |  
|Cash flows from financing activities:                                                    |  |      |            |   |      |   |             |  
|Proceeds from (payments on) debt                                                         |  |      | (1,977,032 | ) |      |   | 9,581,705   |  
|Payments on nonrecourse debt and obligation under capital lease                          |  |      | (82,498    | ) |      |   | (10,948,319 | )
|Common stock purchased and retired                                                       |  |      | (230,259   | ) |      |   | (2,581,611  | )
|Exchangeable redeemable preferred stock redeemed                                         |  |      | (13,088    | ) |      |   | (213,796    | )
|Stock options exercised                                                                  |  |      | 0          |   |      |   | 1,129       |  
|                                                                                         |  |      |            |   |      |   |             |  
|Net cash used in financing activities                                                    |  |      | (2,302,877 | ) |      |   | (4,160,892  | )
|                                                                                         |  |      |            |   |      |   |             |  
|Cash flows from discontinued operations                                                  |  |      | 22,228     |   |      |   | 0           |  
|                                                                                         |  |      |            |   |      |   |             |  
|Increase (decrease) in cash and cash equivalents                                         |  |      | (6,327,066 | ) |      |   | 10,489,342  |  
|Cash and cash equivalents, beginning of year                                             |  |      | 37,973,564 |   |      |   | 27,484,222  |  
|                                                                                         |  |      |            |   |      |   |             |  
|Cash and cash equivalents, end of year                                                   |  | $    | 31,646,498 |   |      | $ | 37,973,564  |  
|                                                                                         |  |      |            |   |      |   |             |  

The accompanying Notes are an integral part of these Consolidated Financial Statements.



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ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended September 30, 2009, and 2008



|1. | BASIS OF PRESENTATION AND GENERAL INFORMATION
|-- | ---------------------------------------------

Archon Corporation, (the Company or Archon), is a Nevada corporation. The Companys primary business operations are conducted through a wholly-owned subsidiary corporation,
Pioneer Hotel Inc. (PHI), which operates the Pioneer Hotel & Gambling Hall (the Pioneer) in Laughlin, Nevada. In addition, the Company, owns real estate on Las Vegas Boulevard South (the Strip) in Las
Vegas, Nevada, and also owns rental properties in Dorchester, Massachusetts and Gaithersburg, Maryland.

The Companys
primary business is casino and hotel operations. Casino and hotel revenues represent 63% and 68% of total revenues for the periods ended September 30, 2009 and 2008, respectively. The Company has investment property operations which consist of
34% and 29% of total revenues for the years ended September 30, 2009 and 2008, respectively.



|2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|-- | ------------------------------------------

Principles of Consolidation

The accompanying consolidated financial statements include the
accounts of Archon and its wholly-owned subsidiaries. Amounts representing the Companys investment in less than majority-owned companies in which a significant equity ownership interest is held are accounted for on the equity method. All
significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates that affect the reported amounts. Actual results may differ from estimates.

FASB Accounting Standards
Codification (Codification).

In June 2009, the Financial Accounting
Standards Board (FASB) issued FASB ASC 105-10 Overview and Background FASB Codification. FASB ASC 105-10 establishes the FASB Accounting Standards Codification (Codification) as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP). FASB ASC 105-10 is effective for interim and annual periods
ending after September 15, 2009. The Company has adopted the new Codification when referring to Accounting Principles Generally Accepted in the United States (GAAP) in these consolidated financial statements for the fiscal year ending
September 30, 2009.

Cash Equivalents

Highly liquid investments that mature or are otherwise contractually redeemable in cash within 90 days from the date of purchase are treated as cash equivalents. These investments are stated at cost which
approximates their market value.



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##### Table of Contents

Fair Value

The carrying amounts reflected in the consolidated balance sheets for cash, accounts receivable, prepaid expense and accounts payable
approximate the respective fair values due to the short maturities of these items. See Note 13

Uninsured Deposits

At various times during the period and subsequently, the Company maintained account balances that may have
exceeded federally and/or institutionally insured limits, and the risk of losses related to such concentrations may be increasing as a result of future economic developments.

Investment in Marketable Securities

Debt securities
available-for-sale are stated at fair market value with unrealized gains or losses determined by the specific identification method and reported as a component of accumulated other comprehensive income. Debt securities available-for-sale at
September 30, 2009 and 2008 include investments in corporate bonds.

Marketable securities held by Merrill Lynch and
MorganStanley SmithBarney (the holding companies) are held for an indefinite period of time and thus are classified as available-for-sale securities. Realized investment gains and losses are included in the consolidated statement of operations, as
are provisions for other than temporary declines in the market value of available for-sale-securities. Unrealized gains and unrealized losses deemed to be temporary are excluded from earnings (losses), net of applicable taxes, as a component of
other comprehensive income (loss). Factors considered in judging whether an impairment is other than temporary include the financial condition, business prospects and creditworthiness of the issuer, the length of time that fair value has been less
than cost, the relative amount of decline, and the Companys ability and intent to hold the investment until the fair value recovers. During 2009, the Company did not record an impairment charge regarding its investment in marketable securities
because, based on managements evaluation of the circumstances, management believed that the decline in fair value below the cost of certain of the Companys marketable securities was temporary. At September 30, 2009 and 2008,
investments in equity securities available-for-sale included common and preferred stocks.

Included in Gain (loss) on
sale of marketable securities on the consolidated statements of operations are approximately $(1.0) million and $2.2 million realized gains (losses) for the years ended September 30, 2009 and 2008, respectively. The Company recorded
approximately $(1.0) million and $(1.0) million of other comprehensive (loss) associated with unrealized (losses) net of tax effect, associated with unrealized losses on these investments during the years ended September 30, 2009 and 2008,
respectively. Through December 31, 2009, the Company experienced a $1.7 million further decline in the value of these investments.



36



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The following is a summary of available-for-sale marketable securities as of
September 30, 2009 and 2008:



|                  |  |      |           |                |   |                    |  |   |                     |   |  |   |          
|----------------- |  | ---- | --------- | -------------- | - | ------------------ |  | - | ------------------- | - |  | - | ---------
|                  |  | 2009
|                  |  | Cost |           | UnrealizedGain |   | Unrealized(Losses) |  |   | Market orFair Value
|Debt securities   |  | $    | 3,260,893 |                | $ | 230,700            |  | $ | (19,833             | ) |  | $ | 3,471,760
|Equity securities |  |      | 4,341,909 |                |   | 228,720            |  |   | (2,047,100          | ) |  |   | 2,523,529
|                  |  |      |           |                |   |                    |  |   |                     |   |  |   |          
|Total             |  | $    | 7,602,802 |                | $ | 459,420            |  | $ | (2,066,933          | ) |  | $ | 5,995,289
|                  |  |      |           |                |   |                    |  |   |                     |   |  |   |          



|                  |  |      |           |                |   |                    |  |   |                     |   |  |   |          
|----------------- |  | ---- | --------- | -------------- | - | ------------------ |  | - | ------------------- | - |  | - | ---------
|                  |  | 2008
|                  |  | Cost |           | UnrealizedGain |   | Unrealized(Losses) |  |   | Market orFair Value
|Debt securities   |  | $    | 2,402,471 |                | $ | 0                  |  | $ | (282,655            | ) |  | $ | 2,119,816
|Equity securities |  |      | 4,828,832 |                |   | 411,846            |  |   | (1,629,157          | ) |  |   | 3,611,521
|                  |  |      |           |                |   |                    |  |   |                     |   |  |   |          
|Total             |  | $    | 7,231,303 |                | $ | 411,846            |  | $ | (1,911,812          | ) |  | $ | 5,731,337
|                  |  |      |           |                |   |                    |  |   |                     |   |  |   |          

The following is a summary of the net unrealized gains
and losses as presented in Other Comprehensive Income as of September 30, 2009 and 2008:



|                  |  |                 |         |                              |   |          |                             |  |   |                        |   |  |                                 |          |   |  |   |            |  
|----------------- |  | --------------- | ------- | ---------------------------- | - | -------- | --------------------------- |  | - | ---------------------- | - |  | ------------------------------- | -------- | - |  | - | ---------- | -
|                  |  | 2009            |        
|Description       |  | UnrealizedGains |         | Unrealized(Losses)Short Term |   |          | Unrealized(Losses)Long Term |  |   | DeferredTaxes(Benefit) |   |  | OtherComprehensiveIncome (Loss) |         
|Debt Securities   |  | $               | 230,699 |                              | $ | (958     | )                           |  | $ | (18,875                | ) |  | $                               | 73,803   |   |  | $ | 137,063    |  
|Equity Securities |  |                 | 228,720 |                              |   | (464,058 | )                           |  |   | (1,583,042             | ) |  |                                 | (636,433 | ) |  |   | (1,181,947 | )
|                  |  |                 |         |                              |   |          |                             |  |   |                        |   |  |                                 |          |   |  |   |            |  
|Total             |  | $               | 459,419 |                              | $ | (465,016 | )                           |  | $ | (1,601,917             | ) |  | $                               | (562,630 | ) |  | $ | (1,044,884 | )
|                  |  |                 |         |                              |   |          |                             |  |   |                        |   |  |                                 |          |   |  |   |            |  



|                  |  |                 |         |                              |   |            |                             |  |   |                        |   |  |                                 |          |   |  |   |          |  
|----------------- |  | --------------- | ------- | ---------------------------- | - | ---------- | --------------------------- |  | - | ---------------------- | - |  | ------------------------------- | -------- | - |  | - | -------- | -
|                  |  | 2008            |        
|Description       |  | UnrealizedGains |         | Unrealized(Losses)Short Term |   |            | Unrealized(Losses)Long Term |  |   | DeferredTaxes(Benefit) |   |  | OtherComprehensiveIncome (Loss) |         
|Debt Securities   |  | $               | 0       |                              | $ | (21,580    | )                           |  | $ | (261,075               | ) |  | $                               | (98,929  | ) |  | $ | (183,726 | )
|Equity Securities |  |                 | 411,846 |                              |   | (1,466,676 | )                           |  |   | (162,481               | ) |  |                                 | (426,059 | ) |  |   | (791,252 | )
|                  |  |                 |         |                              |   |            |                             |  |   |                        |   |  |                                 |          |   |  |   |          |  
|Total             |  | $               | 411,846 |                              | $ | (1,488,256 | )                           |  | $ | (423,556               | ) |  | $                               | (524,988 | ) |  | $ | (974,978 | )
|                  |  |                 |         |                              |   |            |                             |  |   |                        |   |  |                                 |          |   |  |   |          |  

The Company recorded the combined total of unrealized gains and (losses) disclosed in the above tables, on
the balance sheet with 65% as retained earnings  other comprehensive income, and 35% as deferred income taxes, in the amounts shown in the above tables.



37



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##### Table of Contents

The following is a summary of the proceeds from sale of marketable securities and the gains
or losses reclassified from Other Comprehensive Income (OCI) as of September 30, 2009 and 2008:



|                  |  |                    |           |                    |   |                       |  |   |                                   |   |  |   |            |  
|----------------- |  | ------------------ | --------- | ------------------ | - | --------------------- |  | - | --------------------------------- | - |  | - | ---------- | -
|                  |  | 2009               |          
|Description       |  | ProceedsFrom Sales |           | GrossRealizedGains |   | GrossRealized(Losses) |  |   | Gain or(Loss)ReclassifiedFrom OCI |  
|Debt securities   |  | $                  | 12,769    |                    | $ | 0                     |  | $ | (293,582                          | ) |  | $ | (293,582   | )
|Equity securities |  |                    | 8,320,599 |                    |   | 85,797                |  |   | (835,766                          | ) |  |   | (749,969   | )
|                  |  |                    |           |                    |   |                       |  |   |                                   |   |  |   |            |  
|Total             |  | $                  | 8,333,368 |                    | $ | 85,797                |  | $ | (1,129,348                        | ) |  | $ | (1,043,551 | )
|                  |  |                    |           |                    |   |                       |  |   |                                   |   |  |   |            |  



|                  |  |                    |            |                    |   |                       |  |   |                                      |   |  |   |          
|----------------- |  | ------------------ | ---------- | ------------------ | - | --------------------- |  | - | ------------------------------------ | - |  | - | ---------
|                  |  | 2008              
|Description       |  | ProceedsFrom Sales |            | GrossRealizedGains |   | GrossRealized(Losses) |  |   | Gain or(Loss)ReclassifiedFrom O.C.I.
|Debt securities   |  | $                  | 0          |                    | $ | 0                     |  | $ | 0                                    |   |  | $ | 0        
|Equity securities |  |                    | 10,230,709 |                    |   | 2,695,365             |  |   | (510,117                             | ) |  |   | 2,185,248
|                  |  |                    |            |                    |   |                       |  |   |                                      |   |  |   |          
|Total             |  | $                  | 10,230,709 |                    | $ | 2,695,365             |  | $ | (510,117                             | ) |  | $ | 2,185,248
|                  |  |                    |            |                    |   |                       |  |   |                                      |   |  |   |          

The Company classifies securities that have a readily
determinable fair value and are not bought and not held principally for the purpose of selling them in the near term as securities available-for-sale, pursuant to FASB ASC 320-10, Investments-Debt & Equity Securities. Under FASB ASC
320-10, unrealized holding gains and losses for available-for-sale securities shall be excluded from earnings and reported in other comprehensive income until realized

Inventories

Food, beverage, gift shop and other inventories
are stated at the lower of first-in, first-out cost or market.

Property and Equipment

Property and equipment, including rental properties, is stated at cost less accumulated depreciation. Costs of maintenance and repairs of
property and equipment are expensed as incurred. Depreciation is provided over the estimated useful lives of the assets, which for leasehold improvements is limited to the remaining term of the leases. See Note 8.

Depreciation is computed by the straight-line method over the shorter of the estimated useful lives or lease terms. The length of
depreciation periods for buildings and improvements is seven to 40 years and for machinery and equipment three to 15 years.

During the fiscal years ended September 30, 2009 and 2008, impairment losses of $3.5 million and $11 million, respectively, were recorded with respect to the Pioneer operating assets.

The following tables show a roll-forward of gross carrying value and accumulated depreciation roll-forward by asset class for the fiscal
years ended September 30, 2009 and 2008 follows:



38



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##### Table of Contents

|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|------------------------------------------------- |  | ---------------------- | ----------- | - | ---------------------- | - | --------- | ------------ |  | - | -------------------- | - |  | ---------------------- | ---------- | - |  | - | ----------- | -
|                                                  |  | Fiscal Year 2009       |             |   |                        |   |           |              | 
|Description                                       |  | Carrying Value10/01/08 |             |   | Additionsand Deletions |   |           | Depreciation |  |   | ImpairmentWrite Down |   |  | Carrying Value09/30/09 |           
|Rental property held for investment:              |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   | 
|Las Vegas Strip  Land                            |  | $                      | 21,504,400  |   |                        | $ | 0         |              |  | $ | 0                    |   |  | $                      | 0          |   |  | $ | 21,504,400  |  
|Washoe County  Land                              |  |                        | 55,700      |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   | 55,700      |  
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Dorchester  Warehouse                            |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Land                                              |  |                        | 15,000,000  |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   | 15,000,000  |  
|Buildings & Improvements                          |  |                        | 67,418,633  |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   | 67,418,633  |  
|Machinery & Equipment                             |  |                        | 0           |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   | 0           |  
|Allowance for depreciation                        |  |                        | (12,781,405 | ) |                        |   |           |              |  |   | (1,685,460           | ) |  |                        |            |   |  |   | (14,466,865 | )
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|                                                  |  |                        | 69,637,228  |   |                        |   |           |              |  |   | (1,685,460           | ) |  |                        |            |   |  |   | 67,951,768  |  
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Subtotal                                          |  |                        | 91,197,328  |   |                        |   |           |              |  |   | (1,685,460           | ) |  |                        |            |   |  |   | 89,511,868  |  
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Property used in operations:                      |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Archon Corporate Offices:                         |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Land                                              |  |                        | 0           |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   | 0           |  
|Buildings & Improvements                          |  |                        | 68,920      |   |                        |   | (3,084    | )            |  |   |                      |   |  |                        |            |   |  |   | 65,836      |  
|Machinery & Equipment                             |  |                        | 1,097,750   |   |                        |   | (325,658  | )            |  |   |                      |   |  |                        |            |   |  |   | 772,092     |  
|Allowance for depreciation                        |  |                        | (782,999    | ) |                        |   | 343,736   |              |  |   | (148,452             | ) |  |                        |            |   |  |   | (587,715    | )
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|                                                  |  |                        | 383,671     |   |                        |   | 14,994    |              |  |   | (148,452             | ) |  |                        |            |   |  |   | 250,213     |  
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Pioneer Hotel & Gambling Hall:                    |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Land                                              |  |                        | 3,925,589   |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   | 3,925,589   |  
|Buildings & Improvements                          |  |                        | 27,757,385  |   |                        |   | 1,204,293 |              |  |   |                      |   |  |                        | (3,276,469 | ) |  |   | 25,685,209  |  
|Machinery & Equipment                             |  |                        | 7,608,883   |   |                        |   | 106,928   |              |  |   |                      |   |  |                        | (223,531   | ) |  |   | 7,492,280   |  
|Allowance for depreciation                        |  |                        | (26,765,192 | ) |                        |   |           |              |  |   | (750,521             | ) |  |                        |            |   |  |   | (27,515,713 | )
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|                                                  |  |                        | 12,526,665  |   |                        |   | 1,311,221 |              |  |   | (750,521             | ) |  |                        | (3,500,000 | ) |  |   | 9,587,365   |  
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Subtotal                                          |  |                        | 12,910,336  |   |                        |   | 1,326,215 |              |  |   | (898,973             | ) |  |                        | (3,500,000 | ) |  |   | 9,837,578   |  
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Property and equipment, net                       |  | $                      | 104,107,664 |   |                        | $ | 1,326,215 |              |  | $ | (2,584,433           | ) |  | $                      | (3,500,000 | ) |  | $ | 99,349,446  |  
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Property Held for Sale  Discontinued Operations: |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Gaithersburg  Warehouse:                         |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|Land                                              |  | $                      | 23,000,000  |   |                        | $ | 0         |              |  | $ | 0                    |   |  | $                      | 0          |   |  | $ | 23,000,000  |  
|Buildings & Improvements                          |  |                        | 36,600,000  |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   | 36,600,000  |  
|Machinery & Equipment                             |  |                        | 3,000,000   |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   | 3,000,000   |  
|Allowance for depreciation                        |  |                        | (9,938,750  | ) |                        |   |           |              |  |   | (915,000             | ) |  |                        |            |   |  |   | (10,853,750 | )
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  
|                                                  |  | $                      | 52,661,250  |   |                        | $ | 0         |              |  | $ | (915,000             | ) |  | $                      | 0          |   |  | $ | 51,746,250  |  
|                                                  |  |                        |             |   |                        |   |           |              |  |   |                      |   |  |                        |            |   |  |   |             |  



39



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##### Table of Contents

|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|------------------------------------ |  | ---------------------- | ----------- | - | ---------------------- | - | ------------ |  | - | -------------------- | - |  | ---------------------- | ----------- | - |  | - | ----------- | -
|                                     |  | Fiscal Year 2008       |             |   |                        |   |              |  |  
|Description                          |  | Carrying Value10/01/07 |             |   | Additionsand Deletions |   | Depreciation |  |   | ImpairmentWrite Down |   |  | Carrying Value09/30/08 |            
|Rental property held for investment: |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   | 
|Las Vegas Strip  Land               |  | $                      | 21,504,400  |   |                        | $ | 0            |  | $ | 0                    |   |  | $                      | 0           |   |  | $ | 21,504,400  |  
|Washoe County  Land                 |  |                        | 55,700      |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   | 55,700      |  
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Gaithersburg  Warehouse:            |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Land                                 |  | $                      | 23,000,000  |   |                        | $ | 0            |  | $ | 0                    |   |  | $                      | 0           |   |  | $ | 23,000,000  |  
|Buildings & Improvements             |  |                        | 36,600,000  |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   | 36,600,000  |  
|Machinery & Equipment                |  |                        | 3,000,000   |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   | 3,000,000   |  
|Allowance for depreciation           |  |                        | (9,023,750  | ) |                        |   |              |  |   | (915,000             | ) |  |                        |             |   |  |   | (9,938,750  | )
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|                                     |  | $                      | 53,576,250  |   |                        | $ | 0            |  | $ | (915,000             | ) |  | $                      | 0           |   |  | $ | 52,661,250  |  
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Dorchester  Warehouse               |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Land                                 |  |                        | 15,000,000  |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   | 15,000,000  |  
|Buildings & Improvements             |  |                        | 67,418,633  |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   | 67,418,633  |  
|Machinery & Equipment                |  |                        | 0           |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   | 0           |  
|Allowance for depreciation           |  |                        | (11,095,945 | ) |                        |   |              |  |   | (1,685,460           | ) |  |                        |             |   |  |   | (12,781,405 | )
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|                                     |  |                        | 71,322,688  |   |                        |   |              |  |   | (1,685,460           | ) |  |                        |             |   |  |   | 69,637,228  |  
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Total                                |  |                        | 146,459,038 |   |                        |   |              |  |   | (2,600,460           | ) |  |                        |             |   |  |   | 143,858,578 |  
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Property used in operations:         |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Archon Corporate Offices:            |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Land                                 |  |                        | 0           |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   | 0           |  
|Buildings & Improvements             |  |                        | 68,920      |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   | 68,920      |  
|Machinery & Equipment                |  |                        | 998,655     |   |                        |   | 99,095       |  |   |                      |   |  |                        |             |   |  |   | 1,097,750   |  
|Allowance for depreciation           |  |                        | (671,196    | ) |                        |   |              |  |   | (111,803             | ) |  |                        |             |   |  |   | (782,999    | )
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|                                     |  |                        | 396,379     |   |                        |   | 99,095       |  |   | (111,803             | ) |  |                        |             |   |  |   | 383,671     |  
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Pioneer Hotel & Gambling Hall:       |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Land                                 |  |                        | 7,925,589   |   |                        |   |              |  |   |                      |   |  |                        | (4,000,000  | ) |  |   | 3,925,589   |  
|Buildings & Improvements             |  |                        | 34,344,952  |   |                        |   |              |  |   |                      |   |  |                        | (6,587,567  | ) |  |   | 27,757,385  |  
|Machinery & Equipment                |  |                        | 7,647,535   |   |                        |   | 373,781      |  |   |                      |   |  |                        | (412,433    | ) |  |   | 7,608,883   |  
|Allowance for depreciation           |  |                        | (25,488,981 | ) |                        |   | 290,695      |  |   | (1,566,906           | ) |  |                        | 0           |   |  |   | (26,765,192 | )
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|                                     |  |                        | 24,429,095  |   |                        |   | 664,476      |  |   | (1,566,906           | ) |  |                        | (11,000,000 | ) |  |   | 12,526,665  |  
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Total                                |  |                        | 24,825,474  |   |                        |   | 763,571      |  |   | (1,678,709           | ) |  |                        | (11,000,000 | ) |  |   | 12,910,336  |  
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  
|Property and equipment, net          |  | $                      | 117,708,262 |   |                        | $ | 763,571      |  | $ | (3,364,169           | ) |  | $                      | (11,000,000 | ) |  | $ | 104,107,664 |  
|                                     |  |                        |             |   |                        |   |              |  |   |                      |   |  |                        |             |   |  |   |             |  



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Long-Lived Assets

The Company applies the provisions of FASB ASC 360-10, Property, Plant and Equipment, where applicable to all long lived assets. FASB
ASC 360-10 addresses accounting and reporting for impairment and disposal of long-lived assets. The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with FASB ASC 360-10. FASB ASC 360-10
requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amounts. In
that event, a loss is recognized in the fourth quarter, based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal.

Management concluded that the underperformance of the Pioneer
Hotel and Casino was a result of the general downturn in the economy. Events that occurred in the fourth quarter (ended September 30, 2008) demonstrated to management that the Pioneer would be underperforming for the foreseeable future. These
events include numerous bank failures, a serious stock market decline, the reporting of significant declines in gaming revenues in the area, and significant and continuing declines in the housing and labor markets. Therefore, management is of the
opinion that recording an impairment loss in the fourth quarter was appropriate. Therefore, the productive assets (land, buildings, and furniture, fixtures and equipment) of the Pioneer Hotel and Casino in Laughlin, Nevada were tested for
recoverability. After the asset group was tested, appraised, and analyzed, management determined $11.0 million to be the amount of the impairment loss for the year ended September 30, 2008.

After continued underperformance of the Pioneer Hotel and Casino and the further decline in the economy, management was compelled to perform
another cash flow analysis for the year ended September 30, 2009, to determine if an additional impairment loss was appropriate. After the asset group was tested and analyzed, management designated $3.5 million as the amount of the impairment
loss or the year ended September 30, 2009.

Debt Issuance Costs

Loan issuance costs incurred in connection with financing the acquisition of rental property are included in other assets in the accompanying
consolidated balance sheets and are being amortized over the remaining loan period on the straight-line method, which approximates the effective interest method. The total capitalized as debt issuance cost is $2.8 million, and the amount amortized
is $0.2 million for fiscal years ended September 30, 2009 and 2008. Total debt issuance costs remaining to be amortized are $1.0 million and $1.2 million as of September 30, 2009 and 2008.

Slot Club Liability

The Pioneer has a program called the Bounty Hunter Round-Up Club (the Club) that was established to encourage repeat business from frequent and active slot and table game customers. A member of the Club accumulates
points in the members account for play on slot machines and table games that can be redeemed for cash, free gifts, food and beverages and additional points redeemable for free play. Included in accrued expenses are approximately $0.9 million
and $1.3 million at September 30, 2009 and 2008, for estimated redemption value of points accumulated by patrons.

Revenue
Recognition

Casino revenue is recorded as gaming wins less losses. Hotel, food and beverage, entertainment and
other operating revenues are recognized as services are performed. Casino revenues are recognized net of certain sales incentives in accordance with FASB ASC 605-50, Revenue Recognition, Customer Payments and Incentives. Accordingly, cash
incentives to customers for gambling, and the cash value of points and coupons earned by the slot club members totaling $0.6 million and $0.4 million for the years ended September 30, 2009 and 2008, have been recognized as a direct reduction of
casino revenue.



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##### Table of Contents

Advance deposits on rooms, if any, are recorded as deferred revenue until services are
provided to the customer. Revenues include the retail amount of room, food, beverage and other services provided gratuitously to customers totaling $4.0 million and $5.6 million for the years ended September 30, 2009 and 2008. These revenues
are recognized as services are performed. The estimated cost of providing these promotional services has been reported in the accompanying consolidated statements of operations as an expense of each department granting complimentary services. The
table below summarizes the departments costs of such services (dollars in thousands):



|                  |  |      |       |      |   |      
|----------------- |  | ---- | ----- | ---- | - | -----
|                  |  | 2009 |       | 2008
|Food and beverage |  | $    | 2,503 |      | $ | 3,963
|Hotel             |  |      | 513   |      |   | 498  
|Other             |  |      | 3     |      |   | 109  
|                  |  |      |       |      |   |      
|Total             |  | $    | 3,019 |      | $ | 4,570
|                  |  |      |       |      |   |      

Rental revenue from rental properties is recognized as
earned on a straight-line basis over the term of the lease. When rental payments received exceed rents earned and recognized, the difference is recorded as deferred rental income in the current liabilities section of the balance sheet, and
conversely, when rents earned and recognized exceed rental payments received, the difference is recorded as other assets.

Other
Revenue

Other revenue at September 30, 2009 and 2008 consisted of the following (dollars in thousands):



|                   |  |      |       |      |   |      
|------------------ |  | ---- | ----- | ---- | - | -----
|                   |  | 2009 |       | 2008
|Rent               |  | $    | 13    |      | $ | 245  
|Retail             |  |      | 372   |      |   | 889  
|Miscellaneous      |  |      | 1,316 |      |   | 1,327
|                   |  |      |       |      |   |      
|Total other income |  | $    | 1,701 |      | $ | 2,461
|                   |  |      |       |      |   |      

Concentrations

The Companys primary operations are concentrated in the geographic area of Laughlin, Nevada and in the hotel and casino industry. Thus
the company is at risk of unfavorable changes in general economic conditions including recession, economic slowdown, or higher fuel or other transportation costs. These factors may reduce disposable income of casino patrons or result in fewer
patrons visiting casinos.

The Company owns real estate on the Las Vegas, Nevada Strip and on the East Coast of the United
States. Although the Company is presently not dependent on cash flows from these properties, a significant decline in real estate values in these markets could have an impact on the Companys ability to readily generate cash flow from the real
estate.



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##### Table of Contents

Concentrations of revenue by segment as of September 30, 2009 and 2008 follows (dollars
in thousands)



|                                      |  |      |        |  |    |  
|------------------------------------- |  | ---- | ------ |  | -- | -
|                                      |  | 2009 |       
|Pioneer                               |  | $    | 20,293 |  | 63 | %
|                                      |  |      |        |  |    |  
|Rental properties held for investment |  | $    | 10,713 |  | 34 | %
|                                      |  |      |        |  |    |  
|Other and eliminations                |  | $    | 967    |  | 3  | %
|                                      |  |      |        |  |    |  



|                                      |  |      |        |  |    |  
|------------------------------------- |  | ---- | ------ |  | -- | -
|                                      |  | 2008 |       
|Pioneer                               |  | $    | 25,589 |  | 68 | %
|                                      |  |      |        |  |    |  
|Rental properties held for investment |  | $    | 11,138 |  | 29 | %
|                                      |  |      |        |  |    |  
|Other and eliminations                |  | $    | 1,057  |  | 3  | %
|                                      |  |      |        |  |    |  

Accounting for Stock-Based Compensation

The Company provides some compensation benefits to its employees in the form of stock options, restricted stock. Effective December 1,
2005, the Company adopted the fair value recognition provisions of ASC 718, which requires that companies measure and recognize compensation expense at an amount equal to the fair value of sharebased payments granted under compensation arrangements.
The Company adopted ASC 718 using the modified prospective transition method. Under that transition method, the provisions apply to all awards granted or modified after the date of adoption. In addition, compensation expense must be recognized for
any unvested stock option awards outstanding as of the date of adoption on a straight-line basis over the remaining vesting period. The fair value of stock options granted is estimated using the Black-Scholes option-pricing model. ASC 718 also
requires the tax benefit resulting from tax deductions in excess of the compensation expense recognized for those options to be reported in the statement of cash flows as an operating cash outflow and a financing cash inflow.

The assumptions used in estimating the fair value of each option grant on the date of grant using the Black-Scholes-Merton option
pricing model for options granted in 2009 and 2008 (dollars in thousands, except per share data) are as follows:



|                                                             |  |      |  |      |       |  
|------------------------------------------------------------ |  | ---- |  | ---- | ----- | -
|                                                             |  | 2009 |  | 2008 |      
|Weighted average assumptions:                                |  |      |  |      |       |  
|Expected stock price volatility                              |  | N/A  |  |      | 21.0  | %
|Risk-free interest rate                                      |  | N/A  |  |      | 1.52  | %
|Expected option lives (in years)                             |  | N/A  |  |      | 3     |  
|Expected dividend yield                                      |  | N/A  |  |      | N/A   |  
|Estimated fair value of options, net of tax effect           |  | N/A  |  | $    | 1,569 |  
|Estimated fair value of options per share, net of tax effect |  | N/A  |  | $    | 0.25  |  

The
Black-Scholes-Merton option valuation model requires the input of highly subjective assumptions, including the expected life of the stock-based award and stock price volatility. The assumptions listed above represent managements best
estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if other assumptions had been used, our recorded and pro forma stock-based compensation expense could have been materially
different from that depicted above. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the
share-based compensation expense could be materially different.



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Legal Defense Costs

The Company does not accrue for estimated future legal and related defense costs, if any, to be incurred in connection with outstanding or
threatened litigation and other disputed matters but, rather, records such as period costs when the services are rendered.

Income
Taxes

The Company accounts for income taxes in accordance with FASB Statement No. 109, Accounting for
Income Taxes. Deferred income taxes are recorded for the expected tax consequences of temporary differences between the tax bases of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. We
record a valuation allowance to reduce our deferred tax assets to the amount of future tax benefit that is more likely than not to be realized.

On October 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes(FIN 48), to account for our uncertain tax positions. FIN 48
contains a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the
tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate
settlement. The Company recognizes interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations.

Income (Loss) Per Common Share

The Company computes net
income (loss) per share in accordance with FASB ASC 260-10, Earnings per Share. FASB ASC 260-10 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by
dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all potentially dilutive common shares outstanding during the period. In
computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive shares if their effect is
anti-dilutive. Dilutive stock options of approximately 741,500 were not included in calculations of diluted income per common share for the fiscal year ended September 30, 2009, and 2008 as the options were out of the money and, therefore,
would be anti-dilutive. Furthermore, diluted EPS was not calculated as of September 30, 2009 due to losses incurred in the fiscal year. The calculation would be anti-dilutive.

As of August 31, 2007, the Company called for the redemption of all outstanding shares of its Exchangeable Redeemable Preferred Stock
on and at a redemption price of $5.241 per share, which sum included earned and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and
to earn dividends. As of the date of the preparation of these financial statements, the holders of 4,259,878 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price. See note
10.

Recently Issued Accounting Standards

FASB ASC 105-10. In June 2009, the FASB issued FASB ASC 105-10, Overview and Background FASB Codification. FASB ASC 105-10 establishes the FASB Accounting Standards Codification
(Codification) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with generally accepted accounting principles
(GAAP). FASB ASC 105-10 is effective for interim and annual periods ending after September 15, 2009. The Company implemented the new Codification when referring to GAAP in its annual report on Form 10-K for the fiscal year ending
September 30, 2009. This did not have an impact on the consolidated results of the Company.

FASB ASC
810-10. In June 2009, the FASB issued FASB ASC 810-10, Consolidation. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should
consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. FASB ASC 810-10 is effective for the first annual reporting period beginning after November 15,
2009 and for interim periods within that first annual reporting period. The Company will adopt FASB ASC 810-10 in fiscal 2010. The Company does not expect that the adoption of FASB ASC 810-10 will have a material impact on the consolidated financial
statements.



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##### Table of Contents

FASB ASC 860-10. In June 2009, the FASB issued FASB ASC 860-10, Transfers
and Servicing. FASB ASC 860-10 eliminates the concept of a qualifying special-purpose entity, changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to
users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entitys continuing involvement in and exposure to the risks related to transferred financial
assets. FASB ASC 860-10 is effective for fiscal years beginning after November 15, 2009. The Company will adopt FASB ASC 860-10 in fiscal 2010. The Company does not expect that the adoption of FASB ASC 860-10 will have a material impact on
the consolidated financial statements.

FASB ASC 855-10. In June 2009, the FASB issued FASB ASC 855-10,
Subsequent Events. FASB ASC 855-10 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FASB ASC 855-10
applies to both interim financial statements and annual financial statements. FASB ASC 855-10 is effective for interim or annual financial periods ending after June 15, 2009. FASB ASC 855-10 does not have a material impact on our consolidated
financial statements.

FASB ASC 944-20. In May 2008, the FASB issued FASB ASC 944-20, Financial
Services-Insurance. FASB ASC 944-20 requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation.
This Statement also clarifies how previous standards apply to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase
comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the
Statement will improve the quality of information provided to users of financial statements. FASB ASC 944-20 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. The Company does not expect the
adoption of FASB ASC 944-20 will have a material impact on its financial condition or results of operation.

FASB ASC
815-10. In March 2008, the FASB issued FASB ASC 815-10, Derivative Instruments and Hedging. FASB ASC 815-10, which will require enhanced disclosures regarding the impact on financial position, financial performance, and cash
flows, will be effective for the Company beginning on October 1, 2009. However, since the Company does not now have, nor does it contemplate issuing or obtaining any derivative instruments, or engaging in any hedging activities, in
the foreseeable future, we do not currently expect any effect on our future financial statements by adopting FASB ASC 815-10.

FASB ASC 810-10. In December 2007, the FASB issued FASB ASC 810-10, Consolidation. It requires that a noncontrolling (minority) interest in a subsidiary, including a consolidatable
variable interest entity should be reported as equity in the consolidated financial statements. FASB ASC 810-10 will not likely have any effect on the Companys consolidated financial statements since we do not presently have and are not
contemplating investing in, establishing or acquiring a subsidiary with a noncontrolling interest. FASB ASC 810-10 will be effective, if applicable, for the Companys fiscal year beginning October 1, 2009.

FASB ASC 820-10 and 825-10. In September 2006, the FASB issued FASB ASC 810-10, Fair Value Measurements. FASB ASC
810-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States, and expands disclosure about fair value measurements. In February 2007, the FASB issued FASB ASC
810-10, Financial Instruments, which will permit the option of choosing to measure certain eligible items at fair value at specified election dates and report unrealized gains and losses in earnings. We have no present intention of
opting to adopt FASB ASC 810-10. FASB ASC 810-10 will become effective for us for financial assets and liabilities carried at fair value for fiscal year ended September 30, 2009 but will not become effective for nonfinancial assets until fiscal
year ended September 30, 2010 (including interim periods within those years). We do not now expect any other effects of FASB ASC 810-10 since it is unlikely that we will choose to value assets or liabilities at fair value.

FASB ASC 805-10. In December 2007, the FASB issued FASB ASC 805-10, Business Combinations. This Statement requires that
the acquisition method of accounting (which previous standards called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. We have not yet evaluated this statement for
the impact, if any, which FASB ASC 805-10 might have on the consolidated financial statements, in the event we make any business combination or other covered acquisitions after September 30, 2009.



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Restatements and Reclassifications

Certain restatements to correct errors and significant and minor reclassifications to conform to the presentations used in fiscal 2009 have
been made in prior years consolidated financial statements, none of which had any effect on previously reported net income or loss, or related per share amounts, of any period.

Assets: The 2008 balance sheet has been restated to correct an error in classification of certain assets from property
held for sale during 2008 to rental property held for investment, net, since management has subsequently concluded that the property no longer qualified as held for sale at September 30, 2008. The current portion related to deferred taxes was also
reclassified from the 2008 financials to current assets.

Liabilities and Stockholders Equity: The
2008 balance sheet was also restated for $0.6 million reclassified from retained earnings  accumulated deficit to exchangeable redeemable preferred stock  unredeemed to correct an error in determining and recording the total value of
unredeemed shares including all accumulated dividends. This change did not change the total of liabilities and stockholders equity.

Consolidated Statements of Operations: Associated with the reclassification of property held for sale to rental property held for investment, approximately $4.2 million from other
revenue and $0.2 million from gain from settlement of liabilities was reclassified to investment properties. A new line was added separating the gain or (loss) on sale of marketable securities from interest and other income. The operating results of
property reclassified from rental property held for investment to property held for sale is reflected as discontinued operations net of tax in both years for comparison purposes. See Note 6

Other minor reclassifications were made throughout the financial statements and notes.

The effects of these restatements and reclassifications on the Companys previously issued September 30, 2008, balance sheet are
summarized as follows:



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##### Table of Contents

|                                         |  |                    |             |   |           |   |             |          |  |   |            
|---------------------------------------- |  | ------------------ | ----------- | - | --------- | - | ----------- | -------- |  | - | -----------
|                                         |  | PreviouslyReported |             |   | NetChange |   |             | Restated
|ASSETS                                   |  |                    |             |   |           |   |             |          |  |   |            
|Current assets:                          |  |                    |             |   |           |   |             |          |  |   |            
|Cash and equivalents                     |  | $                  | 37,973,564  |   |           | $ |            |          |  | $ | 37,973,564 
|Investment in marketable securities      |  |                    | 5,731,337   |   |           |   |            |          |  |   | 5,731,337  
|Accounts receivable, net                 |  |                    | 144,810     |   |           |   |            |          |  |   | 144,810    
|Inventories                              |  |                    | 342,379     |   |           |   |            |          |  |   | 342,379    
|Prepaid expenses and other               |  |                    | 1,371,281   |   |           |   |            |          |  |   | 1,371,281  
|Deferred tax assets                      |  |                    |            |   |           |   | 332,341     |          |  |   | 332,341    
|                                         |  |                    |             |   |           |   |             |          |  |   |            
|Total current assets                     |  |                    | 45,563,371  |   |           |   | 33,234      |          |  |   | 45,895,712 
|                                         |  |                    |             |   |           |   |             |          |  |   |            
|Property held for sale                   |  |                    | 21,504,400  |   |           |   | (21,504,400 | )        |  |   | 0          
|                                         |  |                    |             |   |           |   |             |          |  |   |            
|Property and equipment:                  |  |                    |             |   |           |   |             |          |  |   |            
|Rental property held for investment, net |  |                    | 122,354,178 |   |           |   | 21,504,400  |          |  |   | 143,585,578
|Casino property and equipment, net       |  |                    |             |   |           |   | 12,910,336  |          |  |   | 12,910,336 
|Land used in operations                  |  |                    | 3,925,589   |   |           |   | (3,925,589  | )        |  |   |           
|Buildings and improvements               |  |                    | 7,951,200   |   |           |   | (7,951,200  | )        |  |   |           
|Machinery and equipment                  |  |                    | 1,816,546   |   |           |   | (1,816,546  | )        |  |   |           
|Accumulated depreciation                 |  |                    | (782,999    | ) |           |   | 782,999     |          |  |   |           
|                                         |  |                    |             |   |           |   |             |          |  |   |            
|Property and equipment, net              |  |                    | 135,264,514 |   |           |   | 21,504,400  |          |  |   | 156,789,914
|Other assets                             |  |                    | 7,641,889   |   |           |   |            |          |  |   | 7,641,889  
|                                         |  |                    |             |   |           |   |             |          |  |   |            
|Total assets                             |  | $                  | 209,974,174 |   |           | $ | 332,341     |          |  | $ | 210,306,515
|                                         |  |                    |             |   |           |   |             |          |  |   |            



|                                                                                                                                                        |  |                    |             |   |           |   |          |          |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | ----------- | - | --------- | - | -------- | -------- |  | - | ----------- | -
|                                                                                                                                                        |  | PreviouslyReported |             |   | NetChange |   |          | Restated | 
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                    |  |                    |             |   |           |   |          |          |  |   |             |  
|Current liabilities:                                                                                                                                    |  |                    |             |   |           |   |          |          |  |   |             |  
|Line of credit                                                                                                                                          |  | $                  | 9,843,691   |   |           | $ |         |          |  | $ | 9,843,691   |  
|Accounts payable                                                                                                                                        |  |                    | 2,848,701   |   |           |   |         |          |  |   | 2,848,701   |  
|Interest payable                                                                                                                                        |  |                    | 219,233     |   |           |   |         |          |  |   | 219,233     |  
|Other accrued expenses                                                                                                                                  |  |                    | 4,474,276   |   |           |   |         |          |  |   | 4,474,276   |  
|Exchangeable redeemable preferred stockunredeemed                                                                                                      |  |                    | 214,972     |   |           |   | 619,374  |          |  |   | 834,346     |  
|Current portion of debt                                                                                                                                 |  |                    | 82,057      |   |           |   |         |          |  |   | 82,057      |  
|Current portion of non-recourse debt                                                                                                                    |  |                    | 2,828,304   |   |           |   |         |          |  |   | 2,828,304   |  
|                                                                                                                                                        |  |                    |             |   |           |   |          |          |  |   |             |  
|Total current liabilities                                                                                                                               |  |                    | 20,511,234  |   |           |   | 619,374  |          |  |   | 21,130,608  |  
|Debtless current portion                                                                                                                               |  |                    | 441         |   |           |   |         |          |  |   | 441         |  
|Nonrecourse debtless current portion                                                                                                                   |  |                    | 71,500,098  |   |           |   |         |          |  |   | 71,500,098  |  
|Deferred tax liabilities                                                                                                                                |  |                    | 23,242,864  |   |           |   | 332,341  |          |  |   | 23,575,205  |  
|Deferred rent income                                                                                                                                    |  |                    | 39,112,665  |   |           |   |         |          |  |   | 39,112,665  |  
|                                                                                                                                                        |  |                    |             |   |           |   |          |          |  |   |             |  
|Total liabilities                                                                                                                                       |  |                    | 154,367,302 |   |           |   | 951,715  |          |  |   | 155,319,017 |  
|                                                                                                                                                        |  |                    |             |   |           |   |          |          |  |   |             |  
|Stockholders equity:                                                                                                                                   |  |                    |             |   |           |   |          |          |  |   |             |  
|Preferred stock, exchangeable, redeemable 16.0% cumulative $2.14 per share liquidation value, authorized10,000,000 shares;
none issued and outstanding |  |                    |             |   |           |   |          |          |  |   |             |  
|Common stock, $.01 par value; authorized100,000,000 shares; issued and outstanding6,316,576 and 6,329,177
shares                                      |  |                    | 63,292      |   |           |   |         |          |  |   | 63,292      |  
|Additional paid-in capital                                                                                                                              |  |                    | 63,300,848  |   |           |   |         |          |  |   | 63,300,848  |  
|Accumulated deficit                                                                                                                                     |  |                    | (6,582,794  | ) |           |   | (619,374 | )        |  |   | (7,202,168  | )
|Accumulated other comprehensive income (loss)                                                                                                           |  |                    | (974,978    | ) |           |   |         |          |  |   | (974,978    | )
|                                                                                                                                                        |  |                    |             |   |           |   |          |          |  |   |             |  
|Total                                                                                                                                                   |  |                    | 55,806,368  |   |           |   | (619,374 | )        |  |   | 55,186,994  |  
|Less notes receivable from principal stockholders                                                                                                       |  |                    | (111,722    | ) |           |   |         |          |  |   | (111,722    | )
|Less treasury common stock0 and 4,875 shares, at cost                                                                                                  |  |                    | (87,774     | ) |           |   |         |          |  |   | (87,774     | )
|                                                                                                                                                        |  |                    |             |   |           |   |          |          |  |   |             |  
|Total stockholders equity                                                                                                                              |  |                    | 55,606,872  |   |           |   | (619,374 | )        |  |   | 54,987,498  |  
|                                                                                                                                                        |  |                    |             |   |           |   |          |          |  |   |             |  
|Total liabilities and stockholders equity                                                                                                              |  | $                  | 209,974,174 |   |           | $ | 332,341  |          |  | $ | 210,306,515 |  
|                                                                                                                                                        |  |                    |             |   |           |   |          |          |  |   |             |  



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|3. | ACCOUNTS RECEIVABLE, NET
|-- | ------------------------

Accounts receivable at September 30, 2009 and 2008 consisted of the following:



|                                      |  |      |         |   |      |   |         |  
|------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                      |  | 2009 |         |   | 2008 |  
|Casino and hotel                      |  | $    | 203,041 |   |      | $ | 183,032 |  
|Rental properties                     |  |      | 0       |   |      |   | 0       |  
|                                      |  |      |         |   |      |   |         |  
|Subtotal                              |  |      | 203,041 |   |      |   | 183,032 |  
|Less: allowance for doubtful accounts |  |      | (32,106 | ) |      |   | (38,222 | )
|                                      |  |      |         |   |      |   |         |  
|Total                                 |  | $    | 170,935 |   |      | $ | 144,810 |  
|                                      |  |      |         |   |      |   |         |  

Changes in the allowance for doubtful accounts for the years ended September 30, 2009 and 2008 were as
follows:



|                           |  |      |        |   |      |   |        |  
|-------------------------- |  | ---- | ------ | - | ---- | - | ------ | -
|                           |  | 2009 |        |   | 2008 |  
|Balance, beginning of year |  | $    | 38,222 |   |      | $ | 43,404 |  
|Provision                  |  |      | 2,681  |   |      |   | (4,457 | )
|Accounts written-off       |  |      | (8,797 | ) |      |   | (725   | )
|                           |  |      |        |   |      |   |        |  
|Balance, end of year       |  | $    | 32,106 |   |      | $ | 38,222 |  
|                           |  |      |        |   |      |   |        |  

Allowance for Doubtful Accounts. The Company allows for an estimated amount of receivables
that may not be collected. The Company estimates its allowance for doubtful accounts using a specific formula applied to aged receivables as well as a specific review of large balances. Historical experience is considered, as are customer
relationships, in determining specific reserves.



|4. | GAIN FROM SALE AND EXTENSION OF LAND PURCHASE OPTION
|-- | ----------------------------------------------------

In 2006, the Company entered into an Option Agreement (Agreement) sales and extension option agreement (the Agreement) for the sale of a parcel of land on the Las Vegas Strip owned
by the Company. During fiscal years ended 2007 and 2008, the Company received nonrefundable payments in connection with the Agreement totaling $67.1 million. In fiscal year ended 2008, the Agreement expired and the nonrefundable payments totaling
$67.1 million were recorded as revenue and reflected in the accompanying consolidated statements of operations as gain on termination of land sale option.



|5. | RENTAL PROPERTY HELD FOR INVESTMENT
|-- | -----------------------------------

The property in Dorchester, Massachusetts includes several buildings used for commercial office space. The property is under a net lease through 2020 with a single tenant. Under the lease, the tenant is
responsible for substantially all obligations related to the property. The property was acquired in 2000 for approximately $82.4 million plus $0.5 million in debt issuance costs. The Company paid $5.6 million in cash and assumed $77.3 million in
nonrecourse debt associated with the property. The Company allocated approximately $15.0 million of the purchase price to land and the balance to building and improvements. The loan issue costs incurred to acquire the property recorded in other
assets in the accompanying Consolidated Balance Sheets are being amortized over the remaining loan period. Deferred prepaid rental revenue at September 30, 2009 and 2008 in the amounts of $36.8 million and $39.1 million, respectively, is
presented on the accompanying Consolidated Balance Sheets. See Note 2, Debt Issue Cost and Note 7

The following table shows
the schedule of rent proceeds that will be used to meet future debt obligations related to the Dorchester property.



|           |  |                             |       |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |       
|---------- |  | --------------------------- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ------------------ |  | ----- | ----- |  | - | ------ |  | - | ------
|           |  | Rental Income Due by Period
|           |  | 2010                        |       | 2011 |   | 2012  |  | 2013 |       | 2014 |   | 2015 andThereafter |  | Total
|           |  | (Amounts in Thousands)     
|Dorchester |  | $                           | 3,800 |      | $ | 3,800 |  | $    | 3,800 |      | $ | 3,800              |  | $     | 3,800 |  | $ | 22,800 |  | $ | 41,800
|           |  |                             |       |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |       

The Company owns, through its wholly owned subsidiary,
Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of land (the Property) located on the east side of Las Vegas Boulevard South, just south of Sahara Avenue. The Company presently leases the Property to three
different lessees for an aggregate amount of $35,000 per month. The leases may be terminated in the event the property is sold or developed by the Company.



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|6. | PURCHASE AND SALE AGREEMENT OF GAITHERSBURG PROPERTY
|-- | ----------------------------------------------------

On May 28, 2009, the Company, through its wholly owned subsidiary SFHI, LLC (SFHI), entered into a Purchase and Sale Agreement (the Agreement) with Montgomery County, Maryland
(the County) whereby the County will purchase SFHIs 51.57 acre parcel of land together with an approximately 341,693 square feet office building erected thereon (the Property), located at 100 Edison Park Drive in
Gaithersburg, Maryland. The purchase price for the Property will be seventy-six million three hundred forty thousand dollars ($76,340,000). The Agreement provided the County with a 90-day feasibility period during which the County determined that
the Property is suitable for its intended use, and the County will now proceed to close escrow by notifying the Company of the closing date, which date may be no sooner than 90 days from the date of notice and no later than April 30, 2014.

Simultaneous with the execution of the Purchase and Sale Agreement, the County entered into a sublease with the existing
tenant of SFHI at this location, GXS, Inc., whereby the County, as of October 1, 2009, leased and occupied the entire Property until the earlier of (i) completion of its purchase of the Property or (ii) April 30, 2014. Pursuant
to the applicable provisions of the existing lease with GXS, Inc., SFHI consented to the sublease. In addition, GXS, Inc. agreed to pay SFHI the sum of $2,125,000, $1,725,000 of which was paid on October 1, 2009, with the balance of $400,000
payable on or before July 1, 2010.

ASSETS HELD FOR SALE

The Company reviewed the guidance provided by FASB ASC 360-10-45-11, and thus has classified the assets associated with the Gaithersburg
property as held for sale. The following will summarize the components classified as held for sale as of September 30, 2009:



|                                                  |  |      |             |  
|------------------------------------------------- |  | ---- | ----------- | -
|Property Held for Sale  Discontinued Operations: |  | 2009 |            
|ASSETS                                            |  |      |             |  
|GaithersburgWarehouse:                           |  |      |             |  
|Loan Issue Cost                                   |  | $    | 929,310     |  
|Deferred Rent                                     |  |      | 2,682,345   |  
|Land                                              |  |      | 23,000,000  |  
|Buildings & Improvements                          |  |      | 36,600,000  |  
|Machinery & Equipment                             |  |      | 3,000,000   |  
|Allowance for depreciation                        |  |      | (10,853,750 | )
|                                                  |  |      |             |  
|Total                                             |  | $    | 55,357,905  |  
|                                                  |  |      |             |  
|LIABILITIES                                       |  |      |             |  
|Interest payable                                  |  | $    | 156,949     |  
|Current portion of debt                           |  |      | 3,185,888   |  
|                                                  |  |      |             |  
|Total current liabilities                         |  |      | 3,342,837   |  
|Long-term debt less current portion               |  |      | 37,114,921  |  
|                                                  |  |      |             |  
|Total                                             |  | $    | 40,457,758  |  
|                                                  |  |      |             |  

LIABILITIES ON ASSETS HELD FOR SALE

The following debt is related to assets held for sale. The Company issued approximately $55.4 million of first mortgage debt with a 7.01%
interest rate per annum in connection with its acquisition of a commercial office building located in Gaithersburg, Maryland. The building is under lease through April 2014. The monthly lease payments are applied against the outstanding
indebtedness. Monthly principal and interest payments amortize the debt to approximately $22.3 million by the end of the lease in April 2014. The Company anticipates that the future tenant payments related to the net leases will be sufficient to
fund required payments under the first mortgage notes and Section 467 debt.



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|      |  |   |           
|----- |  | - | ----------
|2010  |  | $ | 3,342,837 
|2011  |  |   | 3,573,477 
|2012  |  |   | 3,986,926 
|2013  |  |   | 4,447,563 
|2014  |  |   | 25,106,955
|      |  |   |           
|Total |  | $ | 40,457,758
|      |  |   |           

DISCONTINUED OPERATIONS

As a result of the pending sale of the Gaithersburg property, the result of operation related to this property has been reflected as
discontinued operations. The prior year result of operations of this property has also been reclassified as discontinued for comparative purposes.

The property in Gaithersburg, Maryland, is a building used for commercial office space. The property is under a net lease through 2014 with a single tenant. Under the lease, the tenant is responsible for
substantially all obligations related to the property. The property was acquired for $62.6 million, plus debt issuance costs of $2.7 million. The Company paid $9.9 million in cash and issued $55.4 million in nonrecourse first mortgage indebtedness.
The Company allocated approximately $23.0 million of the purchase price to land, $3.0 million to machinery and equipment and the balance to building and improvements. The expenses incurred to acquire the property (approximately $2.7 million) are
recorded in other assets in the accompanying Consolidated Balance Sheets and are being amortized over the remaining loan period.

The following table shows the schedule of rent proceeds that will be used to meet future debt obligations related to the Gaithersburg property until it is sold.



|             |  |                             |       |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |   |  |   |       
|------------ |  | --------------------------- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ------------------ |  | ----- | ----- |  | - | - |  | - | ------
|             |  | Rental Income Due by Period
|             |  | 2010                        |       | 2011 |   | 2012  |  | 2013 |       | 2014 |   | 2015 andThereafter |  | Total
|             |  | (Amounts in Thousands)     
|Gaithersburg |  | $                           | 5,966 |      | $ | 6,115 |  | $    | 6,268 |      | $ | 6,425              |  | $     | 4,257 |  | $ | 0 |  | $ | 29,031
|             |  |                             |       |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |   |  |   |       



|7. | DEBT
|-- | ----

Loans Payable

The Companys wholly owned subsidiary, SLVC, secured and maintained a $29.0 million line of credit with a
financial institution, which a total of $7.9 million was drawn and outstanding as of September 30, 2009, see Note 19 for additional discussions regarding payoff subsequent to September 30, 2009. The loan and promissory note, were secured
by deed of trust on SLVCs approximate 27 acre parcel of land on Las Vegas Boulevard South (the Property). The SLVC line of credit loan was guaranteed by SLVC and the Company, as well as, personally guaranteed by Paul W. Lowden,
President of SLVC, and Suzanne Lowden, Secretary/Treasurer of SLVC.

The September 30, 2008 line of credit balance
consisted of $9.7 million outstanding under the line of credit referenced above and various loans with a total balance of $0.1 million collateralized by slot and other equipment with interest rates up to 10.0%, current monthly principal payments of
approximately $7,000 with maturities through September 2009.



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The Companys Chairman of the Board and CEO has personally guaranteed certain loans for
which the Company has accrued a loan guarantee fee equal to 0.5% of the guaranteed loan balance per calendar quarter. The total accrued increased to $0.3 million in fiscal year ended September 30, 2009 from $0.2 million in fiscal year ended
September 30, 2008.

Nonrecourse Debt Obligations

As discussed in note 5, the Company assumed $77.3 million of indebtedness, consisting of approximately $75.1 million of first mortgage
indebtedness, $43.9 million with an interest rate of 10.2% and $31.2 million with an interest rate of 12.18% and $2.2 million of indebtedness under of the Internal Revenue Code of 1986, as amended, (the Code) Section 467
(Section 467), in connection with its acquisition on March 2, 2001 of the commercial office building located in Dorchester, Massachusetts. The building is under a net lease through June 2020, requiring that the lease payments be
applied to the outstanding indebtedness. The first mortgage indebtedness is nonrecourse and matures in June 2020 to coincide with the end of the lease term. See Note 5

The scheduled maturities of long-term debt as of September 30, 2009 are as follows:



|           |  |   |            
|---------- |  | - | -----------
|2010       |  | $ | 0          
|2011       |  |   | 0          
|2012       |  |   | 0          
|2013       |  |   | 0          
|2014       |  |   | 0          
|Thereafter |  |   | 31,199,287 
|           |  |   |            
|Total      |  | $ | 31,199,0287
|           |  |   |            



|8. | LEASES
|-- | ------

At
September 30, 2009 the Company had a noncancellable operating lease for real property that expires in 2078 and other minor operating leases for corporate offices. Under most of the leases, the Company, as lessee, pays the taxes, insurance and
the operating expenses related to the leased property

Future aggregate minimum lease payments as of September 30, 2009
are as follows:



|           |  |   |           
|---------- |  | - | ----------
|2010       |  | $ | 382,790   
|2011       |  |   | 382,790   
|2012       |  |   | 382,790   
|2013       |  |   | 382,790   
|2014       |  |   | 382,790   
|Thereafter |  |   | 24,530,439
|           |  |   |           
|Total      |  | $ | 26,444,389
|           |  |   |           

Rent expense was $0.4 million and $0.4 million on all
operating leases for the years ended September 30, 2009 and 2008, respectively.



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|9. | OPEN MARKET PURCHASES OF COMPANY COMMON STOCK
|-- | ---------------------------------------------

During fiscal year 2009 the Company determined that in the current difficult economy and in light of low interest rates being paid on deposit of surplus funds that open market purchase(s) of its own
shares, up to 5.0% of its outstanding common stock, represented a desirable use of its available and surplus cash.

In
December 2008, the Board of Directors of the Company approved the Companys adoption of a plan, effective January 5, 2009, for the Company to make periodic and ongoing open market purchases of up to 5.0% of its own common stock (up to
319,539 shares of common stock) in accordance with Rule 10b-18 (the Rule) of the Rules and Regulations Promulgated Under The Securities Exchange Act Of 1934 (the Act), and, more specifically, in accordance with SEC Release
No. 33-8335 (the Release). The Release is a safe harbor and approved method to make open market purchases of a companys own common stock in compliance with the Rule without those purchases being deemed manipulative
under the Act.

The Rule and Release impose certain specific restrictions on the Company as to purchases of its own common
shares. These include specific restrictions as to timing of open market purchases, manner of purchases, pricing of purchases and when purchases will (and will not) be allowed.

The Rule and Release also mandate certain additional and periodic disclosures that the Company must make concerning the open market
purchases in its Series 10 filings (Report on Forms 10-K and 10-Q).

On January 8, 2010, subsequent to the end of fiscal
year 2009, the Company purchased a grouping of shares of common stock of the Company sufficient to cause it to effectively reach the maximum shares allotted to be purchased pursuant to the Rule and Release referenced above (when combined with prior
program purchases since December 2008). As a result, the Company, on January 13, 2010, announced the close of the common stock purchase program.

All open market purchases were voluntary and effected utilizing licensed securities broker-dealers.

The table below summarizes the Companys buy back of its common stock for the last 12-month period ended September 30, 2009, as well as, the total shares purchased under the program through its
close on January 13, 2010:



|                  |  |                                             |  |                                         |       |                                                                                            |         |                                                                                                                       |        
|----------------- |  | ------------------------------------------- |  | --------------------------------------- | ----- | ------------------------------------------------------------------------------------------ | ------- | --------------------------------------------------------------------------------------------------------------------- | -------
|Period            |  | (a) TotalNumberof Shares(or
Units)Purchased |  | (b) AveragePrice Paid perShare(or Unit) |       | (c) Total Number ofShares (or Units)Purchased as Partof
PubliclyAnnounced Plans orPrograms |         | (d) Maximum Number(or ApproximateDollar Value)of Shares
(orUnits) that May Yet BePurchased Under thePlans or Programs
|Beginning balance |  |                                             |  |                                         |       |                                                                                            |         |                                                                                                                       | 316,215
|January 2009      |  | 3,996                                       |  | $                                       | 27.83 |                                                                                            | 3,996   |                                                                                                                       | 312,219
|February 2009     |  | 4,590                                       |  | $                                       | 16.96 |                                                                                            | 8,586   |                                                                                                                       | 307,629
|March 2009        |  | 7,150                                       |  | $                                       | 16.60 |                                                                                            | 15,736  |                                                                                                                       | 300,479
|April 2009        |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|May 2009          |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|June 2009         |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|July 2009         |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|August 2009       |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|September 2009    |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|October 2009      |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|November 2009     |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|December 2009     |  | 0                                           |  |                                         | 0     |                                                                                            | 15,736  |                                                                                                                       | 300,479
|January 2009      |  | 298,632                                     |  | $                                       | 13.50 |                                                                                            | 314,368 |                                                                                                                       | 1,847  
|Ending balance    |  | 314,368                                     |  | $                                       | 13.80 |                                                                                            | 314,368 |                                                                                                                       | 1,847  

As of
September 30, 2009, the Company retired 15,736 of the shares repurchased.



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|10. | REDEMPTION OF THE COMPANYS PREFERRED STOCK AND REDEMPTION PRICE DISPUTES.
|--- | --------------------------------------------------------------------------

The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, at
a redemption price of $5.241 per share, which sum included accrued and unpaid dividends to the date of redemption. From and after August 31, 2007, all shares of the Exchangeable Redeemable Preferred Stock ceased to be outstanding and to accrue
dividends. As of February 2, 2010, the holders of 4,259,878 shares of the Exchangeable Redeemable Preferred Stock have surrendered their shares and received payment of the redemption price; while 156,699 shares have yet to be surrendered and
still have the right to receive their payment due without interest. As of September 30, 2009 and 2008, exchangeable redeemable preferred stock  unredeemed was $821,259 and $834,346, respectively.

On August 27, 2007, a group of institutional investors filed an action, in Nevada, against the registrant. The Complaint was
subsequently amended to add an additional party plaintiff (collectively, the Plaintiffs). The Amended Complaint: (i) seeks a finding by the Court that the Company has breached its obligations under the Companys Certificate of
Designation of the Preferred Stock, dated September 30, 1993 (the Certificate), and awarding the Plaintiffs full compensation of any and all available damages suffered by the Plaintiffs as a result of the Companys breach of
the Certificate; (ii) seeks a finding by the Court that the Companys issuance of its redemption notice with an improper redemption price is an anticipatory breach of a material term of the Certificate and awarding the Plaintiffs full
compensation of any and all available damages suffered as a result of the Companys anticipatory breach of the Certificate; (iii) seeks a declaration by the Court that the dividends be properly calculated and compounded per the terms of
the Certificate in an amount no less than $7,235,351 up through and including the date of final judgment; (iv) seeks an order from the Court calling for the Company to reimburse the Plaintiffs attorneys fees, expenses and costs
incurred in enforcing their rights; and (v) seeks such other and further relief as the Court may deem appropriate.

The
Plaintiffs, thereafter, filed a motion for partial summary judgment, seeking a ruling from the court that the Company breached its obligations under the Certificate of Designation by calculating the redemption price as it did. The Court granted that
motion on August 8, 2008, finding the language of the Certificate of Designation to be unambiguous and that the redemption price should have been calculated differently. The Court has not yet issued a monetary judgment against the Company.
Subsequent to the Courts ruling on the motion for partial summary judgment, Plaintiffs filed a motion for entry of final judgment, seeking entry of judgment that the redemption price for the preferred shares should have been $8.69 per share.
At the same time, the Company filed a request for certification asking the Court to certify its partial summary judgment order for immediate interlocutory appeal. The Court granted the request for certification and denied the request for entry of
final judgment without prejudice. The Company filed a Petition for Permission to Appeal with the Ninth Circuit Court of Appeals and the Ninth Circuit declined to accept the matter for interlocutory review at this time.



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The Company has initiated proceedings against a third-party firm concerning that firms
potential liability related to the drafting of the Certificate of Designation. This third-party action has subsequently been removed by the firm to Federal Court in April, 2009 and is at an early stage of resolution. The third-party has moved to
compel arbitration of the dispute. The Magistrate Judge issued an order that the matter be referred to arbitration and the District Court confirmed that order. The Company intends to pursue its claims against the firm in arbitration. The Company is
also considering rights and remedies it may have with regard to other parties who participated in the issuance of the Preferred Stock in the event that the Company does not prevail on its interpretation of the Certificate of Designation.

Also, two other holders of the Exchangeable Redeemable Preferred Stock filed Complaints, both alleging essentially the same claim as the
first complaint related to the case set forth immediately above. If the plaintiffs in these two additional actions are correct, the redemption price as of August 31, 2007 should have been $8.69 per share and not $5.241 per share as calculated
by the Company. If applied to all the then outstanding shares of Exchangeable Redeemable Preferred Stock, including the shares held by the Companys officers and directors, valuation of the redemption price at $8.69 per share would increase the
redemption price in excess of $15.2 million.

Management is unable to estimate the minimum liability that may be incurred, if
any, as a result of the outcome of each of these matters and, therefore, has made no provision in the financial statements for liability related to these cases.



|11. | STOCK OPTION PLAN
|--- | -----------------

The Companys Stock Option Plan provides for the grant of up to 1.4 million shares of its common stock to key employees. The Stock Option Plan provides for both incentive stock options and non-qualified stock options. Stock option
grants generally vest over a three-year period from the employees hire date. No options were granted during the fiscal year 2009. During the fiscal year ended September 30, 2008, 441,500 options were granted. As of September 30, 2009
and 2008, there were approximately 741,500, outstanding and exercisable under the Stock Option Plan. During the fiscal year ended September 30, 2009, no options were exercised or granted. During fiscal years 2008, 112,850 options were
exercised, zero options were granted.

The outstanding options have expiration dates through 2018 and have an average
remaining life of approximately 7.3 years. The average exercise price of the outstanding options at September 30, 2009 is approximately $28.09.

In December 2008, the Companys Board of Directors authorized, approved by the shareholders at the June 15, 2009 annual meeting, an increase of 250,000 in the number of shares available for
grant under the Plan.

SFHI Inc., SLVC and PHI (collectively, the Subsidiaries), have adopted subsidiary stock
option plans (the Subsidiary Plans). The Subsidiary Plans provide for the grant of options by each of the Subsidiaries with respect to an aggregate of up to 10% of the outstanding shares of such Subsidiarys Common Stock to
employees, non-employee directors, consultants or affiliates of the Company or the Subsidiaries. The purpose of the Subsidiary Plans is to enable the Subsidiaries and the Company to attract, retain and motivate their employees, non-employee
directors, consultants and affiliates by providing for or increasing the proprietary interest of such persons in the Subsidiaries. As of September 30, 2009, no options had been granted under any of the Subsidiary Plans.

The following table summarizes stock option activity during fiscal 2009 under all plans:



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|                                           |  |                       |  |                                        |       |                                          |          |                                 |   |         |  
|------------------------------------------ |  | --------------------- |  | -------------------------------------- | ----- | ---------------------------------------- | -------- | ------------------------------- | - | ------- | -
|                                           |  | NumberofShares(000s) |  | Weighted-AverageExercisePricePer Share |       | Weighted-AverageRemainingContractualTerm |          | AggregateIntrinsicValue($000s) |  
|Options outstanding at September 30, 2008: |  | 742                   |  | $                                      | 28.09 |                                          | 8.3 yrs. |                                 | $ | (5,829  | )
|Granted                                    |  | 0                     |  |                                        | N/A   |                                          | N/A      |                                 |   | N/A     |  
|Exercised                                  |  | 0                     |  |                                        | N/A   |                                          | N/A      |                                 |   | N/A     |  
|Canceled                                   |  | 0                     |  |                                        | N/A   |                                          | N/A      |                                 |   | N/A     |  
|Options outstanding at September 30, 2009  |  | 742                   |  |                                        | 28.09 |                                          | 7.3 yrs. |                                 | $ | (12,457 | )
|Options exercisable at September 30, 2009  |  | 742                   |  |                                        | 28.09 |                                          | 7.3 yrs. |                                 | $ | (12,457 | )

As of September 30,
2009, there was no unrecognized compensation cost related to unvested stock options. There were no unvested shares at September 30, 2009.



|12. | INCOME TAXES
|--- | ------------

The
provision for income taxes consisted of the following:



|                                           |  |                        |        |   |      |   |        |  
|------------------------------------------ |  | ---------------------- | ------ | - | ---- | - | ------ | -
|                                           |  | 2009                   |        |   | 2008 |  
|                                           |  | (Dollars in thousands) |       
|Current provision                          |  | $                      | 0      |   |      | $ | 1,296  |  
|Deferred provision (benefit)               |  |                        | (1,889 | ) |      |   | (2,566 | )
|                                           |  |                        |        |   |      |   |        |  
|Total provision (benefit) for income taxes |  | $                      | (1,889 | ) |      | $ | (1,270 | )
|                                           |  |                        |        |   |      |   |        |  
|Effective income tax rate                  |  |                        | 35.0   | % |      |   | 35.0   | %
|                                           |  |                        |        |   |      |   |        |  

The provision for income taxes differed from the amount computed by applying the federal statutory rate to
our income before provision for income taxes as follows:



|                                                           |  |                        |        |   |      |   |         |  
|---------------------------------------------------------- |  | ---------------------- | ------ | - | ---- | - | ------- | -
|                                                           |  | 2009                   |        |   | 2008 |  
|                                                           |  | (Dollars in thousands) |       
|Tax provision at statutory rate (35%)                      |  | $                      | 0      |   |      | $ | 19,663  |  
|Effect of using net operating loss carry forward           |  |                        | 0      |   |      |   | (23,136 | )
|Effect of using alternative minimum tax                    |  |                        | 0      |   |      |   | 12,962  |  
|Effect of using alternative minimum tax net operating loss |  |                        | 0      |   |      |   | (11,665 | )
|Deferred provision (benefit)                               |  |                        | (1,889 | ) |      |   | 906     |  
|                                                           |  |                        |        |   |      |   |         |  
|Total provision (benefit) for income taxes                 |  | $                      | (1,889 | ) |      | $ | (1,270  | )
|                                                           |  |                        |        |   |      |   |         |  



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The components of the deferred tax assets and liabilities consist of the following:



|                                                   |  |                        |         |   |      |   |         |  
|-------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                   |  | 2009                   |         |   | 2008 |  
|                                                   |  | (Dollars in thousands) |        
|Deferred tax liabilities:                          |  |                        |         |   |      |   |         |  
|Differences in timing of prepaid expenses          |  | $                      | (214    | ) |      | $ | (380    | )
|Fixed asset basis, depreciation and amortization   |  |                        | (23,150 | ) |      |   | (24,497 | )
|Land                                               |  |                        | (2,236  | ) |      |   | (2,236  | )
|Other                                              |  |                        | (0      | ) |      |   | (231    | )
|                                                   |  |                        |         |   |      |   |         |  
|Total deferred tax liabilities                     |  |                        | (25,600 | ) |      |   | (27,344 | )
|                                                   |  |                        |         |   |      |   |         |  
|Deferred tax assets:                               |  |                        |         |   |      |   |         |  
|Net operating loss carryforward                    |  |                        | 2,629   |   |      |   | 2,219   |  
|Differences in timing of uncollectable accounts    |  |                        | 14      |   |      |   | 15      |  
|Unrealized losses on marketable securities         |  |                        | 563     |   |      |   | 525     |  
|Stock based compensation                           |  |                        | 844     |   |      |   | 844     |  
|Employee compensation and benefits                 |  |                        | 150     |   |      |   | 172     |  
|Tax credits and charitable deduction carryforwards |  |                        | 84      |   |      |   | 326     |  
|                                                   |  |                        |         |   |      |   |         |  
|Total deferred tax assets                          |  |                        | 4,284   |   |      |   | 4,101   |  
|                                                   |  |                        |         |   |      |   |         |  
|Valuation allowance                                |  |                        | 0       |   |      |   | 0       |  
|                                                   |  |                        |         |   |      |   |         |  
|Net deferred tax asset (liability)                 |  | $                      | (21,316 | ) |      | $ | (23,243 | )
|                                                   |  |                        |         |   |      |   |         |  
|Recorded as:                                       |  |                        |         |   |      |   |         |  
|Current deferred tax assets                        |  | $                      | 513     |   |      | $ | 332     |  
|Non-current deferred tax liabilities               |  |                        | (21,829 | ) |      |   | (23,575 | )
|                                                   |  |                        |         |   |      |   |         |  
|Net deferred tax asset (liability)                 |  | $                      | (21,316 | ) |      | $ | (23,243 | )
|                                                   |  |                        |         |   |      |   |         |  

At September 30, 2009 and 2008 the Company has determined that a valuation allowance is not needed to
reduce deferred tax assets as the amount of future tax benefit is more likely than not to be realized.

At September 30,
2009, the Company had federal net operating loss carryforwards of approximately $7.5 million. These losses expire in various years between fiscal 2023 and fiscal 2028, and are subject to limitations on their utilization.

At September 30, 2009, the Company had charitable deduction carryforwards of approximately $238 thousand. These deductions expire in
various years between fiscal 2009 and fiscal 2012, and are subject to limitations on their utilization.

The Company
recognized no interest and penalties related to uncertain tax positions in our provision for income taxes line of our consolidated statements of operations during both fiscal 2009 and fiscal 2008.



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|13. | FAIR VALUE OF FINANCIAL INSTRUMENTS
|--- | -----------------------------------

The Company estimates the fair value of its unredeemed preferred stock to be approximately $0.8 million at September 30, 2009 based upon the redemption price of $5.241 per share. The Company
estimates that its debt and all other financial instruments have a fair value that approximates their recorded amounts, except for its nonrecourse debt associated with a rental property owned in Massachusetts. The debt, which bears interest at
12.18% and matures in 2020, has an estimated fair value of approximately $6 million greater than its carrying amount at September 30, 2009 of approximately $31.2 million. The interest rate used to discount the notes and estimate the fair value
was 7%, the same interest rate that is associated with similar nonrecourse debt of the Company.



|                  |  |                                  |           |         |   |           |  |         |   |  |   |  
|----------------- |  | -------------------------------- | --------- | ------- | - | --------- |  | ------- | - |  | - | -
|                  |  | Fair Value at September 30, 2009
|                  |  | Total                            |           | Level 1 |   | Level 2   |  | Level 3
|Assets:           |  |                                  |           |         |   |           |  |         |   |  |   |  
|Debt securities   |  | $                                | 3,471,759 |         | $ | 3,471,759 |  | $       | 0 |  | $ | 0
|Equity securities |  |                                  | 2,523,530 |         |   | 2,523,530 |  |         | 0 |  |   | 0
|                  |  |                                  |           |         |   |           |  |         |   |  |   |  
|Total             |  | $                                | 5,995,289 |         | $ | 5,995,289 |  | $       | 0 |  | $ | 0
|                  |  |                                  |           |         |   |           |  |         |   |  |   |  
|Liabilities:      |  |                                  |           |         |   |           |  |         |   |  |   |  
|None              |  | $                                | 0         |         | $ | 0         |  | $       | 0 |  | $ | 0
|                  |  |                                  |           |         |   |           |  |         |   |  |   |  



|14. | EMPLOYEE BENEFIT PLANS
|--- | ----------------------

The Company has a savings plan (the Savings Plan) for its eligible employees, which is qualified under Section 401(k) of the Internal Revenue Code. The Plan covers substantially all employees, including the Companys
executive officers. Employee contributions to the Plan are discretionary. The Plan allows eligible employees to contribute, on a pre-tax basis, up to 6% of their gross salary to the plan; the Company was obligated to match 25% of such employee
contributions made until April 30. 2009 when the Company match component was terminated. Employees may also contribute, on a pre-tax basis, up to an additional 9% of their gross salary, and, on a post-tax basis, up to an additional 10% of their
salary. Such contributions are not matched by the Company. The Companys matching contributions paid in 2009 and 2008 were $34,854 and $67,000, respectively.



|15. | RELATED PARTIES
|--- | ---------------

The Companys Chairman of the Board and CEO has personally guaranteed certain loans for which the Company has accrued a loan guarantee fee equal to 0.5% of the guaranteed loan balance per calendar quarter. The total accrued increased
to $0.3 million in fiscal year ended September 30, 2009 from $0.2 million in fiscal year ended September 30, 2008.



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The Company is subject to a Patent Rights and Royalty Agreement with the brother of the
Companys Chairman of the Board and CEO with respect to certain gaming technology for which he had been issued a patent. The Company agreed to pay certain royalty payments with respect to the technology incorporated into gaming devices placed
in operation, as well as costs related to maintain the patent. The patentholder granted the Company an exclusive five-year license that expired in January 2007 in the United States with respect to the technology, but which automatically renewed
until 2009 and will renew for an additional two-year term unless the Company terminates the agreement. The Company also has an understanding with the related party patentholder that it will pay for the costs of commercial development of the
technology. Through September 30, 2006, the Company had expended approximately $0.4 million for commercial development of the technology, and no additional costs have been expended. There were no expenditures incurred during the periods ended
September 30, 2009 and 2008. No royalties were paid to the patentholder during the periods presented.

Prior to fiscal
2004, the Company operated Dukes casino (Dukes) in Sparks, Nevada, and invested $100,000 in Dukes and loaned Dukes approximately $1.4 million. One of Dukes partners is the son of the Companys Board
Chairman and CEO. In December 2003, Dukes closed its casino operations, and the Company wrote-off its investment in and receivable from Dukes net of a previously recorded 100% allowance of approximately $1.5 million. The Company made the
determination at the time that the collateral value securing the receivable was deemed insignificant subsequent to the closure of the casino.

During an approximate two-year period ended prior to the year ended September 30, 2007, the Company expended approximately $800,000 in legal fees on behalf of Dukes in its litigation against a
contractor, although the Company was not a party to the litigation. Dukes had agreed to reimburse the Company for legal fees and other amounts owed the Company depending on potential amounts recovered, if any from the litigation. Through
September 30, 2007, the Company received approximately $1.7 million, of which $800,000 has been credited against legal expense with the balance included in operating income in the prior year. The Company has negotiated with Dukes and obtained
an assignment of all future payments under the judgment and settlement with the general contractor for the project. The general contractor had been notified of the assignment and will be making all future payments due under the settlement with
Dukes to the Company directly according to the terms of the settlement agreement. The Company received timely payments totaling $792,000 and $912,000, during the year ended September 30, 2009 and 2008, under the terms of the settlement
agreement with Dukes LLC from the general contractor responsible for the judgment.



|16. | CONTINGENCIES
|--- | -------------

As
discussed in Note 10, some holders of the Companys Exchangeable Redeemable Preferred Stock have filed various complaints against the Company asserting that the accrued and unpaid dividend portion of the redemption price had been incorrectly
calculated and the total redemption price should have been as much as $15.2 million greater than the $23.1 million set aside by the Company and are seeking a declaratory judgment and an award of damages. If the plaintiffs are correct, the redemption
price as of August 31, 2007, would have been $8.69 per share and not $5.241 per share as calculated by the Company. The Company will continue to vigorously defend these lawsuits and has both procedural and substantive defenses.

In addition, the Company is subject to various lawsuits relating to routine matters incidental to its business. Although unable to estimate
the minimum costs, if any, ultimately to be incurred in these and the foregoing matters, and accordingly no provision has been made therefore, management does not believe that the outcome of such litigation, in the aggregate, will have a material
adverse effect on the Companys future financial position, results of operations or cash flows.

The United States has
recently been experiencing a recession that has resulted in highly curtailed economic activity including, among other things, reduced casino gaming and declining real estate values, both nationwide and particularly in the Southern Nevada local
market. The effects and duration of these developments and related uncertainties on the Companys future operations and cash flows cannot be estimated at this time but may likely be significant. In addition, the Company frequently has cash and
equivalents on deposit substantially in excess of federally-insured limits, and the risk of losses related to such concentrations may be increasing as a result of recent economic developments. However, the extent of loss, if any, to be
sustained as a result of a future financial institution failure, is not subject to estimation at this time.



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|17. | SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION
|--- | ------------------------------------------------

Supplemental statement of cash flows information for the years ended September 30, 2009 and 2008 consisted of:



|                                         |  |                        |       |   |      |   |        |  
|---------------------------------------- |  | ---------------------- | ----- | - | ---- | - | ------ | -
|                                         |  | 2009                   |       |   | 2008 |  
|                                         |  | (amounts in thousands) |      
|Operating activities:                    |  |                        |       |  
|Cash paid during the period for interest |  | $                      | 7,376 |   |      | $ | 7,829  |  
|                                         |  |                        |       |   |      |   |        |  
|Non cash:                                |  |                        |       |   |      |   |        |  
|Unrealized losses on securities          |  | $                      | (107  | ) |      | $ | (7,842 | )
|                                         |  |                        |       |   |      |   |        |  
|Adjustment to redeemable preferred       |  | $                      | 13    |   |      | $ | 3,954  |  
|                                         |  |                        |       |   |      |   |        |  



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|18. | SEGMENT INFORMATION
|--- | -------------------

The Companys operations are in the hotel/casino industry and rental properties. The Companys hotel/casino operations are conducted at the Pioneer in Laughlin, Nevada. As discussed above, the Company owns rental properties in
Nevada, Massachusetts and Maryland. Other and Eliminations below includes financial information for the Companys corporate operations, adjusted to reflect eliminations upon consolidation.

Segment information for continuing operations only for the years ended September 30, 2009 and 2008 consisted of:



|                                      |  |                        |         |   |                |   |         |  
|------------------------------------- |  | ---------------------- | ------- | - | -------------- | - | ------- | -
|                                      |  | 2009                   |         |   | 2008(Restated) |  
|                                      |  | (dollars in thousands) |        
|Pioneer Hotel:                        |  |                        |         |   |                |   |         |  
|Net operating revenues                |  | $                      | 20,293  |   |                | $ | 25,371  |  
|Operating loss                        |  |                        | (6,042  | ) |                |   | (14,076 | )
|Depreciation                          |  |                        | 751     |   |                |   | 1,534   |  
|Interest expense                      |  |                        | 884     |   |                |   | 1,262   |  
|Interest and other income             |  |                        | 7       |   |                |   | 11      |  
|Loss before income taxes              |  |                        | (6,919  | ) |                |   | (14,267 | )
|Capital expenditures(2)               |  |                        | 1,311   |   |                |   | 632     |  
|Identifiable assets(1)                |  |                        | 12,318  |   |                |   | 16,104  |  
|Investment Properties:                |  |                        |         |   |                |   |         |  
|Net operating revenues                |  | $                      | 10,713  |   |                | $ | 11,138  |  
|Operating income                      |  |                        | 8,232   |   |                |   | 8,710   |  
|Depreciation                          |  |                        | 1,685   |   |                |   | 1,685   |  
|Interest expense                      |  |                        | 4,566   |   |                |   | 3,787   |  
|Interest and other income             |  |                        | 38      |   |                |   | 41      |  
|Net income before income taxes        |  |                        | 3,704   |   |                |   | 72,095  |  
|Capital expenditures(2)               |  |                        | 0       |   |                |   | 0       |  
|Identifiable assets(1)                |  |                        | 90,816  |   |                |   | 150,724 |  
|Property Held for Sale:               |  |                        |         |   |                |   |         |  
|Net operating revenues                |  | $                      | 0       |   |                | $ | 0       |  
|Operating loss                        |  |                        | 0       |   |                |   | 0       |  
|Depreciation                          |  |                        | 0       |   |                |   | 0       |  
|Interest expense                      |  |                        | 0       |   |                |   | 0       |  
|Interest and other income             |  |                        | 0       |   |                |   | 0       |  
|Discontinued operations, net of tax   |  |                        | 961     |   |                |   | 890     |  
|Capital expenditures(2)               |  |                        | 0       |   |                |   | 0       |  
|Identifiable assets(1)                |  |                        | 55,358  |   |                |   | 0       |  
|Other (Including) Eliminations:       |  |                        |         |   |                |   |         |  
|Net operating revenues                |  | $                      | 967     |   |                | $ | 1,057   |  
|Operating loss                        |  |                        | (1,962  | ) |                |   | (5,418  | )
|Depreciation                          |  |                        | 148     |   |                |   | 145     |  
|Interest expense                      |  |                        | (190    | ) |                |   | (191    | )
|Interest and other income             |  |                        | 1,128   |   |                |   | 1,373   |  
|Net income (loss) before income taxes |  |                        | (1,688  | ) |                |   | (1,665  | )
|Capital expenditures(2)               |  |                        | 15      |   |                |   | 99      |  
|Identifiable assets(1)                |  |                        | 38,492  |   |                |   | 43,479  |  
|Consolidated:                         |  |                        |         |   |                |   |         |  
|Net operating revenues                |  | $                      | 31,973  |   |                | $ | 37,784  |  
|Operating income (loss)               |  |                        | 228     |   |                |   | (10,784 | )
|Depreciation                          |  |                        | 2,584   |   |                |   | 3,364   |  
|Interest expense                      |  |                        | 5,260   |   |                |   | 4,858   |  
|Interest and other income             |  |                        | 1,173   |   |                |   | 1,428   |  
|Net income (loss) before income taxes |  |                        | (4,903  | ) |                |   | 56,162  |  
|Discontinued operations, net of tax   |  |                        | 961     |   |                |   | 890     |  
|Capital expenditures(2)               |  |                        | 1,326   |   |                |   | 731     |  
|Identifiable assets(1)                |  |                        | 196,984 |   |                |   | 210,307 |  



|(1) | Identifiable assets represent total assets less elimination for intercompany items.
|--- | -----------------------------------------------------------------------------------

|(2) | Includes acquisition of capital assets through non-cash activities.
|--- | -------------------------------------------------------------------



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|19. | SUBSEQUENT EVENTS
|--- | -----------------

The Company has evaluated subsequent events through February 4, 2010, the date which the financial statements were available to be issued and the following items are disclosed:

Form 10-K Filing

The Companys common stock is traded on the Over the Counter Bulletin Board (the OTCBB) under the symbol ARHNE. As the Company did not file its Form 10-K by the extended due date of January 13, 2010, the
Companys stock has been delisted until the time that the Form 10-K is filed with the SEC.

Line of Credit

On November 15, 2009, the Companys wholly owned subsidiary, SLVC, secured a new $15.0 million line of
credit loan granted by a Nevada bank $7.9 million of which was drawn immediately to payoff the Line of Credit outstanding at September 30, 2009 of $7.9 million as described in Note 7. The loan and promissory note, secured by deed of trust on
SLVCs approximate 27 acre parcel of land on Las Vegas Boulevard South (the Property), are for a period of one year commencing November 15, 2009, and ending November 14, 2010. The line of credit loan is revolving and is
subject to additional lending requirements. The SLVC line of credit loan is guaranteed by SLVC and the Company, as well as, personally guaranteed by Paul W. Lowden, President of SLVC, and Suzanne Lowden, Secretary/Treasurer of SLVC.

Treasury Stock

On January 8, 2010, subsequent to the end of fiscal year 2009, the Company purchased a grouping of 298,632 shares of common stock of the Company sufficient to cause it to effectively reach the maximum shares allotted to be purchased
pursuant to the Rule and Release referenced above (when combined with prior program purchases since December 2008). As a result, the Company, on January 13, 2010, announced the close of the common stock purchase program.



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|Item 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

None.



|Item 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing
and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Companys internal control over financial reporting is a process designed to provide reasonable assurance to our
management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of
the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the financial statements.

As of the end of the period covered by this report, under the supervision and with the participation of management, including
our Chief Executive Officer and Principal Accounting Officer, an evaluation of the effectiveness of the Companys internal control over financial reporting was conducted based on the framework in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, the Companys management concluded that the Companys control over financial reporting was
effective.

This annual report does not include an attestation report of the companys registered public accounting firm
regarding internal control over financial reporting. Managements report was not subject to attestation by the companys registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit
the company to provide only managements report in this annual report.

Changes in Internal Controls

As part of our normal operations, we update our internal controls as necessary to accommodate any modifications to our business processes or
accounting procedures. There have not been any significant changes in our internal controls or in other factors that materially affected, or are reasonably likely to materially affect these controls as of the end of the period covered by this
report.



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Limitations on the Effectiveness of Controls

Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. All internal control
systems, no matter how well designed, have inherent limitations, including the possibility of human error and the circumvention of overriding controls. Accordingly, even effective internal control over financial reporting can provide only reasonable
assurance with respect to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

PART III



|Item 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
|-------- | --------------------------------------------------

Directors and Executive Officers

The following is a list of the current
executive officers and directors of the Company:



|                         |  |                                                                          
|------------------------ |  | -------------------------------------------------------------------------
|Name                     |  | Position with the Company                                                
|Paul W. Lowden           |  | Chairman of the Board of Directors, President and Chief Executive Officer
|Suzanne Lowden           |  | Director, Executive Vice President, Secretary and Treasurer              
|John W. Delaney(2)       |  | Director                                                                 
|Howard E. Foster(1)      |  | Director                                                                 
|William J. Raggio(1) (2) |  | Director                                                                 
|Richard H. Taggart(1)    |  | Director                                                                 
|Grant L. Siler           |  | Principal Accounting Officer                                             



|(1) | Member of the Audit Committee of the Board of Directors of the Company.
|--- | -----------------------------------------------------------------------



|(2) | Member of the Compensation Committee of the Board of Directors of the Company.
|--- | ------------------------------------------------------------------------------

The age, present position with the Company, and principal occupation during the past five years of each director and executive officer named
above is set forth below:

Paul W. Lowden

Paul Lowden, 65, has served as President, Chairman of the Board and Chief Executive Officer of the Company since its formation in September 1993. Mr. Lowden held the same positions with the
Companys predecessor, Sahara Resorts, from 1982 through September 1993. Mr. Lowden is married to Suzanne Lowden. Mr. Lowdens term as a director of the Company expires at the annual meeting of stockholders in 2011.



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Suzanne Lowden

Suzanne Lowden, 56, has served as a director and Executive Vice President of the Company since its formation, and had served as a director of
Sahara Resorts since 1987. Mrs. Lowden was elected Vice President of Sahara Resorts in July 1992. She was also a founding board member of Commercial Bank of Nevada which was acquired by Colonial Bank in 1998. Mrs. Lowden sat on the Board
of Directors of Colonial Bank of Nevada until June 2009. Mrs. Lowden served as a Nevada State Senator from November 1992 through 1996. She worked for the CBS affiliate in Las Vegas from 1977 to 1987 as an anchorwoman and reporter.
Mrs. Lowden serves on the Board of Directors of the Muscular Dystrophy Association and has been elected as the chairman of the finance committee and treasurer. Mrs. Lowden served as chairman of the Nevada Republican party. Mrs. Lowden
and Director Paul W. Lowden have been married for 26 years. Mrs. Lowdens term as a director of the Company expires at the annual meeting of stockholders in 2010.

John W. Delaney

John W. Delaney, 61, has served as a
director of the Company since January 1997. Mr. Delaney is currently president and chief executive officer of Central Banc Corporation., a mortgage banking firm, located in Bellevue, Washington where he has been employed since 1978.
Mr. Delaneys term as a director of the Company expires at the annual meeting of stockholders in 2012.

Howard E.
Foster

Howard E. Foster, 65, has served as a director of the Company elected by holders of the Companys
Preferred Stock since May 2000. Since 1980, Mr. Foster has been the President of Howard Foster and Company, an investment advisor firm located in San Rafael, California and specializing in small capitalization stocks, turnaround situations and
financially distressed companies. Prior to that time, Mr. Foster served as Chief Financial Officer of two publicly-held companies, Associated Products and Bio-Rad Laboratories, and previously worked in the audit, tax and management consulting
divisions of Arthur Andersen & Co. Mr. Foster has served on the Boards of Directors of Bio-Rad Laboratories, Barringer Technologies and Nevada National Bancorporation, where he served as a director elected by preferred stockholders of
Nevada National Bancorporation. Mr. Fosters term as a special director of the Company was scheduled to expire at the Annual Meeting of stockholders in 2009, or, if earlier, the date on which the Preferred Stock interest is no longer
represented on the Board. The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, thereupon terminating the terms of the special directors. On November 12, 2007,
Mr. Foster was appointed as a Director of the Company with a term that expires at the Annual Meeting of stockholders in 2012.

The Board of Directors of the Company considers Mr. Foster to be an independent financial expert within the meaning of Item 401 (h) (2) of Regulation S-K, which generally means the Company believes Mr. Foster has an
understanding of generally accepted accounting principles; the ability to assess the general application of such principles; experience preparing, auditing, analyzing, or evaluating financial statements similar to the Companys; an
understanding of internal control over financial reporting; and an understanding of audit committee functions.

William J.
Raggio

William J. Raggio, 82, has served as a director, Vice President, Secretary and Corporate Counsel of the
Company since its formation in September 1993 until May 1999. Mr. Raggio held the same position with Sahara Resorts from 1982 until September 1993. Mr. Raggio resigned his position on the Board of Directors of the Company and certain of
its subsidiaries in May 1999 due to a potential conflict caused by his position on the board of another gaming company, a position that Mr. Raggio no longer holds. Mr. Raggio was reappointed to the Board of Directors of the Company in
December 2000. Mr. Raggio is a shareholder and member of the law firm Jones Vargas of Reno, Nevada. Since 1972 he has been a Nevada State Senator. Mr. Raggio was a director of Sierra Health Services, Inc., a Nevada corporation until May
2006. Mr. Raggios term as a director of the Company expires at the annual meeting of stockholders in 2011.



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Richard H. Taggart

Richard H. Taggart, 67, has served as a director of the Company elected by holders of the Companys Preferred Stock since May 2006 when
he was appointed by the Board of Directors to fill a resignation. Over a twenty-six year career, Mr. Taggart held various positions, such as, senior executive vice president, subsidiary president and board and executive committee member at
Valley Bank and its parent, Valley Capital Corporation, where he retired from banking in 1992. He served on the Boards of Colonial Bank of Nevada until June 2009, and the Las Vegas Country Club. He also serves on the Boulder Dam Council of the Boy
Scouts of America Advisory Committee. Mr. Taggarts term as a special director of the Company was scheduled to expire at the Annual Meeting of stockholders in 2010, or, if earlier, the date on which the Preferred Stock interest is no
longer represented on the Board. The Company called all outstanding shares of its Exchangeable Redeemable Preferred Stock for redemption on and as of August 31, 2007, thereupon terminating the terms of the special directors. On
November 12, 2007, Mr. Taggart was appointed as a director of the Company with a term that expires at the Annual Meeting of stockholders in 2010.

Grant L. Siler

Grant L. Siler, 56, has served as Principal
Accounting Officer of the Company since July 2007. Prior to being appointed as Principal Accounting Officer, Mr. Siler served as Controller of the Pioneer Hotel & Gambling Hall from May 2001 to July 2007. Prior to joining the Company,
Mr. Siler served as Controller of the Flamingo Hilton Laughlin from August 1993 to May 2001.

Section 16(a)
Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Companys executive officers and directors, and persons who own more than 10.0% of a registered class of the Companys equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange
Commission. People who are subject to the reporting obligations of Section 16(a) are required by SEC regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a).

Based solely on our review of the copies of the reports we received and written representations from the Companys executive officers,
directors and holders of 10% of the common stock, the Company believes that, during fiscal year 2009 there were no forms filed late with the SEC.

Code of Ethics

Pursuant to Item 406 of Regulation S-K, the Company
adopted a Code of Ethics governing the behavior of the Companys principal executive and senior financial officers.



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|Item 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The Company has three named executive officers, Mr. Paul W. Lowden, President, CEO, and Chairman of the Board; Ms. Suzanne Lowden, Executive Vice President, Secretary and Treasurer; and Mr. Grant Siler, Principal
Accounting Officer. The compensation committee of the Board approved Mr. Lowdens compensation package for the fiscal year ended 2009 which provided for an annual base salary of $550,000. Additionally, in recognition of
Mr. Lowdens efforts, the compensation committee approved a bonus in the amount of $200,000 payable in bi-weekly installments throughout fiscal year 2007-2008. There were no other executive officers serving as such at the end of the
Companys fiscal year ended September 30, 2009 that earned a total annual base salary and bonus in excess of $100,000 during the fiscal year ended September 30, 2009, other than those named.

Summary Compensation Table



|                                                  |  |      |  |           |         |          |   |                |  |                 |   |                                      |   |                                                                        |  |                              |   |          |   |       |  |   |        |  |   |        
|------------------------------------------------- |  | ---- |  | --------- | ------- | -------- | - | -------------- |  | --------------- | - | ------------------------------------ | - | ---------------------------------------------------------------------- |  | ---------------------------- | - | -------- | - | ----- |  | - | ------ |  | - | -------
|Name and Principal Position                       |  | Year |  | Salary($) |         | Bonus($) |   | StockAwards($) |  | OptionAwards($) |   | Non-EquityIncentivePlanCompen-sation |   | Change InPensionValueandNonqualifiedDeferredCompen-sationEarnings($(2) |  | All OtherCompen-sation($)(3) |   | Total($)
|Paul W. Lowden,(1)                                |  | 2009 |  | $         | 550,000 |          | $ | 200,000        |  | $               | 0 |                                      | $ | 0                                                                      |  | $                            | 0 |          | $ | 1,947 |  | $ | 32,896 |  | $ | 784,843
|President, CEO and Chairman of the Board          |  | 2008 |  |           | 550,000 |          | $ | 200,000        |  | $               | 0 |                                      | $ | 0                                                                      |  | $                            | 0 |          | $ | 3,875 |  | $ | 39,380 |  | $ | 793,255
|Suzanne Lowden                                    |  | 2009 |  |           | 138,000 |          |   | 0              |  |                 | 0 |                                      |   | 0                                                                      |  |                              | 0 |          |   | 358   |  |   | 6,472  |  |   | 144,830
|Executive Vice President, Secretary and Treasurer |  | 2008 |  |           | 136,182 |          |   | 6,797          |  |                 | 0 |                                      |   | 0                                                                      |  |                              | 0 |          |   | 985   |  |   | 9,642  |  |   | 153,606
|Grant L. Siler                                    |  | 2009 |  |           | 113,840 |          |   | 0              |  |                 | 0 |                                      |   | 0                                                                      |  |                              | 0 |          |   | 582   |  |   | 258    |  |   | 114,680
|Principal Financial Officer                       |  | 2008 |  |           | 113,357 |          |   | 3,203          |  |                 | 0 |                                      |   | 0                                                                      |  |                              | 0 |          |   | 1,652 |  |   | 258    |  |   | 118,470



|(1) | See Compensation Arrangements with Mr. Lowden. Compensation for Mr. Lowden in 2009 includes annual base salary of
$550,000 and bonus of $200,000.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Matching contributions made by the Company to the Retirement Savings 401(k) Plan.
|--- | ---------------------------------------------------------------------------------



|(3) | Please see the table below, All Other Compensation Table.
|--- | -----------------------------------------------------------



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All Other Compensation Table



|                                                  |  |      |  |                       |       |                   |   |                       |  |                                |   |                      |   |          |  |   |       |  |   |       
|------------------------------------------------- |  | ---- |  | --------------------- | ----- | ----------------- | - | --------------------- |  | ------------------------------ | - | -------------------- | - | -------- |  | - | ----- |  | - | ------
|Name and Principal Position                       |  | Year |  | LifeInsurancePremiums |       | AutoReimbursement |   | GasolineReimbursement |  | HouseholdServicesReimbursement |   | MedicalReimbursement |   | Total($)
|Paul W. Lowden,                                   |  | 2009 |  | $                     | 8,868 |                   | $ | 6,954                 |  | $                              | 0 |                      | $ | 11,165   |  | $ | 5,909 |  | $ | 32,896
|President, CEO and Chairman of the Board          |  | 2008 |  |                       | 7,404 |                   | $ | 8,034                 |  | $                              | 0 |                      | $ | 21,577   |  | $ | 2,365 |  | $ | 39,380
|Suzanne Lowden                                    |  | 2009 |  |                       | 258   |                   |   | 4,123                 |  |                                | 0 |                      |   | 0        |  |   | 2,091 |  |   | 6,472 
|Executive Vice President, Secretary and Treasurer |  | 2008 |  |                       | 258   |                   |   | 5,702                 |  |                                | 0 |                      |   | 0        |  |   | 3,682 |  |   | 9,642 
|Grant L. Siler                                    |  | 2009 |  |                       | 258   |                   |   | 0                     |  |                                | 0 |                      |   | 0        |  |   | 0     |  |   | 258   
|Principal Financial Officer                       |  | 2008 |  |                       | 258   |                   |   | 0                     |  |                                | 0 |                      |   | 0        |  |   | 0     |  |   | 258   

2008-2007 Grants of
Plan-Based Awards Table



|                                                  |  |              |  |                                                               |  |                                                           |  |                                                      |  |                                                              |  |                                        |  |                                             |  |         |  |  |  |   |       |  |         
|------------------------------------------------- |  | ------------ |  | ------------------------------------------------------------- |  | --------------------------------------------------------- |  | ---------------------------------------------------- |  | ------------------------------------------------------------ |  | -------------------------------------- |  | ------------------------------------------- |  | ------- |  |  |  | - | ----- |  | --------
|Name                                              |  | GrantDate    |  | Estimated Future PayoutsUnder
Non-EquityIncentive Plan Awards |  | Estimated Future PayoutsUnder
EquityIncentive Plan Awards |  | AllOtherStockAwards:NumberofSharesofStockorUnits (#) |  | AllOtherOptionAwards:NumberofSecuritiesUnderlyingOptions (#) |  | Exerciseor BasePriceOptionAwards($/Sh) |  | GrantDateforFairValueofStockAndOptionAwards
|                                                  |  | Threshold($) |  | Target($)                                                     |  | Max.($)                                                   |  | Threshold(#)                                         |  | Target(#)                                                    |  | Max.(#)                                |  |                                             |  |        
|Paul W. Lowden,                                   |  | 2009         |  |                                                               |  |                                                           |  |                                                      |  |                                                              |  |                                        |  |                                             |  | 0       |  |  |  | $ |       |  |         
|President, CEO and Chairman of the Board          |  | 2008         |  |                                                               |  |                                                           |  |                                                      |  |                                                              |  |                                        |  |                                             |  | 375,000 |  |  |  |   | 33.25 |  | 03/17/08
|Suzanne Lowden                                    |  | 2009         |  |                                                               |  |                                                           |  |                                                      |  |                                                              |  |                                        |  |                                             |  | 0       |  |  |  |   |       |  |         
|Executive Vice President, Secretary and Treasurer |  | 2008         |  |                                                               |  |                                                           |  |                                                      |  |                                                              |  |                                        |  |                                             |  | 15,000  |  |  |  |   | 33.25 |  | 03/17/08
|Grant L. Siler                                    |  | 2009         |  |                                                               |  |                                                           |  |                                                      |  |                                                              |  |                                        |  |                                             |  | 0       |  |  |  |   |       |  |         
|Principal Financial Officer                       |  | 2008         |  |                                                               |  |                                                           |  |                                                      |  |                                                              |  |                                        |  |                                             |  | 1,500   |  |  |  |   | 32.00 |  | 09/17/08

Compensation Arrangements with
Mr. Lowden (President, Chairman of the Board and CEO)

The Compensation Committee of the Company approved
Mr. Lowdens compensation package for fiscal year 2009, which provided for an annual base salary of $550,000 (the same base salary paid to Mr. Lowden in 2008). Additionally, in recognition of Mr. Lowdens important efforts
to the Company, and his extra service to the Company in directly guarantying the obligations of the Company to its lending bank, the Compensation Committee approved an annual incentive (bonus) to Mr. Lowden in the amount of $200,000 in 2009
(the same incentive bonus paid in 2008). To further assist the Company, and to maintain good cash flow, this incentive bonus is payable to Mr. Lowden in bi-weekly installments throughout fiscal year 2010. In addition the Company has accrued a
loan guarantee fee equal to 0.5% of the guaranteed loan balances per calendar quarter. The amount accrued is $48,708 and $46,720 in fiscal years 2009 and 2008.



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What are the Objectives of the Companys Compensation Program?The
Compensation Program at the Company is designed to facilitate long term and stable management. The Company has diverse activities ranging from gaming to property ownership and the range of expertise necessary for its proper operation is not easily
located. Mr. Lowden is knowledgeable about the current activities of the Company and the future opportunities the Company may be presented in the near, mid and long-term. As the only compensated executive-level manager of the Company, and in
addition as its majority shareholder, the Compensation Program is primarily directed towards insuring that Mr. Lowden is reasonably compensated for his services.

What is the Compensation Program Designed to Award?The Compensation Program recognizes a number of factors as an indicator of the propriety of base salary and as a basis for determining
reasonable incentives. Those factors include: (a) the cost associated with locating suitable and experienced replacement executive management, including the cost of additional benefits; (b) the cost of locating experienced outsourcing for
certain tasks associated with the duties now performed; (c) periodic results associated with the management of Companys assets and the success of executive management in the creation of long term shareholder value; (d) difficulties
in the industry and the economy as a whole leading to the necessary devolution of extraordinary effort and time and, (e) the degree of personal risk experienced by the executive manager in the Company. This final criteria takes into account the
fact that Mr. Lowden has been asked to personally guaranty the obligations of the Company (which is an unusual aspect of such an executive officers duties) and, therefore, creates opportunities for reduced rates of interest on borrowings
as the loans are thereby risk-rated at more favorable levels. This last criteria exposes Mr. Lowden to risk not normally faced by similar executives.

What are Each of the Elements of the Companys Compensation Program? As presently configured, the Compensation Program for the Company has three primary elements: First, and primarily,
to establish a base rate of salary for its primary executive officer, Mr. Lowden. Second, to establish an annual incentive, if any, to be paid to its primary executive officer, Mr. Lowden. And, third, to issue on a periodic basis, those
certain stock option grants, if any, to directors, officers and/or employees according to the plan(s) previously approved by the shareholders of the Company and still in effect.

The Company favors current compensation over deferred compensation arrangements. In addition, the Company favors cash over non-cash
compensation.

Which Elements was Mr. Lowden Eligible to Receive in Each of the Years in the Summary Compensation
Table? Who Determines Compensation?Mr. Lowden has received all three elements of compensation in previous years. In 2008 and 2007, however, he received only a base salary and an annual incentive (bonus). Mr. Lowdens base
salary and incentives have remained constant in each of those years and have not been increased. Mr. Lowden received 375,000 stock options in 2008, which constitutes the third element of his compensation, but none were granted in 2007.
Mr. Lowdens compensation reflected his experience, effort and performance. Mr. Lowden played an important role in the option transaction referenced above and the Board felt that his salary and incentives were well within the range of
executive managers with such major financial obligations to monitor and process. The decision as to Mr. Lowdens compensation (as to all three elements) is addressed and determined entirely by the Board of Directors after Mr. Lowden
first recuses himself from that decision.

Compensation of Directors

Directors who are not employees of the Company or its affiliates receive $24,000 annually and $1,000 per board meeting attended, $800 per
committee meeting attended as a member and $900 per committee meeting attended as Chairman.

The Company requires all members
of the Board of Directors to comply with all Company policies prior to attending a newly elected directors first meeting of the Board of Directors. These requirements include filing a gaming application with the Nevada Gaming Authorities and
executing a confidentiality agreement, as well as compliance and disclosure statements. Until such time as an elected individual has complied with these requirements, he or she is not entitled to the benefits of the directorship position, including
any director fees or stock option awards that would otherwise be paid or granted.



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Compensation Plans

Stock Option Plan

The Companys Stock Option Plan provided for
the grant of options up to an aggregate of 1,489,070 shares of its common stock to key employees as determined by the Compensation Committee. The Stock Option Plan provided for both incentive stock options and non-qualified stock options. The
Company ceased granting options under the Stock Option Plan as of September 30, 2003 as the plan had expired in 2002. However, the shareholders, in July 2005, approved amending the plan whereby the plan was extended until 2012 As of
September 30, 2009, there were approximately 692,000 options outstanding under the Stock Option Plan and approximately 434,000 options which are available for issuance under the Stock Option Plan.

1998 Subsidiary Stock Option Plans

The Company and certain of its subsidiaries, SFHI, Inc., Sahara Las Vegas Corp., and Pioneer Hotel Inc., have adopted Subsidiary Plans. The Subsidiary Plans provide for the grant of options by each of the
Subsidiaries with respect to an aggregate of up to 10% of the outstanding shares of such Subsidiarys common stock to employees, non-employee directors, consultants or affiliates of the Company or the Subsidiaries. The purpose of the Subsidiary
Plans is to enable the Subsidiaries, the Company and any subsidiaries of the Company or Subsidiaries to attract, retain and motivate their employees, non-employee directors, consultants and affiliates by providing for or increasing the proprietary
interest of such persons in the Subsidiaries. Certain of the agreements under which the Companys long-term debt is issued provide that if the Company ceases to own, directly or indirectly, 100% of the outstanding capital stock of specified
Subsidiaries, an event of default will occur or an offer to repurchase the debt must be made. As a result, the Subsidiary Plans provide that options granted under the Subsidiary Plans may not be exercised if the exercise would result in a default,
or require an offer to repurchase the outstanding debt, under any agreement with respect to long-term debt of the Company or any of its Subsidiaries. As of September 30, 2009, no options had been granted under any Subsidiary Plans.

Savings Plan

The
Company has adopted a savings plan qualified under Section 401(k) of the Code (the Savings Plan). The Savings Plan covers substantially all employees, including the Companys executive officers. Employee contributions to the
Savings Plan are discretionary. The Savings Plan allows eligible employees to contribute, on a pre-tax basis, up to 6% of their gross salary to the plan; the Company matched 25% of such employee contributions made until April 1, 2009 when the
company match component was terminated. Employees may also contribute, on a pre-tax basis, up to an additional 9% of their gross salary, and, on a post-tax basis, up to an additional 10% of their salary. Such contributions are not matched by the
Company. The matching expense in fiscal 2009 was approximately $34,854 of which approximately $1,947 and $1,671 were contributed by the Company to the account of Mr. Lowden and all other executive officers as a group, respectively, as matches
for employee contributions made.

Compensation Committee Interlocks and Insider Participation

The members of the compensation committee, John W. Delaney and William J. Raggio, are non-employee directors. Mr. Delaney has never been
an officer of the Company or of any of its subsidiaries. Mr. Delaney is the president of Central Banc Mortgage Corporation, a mortgage banking company of which Paul W. Lowden is a director and sole stockholder. During fiscal 2001 through fiscal
2003, the Company purchased from J & J Mortgage an aggregate of $0.7 million of commercial and residential loans originally funded by Central Banc Mortgage Corporation to unaffiliated third parties. See Item 13, Certain Relationships
and Related Transactions.



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William J. Raggio, who from 1982 to 1999 served as Vice-President, Secretary and General
Counsel of the Company and its predecessors, is a shareholder and a member of the law firm of Jones Vargas. During fiscal years 2008 and 2007, the Company retained Jones Vargas to advise the Company regarding various legal matters, and the Company
continues to engage Jones Vargas for legal representation.



|Item 12 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|------- | --------------------------------------------------------------

The following sets forth information regarding beneficial ownership of the common stock of the Company, as of February 2, 2010, by (i) each person known to be the beneficial owner of more than
5% of the outstanding common stock; (ii) each director of the Company; and (iii) all directors and officers of the Company as a group.



|                                                  |  |                      |     |  |         |  
|------------------------------------------------- |  | -------------------- | --- |  | ------- | -
|Named Beneficial Owner                            |  | Shares ofCommonStock |     |  | Percent |  
|Paul W. Lowden(1)                                 |  | 5,000,634            | (2) |  | 78.2    | %
|Suzanne Lowden                                    |  | 15,271               | (3) |  | *       |  
|John W. Delaney                                   |  | 28,750               | (3) |  | *       |  
|Howard Foster                                     |  | 15,300               | (4) |  | *       |  
|William J. Raggio                                 |  | 32,972               | (3) |  | *       |  
|Richard H. Taggart                                |  | 11,700               | (5) |  | *       |  
|Grant L. Siler                                    |  | 1,500                | (6) |  | *       |  
|All Directors and Officers as a group (7 persons) |  | 5,106,127            |     |  | 80.0    | %



|* | Less than 1.0%
|- | --------------



|(1) | The address for Paul W. Lowden is c/o Archon Corporation, 4336 Losee Road, Suite 5, North Las Vegas, Nevada 89030. The shares owned by each person, or
by the group, and the shares included in the total number of shares outstanding have been adjusted, and the percentage owned (where such percentage exceeds 1%) has been computed, in accordance with Rule 13d-3(d)(1) under the Securities Exchange Act
of 1934.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes 1,737,470 shares held by LICO, which is wholly owned by Mr. Lowden and 375,000 shares that may be acquired upon the exercise of
outstanding stock options.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Includes 15,000 shares that may be acquired upon the exercise of outstanding stock options.
|--- | -------------------------------------------------------------------------------------------



|(4) | Includes 5,300 shares owned directly or beneficially by Mr. Foster and 10,000 shares that may be acquired upon the exercise of outstanding stock
options.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Includes 10,000 shares that may be acquired upon the exercise of outstanding stock options.
|--- | -------------------------------------------------------------------------------------------



|(6) | Includes 1,500 shares that may be acquired upon the exercise of outstanding stock options.
|--- | ------------------------------------------------------------------------------------------



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|Item 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

The Company, through its Board of Directors and Committees, believes that the relationships noted below do not adversely impact the Company and the events mentioned below are on terms at least as
favorable to the Company as would have been obtained from an unrelated third party.

Paul W. Lowden and Suzanne Lowden have
been married to one another for 26 years.

The Company has entered into a Patent Rights and Royalty Agreement with David
Lowden, the brother of Paul W. Lowden, with respect to certain gaming technology for which David Lowden has been issued a patent. The Company has agreed to pay certain royalty payments with respect to the technology incorporated into gaming devices
placed in operation, as well as costs related to maintain the patent. David Lowden granted the Company an exclusive five-year license which initially expired in January 2007 in the United States with respect to the technology, which automatically
renews for additional two-year terms unless the Company terminates the agreement within thirty days prior to the renewal or the agreement is otherwise earlier terminated in accordance with its terms. The license automatically renewed for an
additional two-year period now expiring in January 2009. The Company also has an understanding with David Lowden that it will pay for the costs of commercial development of the technology. As of September 30, 2008, the Company had expended
approximately $0.4 million for commercial development of the technology. No costs were expensed in fiscal years 2009 and 2008.

During fiscal years 2001 through 2003, the Company purchased an aggregate of $0.7 million of commercial and residential loans originally funded by Central Banc Mortgage Corporation to unaffiliated third parties. The loans were purchased by
the Company for the principal amount, plus accrued interest, if any. Central Banc Mortgage Corporation is owned by LICO, which in turn is owned by Paul W. Lowden. John W. Delaney is the president of Central Banc Mortgage Corporation. At
September 30, 2009, the Company was owed approximately $24,112 from Central Banc Mortgage Corporation related to these transactions.

William J. Raggio, a director of the Company, is a shareholder and member of the law firm of Jones Vargas. During fiscal years 2009 and 2008, the Company retained Jones Vargas to advise the Company
regarding various legal matters, and the Company continues to engage Jones Vargas for legal representation. The primary contact for legal work is Alan Rabkin, Esq., a member of the firm. During fiscal year ended September 30, 2009 the Company
made payments to the Law Firm of Jones Vargas in the amount of approximately $0.2 million.

See Executive Compensation
 Compensation Arrangements with Mr. Lowden for information regarding certain bonus arrangements for Mr. Lowden and obligations of LICO, a company wholly-owned by Mr. Lowden, owed to the Company.

Mr. Lowden has personally guaranteed certain loans for which the Company has accrued a loan guarantee fee equal to 0.5% of the
guaranteed loan balance per calendar quarter.



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|Item 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The following fees were incurred with DeJoya Griffith and Company, LLC and Piercy Bowler Taylor & Kern for services provided to the Company relative to the fiscal years ended September 30,
2009 and 2008:



|                   |  |      |         |      |   |        
|------------------ |  | ---- | ------- | ---- | - | -------
|                   |  | 2009 |         | 2008
|Audit Fees:        |  | $    | 170,755 |      | $ | 228,478
|Audit Related Fees |  |      | 18,000  |      |   | 27,479 
|Tax Fees           |  |      | 0       |      |   | 0      

Audit fees are the
aggregate fees incurred for professional services rendered in connection with the engagements to audit the Companys annual financial statements for the fiscal years ended September 30, 2009 and 2008 including the reviews of the
Companys interim financial statements included in its quarterly reports on Form 10-Q for those fiscal years.

Audit
related fees billed are for professional services rendered in connection with the audit of the Companys 401(k) retirement plan relative to the calendar years 2008 and 2007, which ended during the Companys fiscal years ended
September 30, 2009 and 2008.

In the fiscal years ended September 30, 2009 and 2008, no fees were incurred with De
Joya Griffith and Company, LLC and Piercy Bowler Taylor & Kern pursuant to the de minimums exception to the pre-approval policy permitted under the Securities and Exchange Act of 1934, as amended.

PART IV



|Item 15. | EXHIBITS
|-------- | --------



|(a) | 1. and 2. Financial Statements and Schedules
|--- | --------------------------------------------

The financial statements filed as part of this report are listed in the Index to Consolidated Financial Statements under Item 8.



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|(b) | Exhibits
|--- | --------

The following are
filed as Exhibits to this Annual Report on Form 10-K:



|              |  |                                                                                                                                                                                                                                                                   
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                            
|              | 
|3.1           |  | Articles of Incorporation and Bylaws of the Company (Previously filed with the Securities and Exchange Commission as an exhibit to the Companys S-4 (No. 33-67864) Registration
Statement on Form 10-K dated June 15, 1982 and incorporated herein by reference.)
|              | 
|3.2           |  | Certificate of Designation for Exchangeable Redeemable Preferred Stock. (Previously filed with the Securities and Exchange Commission as an exhibit to the Companys
Registration Statement on Form S-4 (No. 33-67864) and incorporated herein by reference.)     
|              | 
|3.3           |  | Amended and Restated By-laws of Santa Fe Gaming Corporation. (12)                                                                                                                                                                                                 
|              | 
|10.1          |  | Notes secured by liens on office building in Las Vegas, Nevada in the original principal amounts of $301,598.05, $23,337.96 and $649,063.99 bearing interest at 10%, 11% and 131/2% per annum, respectively. (1)                                                  
|              | 
|10.2          |  | Key Employee Stock Option Plan. (2)                                                                                                                                                                                                                               
|              | 
|10.3          |  | Lease Modification Letter dated August 24, 1995 by and between Wet N Wild Nevada, Inc. and Sahara Corporation. (3)                                                                                                                                               
|              | 
|10.4          |  | Management Agreement by and between Pioneer Hotel and Santa Fe Gaming Corporation dated as of December 30, 1998. (5)                                                                                                                                              
|              | 
|10.5          |  | Right of First Refusal dated November 15, 1999 by and among Station Casinos, Inc., SFGC and SFHI. (6)                                                                                                                                                             
|              | 
|10.6          |  | Non-Competition Agreement dated November 15, 1999 by and among Station Casinos, Inc., SFHI, SLVC, and SFGC. (6)                                                                                                                                                   
|              | 
|10.7          |  | First Amendment to Non-Competition Agreement dated November 16, 1999 by and among Station Casinos, Inc., SFHI, SLVC, and SFGC. (6)                                                                                                                                
|              | 
|10.8          |  | Shareholders Agreement dated as of June 12, 2000 among Station Casino, Inc., Paul W. Lowden, David G. Lowden and Christopher W. Lowden. (7)                                                                                                                       
|              | 
|10.9          |  | Lease Agreement between HAHF Pioneer, LLC as landlord and Pioneer Hotel Inc., as tenant dated December 29, 2000. (9)                                                                                                                                              
|              | 
|10.10         |  | Exchange Agreement among Pioneer LLC, as transferor; Pioneer Hotel Inc., as tenant; HAHF Pioneer LLC as transferee and Heller Affordable House of Florida, Inc., dated
December 29, 2000. (9)                                                                     
|              | 
|10.11         |  | Purchase Contract by and between David Bralove, as trustee of the Gaithersburg Realty Trust and Santa Fe Hotel, Inc. dated February 28, 2001. (10)                                                                                                                
|              | 
|10.12         |  | Promissory Note dated February 28, 2001 by and between SFHI, LLC and Lehman Brothers Holdings Inc., d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc.
(10)                                                                                        
|              | 
|10.13         |  | Deed of Trust and Security Agreement dated February 28, 2001 by and between SFHI, LLC and Lehman Brothers Holdings Inc., d/b/a Lehman Capital, a division of Lehman Brothers
Holdings Inc. (10)                                                                   
|              | 
|10.14         |  | 75 Lease Agreement by and between REII-Gaithersburg, Maryland, L.L.C. and GE Information Services, Inc. dated January 29, 1999. (10)                                                                                                                              
|              | 
|10.15         |  | Assignment of Lease and Rents dated February 28, 2001 by and between Gaithersburg Realty Trust and SFHI, LLC. (10)                                                                                                                                                
|              | 
|10.16         |  | Contract dated December 8, 2000 by and between S-BNK#2 Investors, L.P. and Santa Fe Hotel Inc. (10)                                                                                                                                                               



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|              |  |                                                                                                                                                                                                                                                                    
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                             
|              | 
|10.17         |  | First Amendment dated December 26, 2000 to Contract dated December 8, 2000 by and between S-BNK#2 Investors, L.P. and Santa Fe Hotel Inc. (10)                                                                                                                     
|              | 
|10.18         |  | Nonrecourse Note S-BNK Dorchester Operations, LLC 10.20% A-1 Note due June 30, 2005. (10)                                                                                                                                                                          
|              | 
|10.19         |  | Nonrecourse Note S-BNK Dorchester Operations, LLC 12.18% A-2 Note due June 30, 2020. (10)                                                                                                                                                                          
|              | 
|10.20         |  | Mortgage, Open-End Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing financing Statement dated as of June 30, 2000 between S-BNK Dorchester
Operations, LLC. and First Security Bank, National Association as Indenture Trustee. (10)
|              | 
|10.21         |  | Lease Agreement dated June 30, 2000 by and between S-BNK Dorchester Operations, LLC and Sovereign Bank. (10)                                                                                                                                                       
|              | 
|10.22         |  | Indenture dated as of June 30, 2000 between S-BNK Dorchester Operations, LLC. and First Security Bank, National Association as Indenture Trustee. (10)                                                                                                             
|              | 
|10.23         |  | Patent Rights Royalty Agreement dated as of January 2, 2002 between Archon Corporation and David G. Lowden. (11)                                                                                                                                                   
|              | 
|10.24         |  | Subordinated Loan Agreement dated October 8, 2002 between Archon Corporation and Dukes-Sparks, LLC. (13)                                                                                                                                                          
|              | 
|10.25         |  | Lease dated October 4, 2002 between Archon Corporation and Dukes Casino. (13)                                                                                                                                                                                     
|              | 
|10.26         |  | Option Agreement dated October 8, 2002 between Endeavors North LLC and Archon Corporation. (13)                                                                                                                                                                    
|              | 
|10.27         |  | Loan Agreement dated December 15, 2003 between Colonial Bank, Archon Corporation and Sahara Las Vegas Corp. (14)                                                                                                                                                   
|              | 
|10.28         |  | Security Agreement and Second Deed of Trust Dated October 8, 2002 (15)                                                                                                                                                                                             
|              | 
|10.29         |  | Demand Note dated February 6, 2003 in favor of Archon Corporation. (16)                                                                                                                                                                                            
|              | 
|10.30         |  | Corporate Resolution to Guarantee Dated November 15, 2009*                                                                                                                                                                                                         
|              | 
|21            |  | Subsidiaries of Archon Corporation (17)                                                                                                                                                                                                                            
|              | 
|23.1          |  | Consent of De Joya Griffith & Company LLC*                                                                                                                                                                                                                         
|              | 
|23.2          |  | Consent of Piercy Bowler Taylor & Kern*                                                                                                                                                                                                                            
|              | 
|31.1          |  | Certification of Paul W. Lowden, Principal Executive Officer, pursuant to Rule 13a- 15(e) or 15d-15(e) of the Securities and Exchange Act of 1934, as adopted pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.*                                          
|              | 
|31.2          |  | Certification of Grant L. Siler, Principal Accounting Officer, pursuant to Rule 13a- 15(e) or 15d-15(e) of the Securities and Exchange Act of 1934, as adopted pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.*                                         
|              | 
|32.0          |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                   



|* | Filed concurrently herewith.
|- | ----------------------------



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##### Table of Contents

FOOTNOTES TO EXHIBITS



|(1) | Previously filed with the Securities and Exchange Commission as an exhibit to the Registration Statement on Form S-1 (No. 33-13214) of Sahara Casino Partners, L.P. and
incorporated herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Previously filed with the Securities and Exchange Commission as an exhibit to Sahara Gaming Corporations Annual Report on Form 10-K for the year ended
September 30, 1993 and incorporated herein by reference.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Previously filed with the Securities and Exchange Commission as an exhibit to Sahara Gaming Corporations Report on Form 10-K for the year ended September 30,
1995 and incorporated herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 10-Q for the quarter ended
March 30, 1999 and incorporated herein by reference.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 10-Q for the quarter ended June 30,
1999 and incorporated herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 8-K dated November 15, 1999 and
incorporated herein by reference.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 10-Q for the quarter ended June 30,
2000 and incorporated herein by reference.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(8) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 8-K dated June 12, 2000 and
incorporated herein by reference.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | Previously filed with the Securities and Exchange Commission as an exhibit to Santa Fe Gaming Corporations Report on Form 8-K dated December 29, 2000 and
incorporated herein by reference.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(10) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q for the quarter ended March 31, 2001
and incorporated herein by reference.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(11) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q for the quarter ended June 30, 2002 and
incorporated herein by reference.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(12) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q dated August 20, 2003 and incorporated
herein by reference.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(13) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-K dated December 30, 2002 and
incorporated herein by reference.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(14) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 8-K dated January 13, 2004 and incorporated
herein by reference.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(15) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q dated August 20, 2003 and incorporated
herein by reference.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(16) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-Q dated February 14, 2003 and
incorporated herein by reference.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(17) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Report on Form 10-K/A (Amendment No. 1) dated
January 23, 2004 and incorporated herein by reference.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(18) | Previously filed with the Securities and Exchange Commission as an exhibit to Archon Corporations Proxy Statement on Schedule 14A dated May 7, 2004 and
incorporated herein by reference.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.



|                  |  |  |  |                    |  |                                                                                 
|----------------- |  |  |  | ------------------ |  | --------------------------------------------------------------------------------
|                  |  |  |  | ARCHON CORPORATION
|                  |  |  | 
|February 22, 2010 |  |  |  | By:                |  | /s/ Paul W. Lowden                                                              
|(Date Signed)     |  |  |  |                    |  | Paul W. Lowden, Chairman of The Board, President and Principal Executive Officer

Pursuant to the requirements of 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 date indicated.



|                                          |  |                                                                  |  |                  
|----------------------------------------- |  | ---------------------------------------------------------------- |  | -----------------
|Signature                                 |  | Title                                                            |  | Date             
|                                          |  |                                                                 
|/s/ Paul W. Lowden Paul W. Lowden         |  | Chairman of the Board , Presidentand Principal Executive Officer |  | February 22, 2010
|                                          |  |                                                                 
|/s/ John Delaney John Delaney             |  | Director                                                         |  | February 22, 2010
|                                          |  |                                                                 
|/s/ Suzanne Lowden Suzanne Lowden         |  | Director                                                         |  | February 22, 2010
|                                          |  |                                                                 
|/s/ William J. Raggio William J. Raggio   |  | Director                                                         |  | February 22, 2010
|                                          |  |                                                                 
|/s/ Howard E. Foster Howard E. Foster     |  | Director                                                         |  | February 22, 2010
|                                          |  |                                                                 
|/s/ Richard H. Taggart Richard H. Taggart |  | Director                                                         |  | February 22, 2010
|                                          |  |                                                                 
|/s/ Grant L. Siler Grant L. Siler         |  | Principal Accounting Officer                                     |  | February 22, 2010



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