##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-K



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



For the fiscal year ended: September 30, 2005



| ̈ | 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



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ARCHON CORPORATION

(Exact name of registrant as specified in its charter)



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



3993 Howard Hughes
Parkway, Suite 630, Las Vegas, Nevada 89109

(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)



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|                                        |  |                                
|--------------------------------------- |  | -------------------------------
|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)                       



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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 a check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).     YES ̈NO  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 $28,500,000. The market value was computed by reference to the closing price of the common stock as of March
31, 2005.



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.



6,235,931 as of January 5, 2006



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 ̈NO  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, 2005

TABLE
OF CONTENTS



|         |  |                                                                                       |  |         
|-------- |  | ------------------------------------------------------------------------------------- |  | --------
|         |  |                                                                                       |  | Page No.
|PART I   |  |                                                                                      
|Item 1.  |  | Business                                                                              |  | 1       
|         |  | General                                                                               |  | 1       
|         |  | Hotel and Casino Operations                                                           |  | 1       
|         |  | Investment Properties                                                                 |  | 2       
|         |  | Land Held for Development                                                             |  | 3       
|         |  | Nevada Regulations and Licensing                                                      |  | 3       
|Item 2.  |  | Properties                                                                            |  | 6       
|Item 3.  |  | Legal Proceedings                                                                     |  | 7       
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                   |  | 8       
|         | 
|PART II  |  |                                                                                      
|Item 5.  |  | Market for the Registrants Common Stock and Related Security Holders Matters         |  | 9       
|Item 6.  |  | Selected Financial Data                                                               |  | 10      
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 11      
|Item 7A. |  | Market Risk Disclosure                                                                |  | 22      
|Item 8.  |  | Financial Statements                                                                  |  | 23      
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  |  | 49      
|Item 9A. |  | Controls and Procedures                                                               |  | 49      
|        
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                    |  | 50      
|Item 11. |  | Executive Compensation                                                                |  | 52      
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management                        |  | 55      
|Item 13. |  | Certain Relationships and Related Transactions                                        |  | 56      
|Item 14. |  | Principal Accountant Fees and Services                                                |  | 57      
|         | 
|PART IV  |  |                                                                                      
|Item 15. |  | Exhibits and Reports on Form 8-K                                                      |  | 57      



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##### Table of Contents

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 investment properties in Dorchester, Massachusetts
and Gaithersburg, Maryland.



The principal executive office of
the Company is located at 3993 Howard Hughes Parkway, Suite 630, Las Vegas, Nevada 89109 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 61/2 acres 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. 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.



Revenues.The primary source of revenues to the Companys hotel-casino operations is gaming, which represented approximately 55.2%,
60.1% and 60.5% in 2005, 2004 and 2003, respectively, of total revenues. The Pioneer contributed 100% in fiscal 2005 to total gaming revenues and approximately 99% and 96% in fiscal 2004 and 2003, respectively. As of September 30, 2005 the
Pioneer had approximately 772 slot machines, nine blackjack tables (21), one craps table, one roulette wheel and four other gaming tables. In addition, the Pioneer offers keno.



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. The occupancy rate at the Pioneer was approximately 57%, 70% and 77%, respectively, in fiscal years 2005, 2004 and 2003, respectively.



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##### Table of Contents

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 Bounty Hunter 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 September 30, 2005, the Company employed 13 executive and
administrative personnel and the Pioneer employed approximately 500 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 which permits compacts that allow 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.



Investment Properties



The Company
acquired investment 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 non-recourse 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 property in Gaithersburg, Maryland is located on 55 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 non-recourse
first mortgage indebtedness. The building is located on approximately 20 acres of the property. 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.



See
also Item 2., Properties.



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Land Held for Development



The
Company owns, through Sahara Las Vegas Corp. (SLVC), an approximately 27-acre parcel of real property on the Strip. In connection with the acquisition of the property, the Company assumed an operating lease under which a water theme park
operated. The lease was terminated September 30, 2004.



On
December 9, 2003, the Company filed certain use permit applications with Clark County, Nevada, in connection with proposed development plans for its 27-acre Strip property. The Company obtained a use permit on the site for a master-planned
development with certain FAA construction height approvals on the site up to 750 feet. The Company has not obtained any other critical approvals or permits and development of such site would require other significant regulatory approvals. There is
no assurance that the Company will obtain all land use, building or other regulatory approvals necessary for development of a hotel-casino resort project or other development projects for this site.



The Company is evaluating development and construction of a hotel-casino
project on the site and remains in the predevelopment stage. There are no definitive plans or commitments for the site. The Company may elect to proceed with development, sell the site to other parties or continue to hold the site in its current
state.



The Company cannot give any assurances that it will
obtain financing on acceptable terms for the project. A preliminary budget has not been completed estimating the costs to develop, build, complete and open the project. There are numerous contingencies and intervening events that could occur that
could impact our plans for the site.



Archons Strip site
was leased by an operator of a water-themed amusement park. The Company leased to a non-related third party a small portion of the site as a construction staging area for a neighboring development at least through February 2006.



Any future development of the Strip property is subject to, among other
things, the Companys ability to obtain necessary financing. The Company can give no assurance that it will obtain development financing or successfully develop the property.



See also Item 2., Properties.



The Company has provided financial segment information in the Notes to Consolidated Financial Statements, Note 21.
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.



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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.



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 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.



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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 (a) 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,
(b) recognizes the exercise, directly or indirectly, of any voting rights in its securities or partner interests by the unsuitable person, (c) pays the unsuitable person any remuneration in any form for services rendered or otherwise,
except in certain and specific circumstances or (d) 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.



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.



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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.



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 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. The Company previously leased the Pioneer under a lease that
expired in December 2020, subject to two five-year options to extend the term. However, the Company exercised an early purchase option in December 2003 and no longer has a significant capital lease obligation at this property. See Item 1.,
Business  Hotel and Casino Operations for more detailed information regarding the Pioneer.



The Companys investment 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 non-recourse 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 investment property in Gaithersburg, Maryland is located
on 55 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 non-recourse first mortgage indebtedness. The building is located on approximately 20 acres of the property. 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 Company owns approximately 27 acres of real property located on the Strip. See Item 1., Business - Land Held for Development.



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##### Table of Contents

Item 3. Legal Proceedings



Poulos v. Caesars World, Inc., et al. and Ahern v. Caesars World, Inc., et al.



The Company is a defendant in a class action lawsuit originally filed in the United States District Court of Florida, Orlando Division in 1994, entitled
Poulos v. Caesars World, Inc., et al., Ahern v. Caesars World, Inc., et al. and Schrier v. Caesars World, Inc., et al., along with a fourth action against cruise ship gaming operators and which have been consolidated
in a single action now pending in the United States District Court, District of Nevada (the Court). Also named as defendants in these actions are many of the largest gaming companies in the United States and certain gaming equipment
manufacturers. Each complaint is identical in its material allegations. The actions allege that the defendants have engaged in fraudulent and misleading conduct by inducing people to play video poker machines and electronic slot machines based on
false beliefs concerning how the machines operate and the extent to which there is actually an opportunity to win on a given play. The complaints allege that the defendants acts constitute violations of the Racketeer Influenced and Corrupt
Organizations Act and also give rise to claims for common law fraud and unjust enrichment, and seek compensatory, special consequential, incidental and punitive damages of several billion dollars.



In response to the complaints, all of the defendants, including the Company,
filed motions attacking the pleadings for failure to state a claim, seeking to dismiss the complaints for lack of personal jurisdiction and venue. As a result of those motions, the Court has required the Plaintiffs in the four consolidated cases to
file a single consolidated amended complaint. Subsequent to Plaintiffs filing of their consolidated amended complaint, the defendants filed numerous motions attacking the amended complaint upon many of the bases as the prior motions. The Court
heard the arguments on those motions and ultimately denied the motions. Plaintiffs then filed their motion to certify a class. Defendants have vigorously opposed the motion. In June 2002, the court denied the motion to certify the class. Plaintiffs
then sought discretionary review by the Ninth Circuit of the order denying class certification. In August 2002, the Ninth Circuit granted review. The briefing is complete, an oral hearing took place in January 2004. In September 2005, the federal
district court granted the defendants motion for dismissal. On October 19, 2005, the plaintiffs appealed to the Ninth Circuit. The Company has not recorded a reserve under the provisions of SFAS No. 5 for this matter, as management does
not believe that it is probable that a liability has been incurred



In addition, the Company is subject to various lawsuits relating to routine matters incidental to its business. The Company does not believe that the outcome of such litigation, in the aggregate, will have a material adverse effect on the
Company.



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##### Table of Contents

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



At the Annual Meeting of Stockholders held on July 1, 2005, common stockholders of record elected two directors, voted on a proposal to ratify the
reinstatement and amendment of the Companys 1993 Key Employee Stock Option Plan and voted on a proposal to ratify the selection of Ernst & Young LLP as the Companys independent registered public accounting firm.



The Directors whose terms in office continued after the meeting are as
follows:



|                  |  |             
|----------------- |  | ------------
|                  |  | Term Expires
|Paul W. Lowden    |  | 2008        
|William J. Raggio |  | 2008        
|John W. Delaney   |  | 2006        
|Suzanne Lowden    |  | 2007        



There were 6,235,931
shares of Common Stock entitled to vote at the meeting. A total of 5,224,282 votes (83.8%) were represented at the meeting. The result of the vote taken on the election of Directors elected by the common stockholders to hold office until the
2008 Annual Meeting of Stockholders and until their successors are elected and have qualified is as follows:



|                  |  |           |  |         
|----------------- |  | --------- |  | --------
|                  |  | For       |  | Withheld
|Paul W. Lowden    |  | 4,907,198 |  | 317,084 
|William J. Raggio |  | 4,907,455 |  | 316,827 



Effective July 1,
2005, the proposal to ratify the reinstatement and amendment of the Companys 1993 Key Employee Stock Option Plan was approved by the common shareholders as follows:



|          |  |         |  |         |  |                
|--------- |  | ------- |  | ------- |  | ---------------
|For       |  | Against |  | Abstain |  | Broker Non-Vote
|4,617,000 |  | 607,282 |  | 0       |  | 0              



The result of the vote
taken for ratification of the selection Ernest & Young LLP as the Companys public accountants are as follows:



|          |  |         |  |         |  |                
|--------- |  | ------- |  | ------- |  | ---------------
|For       |  | Against |  | Abstain |  | Broker Non-Vote
|5,211,710 |  | 12,572  |  | 0       |  | 0              



The special directors
elected by the preferred stockholders whose term in office continued after the meeting are as follows:



|                 |  |             
|---------------- |  | ------------
|                 |  | Term Expires
|Howard E. Foster |  | 2006        
|Jay Parthemore   |  | 2007        



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##### Table of Contents

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 ARHN.



The closing price of the Common Stock on January 5, 2006 was $38.50 per
share. The tables below set forth the high and low closing prices by quarter for the fiscal years ended September 30, 2005 and 2004 of the common stock, as reported by the OTCBB.



|             |  |              |       |               |   |              |  |               |       |  |   |      
|------------ |  | ------------ | ----- | ------------- | - | ------------ |  | ------------- | ----- |  | - | -----
|             |  | FirstQuarter |       | SecondQuarter |   | ThirdQuarter |  | FourthQuarter
|Fiscal 2005: |  |              |       |               |   |              |  |               |       |  |   |      
|High         |  | $            | 23.00 |               | $ | 20.05        |  | $             | 29.55 |  | $ | 49.00
|Low          |  |              | 7.00  |               |   | 18.00        |  |               | 19.55 |  |   | 28.50
|             |  |              |       |              
|Fiscal 2004: |  |              |       |               |   |              |  |               |       |  |   |      
|High         |  | $            | 7.00  |               | $ | 6.55         |  | $             | 6.60  |  | $ | 7.00 
|Low          |  |              | 2.58  |               |   | 4.55         |  |               | 4.60  |  |   | 5.20 



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 700 common stockholders of record as of January 5, 2006.



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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 for the years ended September 30, 2005, 2004, 2003, 2002 and 2001:



|                                              |  |                                                  |         |   |                |   |         |      |  |   |         |   |  |      |         |   |  |   |        
|--------------------------------------------- |  | ------------------------------------------------ | ------- | - | -------------- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | -------
|                                              |  | 2005                                             |         |   | 2004(Restated) |   |         | 2003 |  |   | 2002    |   |  | 2001
|                                              |  | (dollars in thousands, except per share amounts)
|Net operating revenues(1)                     |  | $                                                | 43,688  |   |                | $ | 45,693  |      |  | $ | 46,161  |   |  | $    | 48,765  |   |  | $ | 48,003 
|Net income (loss), net of taxes(2)            |  |                                                  | (4,912  | ) |                |   | (1,882  | )    |  |   | (7,847  | ) |  |      | (7,707  | ) |  |   | 89,182 
|Net income (loss) applicable to common shares |  |                                                  | (6,423  | ) |                |   | (3,444  | )    |  |   | (9,374  | ) |  |      | (9,262  | ) |  |   | 87,231 
|Net income (loss) per common share(2)         |  |                                                  | (1.03   | ) |                |   | (0.55   | )    |  |   | (1.51   | ) |  |      | (1.50   | ) |  |   | 14.11  
|Total assets                                  |  |                                                  | 199,638 |   |                |   | 206,932 |      |  |   | 237,390 |   |  |      | 242,086 |   |  |   | 249,485
|Long-term debt, less current portion          |  |                                                  | 79,499  |   |                |   | 82,057  |      |  |   | 148,698 |   |  |      | 153,029 |   |  |   | 157,667
|Exchangeable redeemable preferred stock(3)    |  |                                                  | 9,445   |   |                |   | 9,674   |      |  |   | 9,926   |   |  |      | 10,866  |   |  |   | 10,963 

---

|(1) | Net operating revenues for fiscal years 2001 through 2005 represent primarily operations at
the Pioneer and revenues from investment properties.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Fiscal 2001 results include a $137.2 million gain relating to the SFHI Asset Sale and a $3.4
million gain from litigation settlement. In fiscal 2004 results, a gain of approximately $4.0 million is included principally from the sale of certain land previously owned by the Company.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The Company has not declared dividends on its preferred stock since fiscal 1996. Dividends of
approximately $1.5 million, $1.6 million, $1.5 million, $1.6 million and $2.0 million for fiscal 2005, 2004, 2003, 2002 and 2001, respectively, have not been declared and are in arrears. Total accumulated preferred stock dividends in arrears for the
five preceding years ended on September 30, 2005 are $10.8 million, $9.5 million, $8.2 million, $7.3 million and $5.8 million, respectively. The Company has repurchased and retired 985,932 shares of exchangeable redeemable preferred stock.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations



General



The following Managements Discussion and Analysis of Financial Condition and Results of Operations gives effect to the restatements discussed in Note 18 to the consolidated financial statements.



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 subsequently divested certain of these properties. Presently, the Company operates the Pioneer in Laughlin, Nevada. The Company also owns Strip property that it may develop.
Management believes that the trend of continued development in Las Vegas, Nevada of themed resorts intended to attract visitors will continue in the foreseeable future.



Its property in Laughlin, Nevada 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 Laughlin to maintain profitability. Management believes Laughlin has now become a mature market with marginal growth forecasted for the next few years
based on its current plans.



The Company also owns investment
properties on the East Coast but these investment properties do not contribute significant profitability or net cash flow to the Company.



Management believes the recent revenue and expense trends in its Laughlin hotel/casino property may not change significantly over the next few years, but
believes the opportunity to develop the Strip property could greatly enhance the Companys ability to generate future profitability, although the Company has no definitive plans to develop the property.



Critical Accounting Policies and Estimates



Managements Discussion and Analysis of Financial Condition and Results
of Operations discuss Archons consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these 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. We allow for an estimated amount of receivables that may not be collected. We estimate our 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.



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##### Table of Contents

Long-Lived Assets. We have a significant investment in long-lived property and equipment.
We estimate 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. We estimate useful lives for our 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, we would record an impairment charge. We review useful lives and obsolescence and we assess commercial viability of these assets periodically.



Income Taxes. 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. 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, an adjustment to the valuation allowance would increase income in the period in which the profit is realized.



Results of Operations  Fiscal 2005 Compared to Fiscal 2004



General



During fiscal 2005, the Company experienced a marginal decline in net
operating revenues of 4%. However, due to appreciation in the market value of the Companys common stock, the Company recorded a significant noncash compensation expense of approximately $3.9 million for stock options awarded in April 2005.
This increase to operating expenses of the Company for fiscal 2005 was offset partially by certain reductions of costs primarily at the Pioneer and due to the closure of Dukes Casino in December 2003 of approximately $3.5 million. Overall, the
Companys operating income declined in fiscal 2005 as compared to fiscal 2004 by approximately $2.4 million.



The Company does not anticipate significant changes to its operating results or recourse debt structure, apart from contractual obligations, in the near
term. However, no assurances to such can be given.



Consolidated



Net Operating Revenues.Consolidated net operating revenues for the year ended September 30, 2005 were $43.7 million, a $2.0 million, or 4%, decrease from $45.7 million for the year ended September 30, 2004. Income from investment properties was $12.4
million in each of the fiscal years. Net revenues decreased approximately $2.5 million to $29.7 million during fiscal 2005 at the Pioneer compared to $32.2 million for the 2004 fiscal year. Archon Sparks Management Company (ASMC), which
began operating Dukes Casino in February 2003, had revenues of $0.4 million in the 2004 fiscal year compared to $0 for the 2005 fiscal year.



In fiscal 2005, 68% of the Companys net revenues were derived from the Pioneer and 28% from investment properties. The Companys business
strategy at the Pioneer emphasizes slot and video poker machine play. For fiscal 2005, approximately 81% 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 increased approximately $0.4 million, or 1%, to $41.2 million for the year ended
September 30, 2005 from $40.7 million for the year ended September 30, 2004. Total operating expenses as a percentage of net revenues increased to 94% for the year ended September 30, 2005 from 89% for the year ended
September 30, 2004. The increase of approximately $0.4 million in operating expenses was principally the result of (i) a charge of approximately $3.9 million of stock-based compensation expense related to options granted in fiscal 2005,
(ii) a decrease in operating expenses of approximately $2.2 million, or 7%, at the Pioneer, in fiscal 2005 and (iii) the inclusion in fiscal 2004 of approximately $0.7 million of operating expenses at Dukes casino.



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##### Table of Contents

Operating Income. Consolidated operating income for the year ended September 30, 2005
was $2.5 million, a $2.4 million, or 49%, decrease from $5.0 million for the year ended September 30, 2004. Operating income decreased by $0.3 million at the Pioneer. ASMC had an operating loss of approximately $0.4 million for the fiscal year
ended September 30, 2004.



Loss/Gain on Sale of
Assets. The gain on sale of assets during fiscal 2004 of approximately $4.0 million represents primarily a gain from the sale of certain land held for development partially offset by a loss on disposal of assets by ASMC. During fiscal 2005,
a loss on the disposal of assets of approximately $0.2 million was recorded for the disposal of certain slot equipment.



Interest Expense. Consolidated interest expense for the year ended September 30, 2005 was $11.1 million, a $1.8 million decrease
compared to $12.9 million for the year ended September 30, 2004. Interest expense decreased $1.0 million at the Pioneer due to the purchase of the Pioneer assets of approximately $36 million in December 2003, and the resulting termination of
capital leases, which bore interest at approximately 14%. The capital lease obligations of approximately $36 million were replaced by the acquisition of certain debt in December 2003 of approximately $18 million, bearing interest at prime plus 1%.
Additionally, certain debt related to non-recourse obligations declined during fiscal 2005 and contributed to the decrease in interest expense.



Interest Income. Interest income for the year ended September 30, 2005 was $0.3 million, a decrease of $0.6 million from $0.9 million
for the year ended September 30, 2004 due to a decrease in marketable equity securities in the 2005 and 2004 fiscal years. A significant portion of marketable securities was sold in December 2003, the proceeds of which were used for the
purchase of the Pioneer assets.



Other Income.
Other income was $1.0 million in fiscal 2005 and is comprised primarily of $0.1 million from net gains on sales of marketable securities and $0.9 million of income from other investments and other assets. In fiscal 2004, the Company reported $0.3
million of income from these sources.



Loss Before Income
Tax. Consolidated loss before income tax for the year ended September 30, 2005 was $7.5 million, a $4.7 million decline compared to a consolidated loss before income taxes of $2.8 million for the year ended September 30, 2004. This
decline is principally attributable to the aforementioned stock-based compensation charges offset, in part, by a decline in interest expense due to the retirement of certain obligations under capital leases and reduced debt outstanding.



Federal Income Tax.The Company recorded a federal income
tax benefit of approximately $2.6 million (an approximate 35% effective tax rate) for the year ended September 30, 2005 compared to $0.9 million (an approximate 33% tax rate) for the year ended September 30, 2004.



Preferred Share Dividends. Undeclared preferred share dividends
are not recorded in the stockholders equity section of the balance sheet as the Company may elect at its sole discretion whether to redeem its preferred stock. However, dividends of approximately $1.5 million and $1.6 million for fiscal years
2005 and 2004, respectively, accrued on the preferred stock for purposes of calculating net loss applicable to common shares. The dividend rate increased to its maximum rate of 16.0% effective October 1, 2003 from 15.5% beginning on
April 1, 2003.



Net Loss. Consolidated net
loss applicable to common shares was $6.4 million, or $1.03 per common share, for the year ended September 30, 2005 compared to net loss applicable to common shares of $3.4 million, or $0.55 per common share, for the year ended
September 30, 2004.



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. There are other insignificant casino
and food/beverage revenues and expenses in 2004 from ASMC which are not discussed separately below.



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##### Table of Contents

Net Operating Revenues. Net revenues at the Pioneer decreased $2.5 million, or
approximately 8%, to $29.7 million for the year ended September 30, 2005 from $32.2 million for the year ended September 30, 2004.



Gross casino revenues decreased approximately $3.0 million, or 11%, to $24.1 million for the year ended September 30, 2005 from $27.1 million for the
year ended September 30, 2004. Slot and video poker revenues decreased approximately $2.1 million, or 9%, to $21.7 million for the year ended September 30, 2005 from $23.9 million for the year ended September 30, 2004. Other gross
gaming revenues, including table games, decreased approximately $0.9 million, or 27%, due primarily to decreased table game win. Management believes fewer table game casino and hotel patrons contributed to this decline. Casino promotional allowances
decreased to approximately $5.6 million in fiscal year 2005 compared to $7.8 million for the year ended September 30, 2004 due to lower casino and hotel revenues from decreased patronage at the property.



Hotel revenues decreased approximately $0.3 million, or 11%, to
approximately $2.8 million for the year ended September 30, 2005 from approximately $3.1 million in fiscal 2004, as a decrease in occupancy rate from 69.8% in 2004 to 57.1% in 2005 was partially offset by an increase in the average daily room
rate of approximately 18%. Management believes its efforts to improve the quality and condition of many of its rooms through repairs attributed greatly to its ability to raise room rates. Food and beverage revenues decreased approximately $1.4
million, or 17%, to $6.9 million for the year ended September 30, 2005 from $8.3 million for the year ended September 30, 2004, primarily due to the decrease in casino promotional allowances and decreased patronage. Other revenues were
unchanged at approximately $1.5 million.



Operating Expenses.Operating expenses decreased approximately $2.2 million, or 7%, to $30.3 million for the year ended September 30, 2005 from $32.5 million for the year ended September 30, 2004. Operating expenses
as a percentage of net revenues increased to 102% in fiscal 2005 from 101% in fiscal 2004.



Casino expenses decreased approximately $1.8 million, or 12%, to $13.1 million for the year ended September 30, 2005 from $14.8 million for the year ended September 30, 2004, primarily related to reductions
in casino promotional allowances. Casino expenses as a percentage of casino revenues decreased to 54% for the year ended September 30, 2005 from 55% for the year ended September 30, 2004.



Hotel expenses increased 0.4 million, or 56%, to $1.0 million for the
year ended September 30, 2005 from $0.7 for the year ended September 30, 2004. Due to the decrease in casino promotional allowances, the hotel department received a $0.4 million decreased expense transfer to the casino department. Food and
beverage expenses decreased approximately $0.2 million, or 4%, to $4.1 million in fiscal 2005 from $4.3 million in fiscal 2004. Food and beverage expenses as a percentage of food and beverage revenues increased to 60% for the year ended
September 30, 2005 from 52% for the year ended September 30, 2004. Due to the decrease in casino promotional allowances, the food and beverage department received a $1.1 million decreased expense transfer to the casino department. Other
expenses increased approximately $0.1 million, or 6%, to $1.2 million for the year ended September 30, 2005 compared to $1.1 million for the year ended September 30, 2004. Other expenses as a percentage of other revenues increased to 78%
for the year ended September 30, 2005 from 75% for the year ended September 30, 2004.



Selling, general and administrative expenses decreased $0.3 million, or 7%, to $4.5 million for the year ended September 30, 2005 compared to $4.8
million for the year ended September 30, 2004, primarily due to reductions in payroll and outside services. Selling, general and administrative expenses as a percentage of revenues was unchanged at 15% for the years ended September 30,
2005 and 2004. 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 $0.4 million, or 9%,
to $3.9 million for the year ended September 30, 2005 from $4.3 million for the year ended September 30, 2004, due to a decrease in rent expense. Utilities and property expenses as a percentage of revenues remained unchanged at 13% for the
years ended September 30, 2005 and 2004.



Interest
Expense. Interest expense decreased $1.0 million, or 44%, to $1.3 million for the year ended September 30, 2005 from $2.3 million for the year ended September 30, 2004, due to a decreased amount of debt outstanding in the 2005
period and the absence of certain capital lease obligations that were retired at December 29, 2003, which had effective interest rates of approximately 14%. These lease obligations, approximately $36 million, were replaced with debt of $18
million bearing interest at prime plus 1%.



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##### Table of Contents

Results of Operations  Fiscal 2004 Compared to Fiscal 2003



General



During fiscal 2004, the Company experienced a marginal decline in net operating revenues of 1%. However, due to certain
reductions of personnel costs primarily at the Pioneer and due to the closure of Dukes Casino, the Company reduced its operating expenses, before provisions for receivable and investment, by approximately $1.0 million. Additionally, the
Company incurred less operating expenses in fiscal 2004 as compared to fiscal 2003 as an income statement provision, principally because a receivable from and investment in Dukes LLC, of approximately $1.7 million, was recorded. Similar
charges of approximately $0.2 million in 2004 were recorded. Overall, the Companys operating income improved in fiscal 2004 as compared to fiscal 2003 by approximately $2.0 million.



Acquisition of Pioneer. On December 29, 2003, the Company completed the purchase of the fee ownership of
the Pioneer in Laughlin, Nevada from an affiliate of GE pursuant to an early purchase option under its existing lease agreement dated December 29, 2000. In accordance with the lease agreement, the Company purchased certain property, including
(i) the real property commonly known as 2200 South Casino Drive, located in Laughlin, Nevada; (ii) the casino building, the hotel rooms, together with the meeting rooms, restaurants and associated facilities; and (iii) building
equipment and other similar additions and improvements located on the real property. The purchase price for the property was approximately $35.6 million: approximately $12.6 million was paid through funds from the restricted cash accounts,
approximately $2.5 million in marketable securities, approximately $2.5 million through a note from PDS Gaming that was due on December 29, 2003, and approximately $18.0 million from borrowed funds, whereby the Company acquired an $18.0 million
note payable that is secured by certain land held for development in Las Vegas.



As a result of this transaction, interest expense declined significantly for the Company resulting in decreased interest expense in fiscal 2004 as compared to fiscal 2003 of approximately $3.5 million. This
improvement in reduced interest expense was offset, in part, by a decrease in interest income from marketable securities in fiscal 2004 compared to fiscal 2003 of approximately $0.6 million. A significant portion of marketable securities was sold to
assist in the purchase of the Pioneer assets in December 2003.



The Company does not anticipate significant changes to its operating results or recourse debt structure in the near term, although no assurances to such can be given.



Consolidated



Net Operating Revenues.Consolidated net operating revenues for the year ended September 30, 2004 were
$45.7 million, a $0.5 million, or 1%, decrease from $46.2 million for the year ended September 30, 2003. Income from investment properties was $12.4 million in each of the fiscal years. Revenues increased approximately $0.3 million to $32.2
million during fiscal 2004 at the Pioneer compared to $31.9 million for the 2003 fiscal year. ASMC, which began operating Dukes Casino in February 2003, had revenues of $0.4 million in the 2004 fiscal year compared to $1.3 million for the 2003
fiscal year.



In fiscal 2004, 70% of the Companys net
revenues were derived from the Pioneer and 27% from investment properties. The Companys business strategy at the Pioneer emphasizes slot and video poker machine play. For fiscal 2004, approximately 84% of the Pioneers net revenues were
derived from casino operations. Approximately 88% of gaming revenues at the Pioneer were derived from slot and video poker machines, while 10% of such revenues were from table games and 2% was from other gaming activities such as keno.



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##### Table of Contents

Operating Expenses.Total operating expenses decreased approximately $2.5 million, or 6%,
to $40.7 million for the year ended September 30, 2004 from $43.2 million for the year ended September 30, 2003. Total operating expenses as a percentage of net revenues decreased to 89% for the year ended September 30, 2004 from 94%
for the year ended September 30, 2003. The decline of approximately $2.5 million in operating expenses was principally attributable to (i) a reserve for receivables and investment in fiscal 2003 related principally to Dukes casino of
approximately $1.7 million compared to approximately $0.2 million in fiscal 2004, (ii) the inclusion in fiscal 2003 of approximately $2.2 million of additional operating expenses at Dukes casino compared to approximately $0.7 million in
fiscal 2004, (iii) a decrease in operating expenses of approximately $0.4 million, or less than 1%, at the Pioneer, in fiscal 2004 and (iv) offset by an increase in general corporate expenses in fiscal 2004 of approximately $1.0 million,
principally the result of increased legal, accounting/auditing and payroll expenses.



Operating Income. Consolidated operating income for the year ended September 30, 2004 was $5.0 million, a $2.1 million, or 70%, increase from $2.9 million for the year ended September 30, 2003.
Operating income improved by $0.7 million at the Pioneer. Including a charge in fiscal 2003 principally for a receivable and investment of approximately $1.7 million, ASMC had an operating loss of $0.5 million and $2.7 million for the fiscal years
ended September 30, 2004 and 2003, respectively.



Gain on Sale of Assets. The gain on sale of assets of approximately $4.0 million represents primarily a gain from the sale of certain land held for development during the year ended September 30, 2004 partially offset by
a loss on disposal of assets by ASMC.



Interest
Expense. Consolidated interest expense for the year ended September 30, 2004 was $12.9 million, a $3.5 million decrease compared to $16.4 million for the year ended September 30, 2003. Interest expense decreased $2.6 million at the
Pioneer due to the purchase of the Pioneer assets of approximately $36 million in December 2003, and the resulting termination of capital leases, which bore interest at approximately 14%. The capital lease obligations of approximately $37 million
were replaced by the acquisition of certain debt in December 2003 of approximately $18 million, bearing interest at prime plus 1%.



Interest Income. Interest income for the year ended September 30, 2004 was $0.9 million, a decrease of $0.6 million from $1.5 million
for the year ended September 30, 2003 due to a decrease in marketable equity securities in the 2004 fiscal year. A significant portion of marketable securities was sold in December 2003, the proceeds of which were used for the purchase of the
Pioneer assets.



Other Income. Other income was
$0.3 million in fiscal 2004 and is comprised primarily of $0.1 million from net gains on sales of marketable securities and $0.2 million of income from other investments. In fiscal 2003, the Company reported no similar income from these sources.



Loss Before Income Tax. Consolidated loss before
income tax for the year ended September 30, 2004 was $2.8 million, a $9.2 million improvement compared to a consolidated loss before income taxes of $12.0 million for the year ended September 30, 2003. This improvement is principally
attributable to the aforementioned improvements in operating losses, other income of approximately $4.0 million from a gain on sale of certain assets and a decline in interest expense due to the retirement of certain obligations under capital
leases.



Federal Income Tax.The Company recorded
a federal income tax benefit of approximately $0.9 million (an approximate 33% effective tax rate) for the year ended September 30, 2004 compared to $4.2 million (an approximate 35% tax rate) for the year ended September 30, 2003.



Preferred Share Dividends. Undeclared preferred
share dividends are not recorded in the stockholders equity section of the balance sheet as the Company may elect at its sole discretion whether to redeem its preferred stock. However, dividends of approximately $1.6 million and $1.5 million
for fiscal years 2004 and 2003, respectively, accrued on the preferred stock for purposes of calculating net loss applicable to common shares. The dividend rate increased to 16.0% effective October 1, 2003 from 15.5% beginning on April 1,
2003. The accrued dividend rate increases 50 basis points at each semi-annual dividend payment date, subject to a maximum of 16.0%.



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##### Table of Contents

Net Loss. Consolidated net loss applicable to common shares was $3.4 million, or $0.55 per
common share, for the year ended September 30, 2004 compared to net loss applicable to common shares of $9.4 million, or $1.51 per common share, for the year ended September 30, 2003.



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. There are other insignificant casino
and food/beverage revenues and expenses in 2004 and 2003 from ASMC which are not discussed separately below.



Net Operating Revenues. Revenues at the Pioneer increased $0.3 million, or 1%, to $32.2 million for the year ended September 30, 2004
from $31.9 million for the year ended September 30, 2003.



Gross casino revenues increased approximately $0.3 million, or 1%, to $27.1 million for the year ended September 30, 2004 from $26.8 million for the year ended September 30, 2003. Slot and video poker revenues increased
approximately $0.7 million, or 3%, to $23.9 million for the year ended September 30, 2004 from $23.2 million for the year ended September 30, 2003. Management believes that the increase resulted from an upgrade of certain slot machines
during fiscal 2004. Other gross gaming revenues, including table games, decreased approximately $0.4 million, or 12%, due primarily to decreased table game win. Management believes fewer table game casino and hotel patrons contributed to this
decline. Casino promotional allowances increased to approximately $7.8 million in the fiscal year 2004 compared to $6.7 million for the year ended September 30, 2003 due to marketing promotions and system enhancements implemented to increase
business volume.



Hotel revenues increased approximately $0.4
million, or 16%, to approximately $3.1 million for the year ended September 30, 2004 from approximately $2.7 million in fiscal 2003, as a decrease in occupancy rate from 77.3% in 2003 to 69.8% in 2004 was offset by an increase in the average
daily room rate of approximately 30%. Management believes its efforts to improve the quality and condition of many of its rooms through repairs attributed greatly to its ability to raise room rates. Food and beverage revenues increased approximately
$1.2 million, or 17%, to $8.3 million for the year ended September 30, 2004 from $7.1 million for the year ended September 30, 2003, due principally to the renovations during the fourth quarter of 2003 to the Pioneers main food
outlet. Other revenues decreased approximately $0.5 million, or 26%, to approximately $1.5 million for the year ended September 30, 2004 from $2.0 million for the year ended September 30, 2003, due to decreased sales in the Pioneers
retail outlets caused by fewer patrons and competition from retail establishments in other casinos in Laughlin.



Operating Expenses. Operating expenses decreased approximately $0.4 million, or 1%, to $32.5 million for the year ended September 30,
2004 from $32.9 million for the year ended September 30, 2003. Operating expenses as a percentage of net revenues decreased to 101% in fiscal 2004 from 103% in fiscal 2003.



Casino expenses decreased approximately $0.5 million, or 3%, to $14.8 million for the year ended September 30, 2004
from $15.3 million for the year ended September 30, 2003, primarily related to reductions in payroll. Casino expenses as a percentage of casino revenues decreased to 55% for the year ended September 30, 2004 from 57% for the year ended
September 30, 2003. Hotel expenses were relatively unchanged at $0.7 million for the years ended September 30, 2004 and 2003. Food and beverage expenses increased approximately $1.0 million, or 31%, to $4.3 million in fiscal 2004 from $3.3
million in fiscal 2003. Management believes this increase was due principally to the closure, for several months, of the main food outlet in fiscal 2003 for renovations. Food and beverage expenses as a percentage of food and beverage revenues
increased to 52% for the year ended September 30, 2004 from 46% for the year ended September 30, 2003. Management believes an increase in the quality of food product contributed to this increase. Other expenses decreased approximately $0.7
million, or 39%, to $1.1 million for the year ended September 30, 2004 compared to $1.8 million for the year ended September 30, 2003, due to the decrease in retail sales. Other expenses as a percentage of other revenues decreased to 75%
for the year ended September 30, 2004 from 90% for the year ended September 30, 2003.



Selling, general and administrative expenses decreased $0.4 million, or 6%, to $4.8 million for the year ended September 30, 2004 compared to $5.2
million for the year ended September 30, 2003, primarily due to



17



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reductions in payroll, supplies and outside services. Selling, general and administrative expenses as a percentage of
revenues decreased to 15% for the year ended September 30, 2004 from 16% for the year ended September 30, 2003. 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 remained materially unchanged at approximately $4.3 million for the year ended September 30, 2004 and $4.2 million for the year ended September 30, 2003. Utilities
and property expenses as a percentage of revenues remained unchanged at 13% for the years ended September 30, 2004 and 2003.



Interest Expense. Interest expense decreased $2.6 million, or 53%, to $2.3 million for the year ended September 30, 2004 from $4.9
million for the year ended September 30, 2003, due to the purchase of the Pioneer assets and elimination of the $33.5 million lease obligation. The $33.5 million interest-bearing lease obligation had an effective interest rate of approximately
14% and was replaced with approximately $18 million of debt bearing interest annually at the rate of prime plus 1%.



Liquidity and Capital Resources; Trends and Factors Relevant to Future Operations



Contractual Obligations and Commitments



The following table summarizes the Companys fiscal year contractual obligations and commitments as of
September 30, 2005 for the fiscal years ending September 30, 2006, 2007, 2008, 2009, 2010, 2011 and thereafter:



|                    |  |                         |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|------------------- |  | ----------------------- | ------ | ---- | - | ----- |  | ---- | ----- | ---- | - | ------------------ |  | ----- | ----- |  | - | ------ |  | - | -------
|                    |  | Payments Due By Periods
|                    |  | 2006                    |        | 2007 |   | 2008  |  | 2009 |       | 2010 |   | 2011 andThereafter |  | Total
|                    |  | (dollars in thousands) 
|Non-recourse debt:  |  |                         |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|Gaithersburg        |  | $                       | 1,917  |      | $ | 2,195 |  | $    | 2,490 |      | $ | 2,828              |  | $     | 3,186 |  | $ | 37,114 |  | $ | 49,730 
|Sovereign           |  |                         | 0      |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 31,199 |  |   | 31,199 
|Long-term debt:     |  |                         |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|Building            |  |                         | 80     |      |   | 14    |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 94     
|Equipment           |  |                         | 852    |      |   | 415   |  |      | 56    |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 1,323  
|Mortgage obligation |  |                         | 12,065 |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 12,065 
|Other               |  |                         | 1,918  |      |   | 0     |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 1,918  
|Operating leases:   |  |                         |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|Ground lease        |  |                         | 181    |      |   | 352   |  |      | 352   |      |   | 352                |  |       | 352   |  |   | 24,055 |  |   | 25,644 
|Corporate offices   |  |                         | 92     |      |   | 22    |  |      | 0     |      |   | 0                  |  |       | 0     |  |   | 0      |  |   | 114    
|                    |  |                         |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        
|                    |  | $                       | 17,105 |      | $ | 2,998 |  | $    | 2,898 |      | $ | 3,180              |  | $     | 3,538 |  | $ | 92,368 |  | $ | 122,087
|                    |  |                         |        |      |   |       |  |      |       |      |   |                    |  |       |       |  |   |        |  |   |        



The Company is
required to make the following cash interest payments related to the above debt obligations: (i) Non-recourse debt - $7.3 million (2006), $7.1 million (2007), $7.0 million (2008), $6.8 million (2009), $6.6 million (2010) and $46.3 million
(2011 and thereafter), and (ii) Long-term debt - $1.0 million (2006), $0.2 million (2007), $0 (2008), $0 (2009), $0 (2010) and $0 (2011 and thereafter).



Our ability to service our contractual obligations and commitments 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 our control. In addition, we will be dependent on the continued ability of the tenants in the investment 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 non-recourse debt obligations related to the properties.



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A non-recourse obligation related to the Massachusetts property of approximately $25.7 million matured
and was paid by the tenant during the three months ended June 30, 2005. The tenant of the property was required to make this payment subject to a lease agreement. Based upon the financial condition of the tenant, management does not foresee any
problems in the timely satisfaction of future obligations by third parties.



Liquidity and Capital Resources



As of September 30, 2005, the Company held cash and cash equivalents of $2.1 million compared to $3.4 million at September 30, 2004. In addition, the Company had $6.8 million in investment in marketable securities at
September 30, 2005 compared to $5.4 million at September 30, 2004. Management believes that through cash flow generated from 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, 2006. The investment 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 was approximately $30.5 million for the year ended September 30, 2005 as compared to approximately $5.3 million for the year ended September 30, 2004. This increase was primarily due to an increase in deferred rents
payable of approximately $20.7 million as amounts due under non-recourse debt obligations have been paid in advance of the rental obligations. The increase was also attributable to an improvement in the net loss adjusted for non-cash expenses and
gains on sales of assets which totaled approximately $3.6 million.



Cash Flows from Investing Activities. Cash used in investing activities was $2.1 million during the year ended September 30, 2005, compared to cash provided by investing activities of $20.7 million during the year ended
September 30, 2004. During fiscal 2005, the primary components of cash used by investing activities were net marketable securities transactions of approximately $0.8 million, investment in partnerships of $0.8 million and capital expenditures
of approximately $0.5 million. In the prior year, the primary components of cash provided by investing activities were a decrease in restricted cash balances of approximately $13.9 million, proceeds from the sale of certain land and assets of
approximately $5.8 million and proceeds from net marketable securities transactions of approximately $2.5 million, all of which had been used to purchase assets at the Pioneer and retire certain lease obligations. The Company expended $1.0 million
in capital expenditures in fiscal 2004.



Cash Flows from
Financing Activities.Cash used in financing activities was $29.7 million during the year ended September 30, 2005 compared to $28.4 million during the prior year. During fiscal 2005, the Company paid $31.7 million on debt and
non-recourse debt and borrowed $2.4 million from a margin account. During fiscal 2004, the Company paid approximately $36 million to purchase the Pioneer assets and retire capital lease obligations. Additionally, principal payments of over $6
million were made on non-recourse debt, the Company paid in excess of $5 million of its $18 million of debt acquired in December 2003 and certain other debt obligations of approximately $4 million were made. The Company also collected approximately
$4.9 million of notes receivable included in other assets within its consolidated balance sheets.



The Companys primary source of operating cash is from the Pioneers operations, from interest income on available cash and cash equivalents,
from leasing real estate owned in Las Vegas, NV and from investments in marketable securities. From time to time, transactions involving the sale of certain land or other assets also contribute to the Companys cash balances. Rental income from
the Companys two investment properties is contractually committed to reducing the non-recourse indebtedness issued or assumed in connection with the acquisition of the investment properties. Under the two leases, the tenants are responsible
for substantially all obligations related to the property. The Companys 27-acre parcel of real property on the Strip was previously subject to a lease with a water theme park operator. The Company generated minimal cash from the lease
agreement after payment of property costs. This lease was terminated in September 2004, although a third party has agreed to a short-term lease for approximately 10% of the property which will generate approximately the same amount of net cash
generated from the terminated lease.



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The Companys primary use of funds is for operations of Archon, which includes costs of executive
and administrative personnel, administrative functions and costs to explore development opportunities. The Company had the option to acquire the Pioneer during the period from December 29, 2003 to December 31, 2007. In December 2003, the
Company exercised the Early Purchase Option (the EPO). The EPO was in the amount of $35.6 million and was paid from the following monies: a $2.5 million payment on a note receivable from PDS Gaming, a loan in the amount of $18.0 million,
funds from the restricted cash accounts in the amount of approximately $12.6 million, and $2.5 million from marketable securities. Obligations under lease of approximately $37.0 million were retired upon the exercise of the EPO. Accordingly, the
Company recorded a reduction of its carrying value of property and equipment at the Pioneer of approximately $1.4 million in connection with this transaction.



Pioneer



Pioneers principal uses of cash are for payments of rent and capital expenditures to maintain the facility and administrative expenses incurred in
operating a casino. The Company has implemented changes in personnel and promotional programs and installed new slot equipment to address the decreases in revenues and operating income. One of managements main focuses is to recapture market
share in the Laughlin market.



Payments of obligations under
lease were $0 million and $0.9 million for the fiscal years ended September 30, 2005 and 2004, respectively, and rent expense was approximately $0.3 million and $0.7 million for fiscal years ended September 30, 2005 and 2004, respectively.
Capital expenditures to maintain the facility in fiscal 2005 were approximately $0.2 million.



Dukes Casino



The Company had previously loaned approximately $1.4 million to Dukes  Sparks (Dukes), a Nevada limited-liability company. The Company, through its wholly-owned subsidiary ASMC, operated
Dukes casino. Chris Lowden, son of Paul W. Lowden, is a limited partner in the company which is 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. The Company has
written-off its investment in Dukes and has recorded a reserve for its receivable from Dukes of approximately $1.4 million during its fiscal year ended September 30, 2003 and has no further asset exposure from Dukes.



Preferred Stock



The Companys preferred stock provides that dividends accrue on a
semi-annual basis, to the extent not declared. Prior to fiscal 1997, the Company satisfied the semi-annual dividend payments on its preferred stock through the issuance of paid-in-kind dividends. The Company has not declared the semi-annual
preferred stock dividends since October 1, 1996. The dividend rate per annum was equal to 8% of $2.14 for each share of preferred stock until September 30, 1998, at which date the dividend rate increased to 11%; the dividend rate continued
to increase by an additional 50 basis points on each succeeding semi-annual dividend payment date up to a maximum of 16% per annum. In October 2003, the dividend rate increased to its maximum rate of 16.0%. The accrued stock dividends have not
been recorded as an increase to the preferred stock account. As of September 30, 2005, the aggregate liquidation preference of the preferred stock was approximately $20.2 million, or $4.58 per share.



Pursuant to the Certificate of Designation of Preferred Stock, dividends are
payable only when, as and if declared by the Board of Directors and the liquidation preference is payable only upon a liquidation, dissolution or winding up of the Company. Because dividends in an amount equal to dividend payments for one dividend
period have accrued and remain unpaid for at least two years, the preferred stockholders, voting as a separate class, are entitled to elect two directors. Accordingly, two of the Companys current six board members have been elected by the
preferred shareholders.



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##### Table of Contents

The Board of Directors of the Company authorized an increase in the amount of cash that may be used to
purchase preferred stock to $2.5 million. As of December 16, 2005, the Company had purchased 709,305 shares of preferred stock for $1,370,042 under this program. Previously, the Company had purchased 276,627 shares for $452,232. During the year
ended September 30, 2005, the Company purchased 106,575 preferred shares at a cost of approximately $416,000.



Recently Issued Accounting Standards



EITF 04-5. In June 2005, the U.S. Emerging Issues Task Force (EITF) reached a consensus on EITF issue 04-5, Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (EITF 04-5), addressing when a general partner, or general partners as a group, control and
should therefore, consolidate a limited partnership. Under EITF 04-5, a sole general partner is presumed to control a limited partnership when certain conditions are met. As a result, for the first reporting period beginning after December 15,
2005, it is expected that the Company will be required to include the accounts of Santa Fe Mining Corp (SFMC) for U.S. GAAP purposes.



The Company currently accounts for its 50% ownership in SFMC using the equity method of accounting whereby its equity in SFMC is reflected in the caption
Other assets within its consolidated balance sheets. After adopting this accounting guidance, the Company will consolidate all accounts of SFMC into its consolidated financial statements.



SFAS 123R In December 2004, the Financial Accounting Standards Board
(the FASB) issued SFAS 123R (revised 2004), Share-Based Payment, replacing Statement of Financial Accounting Standard (SFAS) 123, Accounting for Stock-Based Compensation and superseding APB 25, Accounting for
Stock Issued to Employees. SFAS 123R requires recognition of share-based compensation in the financial statements. SFAS 123R will be effective for the first annual reporting period that begins after June 15, 2005, which will be the
Companys first quarter of fiscal 2006. We continue to evaluate our stock-based compensation policies and currently expect to continue using the Black-Scholes valuation model. We estimate the adoption of SFAS 123R will not have a significant
impact on our consolidated statements of operations.



FIN
46. In January 2003, FASB issued FASB Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities(VIEs). In December 2003, the FASB reissued Interpretation No. 46 (FIN 46R) with
certain modifications and clarifications. Application of FIN 46R is effective for interests in certain variable interest entities for periods ending after March 15, 2004 unless FIN 46 was previously applied. FIN 46R establishes standards for
determining under what circumstances VIEs should be consolidated with their primary beneficiary, including those in which the usual condition for consolidation does not apply. FIN 46R also requires disclosures about unconsolidated VIEs in which the
Company has a significant variable interest. The consolidation requirements of FIN 46R apply immediately to VIEs created after January 31, 2003 and were effective beginning in the Companys second quarter ended March 31, 2004. The
Company has evaluated its relationships and does not believe it has any significant, consolidatable VIEs. As such, the adoption of this Interpretation had no impact on the Companys results of operations and financial position.



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 investment properties are generally borne by the tenants. 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



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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 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 process. Excluding its non-recourse debt, the Company has total
interest-bearing debt of approximately $15 million, of which approximately $14 million bears interest at a variable rate (at rates ranging from 7.25% and 7.75% at September 30, 2005). Therefore, the Company maintains certain market rate risk
related to this debt. A change in the interest rates of 1% would cause an approximate $140,000 change in the amount of interest the Company would incur based on the amount of variable debt outstanding at September 30, 2005. 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, 2005, 2004 (Restated) and 2003



|                                                                                                          |  |         
|--------------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                          |  | Page No.
|Report of Independent Registered Public Accounting Firm  Ernst & Young LLP                               |  | 24      
|Report of Independent Registered Public Accounting Firm  Deloitte & Touche LLP                           |  | 25      
|Consolidated Balance Sheets as of September 30, 2005 and 2004 (As Restated)                               |  | 26      
|Consolidated Statements of Operations for the Years Ended September 30, 2005, 2004 and 2003               |  | 28      
|Consolidated Statements of Stockholders Equity for the Years Ended September 30, 2005, 2004 and 2003     |  | 29      
|Consolidated Statements of Cash Flows for the Years Ended September 30, 2005, 2004 (As Restated) and 2003 |  | 30      
|Notes to Consolidated Financial Statements                                                                |  | 31      



Financial Statement
Schedules are omitted because of the absence of conditions under which they are required or because the information is included in the financial statements or the notes thereto.



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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, 2005, and the related consolidated statement 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, 2005, and the consolidated results of its operations and its
cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.



Las Vegas, Nevada

December 15, 2005



/s/ Ernst & Young, LLP



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##### Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Stockholders of Archon Corporation:



We have audited the accompanying consolidated balance sheet of Archon Corporation and subsidiaries (the Company) as of September 30, 2004 and the related
consolidated statements of operations, stockholders equity and cash flows for each of the two years in the period ended September 30, 2004. These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with 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 audits provide a reasonable basis for our opinion.



In our opinion, such consolidated financial statements present fairly, in all material
respects, the financial position of Archon Corporation and subsidiaries as of September 30, 2004, and the results of their operations and their cash flows for each of the two years in the period ended September 30, 2004, in conformity with
accounting principles generally accepted in the United States of America.



As
discussed in Note 18, the accompanying financial statements as and for the year ended September 30, 2004 have been restated.



DELOITTE & TOUCHE LLP

Las Vegas, Nevada

December 23, 2004 (January 6, 2006 as to the effects of the
restatement discussed in Note 18)



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets

as of September 30, 2005 and 2004



|                                         |  |      |             |   |                            |   |             |  
|---------------------------------------- |  | ---- | ----------- | - | -------------------------- | - | ----------- | -
|                                         |  | 2005 |             |   | 2004                       |  
|                                         |  |      |             |   | (As Restated, See Note 18) |  
|ASSETS                                   |  |      |             |   |                            |   |             |  
|Current assets:                          |  |      |             |   |                            |   |             |  
|Cash and cash equivalents                |  | $    | 2,116,708   |   |                            | $ | 3,442,418   |  
|Investment in marketable securities      |  |      | 6,803,967   |   |                            |   | 5,398,441   |  
|Accounts receivable, net                 |  |      | 1,051,998   |   |                            |   | 3,286,668   |  
|Inventories                              |  |      | 355,459     |   |                            |   | 294,162     |  
|Prepaid expenses and other               |  |      | 761,307     |   |                            |   | 805,578     |  
|                                         |  |      |             |   |                            |   |             |  
|Total current assets                     |  |      | 11,089,439  |   |                            |   | 13,227,267  |  
|                                         |  |     
|Property and equipment:                  |  |      |             |   |                            |   |             |  
|Land held for development                |  |      | 21,504,400  |   |                            |   | 21,504,400  |  
|Rental property held for investment, net |  |      | 130,536,513 |   |                            |   | 133,708,401 |  
|Land used in operations                  |  |      | 8,125,589   |   |                            |   | 8,125,589   |  
|Buildings and improvements               |  |      | 35,365,442  |   |                            |   | 35,309,806  |  
|Machinery and equipment                  |  |      | 9,230,908   |   |                            |   | 9,840,218   |  
|Accumulated depreciation                 |  |      | (24,008,187 | ) |                            |   | (22,113,300 | )
|                                         |  |      |             |   |                            |   |             |  
|Property and equipment, net              |  |      | 180,754,665 |   |                            |   | 186,375,114 |  
|Other assets                             |  |      | 7,793,447   |   |                            |   | 7,329,354   |  
|                                         |  |      |             |   |                            |   |             |  
|Total assets                             |  | $    | 199,637,551 |   |                            | $ | 206,931,735 |  
|                                         |  |      |             |   |                            |   |             |  



See
the accompanying Notes to Consolidated Financial Statements.



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Balance Sheets  (continued)

as of September 30, 2005
and 2004



|                                                                                                                                                                                                                                                                                                                         |  |      |             |   |                            |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ----------- | - | -------------------------- | - | ----------- | -
|                                                                                                                                                                                                                                                                                                                         |  | 2005 |             |   | 2004                       |  
|                                                                                                                                                                                                                                                                                                                         |  |      |             |   | (As Restated, See Note 18) |  
|LIABILITIES and STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                                                     |  |      |             |   |                            |   |             |  
|Current liabilities:                                                                                                                                                                                                                                                                                                     |  |      |             |   |                            |   |             |  
|Accounts payable                                                                                                                                                                                                                                                                                                         |  | $    | 2,096,606   |   |                            | $ | 2,138,077   |  
|Interest payable                                                                                                                                                                                                                                                                                                         |  |      | 1,255,096   |   |                            |   | 1,939,750   |  
|Accrued and other liabilities                                                                                                                                                                                                                                                                                            |  |      | 3,197,668   |   |                            |   | 3,220,391   |  
|Current portion of debt                                                                                                                                                                                                                                                                                                  |  |      | 14,915,525  |   |                            |   | 13,475,761  |  
|Current portion of non-recourse debt                                                                                                                                                                                                                                                                                     |  |      | 1,915,478   |   |                            |   | 30,057,775  |  
|                                                                                                                                                                                                                                                                                                                         |  |      |             |   |                            |   |             |  
|Total current liabilities                                                                                                                                                                                                                                                                                                |  |      | 23,380,373  |   |                            |   | 50,831,754  |  
|                                                                                                                                                                                                                                                                                                                         |  |     
|Debt - less current portion                                                                                                                                                                                                                                                                                              |  |      | 484,856     |   |                            |   | 1,127,915   |  
|Non-recourse debt - less current portion                                                                                                                                                                                                                                                                                 |  |      | 79,013,926  |   |                            |   | 80,929,404  |  
|Deferred income taxes                                                                                                                                                                                                                                                                                                    |  |      | 27,353,693  |   |                            |   | 29,748,077  |  
|Deferred rent and other accrued liabilities                                                                                                                                                                                                                                                                              |  |      | 48,021,017  |   |                            |   | 21,902,820  |  
|Commitments and contingencies (see Note 15)                                                                                                                                                                                                                                                                              |  |      |             |   |                            |   |             |  
|                                                                                                                                                                                                                                                                                                                         |  |     
|Stockholders equity:                                                                                                                                                                                                                                                                                                    |  |      |             |   |                            |   |             |  
|Common stock, $.01 par value; authorized-100,000,000 shares; issued and outstanding  6,235,931 and 6,221,431 shares on
September 30, 2005 and 2004                                                                                                                                                                      |  |      | 62,359      |   |                            |   | 62,214      |  
|Preferred stock, exchangeable, redeemable 16.0% cumulative, stated at $2.14 liquidation value, authorized-10,000,000 shares; issued and
outstanding  4,413,777 shares on September 30, 2005 and 4,520,352 shares on September 30, 2004 with cumulative dividends in arrears of $10,791,464 and $9,504,266, respectively |  |      | 9,445,483   |   |                            |   | 9,673,553   |  
|Additional paid-in capital                                                                                                                                                                                                                                                                                               |  |      | 58,342,933  |   |                            |   | 54,582,364  |  
|Accumulated deficit                                                                                                                                                                                                                                                                                                      |  |      | (47,742,393 | ) |                            |   | (42,830,615 | )
|Accumulated other comprehensive income                                                                                                                                                                                                                                                                                   |  |      | 1,363,078   |   |                            |   | 992,023     |  
|                                                                                                                                                                                                                                                                                                                         |  |      |             |   |                            |   |             |  
|Subtotal                                                                                                                                                                                                                                                                                                                 |  |      | 21,471,460  |   |                            |   | 22,479,539  |  
|Less treasury common stock  4,875 shares, at cost                                                                                                                                                                                                                                                                       |  |      | (87,774     | ) |                            |   | (87,774     | )
|                                                                                                                                                                                                                                                                                                                         |  |      |             |   |                            |   |             |  
|Total stockholders equity                                                                                                                                                                                                                                                                                               |  |      | 21,383,686  |   |                            |   | 22,391,765  |  
|                                                                                                                                                                                                                                                                                                                         |  |      |             |   |                            |   |             |  
|Total liabilities and stockholders equity                                                                                                                                                                                                                                                                               |  | $    | 199,637,551 |   |                            | $ | 206,931,735 |  
|                                                                                                                                                                                                                                                                                                                         |  |      |             |   |                            |   |             |  



See
the accompanying Notes to Consolidated Financial Statements.



27



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Operations

For the Years Ended September 30, 2005, 2004 and 2003



|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                        |  | 2005 |             |   | 2004 |   |             | 2003 | 
|Revenues:                                               |  |      |             |   |      |   |             |      |  |   |             |  
|Casino                                                  |  | $    | 24,119,395  |   |      | $ | 27,470,751  |      |  | $ | 27,948,767  |  
|Hotel                                                   |  |      | 2,782,506   |   |      |   | 3,125,408   |      |  |   | 2,689,656   |  
|Food and beverage                                       |  |      | 6,914,157   |   |      |   | 8,381,094   |      |  |   | 7,385,940   |  
|Investment properties                                   |  |      | 12,402,247  |   |      |   | 12,402,247  |      |  |   | 12,402,246  |  
|Other                                                   |  |      | 3,088,930   |   |      |   | 2,166,278   |      |  |   | 2,576,058   |  
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Gross revenues                                          |  |      | 49,307,235  |   |      |   | 53,545,778  |      |  |   | 53,002,667  |  
|Less casino promotional allowances                      |  |      | (5,619,377  | ) |      |   | (7,853,205  | )    |  |   | (6,841,198  | )
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Net operating revenues                                  |  |      | 43,687,858  |   |      |   | 45,692,573  |      |  |   | 46,161,469  |  
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Operating expenses:                                     |  |      |             |   |      |   |             |      |  |   |             |  
|Casino                                                  |  |      | 13,051,698  |   |      |   | 15,126,830  |      |  |   | 16,337,894  |  
|Hotel                                                   |  |      | 1,040,601   |   |      |   | 669,411     |      |  |   | 733,436     |  
|Food and beverage                                       |  |      | 4,138,451   |   |      |   | 4,382,641   |      |  |   | 3,567,409   |  
|Other                                                   |  |      | 1,204,775   |   |      |   | 1,133,699   |      |  |   | 1,828,325   |  
|Selling, general and administrative                     |  |      | 3,550,890   |   |      |   | 4,325,537   |      |  |   | 4,806,533   |  
|Stock-based compensation expense                        |  |      | 3,929,634   |   |      |   | 50,000      |      |  |   | 0           |  
|Corporate expenses                                      |  |      | 3,704,775   |   |      |   | 3,800,474   |      |  |   | 2,796,269   |  
|Utilities and property expenses                         |  |      | 4,702,176   |   |      |   | 5,088,568   |      |  |   | 5,236,325   |  
|Depreciation and amortization                           |  |      | 5,834,726   |   |      |   | 5,980,476   |      |  |   | 6,227,593   |  
|Provision for receivable and investment                 |  |      | 0           |   |      |   | 162,225     |      |  |   | 1,700,000   |  
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Total operating expenses                                |  |      | 41,157,726  |   |      |   | 40,719,861  |      |  |   | 43,233,784  |  
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Operating income                                        |  |      | 2,530,132   |   |      |   | 4,972,712   |      |  |   | 2,927,685   |  
|Interest expense                                        |  |      | (11,059,577 | ) |      |   | (12,880,017 | )    |  |   | (16,415,615 | )
|(Loss) / gain on sale of assets                         |  |      | (244,648    | ) |      |   | 3,953,148   |      |  |   | 0           |  
|Interest income                                         |  |      | 304,361     |   |      |   | 860,165     |      |  |   | 1,489,483   |  
|Other income                                            |  |      | 963,773     |   |      |   | 298,763     |      |  |   | 0           |  
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Loss before income tax benefit                          |  |      | (7,505,959  | ) |      |   | (2,795,229  | )    |  |   | (11,998,447 | )
|Federal income tax benefit                              |  |      | 2,594,181   |   |      |   | 913,487     |      |  |   | 4,151,668   |  
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Net loss                                                |  |      | (4,911,778  | ) |      |   | (1,881,742  | )    |  |   | (7,846,779  | )
|Dividends accrued on preferred shares                   |  |      | (1,511,277  | ) |      |   | (1,562,171  | )    |  |   | (1,526,611  | )
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Net loss applicable to common shares                    |  | $    | (6,423,055  | ) |      | $ | (3,443,913  | )    |  | $ | (9,373,390  | )
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Average common shares outstanding                       |  |      | 6,229,015   |   |      |   | 6,221,431   |      |  |   | 6,221,431   |  
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Average common and common equivalent shares outstanding |  |      | 6,229,015   |   |      |   | 6,221,431   |      |  |   | 6,221,431   |  
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  
|Basic and diluted loss per common share                 |  | $    | (1.03       | ) |      | $ | (0.55       | )    |  | $ | (1.51       | )
|                                                        |  |      |             |   |      |   |             |      |  |   |             |  



See
the accompanying Notes to Consolidated Financial Statements.



28



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Stockholders Equity

For the Years Ended September 30, 2005, 2004 and 2003



|                                         |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   |            |  
|---------------------------------------- |  | ------------ | ------ | --------------- | - | ---------- | -------------------------- |  | - | ------------------- | - |  | --------------------------------------------- | ----------- | - | ------------------------------ | - | --------- | -------------- |  | - | ------- | - |  | - | ------- | - |  | - | ---------- | -
|                                         |  | Common Stock |        | Preferred Stock |   |            | Additional Paid-In Capital |  |   | Accumulated Deficit |   |  | Accumulated Other Comprehensive Income/(Loss) |             |   | Stock Subscriptions Receivable |   |           | Treasury Stock |  |   | Total   |  
|Balances, October 1, 2002                |  | $            | 62,214 |                 | $ | 10,866,321 |                            |  | $ | 53,725,743          |   |  | $                                             | (33,102,094 | ) |                                | $ | (94,678   | )              |  | $ | (73,743 | ) |  | $ | (87,774 | ) |  | $ | 31,295,989 |  
|Net loss                                 |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               | (7,846,779  | ) |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | (7,846,779 | )
|Preferred stock purchased                |  |              |        |                 |   | (940,100   | )                          |  |   | 310,963             |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | (629,137   | )
|Capital contributions                    |  |              |        |                 |   |            |                            |  |   | 492,364             |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | 492,364    |  
|Unrealized gain on marketable securities |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   | 939,519   |                |  |   |         |   |  |   |         |   |  |   | 939,519    |  
|                                         |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   |            |  
|Balances, September 30, 2003             |  |              | 62,214 |                 |   | 9,926,221  |                            |  |   | 54,529,070          |   |  |                                               | (40,948,873 | ) |                                |   | 844,841   |                |  |   | (73,743 | ) |  |   | (87,774 | ) |  |   | 24,251,956 |  
|Net loss                                 |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               | (1,881,742  | ) |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | (1,881,742 | )
|Preferred stock purchased                |  |              |        |                 |   | (252,668   | )                          |  |   | 3,294               |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | (249,374   | )
|Stock-based compensation expense         |  |              |        |                 |   |            |                            |  |   | 50,000              |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | 50,000     |  
|Stock subscriptions received             |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   |           |                |  |   | 73,743  |   |  |   |         |   |  |   | 73,743     |  
|Unrealized gain on marketable securities |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   | 147,182   |                |  |   |         |   |  |   |         |   |  |   | 147,182    |  
|                                         |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   |            |  
|Balances, September 30, 2004             |  |              | 62,214 |                 |   | 9,673,553  |                            |  |   | 54,582,364          |   |  |                                               | (42,830,615 | ) |                                |   | 992,023   |                |  |   | 0       |   |  |   | (87,774 | ) |  |   | 22,391,765 |  
|Net loss                                 |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               | (4,911,778  | ) |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | (4,911,778 | )
|Preferred stock purchased                |  |              |        |                 |   | (228,070   | )                          |  |   | (188,340            | ) |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | (416,410   | )
|Exercise of stock options                |  |              | 145    |                 |   |            |                            |  |   | 19,275              |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | 19,420     |  
|Stock-based compensation expense         |  |              |        |                 |   |            |                            |  |   | 3,929,634           |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   | 3,929,634  |  
|Unrealized gain on marketable securities |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   | 371,055   |                |  |   |         |   |  |   |         |   |  |   | 371,055    |  
|                                         |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   |            |  
|Balances, September 30, 2005             |  | $            | 62,359 |                 | $ | 9,445,483  |                            |  | $ | 58,342,933          |   |  | $                                             | (47,742,393 | ) |                                | $ | 1,363,078 |                |  | $ | 0       |   |  | $ | (87,774 | ) |  | $ | 21,383,686 |  
|                                         |  |              |        |                 |   |            |                            |  |   |                     |   |  |                                               |             |   |                                |   |           |                |  |   |         |   |  |   |         |   |  |   |            |  



See
the accompanying Notes to Consolidated Financial Statements.



29



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##### Table of Contents

Archon Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended September 30, 2005, 2004 and 2003



|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  
|------------------------------------------------------------------------------- |  | ---- | ----------- | - | ------------------------- | - | ----------- | ---- |  | - | ---------- | -
|                                                                                |  | 2005 |             |   | 2004                      |   |             | 2003 | 
|                                                                                |  |      |             |   | (As Restated,See Note 18) |   |             |      | 
|Cash flows from operating activities:                                           |  |      |             |   |                           |   |             |      |  |   |            |  
|Net loss                                                                        |  | $    | (4,911,778  | ) |                           | $ | (1,881,742  | )    |  | $ | (7,846,779 | )
|Adjustments to reconcile net loss to net cash provided by operating activities: |  |      |             |   |                           |   |             |      |  |   |            |  
|Depreciation and amortization                                                   |  |      | 5,834,726   |   |                           |   | 5,980,476   |      |  |   | 6,227,593  |  
|Interest expense from amortization of debt issuance costs                       |  |      | 615,976     |   |                           |   | 342,934     |      |  |   | 231,996    |  
|Stock-based compensation expense                                                |  |      | 3,929,634   |   |                           |   | 50,000      |      |  |   | 0          |  
|Provision for doubtful receivables                                              |  |      | 36,916      |   |                           |   | 31,220      |      |  |   | 40,999     |  
|Loss (gain) on sale of assets                                                   |  |      | 244,648     |   |                           |   | (3,953,148  | )    |  |   | 0          |  
|Negative amortization of debt                                                   |  |      | 0           |   |                           |   | 344,685     |      |  |   | 1,272,197  |  
|Change in assets and liabilities:                                               |  |      |             |   |                           |   |             |      |  |   |            |  
|Accounts receivable, net                                                        |  |      | 2,197,754   |   |                           |   | (139,745    | )    |  |   | 6,802      |  
|Inventories                                                                     |  |      | (61,297     | ) |                           |   | (5,215      | )    |  |   | (2,362     | )
|Prepaid expenses and other                                                      |  |      | 44,272      |   |                           |   | (50,041     | )    |  |   | 219,661    |  
|Deferred income taxes                                                           |  |      | (2,594,181  | ) |                           |   | (725,498    | )    |  |   | (4,151,668 | )
|Other assets                                                                    |  |      | (255,069    | ) |                           |   | (67,659     | )    |  |   | (341,946   | )
|Accounts payable                                                                |  |      | (41,471     | ) |                           |   | 175,273     |      |  |   | 741,383    |  
|Interest payable                                                                |  |      | (684,654    | ) |                           |   | (310,204    | )    |  |   | (35,294    | )
|Accrued and other liabilities                                                   |  |      | (862,212    | ) |                           |   | 5,465,248   |      |  |   | 6,027,592  |  
|Other liabilities                                                               |  |      | 26,957,686  |   |                           |   | 0           |      |  |   | 0          |  
|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  
|Net cash provided by operating activities                                       |  |      | 30,450,950  |   |                           |   | 5,256,584   |      |  |   | 2,390,174  |  
|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  
|Cash flows from investing activities:                                           |  |      |             |   |                           |   |             |      |  |   |            |  
|Proceeds from sale of assets                                                    |  |      | 0           |   |                           |   | 5,770,000   |      |  |   | 0          |  
|Decrease (increase) in restricted cash                                          |  |      | 0           |   |                           |   | 13,898,971  |      |  |   | (483,814   | )
|Capital expenditures                                                            |  |      | (458,926    | ) |                           |   | (989,102    | )    |  |   | (2,022,838 | )
|Marketable securities purchased                                                 |  |      | (946,133    | ) |                           |   | (272,214    | )    |  |   | (1,067,096 | )
|Marketable securities sold                                                      |  |      | 111,459     |   |                           |   | 2,817,330   |      |  |   | 6,531,199  |  
|Investment in partnerships                                                      |  |      | (825,000    | ) |                           |   | (525,000    | )    |  |   | 0          |  
|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  
|Net cash (used in) provided by investing activities                             |  |      | (2,118,600  | ) |                           |   | 20,699,985  |      |  |   | 2,957,451  |  
|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  
|Cash flows from financing activities:                                           |  |      |             |   |                           |   |             |      |  |   |            |  
|Proceeds from long-term debt                                                    |  |      | 2,408,865   |   |                           |   | 18,565,751  |      |  |   | 2,867,171  |  
|Paid on long-term debt and obligation under capital lease                       |  |      | (31,669,935 | ) |                           |   | (51,203,512 | )    |  |   | (5,956,780 | )
|Note receivable                                                                 |  |      | 0           |   |                           |   | 4,884,301   |      |  |   | (4,884,301 | )
|Debt issuance costs                                                             |  |      | 0           |   |                           |   | (437,414    | )    |  |   | 0          |  
|Preferred stock acquired                                                        |  |      | (416,410    | ) |                           |   | (249,374    | )    |  |   | (629,137   | )
|Capital contributions                                                           |  |      | 0           |   |                           |   | 0           |      |  |   | 492,364    |  
|Stock subscription received                                                     |  |      | 0           |   |                           |   | 73,743      |      |  |   | 0          |  
|Stock options exercised                                                         |  |      | 19,420      |   |                           |   | 0           |      |  |   | 0          |  
|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  
|Net cash used in financing activities                                           |  |      | (29,658,060 | ) |                           |   | (28,366,505 | )    |  |   | (8,110,683 | )
|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  
|Decrease in cash and cash equivalents                                           |  |      | (1,325,710  | ) |                           |   | (2,409,936  | )    |  |   | (2,763,058 | )
|Cash and cash equivalents, beginning of year                                    |  |      | 3,442,418   |   |                           |   | 5,852,354   |      |  |   | 8,615,412  |  
|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  
|Cash and cash equivalents, end of year                                          |  | $    | 2,116,708   |   |                           | $ | 3,442,418   |      |  | $ | 5,852,354  |  
|                                                                                |  |      |             |   |                           |   |             |      |  |   |            |  



See
the accompanying Notes to Consolidated Financial Statements.



30



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##### Table of Contents

ARCHON CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended September 30, 2005, 2004 and 2003



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 investment properties in Dorchester, Massachusetts and Gaithersburg, Maryland.



On December 29, 2000, the Company entered into a series of agreements to exchange, pursuant to Sections 721 and 351 of the Internal Revenue Code of
1986, as amended (the Code), the real and personal property, excluding gaming equipment, and intangible assets used in the operation of the Pioneer to a third party and agreed to lease and license the assets sold for up to 20 years,
during which period the Company would operate the Pioneer (collectively, the Pioneer Transactions). Additionally, the Company had the option to acquire the Pioneer during the period from December 29, 2003 to December 31, 2007.
On November 13, 2003, the Company notified GE Capital that in accordance with Article 25 of the lease between HAHF Pioneer, LLC (GE) and PHI, the Company would exercise its Early Purchase Option (EPO) on
December 29, 2003. The EPO was exercised in the amount of $35.6 million and was paid from the following monies: a $2.5 million payment on a note receivable from PDS Gaming, a loan in the amount of $18.0 million, funds from the restricted cash
accounts in the amount of approximately $12.6 million, and $2.5 million from marketable securities.



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.



Cash and Cash Equivalents



Investments which mature within 90 days from the date of purchase are treated as cash equivalents. These investments are stated at cost which approximates
their market value.



Investment in Marketable Securities



Debt securities available-for-sale are stated at
market value with unrealized gains or losses reported as a component of accumulated other comprehensive income. Gains or losses on disposition are based on the net proceeds and the adjusted carrying amount of the securities. Debt securities
available-for-sale at September 30, 2005 and 2004 include investments in government obligations and corporate securities.



Equity securities available-for-sale are reported at fair value with unrealized gains or losses reported as a component of accumulated other comprehensive
income. Realized gains and losses are determined on a specific identification method. At September 30, 2005 and 2004, equity securities available-for-sale included investments in common and preferred stock.



31



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##### Table of Contents

Included in Other income with the consolidated statements of operations are approximately
$112,000, $94,000 and $(101,000) of realized gains / (losses) for the years ended September 30, 2005, 2004 and 2003, respectively. The Company recorded approximately $371,000, $147,000 and $940,000 of other comprehensive gain associated with
unrealized gains or losses on these securities during the years ended September 30, 2005, 2004 and 2003, respectively.



The following is a summary of available-for-sale marketable securities as of September 30, 2005 and 2004:



|                      |  |      |           |                |   |                  |  |                      |         |  |   |          
|--------------------- |  | ---- | --------- | -------------- | - | ---------------- |  | -------------------- | ------- |  | - | ---------
|                      |  | 2005
|                      |  | Cost |           | UnrealizedGain |   | UnrealizedLosses |  | Market or Fair Value
|Other debt securities |  | $    | 2,600,000 |                | $ | 46,900           |  | $                    | 146,800 |  | $ | 2,500,100
|                      |  |      |           |                |   |                  |  |                      |         |  |   |          
|Total debt securities |  |      | 2,600,000 |                |   | 46,900           |  |                      | 146,800 |  |   | 2,500,100
|Equity securities     |  |      | 2,106,925 |                |   | 2,272,134        |  |                      | 75,192  |  |   | 4,303,867
|                      |  |      |           |                |   |                  |  |                      |         |  |   |          
|Total                 |  | $    | 4,706,925 |                | $ | 2,319,034        |  | $                    | 221,992 |  | $ | 6,803,967
|                      |  |      |           |                |   |                  |  |                      |         |  |   |          
|                      | 
|                      |  | 2004
|                      |  | Cost |           | UnrealizedGain |   | UnrealizedLosses |  | Market orFair Value 
|Other debt securities |  | $    | 2,600,000 |                | $ | 104,120          |  | $                    | 0       |  | $ | 2,704,120
|                      |  |      |           |                |   |                  |  |                      |         |  |   |          
|Total debt securities |  |      | 2,600,000 |                |   | 104,120          |  |                      | 0       |  |   | 2,704,120
|Equity securities     |  |      | 1,272,251 |                |   | 1,483,145        |  |                      | 61,075  |  |   | 2,694,321
|                      |  |      |           |                |   |                  |  |                      |         |  |   |          
|Total                 |  | $    | 3,872,251 |                | $ | 1,587,265        |  | $                    | 61,075  |  | $ | 5,398,441
|                      |  |      |           |                |   |                  |  |                      |         |  |   |          



All debt contractually
matures more than ten years in the future as of September 30, 2005 and 2004.



Accounts Receivable



Accounts
receivable are stated at cost, net of related allowance for doubtful accounts. The allowance for doubtful accounts is determined based on a specific identification method.



Inventories



Food, beverage, gift shop and other inventories are stated at first-in, first-out cost, not in excess of market.



Property and Equipment



Property and equipment are stated at cost less accumulated depreciation.
Costs of maintenance and repairs of property and equipment are expensed as incurred. Costs of major improvements are capitalized and depreciated over the estimated useful lives of the assets or the remaining term of the leases. Gains or losses on
the disposal of property and equipment are recognized in the year of sale. In sale/leaseback transactions of equipment, gains are deferred and recognized over the lease term and losses are recognized in the year of sale.



The Company periodically assesses the recoverability of property and
equipment and evaluates such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not



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be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest
charges, are less than the carrying amount in accordance with Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (SFAS 144).



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



Pre-Opening Expenses and Capitalized Interest



The Company expenses development costs as incurred. Interest costs are
capitalized on funds disbursed during the development phase of projects and expensed pursuant to depreciation and amortization methods over the assets estimated useful life.



Slot Club Liability



The Pioneer has a program called the Bounty Hunter 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. Included in accrued liabilities is approximately $1.5 million and $0.6 million at September 30, 2005 and 2004, respectively for estimated redemption value of points accumulated by patrons. This value is estimated based on
historical amounts of free gift costs redeemed.



Federal Income Taxes



Deferred income taxes are provided on temporary
differences between pre-tax financial statement income and taxable income resulting primarily from different methods of depreciation and amortization. The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for
Income Taxes (SFAS 109).



Treasury Stock



Treasury stock is the Companys common stock
that has been issued and subsequently reacquired. The acquisition of common stock is accounted for under the cost method, and presented as a reduction of stockholders equity.



Revenue Recognition



Casino revenue is recorded as gaming wins less losses. Revenues include the retail amount of room, food, beverage and other services provided gratuitously
to customers. Such amounts are then deducted as promotional allowances. 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):



|                  |  |      |       |      |   |       |  |   |      
|----------------- |  | ---- | ----- | ---- | - | ----- |  | - | -----
|                  |  | 2005 |       | 2004 |   | 2003 
|Food and beverage |  | $    | 4,061 |      | $ | 5,217 |  | $ | 4,661
|Hotel             |  |      | 409   |      |   | 855   |  |   | 893  
|Other             |  |      | 195   |      |   | 138   |  |   | 78   
|                  |  |      |       |      |   |       |  |   |      
|Total             |  | $    | 4,665 |      | $ | 6,210 |  | $ | 5,632
|                  |  |      |       |      |   |       |  |   |      



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Rental revenue from investment properties is recognized and accrued as earned on a pro rata basis over
the term of the lease. When rents received exceed rents recognized, the difference is recorded as other liabilities. When rents recognized exceed rents received, the difference is recorded as other assets.



Indirect Expenses



Certain indirect expenses of operating departments such as utilities and
property expense and depreciation and amortization are shown separately in the accompanying Consolidated Statements of Operations.



Earnings Per Share



The Company presents its per share results in accordance with SFAS No. 128, Earnings Per Share (SFAS 128). SFAS 128 requires the
presentation of basic net loss per share and diluted net loss per share. Basic per share amounts are computed by dividing net loss by average shares outstanding during the period, while diluted per share amounts reflect the impact of additional
dilution for all potentially dilutive securities, such as stock options. The effect of options outstanding was not included in diluted calculations during fiscal years 2005, 2004 and 2003 since the Company incurred a net loss. Stock options of
approximately 800,000, 500,000 and 500,000 for the years ended September 30, 2005, 2004 and 2003, respectively, have not been included in the computation of diluted net loss per share as their effect would be antidilutive.



The Board of Directors of the Company has authorized the purchase from time
to time by the Company of preferred stock for total consideration of up to $2.5 million. Pursuant to the Certificate of Designation of the preferred stock, shares of preferred stock acquired by the Company are retired.



Accounting for Stock-Based Compensation



The Company had a Key Employee Stock Option Plan (the Stock Option
Plan), which ceased granting options in 2003. In July 2005, shareholders approved the reinstatement and an amendment to the Stock Option Plan which allows the plan to be reinstated until 2013. The Company accounts for the Stock Option Plan
under the recognition and measurement principles of Accounting Principles Board Opinion (APB) No. 25, Accounting for Stock Issued to Employeesand related Interpretations.



During the fiscal third quarter 2005, certain stock options were granted by
the compensation committee of the Companys board of directors to Christopher Lowden, David Lowden and Paul Lowden. Each individual received a grant of 150,000 stock options (Paul Lowden, however, notified the compensation committee in May 2005
that he was forfeiting the award that was to be granted to him). The options were granted in April 2005 and included terms of immediate vesting and were intended to be issued with an exercise price of $1.00 per share. However, the Compensation
Committee, decided in June 2005 that the options granted in April 2005 were to be granted with an exercise price equal to the closing market price of the Companys common stock on the date of grant. The Company recognized stock-based
compensation associated with the issuance of the stock options of approximately $1.6 million, net of taxes, representing the difference in the Companys common stock price between the date of grant and the measurement date of the options.
Additionally, the compensation committee approved an extension of other previously issued stock options which otherwise would have expired. A charge of approximately $1.0 million related to this extension of stock options was recorded, net of taxes.
The following table illustrates the effect on net loss and loss per share as if the Company had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee
compensation (in thousands except for per share amounts):



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|                                               |  |                                                                                                                                     |        |   |        |   |        |      |     |   |        |   |    |  
|---------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------- | ------ | - | ------ | - | ------ | ---- | --- | - | ------ | - | -- | -
|                                               |  | Years Ended September 30,                                                                                                           |       
|                                               |  | 2005                                                                                                                                |        |   | 2004   |   |        | 2003 |    
|Net loss applicable to common shares           |  | $                                                                                                                                   | (6,423 | ) |        | $ | (3,444 | )    |     | $ | (9,373 | )
|Add:                                           |  | Compensation cost recorded on the consolidated statements of operations, net of related tax effects                                 |        |   | 2,554  |   |        |      | 33  |   |        |   | 0  |  
|Deduct:                                        |  | Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |        |   | (2,383 | ) |        |      | (33 | ) |        |   | (1 | )
|                                               |  |                                                                                                                                     |        |   |        |   |        |      |     |   |        |  
|Pro forma net loss applicable to common shares |  | $                                                                                                                                   | (6,252 | ) |        | $ | (3,444 | )    |     | $ | (9,374 | )
|                                               |  |                                                                                                                                     |        |   |        |   |        |      |     |   |        |  
|Loss per common share:                         |  |                                                                                                                                     |        |   |        |   |        |      |     |   |        |  
|Basic and diluted  as reported                |  | $                                                                                                                                   | (1.03  | ) |        | $ | (0.55  | )    |     | $ | (1.51  | )
|                                               |  |                                                                                                                                     |        |   |        |   |        |      |     |   |        |  
|Basic and diluted  pro forma                  |  | $                                                                                                                                   | (1.00  | ) |        | $ | (0.55  | )    |     | $ | (1.51  | )
|                                               |  |                                                                                                                                     |        |   |        |   |        |      |     |   |        |  



Estimates and Assumptions



The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Significant estimates used by the Company include estimated useful lives for depreciable and amortizable assets, certain other estimated
liabilities and valuation reserves and estimated cash flows in assessing the recoverability of long-lived assets. Actual results may differ from estimates.



Recently Issued Accounting Standards



EITF 04-5. In June 2005, the U.S. Emerging Issues Task Force (EITF) reached a consensus on EITF issue 04-5, Determining Whether a
General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights (EITF 04-5), addressing when a general partner, or general partners as a group, control and
should therefore, consolidate a limited partnership. Under EITF 04-5, a sole general partner is presumed to control a limited partnership when certain conditions are met. As a result, for the first reporting period beginning after December 15,
2005, it is expected that the Company will be required to include the accounts of Santa Fe Mining Corp (SFMC) for U.S. GAAP purposes.



The Company currently accounts for its 50% ownership in SFMC using the equity method of accounting whereby its equity in SFMC is reflected in the caption
Other assets within its consolidated balance sheets. After adopting this accounting guidance, the Company will consolidate all accounts of SFMC into its consolidated financial statements.



SFAS 123R In December 2004, FASB issued Statement of Financial
Accounting Standard (SFAS) 123R (revised 2004), Share-Based Payment, replacing SFAS 123, Accounting for Stock-Based Compensation and superseding APB 25, Accounting for Stock Issued to Employees. SFAS 123R requires
recognition of share-based compensation in the financial statements. SFAS 123R will be effective for the first annual reporting period that begins after June 15, 2005, which will be the Companys first quarter of fiscal 2006. We continue
to evaluate our stock-based compensation policies and currently expect to continue using the Black-Scholes valuation model. We estimate the adoption of SFAS 123R will not have a significant impact on our consolidated statements of operations.



FIN 46. In January 2003, the FASB issued FASB
Interpretation No. (FIN) 46, Consolidation of Variable Interest Entities(VIEs). In December 2003, the FASB reissued Interpretation No. 46 (FIN 46R) with certain modifications and clarifications.
Application of FIN 46R was effective for interests in certain variable interest entities for periods ending after March 15, 2004 unless FIN 46 was previously applied. FIN 46R establishes



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standards for determining under what circumstances VIEs should be consolidated with their primary beneficiary, including
those in which the usual condition for consolidation does not apply. FIN 46R also requires disclosures about unconsolidated VIEs in which the Company has a significant variable interest. The consolidation requirements of FIN 46R apply immediately to
VIEs created after January 31, 2003 and were effective beginning in the Companys second quarter ended March 31, 2004. The Company has evaluated its relationships and does not believe it has any significant, consolidatable VIEs. As
such, the adoption of this Interpretation had no impact on the Companys results of operations and financial position.



Fair Value of Financial Instruments



The Company estimates the fair value of its preferred stock to be approximately $18 million at September 30, 2005 based upon available market prices.
The Company estimates that its debt and all other financial instruments have a fair value that materially approximates their recorded value, except for its non-recourse debt associated with an investment property owned in Massachusetts. The debt,
which bears interest at 12%, has a fair market value approximately $14.4 million greater than its cost at September 30, 2005 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 non-recourse debt of the Company.



Other Income



Other income consists of
gains from the sale of marketable securities and income from investments in unconsolidated entities.



Comprehensive Loss



Comprehensive loss is the total of net loss and all other non-stockholder changes in stockholders equity. Comprehensive loss for each of the three years ended September 30, 2005, 2004 and 2003 is as follows (in thousands):



|                                                                                                                         |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------ |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                                                                         |  | 2005 |        |   | 2004 |   |        | 2003 | 
|Net loss                                                                                                                 |  | $    | (4,912 | ) |      | $ | (1,882 | )    |  | $ | (7,847 | )
|Unrealized gain on marketable securities, net of income taxes of $199, $79 and $506 in 2005, 2004 and 2003, respectively |  |      | 371    |   |      |   | 147    |      |  |   | 940    |  
|                                                                                                                         |  |      |        |   |      |   |        |      |  |   |        |  
|Comprehensive loss                                                                                                       |  | $    | (4,541 | ) |      | $ | (1,735 | )    |  | $ | (6,907 | )
|                                                                                                                         |  |      |        |   |      |   |        |      |  |   |        |  



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3. Accounts Receivable, Net



Accounts receivable at September 30, 2005 and 2004 consisted of the following:



|                                      |  |      |           |   |      |   |           |  
|------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                      |  | 2005 |           |   | 2004 |  
|Casino and hotel                      |  | $    | 178,873   |   |      | $ | 460,981   |  
|Rental properties                     |  |      | 950,018   |   |      |   | 3,021,562 |  
|                                      |  |      |           |   |      |   |           |  
|                                      |  |      | 1,128,891 |   |      |   | 3,482,543 |  
|Less: allowance for doubtful accounts |  |      | (76,893   | ) |      |   | (195,875  | )
|                                      |  |      |           |   |      |   |           |  
|Total                                 |  | $    | 1,051,998 |   |      | $ | 3,286,668 |  
|                                      |  |      |           |   |      |   |           |  



Changes in the
allowance for doubtful accounts for the years ended September 30, 2005, 2004, and 2003 were as follows:



|                           |  |      |          |   |      |   |          |      |  |   |         |  
|-------------------------- |  | ---- | -------- | - | ---- | - | -------- | ---- |  | - | ------- | -
|                           |  | 2005 |          |   | 2004 |   |          | 2003 | 
|Balance, beginning of year |  | $    | 195,875  |   |      | $ | 586,637  |      |  | $ | 606,599 |  
|Provision                  |  |      | 36,916   |   |      |   | 31,220   |      |  |   | 40,999  |  
|Accounts written-off       |  |      | (155,898 | ) |      |   | (421,982 | )    |  |   | (60,961 | )
|                           |  |      |          |   |      |   |          |      |  |   |         |  
|Balance, end of year       |  | $    | 76,893   |   |      | $ | 195,875  |      |  | $ | 586,637 |  
|                           |  |      |          |   |      |   |          |      |  |   |         |  



4. Land Held for Development



In October 1995, the Company acquired an approximately
27-acre parcel on Las Vegas Boulevard South which was recorded at approximately $21.5 million. The Company assumed an operating lease under which a water theme park operated on the 27-acre parcel. The lease was terminated by the Company in September
2004 and the tenant had until January 2005 to vacate the premises. Under the terms of the lease, as amended, the water theme park remitted a base rent of approximately $19,000 monthly plus an annual rent payment based on gross receipts. Subsequent
to September 30, 2004, the Company entered into an agreement to lease a small portion of this property for 16 months at a rate of approximately $42,000 per month.



In 1994, Santa Fe Hotel, Inc. (SFHI) acquired for $1.6 million the approximately 20-acre parcel of undeveloped
real property at the corner of Rainbow and Lone Mountain Road in Las Vegas, Nevada. In connection with the SFHI Asset Sale, the Company and SFHI granted an option to the buyer through October 2003 to purchase the property for $5.0 million. The buyer
has declined to exercise the option to purchase the property and the property was sold in September 2004 to a third party for approximately $5.6 million. A gain of approximately $4.2 million was recorded in the fourth fiscal quarter ended
September 30, 2004 and is included in Gain on sale of assets in the accompanying consolidated statements of operations.



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5. Rental Property Held for Investment, Net



The 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 non-recourse 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 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 rent at September 30, 2005 and 2004 in the amount of $48.0 million and $21.9 million, respectively, is included in Other liabilities on the accompanying Consolidated Balance Sheets. See Note 8



The property in Gaithersburg, Maryland is located on 55 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
non-recourse first mortgage indebtedness. The building is located on approximately 20 acres of the property. 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 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. Deferred rent at September 30, 2005 and
2004 in the amount of $2.7 million and $2.3 million, respectively, is included in Other assets on the accompanying Consolidated Balance Sheets. See Note 8



6. Other Assets



Included in Other assets at September 30, 2005 and 2004 are unamortized loan issue costs, which were incurred during the acquisition of certain
rental property and certain debt, and deferred rents of approximately $4.7 million and $4.7 million, respectively. The unamortized loan issue costs are being amortized on the straight-line basis over the loan period, which closely approximates the
effective interest method, and the deferred rents are being amortized on the straight-line basis over the lease period.



Additionally, Other assets at September 30, 2005 and 2004 include $0.3 million and $0.4 million, respectively, of commercial and residential mortgage
loans, representing loans originally funded by J & J Mortgage to unaffiliated third parties as well as loans made directly to J & J Mortgage under a master loan agreement. The loans purchased by the Company were purchased for the principal
amount, plus accrued interest, if any. The advances to J & J Mortgage under the master loan agreement bear interest at the prime rate plus 2%. J & J Mortgage is owned by Lowden Investment Company (LICO), which in turn is
wholly-owned by Paul W. Lowden, the President, Chief Executive Officer and majority stockholder of the Company. John W. Delaney, a director of the Company, is the president of J & J Mortgage.



Other assets also include amounts for the cash surrender value of life
insurance of approximately $0.7 million and $0.6 million on September 30, 2005 and 2004, respectively, and investments in unconsolidated entities of approximately $1.7 million and $0.9 million on September 30, 2005 and 2004, respectively.
One of the unconsolidated entities is a 50% owned LLC which has the following financial profile at and for the year ended September 30, 2005: Current and total assets of approximately $0.3 million and $1.1 million, respectively; current and
total liabilities of approximately $0.1 million and $0.4 million, respectively; total equity of approximately $0.7 million. The entity also had, during fiscal 2005, revenues of approximately $1.9 million and pretax income of approximately $0.3
million. In accordance with accounting literature, the Company plans to consolidate this entity into its consolidated financial statements in fiscal 2006 because it is the general partner (controlling member) but accounts for this investment
presently under the equity method.



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7. Debt



As of September 30, 2005, the Companys long-term debt was comprised primarily of the following obligations: a loan payable to a bank with a
balance of approximately $12.1 million, secured by land held for development on the Las Vegas Strip, monthly payments of approximately $120,000, including interest of prime plus 1% (7.75% at September 30, 2005) with a balloon payment of
approximately $11.4 million in December 2006; borrowings of $1.9 million from a margin account (collateralized by securities owned by the Company) at a brokerage firm with a variable rate of interest (7.25% at September 30, 2005); a loan with a
balance of $1.3 million collateralized by slot equipment with an approximate interest rate of 7.25%, monthly principal payments of approximately $70,000 through October 2007; and a loan with a balance of $90,000 collateralized by real property with
an interest rate of 13.5%, monthly payments of $8,000 through November 2006.



The Companys loan with a balance of approximately $12.1 million includes a financial covenant which requires the Company to maintain certain levels of earnings before interest, taxes depreciation and
amortization without including financial results related to the Companys investment properties in Massachusetts and Maryland. At September 30, 2005 and 2004, the Company was not in compliance with this covenant. The bank has informed the
Company that it does not intend to accelerate the payment of the note, which includes a balloon payment of principal in December 2006 of approximately $11.4 million, but does not plan to grant a waiver to the Company relating to the default. As
such, the Company has included all principal amounts owing to the bank in current debt at September 30, 2005 and 2004. See Note 18



As of September 30, 2004, the Companys long-term debt was comprised primarily of the following obligations: a loan with a balance of
approximately $12.7 million, secured by land held for development on the Las Vegas Strip, monthly payments of approximately $120,000, including interest of prime plus 1% (5.75% at September 30, 2004) with a balloon payment of approximately
$10.9 million in December 2006; a loan with a balance of $1.8 million collateralized by slot equipment with an interest rate of 7.25%, monthly principal payments of approximately $50,000 through October 2007; and a loan with a balance of $160,000
collateralized by real property with an interest rate of 13.5%, monthly payments of $8,000 through November 2006.



The scheduled maturities of long-term debt as of September 30, 2005 are as follows:



|      |  |   |           
|----- |  | - | ----------
|2006  |  | $ | 14,915,525
|2007  |  |   | 429,283   
|2008  |  |   | 55,573    
|      |  |   |           
|Total |  | $ | 15,400,381
|      |  |   |           



8. Non-Recourse Debt Obligations



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 $2.1 million of indebtedness under Section 467 of the Code, 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, which requires the tenant to make higher semi-annual lease payments
through June 2005 and lower semi-annual lease payments thereafter. The lease payments are applied to the outstanding indebtedness and reduced the first mortgage note balance to $31.2 million by June 2005. The portion of higher lease payments
attributable to future periods is considered an advance of rent under section 467 of the Code. The first mortgage indebtedness is non-recourse and matures in June 2020 to coincide with the end of the lease term. See Note 5



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



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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. See Note 5



The scheduled maturities of non-recourse debt as of September 30, 2005
are as follows:



|           |  |   |           
|---------- |  | - | ----------
|2006       |  | $ | 1,915,478 
|2007       |  |   | 2,195,326 
|2008       |  |   | 2,490,198 
|2009       |  |   | 2,828,304 
|2010       |  |   | 3,185,888 
|Thereafter |  |   | 68,314,210
|           |  |   |           
|Total      |  | $ | 80,929,404
|           |  |   |           



9. Leases



All non-cancelable leases have been classified as operating leases. Under
most leasing arrangements, the Company pays the taxes, insurance and the operating expenses related to the leased property. Amortization of assets leased under capital leases in prior years is included in depreciation and amortization expense in the
Consolidated Statements of Operations.



At September 30,
2005, the Company had an operating lease for real property that expires in 2078 and operating leases for corporate offices. The Company had no significant property and equipment under capital leases at September 30, 2005.



Future minimum lease payments as of September 30, 2005 are as follows:



|           |  |   |           
|---------- |  | - | ----------
|2006       |  | $ | 272,675   
|2007       |  |   | 374,609   
|2008       |  |   | 352,433   
|2009       |  |   | 352,433   
|2010       |  |   | 352,433   
|Thereafter |  |   | 24,053,522
|           |  |   |           
|Total      |  | $ | 25,758,105
|           |  |   |           



Rent expense was
$629,470, $1,084,533 and $970,472 for the years ended September 30, 2005, 2004 and 2003, respectively.



10. Preferred Stock



The Company has outstanding exchangeable redeemable cumulative preferred stock (Preferred Stock). Prior to fiscal 1997, the Company satisfied the semi-annual dividend payments on its Preferred Stock through the issuance of
paid-in-kind dividends. Commencing in fiscal 1997, dividends paid on the Preferred Stock, to the extent declared, must be paid in cash. Pursuant to the terms of the Certificate of Designation with respect to the Preferred Stock, dividends that are
not declared are cumulative and accrue. The dividend rate per annum was equal to 8.0% of $2.14 for each share of preferred stock until September 30, 1998, at which date the dividend rate increased to 11.0%. Beginning October 1, 1999, the
dividend rate increased by an additional 50 basis points on each succeeding semi-



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annual dividend payment date up to a maximum of 16.0% per annum. The dividend rate is 16.0% effective
October 1, 2003. The accrued stock dividends have not been recorded as an increase to the Preferred Stock account. As of September 30, 2005, the aggregate liquidation preference of the Preferred Stock was $20.2 million, or $4.58 per share.



At the election of the Company, the Preferred Stock is
redeemable, in whole or in part, at any time and from time to time at a redemption price equal to the per share liquidation preference of $2.14 plus an amount equal to all accrued but unpaid dividends, whether or not declared.



At the election of the Company, shares of Preferred Stock may be exchanged
from time to time for junior subordinated notes of the Company. The principal amount of the junior subordinated notes, if issued, will be equal to the Liquidation Preference of the Preferred Stock for which such notes are exchanged. The junior
subordinated notes would mature on September 30, 2008, and would bear interest at an annual rate of 11.0%, payable semi-annually.



The Company has not declared dividends on the Preferred Stock since September 30, 1996. Cumulative dividends in arrears were approximately $10.8
million and $9.5 million as of September 30, 2005 and 2004, respectively. Pursuant to the Certificate of Designation, because at least one full dividend payment had not been declared for two years, the holders of the Preferred Stock, as a
separate class, were entitled to elect two directors to the Companys board of directors. The two directors elected by Preferred Stockholders were in addition to the directors elected by the holders of the Companys common stock. The
Preferred Stockholders right to elect two directors will continue until all dividend arrearages have been paid. The agreements relating to the Pioneer Transactions prohibited the Company from paying dividends on the Preferred Stock.



11. Stock Option Plan



The Companys Stock Option Plan provided for the grant of up to
1.2 million shares of its common stock to key employees. The Stock Option Plan provided for both incentive stock options and non-qualified stock options. Stock option grants had generally vested over a three-year period from the employees
hire date. The Stock Option Plan ceased granting options as of September 30, 2003 as the plan had expired. However, in July 2005, the Stock Option Plan was reinstated for an additional 10-year period. During fiscal 2005, there were 300,000
fully vested stock options granted under the Stock Option Plan. As of September 30, 2005, 2004 and 2003, there were approximately 800,000, 500,000 and 500,000 options, respectively, outstanding and exercisable under the Stock Option Plan.
During fiscal year 2005, 2,000 options were exercised. No options were granted or exercised during the fiscal years 2004 and 2003. The outstanding options have expiration dates through 2015 and have an average remaining life of approximately 6
years. The average exercise price of the outstanding options at September 30, 2005 is approximately $8.00.



In December 1995, the Company adopted the 1995 Non-Employee Director Stock Option Plan (the Non-Employee Director Plan) that provided for the
grant of up to 100,000 shares of its common stock to the directors. Under the Non-Employee Director Plan, directors were automatically granted an option to purchase 12,500 shares of the common stock at an exercise price equal to the market value of
such shares on the date of such election to the board. Stock option grants vested immediately. The Non-Employee Director Plan ceased granting options on March 21, 2002. As of September 30, 2005, 2004 and 2003, there were 25,000, 37,500 and
37,500, respectively options outstanding and exercisable under this plan. During fiscal 2005, 12,500 options were exercised. During fiscal years 2004 and 2003, no options were granted or exercised. The outstanding options have an expiration date
through 2007 and have an average remaining life of approximately 2 years. The average exercise price of the outstanding options at September 30, 2005 is approximately $1.00.



SFHI, 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



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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, 2005, no options had been granted under any of the Subsidiary Plans.



Accounting for Stock-Based Compensation



SFAS No. 123, Accounting for Stock-Based
Compensation (SFAS 123), encourages an entity to measure compensation by applying the fair value method of accounting for employee stock-based compensation arrangements, but it permits an entity to continue to account for
employee stock-based compensation arrangements under the provisions of APB No. 25, Accounting for Stock Issued to Employees (APB 25).



The Company has elected to continue to account for stock-based compensation in accordance with APB 25. Under APB 25,
generally only stock options that have intrinsic value at the date of grant are considered compensatory. Intrinsic value represents the excess, if any, of the market price of the stock at the grant date over the exercise price of the option. Under
SFAS 123, all stock option grants are considered compensatory. Compensation cost is measured at the date of grant based on the estimated fair value of the options determined using an option-pricing model. The model takes into account the stock price
at the grant date, the exercise price, the expected life of the option, the volatility of the stock, expected dividends on the stock and the risk-free interest rate over the expected life of the option.



SFAS 123 requires the Company to disclose pro forma net loss and net loss per
share assuming compensation cost for employee stock options had been determined using the fair value-based method. The weighted average assumptions used in estimating the fair value of each option grant on the date of grant using the Black-Scholes
option pricing model, and the estimated weighted average fair value of the options granted should also be disclosed. No such stock options were granted in 2004 or 2003, and therefore, no information has been included for those years.



The model assumes no expected future dividend payments on the Companys
common stock for the options granted in 2005 (dollars in thousands, except per share data).



|                                                             |  |      |       |   |      |     |      |    
|------------------------------------------------------------ |  | ---- | ----- | - | ---- | --- | ---- | ---
|                                                             |  | 2005 |       |   | 2004 |     | 2003
|Weighted average assumptions:                                |  |      |       |   |      |     |      |    
|Expected stock price volatility                              |  |      | 80.0  | % |      | N/A |      | N/A
|Risk-free interest rate                                      |  |      | 5.0   | % |      | N/A |      | N/A
|Expected option lives (in years)                             |  |      | 2     |   |      | N/A |      | N/A
|Expected dividend yield                                      |  |      | N/A   |   |      | N/A |      | N/A
|Estimated fair value of options, net of tax effect           |  | $    | 1,399 |   |      | N/A |      | N/A
|Estimated fair value of options per share, net of tax effect |  | $    | 0.22  |   |      | N/A |      | N/A



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12. Federal Income Taxes



The Company accounts for income taxes under SFAS No. 109, Accounting for Income Taxes (SFAS 109). In accordance
with SFAS 109, deferred income taxes reflect the net effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and
(b) operating loss and tax credit carryforwards. The benefit for income taxes attributable to pre-tax loss consisted of:



|              |  |                        |        |   |      |   |      |      |  |   |        |  
|------------- |  | ---------------------- | ------ | - | ---- | - | ---- | ---- |  | - | ------ | -
|              |  | 2005                   |        |   | 2004 |   |      | 2003 | 
|              |  | (dollars in thousands) |       
|Current       |  | $                      | 0      |   |      | $ | 0    |      |  | $ | 0      |  
|Deferred      |  |                        | (2,594 | ) |      |   | (913 | )    |  |   | (4,152 | )
|              |  |                        |        |   |      |   |      |      |  |   |        |  
|Total benefit |  | $                      | (2,594 | ) |      | $ | (913 | )    |  | $ | (4,152 | )
|              |  |                        |        |   |      |   |      |      |  |   |        |  



The benefit for income
taxes attributable to pre-tax loss differs from the amount computed at the federal income tax statutory rate as a result of the following:



|                         |  |                        |        |   |      |   |      |      |  |   |        |  
|------------------------ |  | ---------------------- | ------ | - | ---- | - | ---- | ---- |  | - | ------ | -
|                         |  | 2005                   |        |   | 2004 |   |      | 2003 | 
|                         |  | (dollars in thousands) |       
|Amount at statutory rate |  | $                      | (2,594 | ) |      | $ | (978 | )    |  | $ | (4,194 | )
|Valuation allowance      |  |                        | 0      |   |      |   | 0    |      |  |   | 0      |  
|Other                    |  |                        | 0      |   |      |   | 65   |      |  |   | 42     |  
|                         |  |                        |        |   |      |   |      |      |  |   |        |  
|Total                    |  | $                      | (2,594 | ) |      | $ | (913 | )    |  | $ | (4,152 | )
|                         |  |                        |        |   |      |   |      |      |  |   |        |  



The components of the
net deferred tax liability consisted of the following:



|                                                     |  |                        |         |   |      |   |         |  
|---------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | ------- | -
|                                                     |  | 2005                   |         |   | 2004 |  
|                                                     |  | (dollars in thousands) |        
|Deferred tax liabilities:                            |  |                        |         |   |      |   |         |  
|Prepaid expenses                                     |  | $                      | 263     |   |      | $ | 459     |  
|Fixed asset cost, depreciation and amortization, net |  |                        | 31,373  |   |      |   | 31,526  |  
|Other                                                |  |                        | 2,963   |   |      |   | 3,014   |  
|                                                     |  |                        |         |   |      |   |         |  
|Deferred tax liabilities                             |  |                        | 34,599  |   |      |   | 34,999  |  
|                                                     |  |                        |         |   |      |   |         |  
|Deferred tax assets:                                 |  |                        |         |   |      |   |         |  
|Net operating loss carryforward                      |  |                        | 5,997   |   |      |   | 3,640   |  
|Reserves for accounts and contracts receivable       |  |                        | 27      |   |      |   | 69      |  
|Other                                                |  |                        | 525     |   |      |   | 849     |  
|Deferred payroll                                     |  |                        | 171     |   |      |   | 168     |  
|Tax credits                                          |  |                        | 525     |   |      |   | 525     |  
|                                                     |  |                        |         |   |      |   |         |  
|Deferred tax assets                                  |  |                        | 7,245   |   |      |   | 5,251   |  
|                                                     |  |                        |         |   |      |   |         |  
|Net deferred tax (liability)                         |  | $                      | (27,354 | ) |      | $ | (29,748 | )
|                                                     |  |                        |         |   |      |   |         |  



At September 30,
2005, the Company had a net operating loss carryforward for regular income tax purposes of approximately $69.0 million, which will fully expire by the year 2026 and begins expiring in 2011. Included in this amount is approximately $53 million that
was not recorded related to the Pioneer Transaction for which the Company has not taken benefit in its financial statements until the uncertainty related to the tax deduction is resolved.



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13. Benefit Plans



The Company has a savings plan (the Savings Plan) qualified under Section 401(k) of the 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 matches
25% of such employee contributions made. 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 2005, 2004 and 2003 were $49,000, $48,000 and $54,000, respectively.



14. Related Parties



The Company has entered into a Patent Rights and Royalty Agreement with David Lowden, 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 has granted the Company an exclusive five-year license expiring in January 2007 in the United States with respect to the technology, which will be automatically renewed 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 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, 2005 and 2004, the Company had expended approximately $250,000 for commercial development of the technology, all of which was expensed prior to fiscal 2004.



During fiscal 2003, the Company operated Dukes casino
(Dukes) in Sparks, Nevada. The Company operated Dukes through its subsidiary, Archon Sparks Management Corporation. One of Dukes partners is Christopher Lowden, son of Paul W. Lowden. The Company invested $100,000 in
Dukes and loaned Dukes approximately $1.4 million. In December 2003, Dukes closed its casino operations. The Company has written-off its investment in Dukes and has recorded a reserve for its receivable from Dukes of
approximately $1.5 million during its fiscal year ended September 30, 2003 and has no further asset exposure from Dukes. The Company made the determination to reserve the entire amount invested in and owed from Dukes as the
collateral value securing the receivable was deemed insignificant subsequent to the closure of the casino.



See Note 9 for information regarding transactions between the Company and J & J Mortgage.



15. Contingencies and Commitments



Litigation. The Company is subject to various lawsuits
relating to routine matters incidental to its business. The Company does not believe that the outcome of such litigation, in the aggregate, will have a material adverse effect on the Company.



Poulos v. Caesars World, Inc., et al. and Ahern v.
Caesars World, Inc., et al. The Company is a defendant in a class action lawsuit originally filed in the United States District Court of Florida in 1994, Orlando Division, entitled Poulos v. Caesars World, Inc., et al.,
Ahern v. Caesars World, Inc., et al. and Schrier v. Caesars World, Inc., et al., along with a fourth action against cruise ship gaming operators and which have been consolidated in a single action now pending in the United
States District Court, District of Nevada (the Court). Also named as defendants in these actions are many of the largest gaming companies in the United States and certain gaming equipment manufacturers. Each complaint is identical in its
material allegations. The actions allege that the defendants have engaged in fraudulent and misleading conduct by inducing people to play video poker machines and electronic slot machines based on false beliefs concerning how the machines operate
and the extent to which



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there is actually an opportunity to win on a given play. The complaints allege that the defendants acts constitute
violations of the Racketeer Influenced and Corrupt Organizations Act and also give rise to claims for common law fraud and unjust enrichment, and seek compensatory, special consequential, incidental and punitive damages of several billion dollars.



In response to the complaints, all of the defendants,
including the Company, filed motions attacking the pleadings for failure to state a claim, seeking to dismiss the complaints for lack of personal jurisdiction and venue. As a result of those motions, the Court has required the Plaintiffs in the four
consolidated cases to file a single consolidated amended complaint. Subsequent to Plaintiffs filing of their consolidated amended complaint, the defendants filed numerous motions attacking the amended complaint upon many of the bases as the
prior motions. The Court heard the arguments on those motions and ultimately denied the motions. Plaintiffs then filed their motion to certify a class. Defendants have vigorously opposed the motion. In June 2002, the court denied the motion to
certify the class. Plaintiffs then sought discretionary review by the Ninth Circuit of the order denying class certification. In August 2002, the Ninth Circuit granted review. The briefing is complete, an oral hearing took place in January 2004. In
September 2005, the federal district court granted the defendants motion for dismissal. On October 19, 2005, the plaintiffs appealed to the Ninth Circuit. The Company has not recorded a reserve under the provisions of SFAS No. 5 for this
matter, as management does not believe that it is probable that a liability has been incurred



16. Supplemental Statement of Cash Flows Information



Supplemental statement of cash flows information for the years ended September 30, 2005, 2004 and 2003 consisted of:



|                                                                                      |  |                        |        |      |   |        |  |   |       
|------------------------------------------------------------------------------------- |  | ---------------------- | ------ | ---- | - | ------ |  | - | ------
|                                                                                      |  | 2005                   |        | 2004 |   | 2003  
|                                                                                      |  | (dollars in thousands)
|Operating activities:                                                                 |  |                        |        |      |   |        |  |   |       
|Cash paid during the year for interest                                                |  | $                      | 11,128 |      | $ | 12,502 |  | $ | 14,920
|                                                                                      |  |                        |        |      |   |        |  |   |       
|Investing and financing non-cash activities:                                          |  |                        |        |      |   |        |  |   |       
|Long-term debt incurred in connection with the acquisition of machinery and equipment |  | $                      | 0      |      | $ | 267    |  | $ | 1,584 
|                                                                                      |  |                        |        |      |   |        |  |   |       
|Accounts payable converted to debt                                                    |  | $                      | 0      |      | $ | 407    |  | $ | 0     
|                                                                                      |  |                        |        |      |   |        |  |   |       
|Reduction of property and equipment from the acquisition of capital leases            |  | $                      | 0      |      | $ | 1,412  |  | $ | 0     
|                                                                                      |  |                        |        |      |   |        |  |   |       
|Reduction of accounts payable from disposal of machinery and equipment                |  | $                      | 0      |      | $ | 299    |  | $ | 0     
|                                                                                      |  |                        |        |      |   |        |  |   |       
|Unrealized gain on marketable securities                                              |  | $                      | 371    |      | $ | 147    |  | $ | 940   
|                                                                                      |  |                        |        |      |   |        |  |   |       



17. Segment Information



The Companys operations are in the hotel/casino
industry and investment properties. The Companys hotel/casino operations are conducted at the Pioneer in Laughlin, Nevada. The Company owns investment properties in Dorchester, Massachusetts and Gaithersburg, Maryland, which were acquired in
March 2001. Other and Eliminations below includes financial information for the Companys corporate operations and Archon Sparks Management Company, adjusted to reflect eliminations upon consolidation.



45



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Segment information for the years ended September 30, 2005, 2004 and 2003 consisted of:



|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|----------------------------- |  | ---------------------- | ------- | - | ------------ | - | ------- | ---- |  | - | ------- | -
|                              |  | 2005                   |         |   | 2004Restated |   |         | 2003 | 
|                              |  | (dollars in thousands) |        
|Pioneer Hotel                 |  |                        |         |   |              |   |         |      |  |   |         |  
|Operating revenues, net       |  | $                      | 29,697  |   |              | $ | 32,188  |      |  | $ | 31,919  |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|EBITDA:                       |  |                        |         |   |              |   |         |      |  |   |         |  
|Operating loss                |  | $                      | (591    | ) |              | $ | (302    | )    |  | $ | (1,017  | )
|Depreciation and amortization |  |                        | 2,477   |   |              |   | 2,507   |      |  |   | 2,481   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|EBITDA(1)                     |  | $                      | 1,886   |   |              | $ | 2,205   |      |  | $ | 1,464   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Interest expense              |  | $                      | 1,291   |   |              | $ | 2,298   |      |  | $ | 4,897   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Interest and other income     |  | $                      | 11      |   |              | $ | 15      |      |  | $ | 23      |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Capital expenditures(4)       |  | $                      | 179     |   |              | $ | 2,460   |      |  | $ | 1,416   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Identifiable assets(2)        |  | $                      | 31,380  |   |              | $ | 34,539  |      |  | $ | 37,072  |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Investment Properties(3)      |  |                        |         |   |              |   |         |      |  |   |         |  
|Operating revenues, net       |  | $                      | 12,402  |   |              | $ | 12,402  |      |  | $ | 12,402  |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|EBITDA:                       |  |                        |         |   |              |   |         |      |  |   |         |  
|Operating income              |  | $                      | 9,230   |   |              | $ | 9,230   |      |  | $ | 9,230   |  
|Depreciation and amortization |  |                        | 3,172   |   |              |   | 3,172   |      |  |   | 3,172   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|EBITDA(1)                     |  | $                      | 12,402  |   |              | $ | 12,402  |      |  | $ | 12,402  |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Interest expense              |  | $                      | 9,897   |   |              | $ | 10,660  |      |  | $ | 11,554  |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Interest and other income     |  | $                      | 1       |   |              | $ | 0       |      |  | $ | 0       |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Capital expenditures(4)       |  | $                      | 0       |   |              | $ | 0       |      |  | $ | 0       |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Identifiable assets(2)        |  | $                      | 136,065 |   |              | $ | 141,401 |      |  | $ | 144,301 |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Other and Eliminations        |  |                        |         |   |              |   |         |      |  |   |         |  
|Operating revenues, net       |  | $                      | 1,589   |   |              | $ | 1,103   |      |  | $ | 1,840   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|EBITDA:                       |  |                        |         |   |              |   |         |      |  |   |         |  
|Operating loss                |  | $                      | (6,109  | ) |              | $ | (3,955  | )    |  | $ | (5,285  | )
|Depreciation and amortization |  |                        | 186     |   |              |   | 301     |      |  |   | 575     |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|EBITDA(1)                     |  | $                      | (5,923  | ) |              | $ | (3,654  | )    |  | $ | (4,710  | )
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Interest expense              |  | $                      | (128    | ) |              | $ | (78     | )    |  | $ | (36     | )
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Interest and other income     |  | $                      | 1,256   |   |              | $ | 1,144   |      |  | $ | 1,466   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Capital expenditures(4)       |  | $                      | 280     |   |              | $ | (1,204  | )    |  | $ | 2,191   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Identifiable assets(2)        |  | $                      | 32,193  |   |              | $ | 30,992  |      |  | $ | 56,017  |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Total                         |  |                        |         |   |              |   |         |      |  |   |         |  
|Operating revenues, net       |  | $                      | 43,688  |   |              | $ | 45,693  |      |  | $ | 46,161  |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|EBITDA:                       |  |                        |         |   |              |   |         |      |  |   |         |  
|Operating income              |  | $                      | 2,530   |   |              | $ | 4,973   |      |  | $ | 2,928   |  
|Depreciation and amortization |  |                        | 5,835   |   |              |   | 5,980   |      |  |   | 6,228   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|EBITDA(1)                     |  | $                      | 8,365   |   |              | $ | 10,953  |      |  | $ | 9,156   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Interest expense              |  | $                      | 11,060  |   |              | $ | 12,880  |      |  | $ | 16,415  |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Interest and other income     |  | $                      | 1,268   |   |              | $ | 1,159   |      |  | $ | 1,489   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Capital expenditures(4)       |  | $                      | 459     |   |              | $ | 1,256   |      |  | $ | 3,607   |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  
|Identifiable assets(2)        |  | $                      | 199,638 |   |              | $ | 206,932 |      |  | $ | 237,390 |  
|                              |  |                        |         |   |              |   |         |      |  |   |         |  

---

|(1) | EBITDA represents earnings before interest, taxes, depreciation and amortization. The
Companys definition of EBITDA may not be the same as that of similarly captioned measures used by other companies. EBITDA is presented solely as a supplemental disclosure because management believes that it is (i) a widely used measure of
operating performance in the gaming industry and (ii) a principal basis of valuation of gaming companies by certain analysts and investors. Management uses segment-level EBITDA as the primary measure of the Companys business
segments performance. EBITDA should not be construed as a substitute for operating income or a better indicator of liquidity than cash flow from operating, investing and financing activities, which are determined in accordance with generally
accepted accounting principles.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | Identifiable assets represent total assets less elimination for intercompany items.
|--- | -----------------------------------------------------------------------------------

|(3) | During fiscal 2001, the Company acquired investment properties in Dorchester, Massachusetts
and Gaithersburg, Maryland. The payments received under lease agreements with respect to both properties are applied to debt service payments on non-recourse indebtedness secured by the respective properties.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Includes acquisition of capital through non-cash activities.
|--- | ------------------------------------------------------------



18. Restatement



Subsequent to the filing of the Companys September 30, 2004 audited financial statements on Form 10-K, management
discovered that it had omitted to disclose and appropriately account for a violation of a financial covenant related to certain debt with a bank. Specifically, the Company failed to disclose that it was in violation of a covenant to maintain certain
levels of earnings before interest, taxes, depreciation and amortization, as defined. Additionally, as the bank had not issued a waiver relating to this default, the Company determined that it did not correctly include all amounts outstanding under
this loan agreement as a current liability within its consolidated balance sheet at September 30, 2004.



Included within these consolidated financial statements at September 30, 2004 is the appropriately restated amount to be shown as the current portion
of debt of $13,475,761 as compared to $1,548,231, a difference of $11,927,530. The difference has also been reflected as a correction to the caption Debt  less current portion in the 2004 consolidated financial statements.



The following summarizes the effect of this restatement on the
consolidated balance sheet as of September 30, 2004.



|                            |  |                          |            |             |   |             |             |  |   |           
|--------------------------- |  | ------------------------ | ---------- | ----------- | - | ----------- | ----------- |  | - | ----------
|                            |  | As of September 30, 2004
|Consolidated Balance Sheet  |  | As PreviouslyReported    |            | Adjustments |   |             | As Restated
|Current portion of debt     |  | $                        | 1,548,231  |             | $ | 11,927,530  |             |  | $ | 13,475,761
|                            |  |                          |            |             |   |             |             |  |   |           
|Total current liabilities   |  | $                        | 38,904,224 |             | $ | 11,927,530  |             |  | $ | 50,831,754
|                            |  |                          |            |             |   |             |             |  |   |           
|Debt  less current portion |  | $                        | 13,055,445 |             | $ | (11,927,530 | )           |  | $ | 1,127,915 
|                            |  |                          |            |             |   |             |             |  |   |           



Subsequent to the
filing of the Companys September 30, 2004 audited financial statements, management also determined that investments in partnerships were incorrectly reflected on the Consolidated Statement of Cash Flows as cash outflows from operating
activities, instead of cash outflows from investing activities.



Included within these consolidated financial statements for the year ended September 30, 2004 is the appropriately restated amount to be shown as Investments in partnerships of $525,000 within the Companys consolidated
statements of cash flows. The difference has also been reflected as a correction to the caption Other assets within the operating activities of the consolidated statements of cash flows.



The following summarizes the effect of the restatement on the consolidated
statement of cash flows for the year ended September 30, 2004.



|                                                    |  |                               |            |   |             |   |          |            |  |   |            |  
|--------------------------------------------------- |  | ----------------------------- | ---------- | - | ----------- | - | -------- | ---------- |  | - | ---------- | -
|                                                    |  | Year Ended September 30, 2004 |           
|Consolidated Statement of Cash Flows                |  | As PreviouslyReported         |            |   | Adjustments |   |          | AsRestated | 
|Investments in partnerships (investing activities)  |  | $                             | 0          |   |             | $ | (525,000 | )          |  | $ | (525,000   | )
|                                                    |  |                               |            |   |             |   |          |            |  |   |            |  
|Net cash (used in) provided by investing activities |  | $                             | 21,224,985 |   |             | $ | (525,000 | )          |  | $ | 20,699,985 |  
|                                                    |  |                               |            |   |             |   |          |            |  |   |            |  
|Changes in other assets (operating activities)      |  | $                             | (592,659   | ) |             | $ | 525,000  |            |  | $ | (67,659    | )
|                                                    |  |                               |            |   |             |   |          |            |  |   |            |  
|Net cash provided by operating activities           |  | $                             | 4,731,584  |   |             | $ | 525,000  |            |  | $ | 5,256,584  |  
|                                                    |  |                               |            |   |             |   |          |            |  |   |            |  





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19. Quarterly Results of Operations (Unaudited)



|                                               |  |                                          |        |   |      |   |        |  
|---------------------------------------------- |  | ---------------------------------------- | ------ | - | ---- | - | ------ | -
|                                               |  | 2005                                     |        |   | 2004 |  
|                                               |  | (dollars in thousands, except per share) |       
|Revenues:                                      |  |                                          |        |   |      |   |        |  
|First Quarter                                  |  | $                                        | 10,175 |   |      | $ | 11,683 |  
|Second Quarter                                 |  |                                          | 12,042 |   |      |   | 12,860 |  
|Third Quarter                                  |  |                                          | 10,974 |   |      |   | 11,078 |  
|Fourth Quarter                                 |  |                                          | 10,497 |   |      |   | 10,072 |  
|                                               |  |                                          |        |   |      |   |        |  
|Total                                          |  | $                                        | 43,688 |   |      | $ | 45,693 |  
|                                               |  |                                          |        |   |      |   |        |  
|Operating income (loss):                       |  |                                          |        |   |      |   |        |  
|First Quarter                                  |  | $                                        | 614    |   |      | $ | 1,223  |  
|Second Quarter                                 |  |                                          | 2,610  |   |      |   | 2,361  |  
|Third Quarter                                  |  |                                          | (1,887 | ) |      |   | 1,151  |  
|Fourth Quarter                                 |  |                                          | 1,193  |   |      |   | 238    |  
|                                               |  |                                          |        |   |      |   |        |  
|Total                                          |  | $                                        | 2,530  |   |      | $ | 4,973  |  
|                                               |  |                                          |        |   |      |   |        |  
|Net (loss) income:                             |  |                                          |        |   |      |   |        |  
|First Quarter                                  |  | $                                        | (1,531 | ) |      | $ | (1,513 | )
|Second Quarter                                 |  |                                          | 261    |   |      |   | (428   | )
|Third Quarter                                  |  |                                          | (2,995 | ) |      |   | (807   | )
|Fourth Quarter                                 |  |                                          | (647   | ) |      |   | 866    |  
|                                               |  |                                          |        |   |      |   |        |  
|Total                                          |  | $                                        | (4,912 | ) |      | $ | (1,882 | )
|                                               |  |                                          |        |   |      |   |        |  
|Net (loss) income applicable to common shares: |  |                                          |        |   |      |   |        |  
|First Quarter                                  |  | $                                        | (1,917 | ) |      | $ | (1,907 | )
|Second Quarter                                 |  |                                          | (126   | ) |      |   | (823   | )
|Third Quarter                                  |  |                                          | (3,361 | ) |      |   | (1,188 | )
|Fourth Quarter                                 |  |                                          | (1,019 | ) |      |   | 474    |  
|                                               |  |                                          |        |   |      |   |        |  
|Total                                          |  | $                                        | (6,423 | ) |      | $ | (3,444 | )
|                                               |  |                                          |        |   |      |   |        |  
|Net (loss) income per common share:            |  |                                          |        |   |      |   |        |  
|First Quarter                                  |  | $                                        | (0.31  | ) |      | $ | (0.31  | )
|Second Quarter                                 |  |                                          | (0.02  | ) |      |   | (0.13  | )
|Third Quarter                                  |  |                                          | (0.54  | ) |      |   | (0.19  | )
|Fourth Quarter                                 |  |                                          | (0.16  | ) |      |   | 0.08   |  
|                                               |  |                                          |        |   |      |   |        |  
|Total                                          |  | $                                        | (1.03  | ) |      | $ | (0.55  | )
|                                               |  |                                          |        |   |      |   |        |  



Operating income
(loss) amounts have been adjusted to reflect a reclassification of amortization of loan issue costs from depreciation and amortization to interest expense for the 2005 quarters shown except for the fourth quarter.



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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure



On January 25, 2005, the Company dismissed Deloitte & Touche LLP (Deloitte) as its independent public accountants. On March 7,
2005, the Company engaged Ernst & Young LLP (E&Y) as its new independent registered public accounting firm. Archons Audit Committee and Board of Directors participated in and approved the decision to dismiss Deloitte
and to engage E&Y.



Item 9A. Controls and Procedures



Evaluation of Disclosure Controls and Procedures



We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.



As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that disclosure controls and procedures were effective.



Subsequent to the filing of the Companys September 30, 2004 financial statements on Form 10-K, management discovered that (i) the Company had failed to properly account for investments in certain partnerships during the year ended
September 30, 2004 as investing activities in its statement of cash flows and (ii) the Company had failed to identify and properly account for a violation of a financial covenant relating to certain bank debt (as described in Note 18 to the
Financial Statements in Item 8 of Part II). Accordingly, the Company had not properly disclosed such violation and its related accounting effect in its annual report. Management believes that the absence of thorough periodic review processes
relating to its cash flow statement review and debt covenant compliance as of and for the year ended September 30, 2004 constituted a material weakness in our internal control over financial reporting which resulted in management not identifying the
proper classification of investment activities and the debt covenant violation discussed above as of September 30, 2004 and consequently the restatements (as described in Note 18 to the Financial Statements in Item 8 of Part II). A material
weakness, as defined by the Public Company Accounting Oversight Board, is a significant deficiency, or a combination of significant deficiencies, that results in a more than remote likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. Accordingly, we now believe that disclosure controls and procedures were not effective as of September 30, 2004.



Changes in Internal Controls



In response to the material weakness discussed above and as of the end of the period covered by this report, the Company has implemented a more
thorough periodic review process to review cash flow statement classifications and to review debt covenants and perform appropriate covenant calculations to determine compliance.



As part of our normal operations, we update our internal controls as necessary to accommodate any modifications to our
business processes or accounting procedures. Except as noted above, there have not been any other 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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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, President and Chief Executive Officer            
|Suzanne Lowden           |  | Director, Executive Vice President, and Assistant Secretary             
|John W. Delaney(2)       |  | Director                                                                
|William J. Raggio(1 )(2) |  | Director                                                                
|Howard E. Foster(1)      |  | Preferred Stockholder Special Director                                  
|Jay Parthemore(1)        |  | Preferred Stockholder Special Director                                  
|John M. Garner           |  | Senior Vice President, Chief Financial Officer, Secretary, and Treasurer

---

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

|(2) | Member of the Compensation Committee 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, 62, 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 2008.



Suzanne Lowden



Suzanne Lowden, 53, 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 is also a founding board member of Commercial Bank of Nevada. 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, reporter, writer and producer of television news. Mrs. Lowden is married to Paul W. Lowden. Mrs. Lowdens term as a director of the Company expires at the
annual meeting of stockholders in 2007.



John W. Delaney



John W. Delaney, 57, has served as a director of the
Company since January 1997. Mr. Delaney is currently president and chief executive officer of Cityfed Mortgage Co., a mortgage banking firm, 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 2006.



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William J. Raggio



William J. Raggio, 79, 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 is also a director of Sierra Health Services, Inc., a Nevada corporation. Mr. Raggios term as a director of the Company
expires at the annual meeting of stockholders in 2008.



Howard E. Foster



Howard E. Foster, 61, has served as a special
director of the Company elected by holders of the Companys Exchangeable, Redeemable Preferred Stock since May 2000. Since 1980, Mr. Foster has been the President of Howard Foster and Company, an investment advisor firm 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 expires at the annual meeting of stockholders in 2006, or, if earlier, the date on which
all dividend arrearages on the Exchangeable Redeemable Preferred Stock have been paid.



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.



Jay Parthemore



Jay Parthemore, 62, has served as a special director of the Companys Exchangeable, Redeemable Preferred Stock since February 2003, when he was
elected by the Board of Directors to fill a vacancy. Mr. Parthemore is currently retired. Over a thirty-three year career, Mr. Parthemore held worldwide marketing executive positions with AT&T and IBM. Mr. Parthemores term
as a special director of the Company expires at the annual meeting of stockholders in 2007, or, if earlier, the date on which all dividend arrearages on the Exchangeable Redeemable Preferred Stock have been paid.



John M. Garner



John Garner, 46, was appointed Senior Vice President, Chief Financial Officer, Secretary and Treasurer in February 2004.
Prior to joining the Company, Mr. Garner, a Certified Public Accountant, served as Chief Financial Officer and Treasurer of Mikohn Gaming Corporation from August 2002 to January 2004 and Director of Finance from July 2001 to August 2002; served
as Chief Financial Officer and Treasurer of Paul-Son Gaming Corporation from July 1998 to July 2001 and served as Corporate Controller-Vice President of Finance of Alliance Gaming Corporation/Bally Gaming, Inc. from 1989 through 1998. Prior to these
positions, Mr. Garner practiced public accounting with Ernst & Young and Peat Marwick Mitchell.



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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% 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 2005, 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.



Item 11. Executive Compensation



Set forth below is information concerning compensation for services in all capacities to the Company and its affiliates for the fiscal years ended September 30, 2005, 2004 and 2003 of Paul W. Lowden, the Chief
Executive Officer and John M. Garner, the Chief Financial Officer. There were no other executive officers serving as such at the end of the Companys fiscal year ended September 30, 2005 that earned a total annual salary and bonus in
excess of $100,000 during the fiscal year ended September 30, 2005.



Summary Compensation Table



|                            |  |                     |  |           |         |          |   |         |                                  |  |                          |   |  |   |        |    
|--------------------------- |  | ------------------- |  | --------- | ------- | -------- | - | ------- | -------------------------------- |  | ------------------------ | - |  | - | ------ | ---
|                            |  | Annual Compensation | 
|Name and Principal
Position |  | Fiscal Year         |  | Salary($) |         | Bonus($) |   |         | Other Annual Compensation ($)(1) |  | All OtherCompensation($) |  
|Paul W. Lowden              |  | 2005                |  | $         | 550,000 |          | $ | 200,000 | (2)                              |  | $                        | 0 |  | $ | 64,846 | (3)
|President, Chairman         |  | 2004                |  |           | 571,154 |          |   | 200,000 | (2)                              |  |                          | 0 |  |   | 79,755 | (3)
|of the Board and CEO        |  | 2003                |  |           | 550,000 |          |   | 200,000 | (2)                              |  |                          | 0 |  |   | 71,344 | (3)
|                            |  |                     |  |           |        
|John M. Garner              |  | 2005                |  | $         | 110,865 |          | $ | 0       | (4)                              |  | $                        | 0 |  | $ | 5,709  | (4)
|Chief Financial             |  | 2004                |  |           | 95,000  |          |   | 1,000   | (4)                              |  |                          | 0 |  |   | 2,371  | (4)
|Officer                     |  | 2003                |  |           | 0       |          |   | 0       | (4)                              |  |                          | 0 |  |   | 0      | (4)

---

|(1) | The Company provides perquisites and other personal benefits, including automobiles to its senior executives and provides such persons complimentary privileges at the restaurants
and bars of the Companys hotel-casino. It is impractical to ascertain the extent to which such privileges are utilized for personal rather than business purposes. However, after reasonable inquiry, the Company believes the value of all such
perquisites and other personal benefits is less than the lesser of $50,000 or 10% of the total salary and bonus reported for the person named above.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | See Compensation Arrangements with Mr. Lowden.
|--- | ------------------------------------------------

|(3) | All Other Compensation for Mr. Lowden in fiscal 2005 includes $7,272 of life insurance premiums paid by the Company for the benefit of Mr. Lowden, auto and gas
reimbursement of $5,413 for the benefit of Mr. Lowden, payment of $17,525 for household services for the benefit of Mr. Lowden, medical reimbursement of $31,661 for the benefit of Mr. Lowden and $2,975 of matching contributions made
by the Company to the Retirement Savings 401(k) Plan for the benefit of Mr. Lowden. All Other Compensation for Paul W. Lowden in fiscal 2004 includes $7,404 of life insurance premiums paid by the Company for the benefit of
Mr. Lowden, auto and gas reimbursement of $4,941 for the benefit of Mr. Lowden, payment of $31,356 for household services for the benefit of Mr. Lowden, medical reimbursement of $32,804 for the benefit of Mr. Lowden and $3,250 of
matching contributions made by the Company to the Retirement Savings 401(k) Plan for the benefit of Mr. Lowden. All Other Compensation for Paul W. Lowden in fiscal 2003 includes $7,404 group term life insurance paid by the Company
for the benefit of Mr. Lowden,, auto and gas reimbursement of $25,994 for the benefit of Mr. Lowden, payment of $34,946 for household services for the benefit of Mr. Lowden and $3,000 of matching contributions made by the Company to
the Retirement Savings 401(k) Plan for the benefit of Mr. Lowden.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4). | All Other Compensation for Mr. Garner in fiscal 2005 includes auto and gas reimbursement of $4,880 for the benefit of Mr. Garner, and $829 of matching
contributions made by the Company to the Retirement Savings 401(k) Plan for the benefit of Mr. Garner. All Other Compensation for John Garner in fiscal 2004 includes auto and gas reimbursement of $2,371 for the benefit of
Mr. Garner.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Compensation Arrangements with
Mr. Lowden



The Compensation Committee approved
Mr. Lowdens compensation package for fiscal year 2005, 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 2005.



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.



Prior to March 31, 2002, upon first being elected to the board of
directors, each non-employee director received options to purchase 12,500 shares of common stock at an exercise price equal to the fair market value of the common stock on the date of grant. Such options fully vested at the date of grant. The
non-employee director stock option plan, pursuant to which such options were granted, ceased granting options in March 2002.



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 1,239,070 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. There were approximately 450,000 shares issued evenly to three individuals in April 2005, one of which is the CEO of the
Company, Paul W. Lowden. However, in May 2005, Mr. Lowden informed the Compensation Committee of the Board of Directors that he forfeited his 150,000 stock options. As of September 30, 2005, there were approximately 800,000 options
outstanding under the Stock Option Plan and approximately 300,000 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, 2005, 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 matches 25% of such employee contributions made. 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 2005 was approximately $49,000 of which approximately $3,000 and $1,000 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 J & J Mortgage, 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 $700,000 of commercial and residential loans originally funded by J & J Mortgage to unaffiliated third parties. See Item 13, Certain Relationships
and Related Transactions. 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



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of the law firm of Jones Vargas. During fiscal years 2005 and 2004, 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 and the exchangeable redeemable preferred stock of the Company, as
of December 27, 2005, by (i) each person known to be the beneficial owner of more than 5% of the outstanding common stock or preferred stock; (ii) each director of the Company; and (iii) all directors and officers of the Company
as a group.



|                                                  |  |                        |        |  |         |   |  |                           |     |  |         |  
|------------------------------------------------- |  | ---------------------- | ------ |  | ------- | - |  | ------------------------- | --- |  | ------- | -
|Named Beneficial Owner                            |  | Shares of Common Stock |        |  | Percent |   |  | Shares of Preferred Stock |     |  | Percent |  
|Paul W. Lowden(1)                                 |  | 4,980,144              | (2)(3) |  | 75.5    | % |  | 810,000                   | (3) |  | 18.4    | %
|Suzanne Lowden                                    |  | 4,792                  | (4)(5) |  | *       |   |  | 2,524                     | (5) |  | *       |  
|John W. Delaney                                   |  | 13,750                 | (6)    |  | *       |   |  | 0                         |     |  | 0       |  
|William J. Raggio                                 |  | 17,972                 | (6)    |  | *       |   |  | 5,472                     |     |  | *       |  
|Howard Foster                                     |  | 5,300                  |        |  | *       |   |  | 99,126                    | (8) |  | 2.2     | %
|Jay Parthemore                                    |  | 175,249                | (7)    |  | 2.8     | % |  | 200                       |     |  | *       |  
|All Directors and Officers as a group (7 persons) |  | 5,197,207              |        |  | 79.0    | % |  | 917,322                   |     |  | 20.8    | %

---

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

|(1) | The address for Paul W. Lowden is c/o Archon Corporation, 3993 Howard Hughes Parkway, Suite 630, Las Vegas, Nevada 89109. 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 1,528,970 shares held by LICO, which is wholly owned by Mr. Lowden and 359,510 shares that may be acquired upon the exercise of outstanding stock options.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes 804,941 shares held by LICO, which is wholly owned by Mr. Lowden.
|--- | --------------------------------------------------------------------------

|(4) | Includes 4,521 shares held by Mrs. Lowden as custodian for a child and excludes shares beneficially owned by Mr. Lowden reflected in the table.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Includes 1,262 shares held by Mrs. Lowden as custodian for a child and excludes shares beneficially owned by Mr. Lowden reflected in the table.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Includes 12,500 shares that may be acquired upon the exercise of outstanding stock options.
|--- | -------------------------------------------------------------------------------------------

|(7) | Includes 9,342 shares in investment accounts held by Mr. Parthemores spouse and mother-in-law. Although Mr. Parthemore has investment power over these securities,
Mr. Parthemore disclaims beneficial ownership in these securities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Includes 69,426 shares owned by clients of Mr. Foster for which Mr. Foster has investment power but no pecuniary interest.
|--- | --------------------------------------------------------------------------------------------------------------------------



55



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Item 13. Certain Relationships and Related Transactions



The Company believes that all transactions 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 are married to
one another.



The Company has entered into a Patent Rights and
Royalty Agreement with David Lowden, 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 has granted the Company an exclusive five-year license expiring in January 2007 in the United States with respect to the technology,
which will be automatically renewed for additional two-year terms unless Archon terminates the agreement within thirty days prior to the renewal or the agreement is otherwise earlier terminated in accordance with its terms. 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, 2005, the Company had expended approximately $250,000 for commercial development of the technology, all of which was
expended prior to fiscal 2004.



In December 2003, Dukes
closed its casino operations. The Company operated Dukes operations. The Company also loaned Dukes approximately $1.4 million. The Company wrote-off its investment in Dukes and recorded a reserve for its receivable from Dukes
of approximately $1.5 million during its fiscal year ended September 30, 2003 and has no further asset exposure from Dukes. The Company made the determination to reserve the entire amount invested in and owed from Dukes as the
collateral value securing the receivable was deemed insignificant subsequent to the closure of the casino.



During fiscal 2001 through fiscal 2003, the Company purchased an aggregate of $700,000 of commercial and residential loans originally funded by J & J
Mortgage to unaffiliated third parties. The loans were purchased by the Company for the principal amount, plus accrued interest, if any. J & J Mortgage is owned by LICO, which in turn is owned by Paul W. Lowden. John W. Delaney is the president
of J & J Mortgage. At September 30, 2005, the Company was owed approximately $300,000 from J and J Mortgage.



William J. Raggio, a director of the Company, is a shareholder and member of the law firm of Jones Vargas. During fiscal year 2005 and 2004, the Company
retained Jones Vargas to advise the Company regarding various legal matters, and the Company continues to engage Jones Vargas for legal representation.



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.



56



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##### Table of Contents

Item 14. Principal Accountant Fees and Services



The following fees were billed by Ernst & Young, LLP and Deloitte & Touche LLP, respectively, for services provided to the Company for the fiscal years ended September 30, 2005 and 2004:



|                   |  |      |         |      |   |        
|------------------ |  | ---- | ------- | ---- | - | -------
|                   |  | 2005 |         | 2004
|Audit Fees:        |  | $    | 158,272 |      | $ | 213,423
|                   |  |      |         |      |   |        
|Audit Related Fees |  | $    | 21,625  |      | $ | 13,000 
|                   |  |      |         |      |   |        
|Tax Fees           |  | $    | 0       |      | $ | 18,000 
|                   |  |      |         |      |   |        



Audit fees are the
aggregate fees billed for professional services rendered in connection with the engagement to audit the Companys annual financial statements for the fiscal years ended September 30, 2005 and 2004 including the reviews of the financial
statements included in the Companys Form 10-Qs for that fiscal year.



Audit related fees billed in fiscal 2005 and 2004 are for professional services rendered in connection with the audit of the Companys 401(k) retirement plan for the years ended December 31, 2004 and
December 2003, respectively.



Tax fees in 2004 are for
professional services rendered in connection with the preparation of the Companys 2002 federal income tax returns and fees billed in 2003 are for professional services rendered in connection with the assistance on property tax matters.



In 2005 and 2004, no fees were paid to Ernst & Young,
LLP and Deloitte & Touche LLP pursuant to the de minimus exception to the pre-approval policy permitted under the Securities and Exchange Act of 1934, as amended.



The Audit Committee Guidelines for Pre-Approval of Independent Auditor Services is attached to this 10-K as Exhibit
99. During the fiscal year ended September 30, 2005, all services provided by the external auditor were pre-approved by the Companys Audit Committee.



PART IV



Item 15. Exhibits and Reports on Form 8-K



|(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.



|(b) | Reports on Form 8-K filed during the fourth fiscal quarter of 2005.
|--- | -------------------------------------------------------------------



None



57



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##### Table of Contents

|(c) | 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)                                                                                                                                                               



58



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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         |  | Non-Recourse Note S-BNK Dorchester Operations, LLC 10.20% A-1 Note due June 30, 2005. (10)                                                                                                                                                                         
|              | 
|10.19         |  | Non-Recourse 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)                                                                                                                                                                                            
|              | 
|14.1          |  | Code of Ethics (16)                                                                                                                                                                                                                                                
|              | 
|21            |  | Subsidiaries of Archon Corporation (17)                                                                                                                                                                                                                            
|              | 
|23.1          |  | Consent of Ernst & Young LLP*                                                                                                                                                                                                                                      
|              | 
|23.2          |  | Consent of Deloitte & Touche LLP*                                                                                                                                                                                                                                  
|              | 
|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 John M. Garner, Principal Financial 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            |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                   
|              | 
|99            |  | Pre-approval Policy of Audit Committee (18)                                                                                                                                                                                                                        

---

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



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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.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



60



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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
|                |  |                   
|January 6, 2006 |  | By:                |  | /s/ Paul W. Lowden       
|(Date Signed)   |  |                    |  | Paul W. Lowden, President



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. LowdenPaul W. Lowden       |  | Chairman of the Board and President (Principal Executive Officer)                             |  | January 6, 2006
|                                       |  |                                                                                              
|/s/ John DelaneyJohn Delaney           |  | Director                                                                                      |  | January 6, 2006
|                                       |  |                                                                                              
|/s/ Suzanne LowdenSuzanne Lowden       |  | Director                                                                                      |  | January 6, 2006
|                                       |  |                                                                                              
|/s/ William J. RaggioWilliam J. Raggio |  | Director                                                                                      |  | January 6, 2006
|                                       |  |                                                                                              
|/s/ Howard E. FosterHoward E. Foster   |  | Special Director                                                                              |  | January 6, 2006
|                                       |  |                                                                                              
|/s/ Jay ParthemoreJay Parthemore       |  | Special Director                                                                              |  | January 6, 2006
|                                       |  |                                                                                              
|/s/ John M. GarnerJohn M. Garner       |  | Chief Financial Officer, Secretary and Treasurer (Principal Financial and Accounting Officer) |  | January 6, 2006



61