**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,DC 20549**

**FORM 10-KSB**

** **
| **(Mark One)** | ** ** | ** **                                                                                                                         |
|----------------|------------|------------------------------------------------------------------------------------------------------------------------------------|
| **x**          | ** ** | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934.**                                         |
| ** **     | ** ** | ** **                                                                                                                         |
| ** **     | ** ** | **For the fiscal year ended December 31, 2006**                                                                                    |
| ** **     | ** ** | ** **                                                                                                                         |
| ** **     | ** ** | **OR**                                                                                                                             |
| ** **     | ** ** | ** **                                                                                                                         |
| **o**          | ** ** | **TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934.**                                           |
| ** **     | ** ** | ** **                                                                                                                         |
| ** **     | ** ** | **For the transition period from                   to** |
|                |            |                                                                                                                                    |  |

** **

**Commissionfile number 0-52042**

**OCM HOLDCO, LLC**

(Name of smallbusiness issuer in its charter)
| **Delaware**                                                              | **20-3626528**                        |
|---------------------------------------------------------------------------|---------------------------------------|
| (State or other  jurisdiction of                                          | (I.R.S. Employer  Identification No.) |
| incorporation or  organization)                                           |                                  |
|                                                                      |                                  |
| **333  South Grand Avenue, 28****th Floor, Los Angeles, California** | **90071**                             |
| (Address of principal  executive offices)                                 | (Zip Code)                            |

 

**(213)830-6300**Issuer’s telephone number

Securities registered under Section 12(b) of the Exchange Act: **None** 

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

**Class AMembership Units**(Title of class)

Check whether theissuer is not required to file reports pursuant to Section 13 or 15(d) of theExchange Act.  o

Check whether theissuer: (1) filed all reports required to be filed by Section 13 or 15(d) ofthe Exchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes  x   No  o

Check if there isno disclosure of delinquent filers in response to Item 405 of Regulation S-Bcontained in this form, and no disclosure will be contained, to the best of theRegistrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-KSB or any amendment tothis Form 10-KSB. o

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

Revenues for thefiscal year ended December 31, 2006 were approximately $6.7 million.

**DOCUMENTSINCORPORATED BY REFERENCE**

None.

Transitional SmallBusiness Disclosure Format (check one): Yes o    No  x

 

 

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SPECIAL NOTEREGARDING FORWARD-LOOKING STATEMENTS

Certain informationincluded in this annual report on Form 10-KSB and other filings of OCM HoldCo,LLC, a Delaware limited liability company (the “*Company*”)under the Securities Act of 1933, as amended (the “*SecuritiesAct*”), and the Securities Exchange Act of 1934, as amended (the “*Exchange Act*”), as well as information communicated orallyor in writing between the dates of such filings, contains or may contain “forward-lookingstatements.” Such statements are subject to certain risks, trends anduncertainties that could cause actual results to differ materially fromexpected results. Among these risks, trends and uncertainties are economicconditions generally and in the industries in which the Company may participate;competition within the Company’s chosen industries, including competition frommuch larger competitors; technological advances; available capital; regulatoryapprovals; and failure by the Company to successfully develop or acquireproducts and form new business relationships.

When used in this report,the words “expects,” “intends,” “anticipates,” “should,” “believes,” “will,” “plans,”“estimates,” “may,” “seeks,” and similar expressions are generally intended toidentify forward-looking statements. You should not place undue reliance onthese forward-looking statements, which reflect our opinions only as of thedate of this annual report on Form 10-KSB. We undertake noobligation to publicly release any revisions to the forward-looking statementsafter the date of this document. You should carefully review the informationdescribed in this annual report on Form 10-KSB. You should alsocarefully review the risk factors described in the previously filedForm 10-SB and subsequent amendments thereto, and those describedfrom time to time in our future reports filed with the Securities and ExchangeCommission (the “*Commission*”).

 

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**OCMHOLDCO, LLC**

**INDEXTO FORM 10-KSB**

 
| **PART I**           | ** ** |
|----------------------|------------|
|                 |
| Item  1.             |       | Description  of Business |   | 1 |
|                 |       |   |   |   |
| Item 2.              |       | Description of Property |   | 15 |
|                 |       |   |   |   |
| Item  3.             |       | Legal  Proceedings |   | 15 |
|                 |       |   |   |   |
| Item 4.              |       | Submission of Matters to a Vote of Security Holders |   | 15 |
|                 |       |   |   |   |
| **PART II**          | ** ** | ** ** | ** ** | ** ** |
|                 |       |   |   |   |
| Item 5.              |       | Market for Common Equity, Related Stockholder Matters  and Small Business Issuer Purchases of Equity Securities |   | 16 |
|                 |       |   |   |   |
| Item 6.              |       | Management’s Discussion and Analysis |   | 17 |
|                 |       |   |   |   |
| Item  7.             |       | Financial  Statements |   | 20 |
|                 |       |   |   |   |
| Item 8.              |       | Changes In and Disagreements With Accountants on  Accounting and Financial Disclosure |   | 20 |
|                 |       |   |   |   |
| Item 8A.             |       | Controls and Procedures |   | 20 |
|                 |       |   |   |   |
| Item  8B.            |       | Other  Information |   | 20 |
|                 |       |   |   |   |
| **PART III**         | ** ** | ** ** | ** ** | ** ** |
|                 |       |   |   |   |
| Item 9.              |       | Directors, Executive Officers, Promoters and Control  Persons; Compliance with Section 16(a) of the Exchange Act |   | 21 |
|                 |       |   |   |   |
| Item 10.             |       | Executive Compensation |   | 23 |
|                 |       |   |   |   |
| Item 11.             |       | Security Ownership of Certain Beneficial Owners and  Management and Related Stockholder Matters |   | 23 |
|                 |       |   |   |   |
| Item 12.             |       | Certain Relationships and Related Transactions |   | 25 |
|                 |       |   |   |   |
| Item 13.             |       | Exhibits |   | 27 |
|                 |       |   |   |   |
| Item 14.             |       | Principal Accountant Fees and Services |   | 27 |
|                 |       |   |   |   |
| SIGNATURES           |       | S-1 |
|                 |       |   |
| INDEX OF EXHIBITS    |       | E-1 |
|                 |       |   |
| FINANCIAL STATEMENTS |       | F-1 |

 

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**PART I**

**Item1.  Description of Business**

**THE COMPANY**

***Overviewof the Company***

The Company was initiallyformed on July 22, 2005, at the direction of OCM Principal Opportunities FundIII, L.P. and OCM Principal Opportunities Fund IIIA, L.P. (the “*Oaktree Funds*”), each of which is a Delaware limitedpartnership and an affiliate of Oaktree Capital Management, LLC, a Californialimited liability company (“*Oaktree*”). TheCompany was formed for the primary purpose of participating in variousactivities relating to the gaming industry.

In 2006, the Company,through a wholly-owned subsidiary, OCM AcquisitionCo, LLC, a Nevada limitedliability company (“*AcquisitionCo*”),acquired a 42% equity interest in Cannery Casino Resorts, LLC, a Nevada limitedliability company (“*CCR*”), and a33-1/3% equity interest in NP Land, LLC, a Nevada limited liability company (“*NP Land*”). The Company’s current business consists primarilyof its ownership of these equity interests. CCR, through wholly-ownedsubsidiaries:

·                  ownsand operates the Cannery Hotel and Casino (“*The Cannery*”)located in North Las Vegas, Nevada;

·                  operatesthe Rampart Casino (the “*Rampart Casino*”)located in the Summerlin area of northwest Las Vegas;

·                  operatesthe Nevada Palace Hotel and Casino (the “*Nevada Palace*”)located in Las Vegas, Nevada, which CCR intends to replace with a new casinoand hotel complex (“*Cannery East*”);and

·                  ownsThe Meadows, an existing harness racetrack located in North Strabane Township,Washington County, Pennsylvania, where it is currently constructing a temporarycasino and intends to construct a permanent casino.

Oaktree is a LosAngeles-based investment management firm with over $35 billion in assetscommitted to management in specialized investment strategies. These strategiesinclude distressed debt, high yield bonds, convertible securities, emergingmarket equities, power infrastructure investments, principal investments forcorporate control, real estate investments, mezzanine financing and Japaneseequity securities. Oaktree has approximately 350 employees, with offices in LosAngeles, New York, Connecticut, London, Frankfurt, Luxembourg, Tokyo, Hong Kongand Singapore. Oaktree is led by Howard Marks, Chairman, and Bruce Karsh,President. Oaktree is registered with the Securities and Exchange Commission asan investment adviser under the Investment Advisers Act of 1940, as amended.The Oaktree Funds are the fourth closed-end “principal” funds that theprofessionals who invest and manage the Oaktree Funds have organized since 1994for the purpose of making control-oriented equity investments.

***Ownershipof the Company***

All of the Company’sissued and outstanding voting equity, the Class A Membership Units, are held byOCM VoteCo, LLC, a Delaware limited liability company (“*VoteCo*”),and all of the Company’s issued and outstanding non-voting equity, the Class BMembership Units, are held by OCM InvestCo, LLC, a Nevada limited liabilitycompany (“*InvestCo*”). VoteCo is owned equally byeight individuals, seven of whom are principals of Oaktree and one of whom is amanaging director of Oaktree (collectively, the “*VoteCoEquityholders*”). InvestCo is owned principally by the Oaktree Funds,which hold all of InvestCo’s issued and outstanding voting securities. Atpresent, the Company has no plans to issue any additional Class A MembershipUnits or Class B Membership Units.

The VoteCo Equityholders,through VoteCo, control all matters of the Company that are subject to the voteof members, including the appointment and removal of the Company’s managers(the “*Managers*”). The Company has issued ClassB Membership Units to InvestCo, which units do not entitle the holders thereofto any voting rights 

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(except as otherwiserequired by applicable law). The Class B Membership Units allow InvestCo andits investors, including the Oaktree Funds, to invest in the Company withouthaving any voting power or power to control the operations or affairs of theCompany (except as otherwise required by law). If InvestCo and its investors,including the Oaktree Funds, had any power to control the operations or affairsof the Company, they and their respective constituent equityholders wouldgenerally be required to be licensed or found suitable pursuant to the gaminglaws and liquor codes of the jurisdictions in which its properties are located.

VoteCo, InvestCo, theCompany and each of the Company’s wholly-owned subsidiaries are managed byStephen Kaplan, a Principal of Oaktree, and Ronald Beck, a Managing Director ofOaktree.

***Acquisitionof Equity Interests in CCR and NP Land; Acquisition of The Meadows***

OnSeptember 22, 2006, the Company, through a subsidiary, acquired a 33-1/3%equity interest in CCR and a 33-1/3% equity interest in NP Land, both Nevadalimited liability companies. The Company’s acquisition of the 33-1/3% equityinterest in CCR and a 33-1/3% equity interest in NP Land was completed pursuantto the terms and conditions of a Contribution and Unit PurchaseAgreement, dated as of May 10, 2005, as amended and restated in its entirety bythe First Amendment and Restatement of Contribution and Unit PurchaseAgreement, dated as of September 23, 2005 (the “*CUPAgreement*”). The parties to the CUP Agreement were William Paulos,William Wortman, Millennium Gaming, Inc., a Nevada corporation wholly-owned byMessrs. Paulos and Wortman (“*Millennium*”),CCR, AcquisitionCo, and other entities named therein. On November 14, 2006, the Company, through a subsidiary, contributed anadditional $50 million to CCR, increasing its equity interest in CCR from 33-1¤3% to 42%.

**Keyfeatures of the transactions completed during 2005 and 2006 pursuant to the CUPAgreement include the following:**

·                  OnSeptember 30, 2005, the first series of transactions contemplated by the CUPAgreement were consummated. The Company’s affiliates loaned an aggregate of$10,607,245 (the “*InvestCo NP Loans*”) and$4,282,454 (the “*LandCo Loan*”) to entitiescontrolled by Mr. Wortman to enable Mr. Wortman, and entities controlled byhim, to acquire from an unrelated third party all of the interests not otherwiseowned by him in the entities which own the land and assets relating to theNevada Palace.

·                  OnJanuary 5, 2006, the second series of transactions contemplated by the CUPAgreement were consummated. The Company’s affiliates loaned to MGIM, LLC, aNevada limited liability company controlled by Messrs. Paulos and Wortman, $64million (the “*AcquisitionCo Loan*”) and$5,125,000 (the “*InvestCo/MGIM Loan*”) to enableMGIM, LLC to acquire from an unrelated third party a 33-1/3% interest in CCRfor a total purchase price of $70 million.

·                  OnSeptember 22, 2006, the day after receiving the required regulatory approvals,the last of the series of transactions contemplated by the CUP Agreement was completed,and the Company acquired a 33-1/3% interest in each of CCR and NP Land inexchange for cancellation of loans of $64 million and $4,282,454, plus accruedinterest of $5,470,685 and $502,631, respectively.

·                  TheInvestCo NP Loans, the LandCo Loan, the AcquisitionCo Loan and theInvestCo/MGIM Loan each accrued interest at 12%, but in the case of the LandCoLoan and the AcquisitionCo Loan, interest was waived and considered additionalinvestment upon the final closing of the equity purchase pursuant to the CUPAgreement. The loans were financed by capital contributions from InvestCo.

On July 26, 2006, CCR,through a wholly-owned subsidiary, PA Meadows, LLC, a Delaware limitedliability company (“*PA Meadows*”),acquired all of the capital stock in entities owning and operating The Meadowsharness racetrack and issued to the seller a note for $175 million to secure acash purchase price obligation, and a note for $25 million to secure a holdbackobligation. The acquisition was pursuant to two agreements: (i) a StockPurchase Agreement between PA Meadows and Magna Entertainment Corp., a Delawarecorporation (“*MEC*”), dated November 8, 2005, asamended by a first amendment dated July 26, 2006, and (ii) a Post-Closing andNote Issuance Agreement dated July 26, 2006 by and between PA Meadows, MEC andthe parties named therein. On November 

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14, 2006, PA Meadows paid$175 million in cash and delivered a $25 million holdback agreement to MEC, infull satisfaction of the notes issued to MEC on July 26, 2006. The acquisitionwas financed by a $50 million equity contribution from the Company to CCR andproceeds from two syndicated credit facilities. In exchange for the $50 millionequity contribution to CCR, CCR issued additional equity interests toAcquisitionCo, causing the Company’s percentage ownership in CCR to increasefrom 33-1/3% to 42%.

Messrs. Paulos andWortman, through Millennium, own the remaining 58% of the equity interests inCCR and continue to play a substantial role in the management of the business.Mr. Wortman also owns the remaining 66-2/3% of the equity interests in NP Land.

***Employees***

The Company has noemployees, other than its two managers, Mr. Kaplan and Mr. Beck, who receive nocompensation from the Company for their services.

***EnvironmentalIssues***

The Company has nophysical assets.

**CANNERY CASINO RESORTS**

CCR was organized on May22, 2001. In December 2002, CCR commenced casino operations at the RampartCasino. In January 2003, CCR completed construction of The Cannery andcommenced its operations. In July 2006, CCR acquired The Meadows, which itcurrently owns and operates and where it is constructing a new casino. InSeptember 2006, CCR acquired the gaming assets of and commenced temporaryoperations at the Nevada Palace, which operations will continue until its demolition,and also began construction of Cannery East. Today, CCR, through itssubsidiaries, operates The Cannery, the Rampart Casino, the Nevada Palace andThe Meadows, and is constructing new casinos at The Meadows and the NevadaPalace.

The Cannery and the RampartCasino are both currently managed by Millennium Management Group II, LLC, aNevada limited liability company (“*MMG II*”), whichis 95% owned by Mr. Paulos and Mr. Wortman. MMG II also manages the NevadaPalace temporarily, pending its demolition, and will manage Cannery East whensubsequently constructed. MMG II or an affiliate of MMG II is expected tomanage casino operations at The Meadows, once such operations commence.

***TheCannery***

In January 2003,approximately a year and three months after commencement of construction inSeptember 2001, CCR, through a subsidiary, commenced operations at The Cannery.

The Cannery is anapproximately 28-acre hotel, casino, entertainment and parking complex owned byCCR and located in North Las Vegas, Nevada. The Cannery recently completed a$40 million expansion project and now features approximately 72,000 square feetof casino space, including 1,961 slot/video poker machines, 37 table games(including 12 poker tables), a poker room, and a race and sports book. The attachedthree-story hotel is designed to be compatible with The Cannery’s World War IIindustrial theme and includes 201 hotel rooms. In addition, The Cannery’sfacilities include a sports-themed restaurant and bar, a buffet restaurant, aMexican-themed restaurant, an Italian restaurant, a steakhouse and a franchiseddonut shop; a 14 screen movie theatre; an indoor/outdoor multi-purposeentertainment venue used to host events such as boxing matches and communityfestivals; an entertainment lounge, a pool and jacuzzi; and parking forapproximately 3,600 vehicles (including a 1,900-space parking garage),including valet options and additional off-site parking for large events, alongwith shuttle bus service to and from the casino.

The Cannery has beendesigned to promote traffic at its full-service casino facility and to providecustomers with a wide variety of gaming alternatives. To accentuate The Cannery’sWorld War II industrial theme and resemblance of a 1940’s era cannery, thecasino includes an approximately 120-foot high smokestack that is visible forseveral 

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miles from all directionsand provides signage for the facility. The Cannery is located near I-15 andI-95 and targets local residents and visitors to the nearby Nellis Air ForceBase and Las Vegas Motor Speedway.

***TheRampart Casino***

In December 2002, CCR,through a subsidiary, commenced operations at the Rampart Casino under a10-year sublease agreement with Hotspur Casinos Nevada, Inc., a Nevadacorporation (“*Hotspur*”).

The Rampart Casino is situatedwithin the JW Marriott Las Vegas Resort, Spa & Golf at the Resort atSummerlin, located in the Summerlin area of northwest Las Vegas. The RampartCasino’s facilities consist of approximately 50,000 square feet of casinospace, over 1,200 slot machines, 26 table games, a race and sports book, threerestaurants, multiple bars, and an entertainment lounge. The JW Marriott LasVegas Resort is located on over 50 acres of land and consists of a hotel withover 500 guest rooms and suites, a spa, and several restaurants.

The Rampart Casinotargets frequent local gaming patrons living in Summerlin, a 22,500-acremaster-planned community with approximately 60,000 households, adjacent to theSummerlin Parkway and within close proximity to six golf courses. In addition,due to its central location within the JW Marriott Las Vegas Resort, theRampart Casino benefits from resort and conference visitor traffic.

The Resort at Summerlin,which included the Regent Hotel and Casino, was originally constructed in 1997.In November 2000, the hotel and casino filed for bankruptcy. The Regent Hoteland Casino was acquired out of bankruptcy in November 2001 by Hotspur ResortsNevada, Inc., the parent of Hotspur, and, in December 2001, was renamed the JWMarriot Las Vegas Resort, Spa & Golf at the Resort at Summerlin.

***CanneryEast / Nevada Palace***

On September 22, 2006,CCR, through a subsidiary, acquired the gaming assets of the Nevada Palace andentered into a 35-year lease of the Nevada Palace land with NP Land. In January2007, CCR commenced construction of Cannery East, a new, much larger, moderncasino hotel complex to replace the Nevada Palace, which will be operatedtemporarily and demolished prior to opening Cannery East. The acquisition ofthe Nevada Palace and the construction of Cannery East were financed withproceeds from a syndicated loan facility. For more information about thesyndicated loan facility, see the Company’s Post-Effective Amendment No. 2 toForm 10-SB filed with the SEC on October 20, 2006. The Company expects CanneryEast to open during the first quarter of 2008.

Cannery East is beingconstructed on the current site of the Nevada Palace on the Boulder Strip ineast Las Vegas, eight miles from McCarran International Airport. Cannery Eastwill target frequent local gaming patrons, the same demographic targeted by TheCannery and the Rampart Casino. Cannery East is expected to be similar innature to The Cannery, featuring a significantly larger complex and complementof amenities and services than the current Nevada Palace, including improvedcasino, hotel, entertainment, restaurant and other amenities. Cannery East willhave approximately 2,000 slot machines and 26 table games, and will include a308-room hotel, five restaurants, six bars and a nightclub.

The Nevada Palace’scurrent facilities include, among other amenities, approximately 200 hotelrooms and 485 slot machines and, while temporarily operated by CCR, areexpected to account for less than 10% of CCR’s consolidated revenues. Duringthe construction of Cannery East, CCR plans to operate the Nevada Palace untilit is no longer feasible to do so without unduly disrupting either theoperations of Nevada Palace or the construction of Cannery East. Although it isdifficult to predict how long the Nevada Palace can continue to operate, CCRbelieves it may be possible to operate the Nevada Palace until a few monthsbefore the opening of Cannery East, but there can be no assurance that CCR willbe able to continue operations at the Nevada Palace for that period of time.

The primary assets of NPLand are approximately 22 acres of land, the current site of the Nevada Palace,which land is leased to a wholly-owned subsidiary of CCR.

***TheMeadows***

In 2006, CCR, through itsindirect subsidiary, PA Meadows, acquired from MEC all of the capital stock ofentities 

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owning and operating TheMeadows harness racetrack. The acquisition was financed in part with proceedsfrom two syndicated loan facilities. For more information about these loanfacilities, see the Company’s Current Report on Form 8-K filed with the SEC onNovember 20, 2006. Concurrently with the acquisition, PA Meadows and itswholly-owned subsidiaries entered into a Racing Services Agreement, whereby awholly-owned subsidiary of MEC (the “*MEC Operator*”)would continue to operate the Meadows racetrack for a minimum term of fiveyears unless terminated earlier under certain circumstances. Under the RacingServices Agreement, the MEC Operator receives all revenues from and is liablefor all of the costs associated with the racing operations, after paying PAMeadows a fixed fee of $50,000 per year, and generally indemnifies CCR and itsaffiliates against losses arising from all obligations and liabilities of theracing operations, subject to certain exceptions. In addition, MEC agreed toguarantee the financial obligations of the MEC Operator. As a result, duringthe term of the Racing Services Agreement, CCR’s principal economic interest inthe racing operations will consist of the $50,000 in annual fixed fees paid bythe MEC Operator.

On December 20, 2006, thePennsylvania Gaming Control Board (the “Pennsylvania Board”) approvedWashington Trotting Association (“*WTA*”), awholly-owned subsidiary of PA Meadows, to receive a Category 1 Slot MachineLicense to operate a casino at The Meadows. Currently, PA Meadows isconstructing a temporary facility for the casino, which it expects will open inmid-2007 and will house approximately 1,800 slot machines. After the opening ofthe temporary casino, PA Meadows expects to begin construction of a permanentcasino. PA Meadows expects that the permanent casino will be completed withinapproximately two years of the opening of the temporary casino and will houseapproximately 3,000 slot machines.

The regulatory structurein Pennsylvania is new, and therefore it is uncertain whether the remainingapprovals and licenses can be obtained within the time frame currentlycontemplated and, therefore, when the temporary facility for the casino at TheMeadows will be completed, when the permanent facility for the casino at TheMeadows will be constructed or, once constructed, when either facility will beopen for business. For more information about the required regulatoryapprovals, see “Item 1. Regulatory Matters—Pennsylvania Gaming Laws andRegulations” below.

***GamingMarkets***

*Las Vegas Locals Gaming Market*

Las Vegas and North LasVegas, which are part of Clark County, Nevada, are located within a rapidlygrowing metropolitan area in the United States. According to the U.S. CensusBureau, between 1995 and 2005 Clark County’s population grew approximately 66%,more than five times the U.S. population growth of approximately 12% over thesame period of time. According to Clark County demographers, county populationgrowth slowed somewhat to approximately 4% between 2004 and 2005 but stillremained above the national average. The Cannery, the Rampart Casino and theNevada Palace are all located in Clark County. CCR’s management believes thatthe growth in Clark County’s population has been driven, in part, by Nevada’sfavorable climate and tax structure, low unemployment, and a strong real estatemarket.

CCR competes primarily inthe Las Vegas locals gaming market, which is defined as the Clark County gamingmarket excluding the Las Vegas Strip, downtown Las Vegas and Laughlin. TheNevada Commission estimates that two-thirds of the local Las Vegas adultpopulation participates in casino gaming on a regular basis. In conjunctionwith the growth of the Clark County population, gaming revenues for the LasVegas locals gaming market has experienced steady increases. According to theNevada Commission, total win from nonrestricted gaming operations in the LasVegas locals gaming market grew from approximately $1.7 billion in 2002 toapproximately $2.1 billion in 2004 and approximately $2.7 billion in 2006,representing an annual growth rate between 2002 and 2004 of 10% and between2004 and 2006 of 14%.

The specific submarketsfor The Cannery, the Rampart Casino and the Nevada Palace are North Las Vegas,Summerlin, and the Boulder Strip, respectively.

*North Las Vegas*

The Cannery is located inNorth Las Vegas, a rapidly growing city in the United States. According to theNevada Commission, total win from nonrestricted gaming operations grew in NorthLas Vegas from approximately $202 

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million in 2002 toapproximately $258 million in 2004, an annual rate of 14%. From 2004 to 2006,such win increased to approximately $314 million, an approximately 11% annualincrease over 2004. The  Cannery is locateda few miles from I-95 and targets local residents and visitors to the nearbyNellis Air Force Base and Las Vegas Motor Speedway.

*Summerlin*

The Rampart Casino islocated in the Summerlin area of northwest Las Vegas, a 22,500-acre,master-planned community with approximately 60,000 households, adjacent to theSummerlin Parkway and within close proximity to six golf courses. Because theSummerlin area is categorized with the balance of Clark County in the NevadaCommission’s revenue reports, specific annual gaming revenues for the Summerlinarea cannot be determined. CCR management believes that the Rampart Casino’sprimary market consists of frequent local gaming patrons who seek a friendlyatmosphere and convenience, as well as higher-than-average payout rates forslot machines and video poker games. In addition, due to its central locationwithin the JW Marriott Resort, the Rampart Casino benefits from resort andconference visitor traffic.

*The Boulder Strip*

The Nevada Palace islocated and Cannery East will be located along the Boulder Highway, known asthe “Boulder Strip.” According to the Nevada Commission, the Boulder Strip,which includes casinos within the city limits of Henderson, Nevada, has seenwin from nonrestricted gaming operations grow from approximately $666 millionin 2002 to approximately $792 million in 2004 and approximately $930 million in2006. This growth represents an average annual growth rate of 10% between 2002and 2004 and 9% between 2004 and 2006. CCR management believes that the BoulderStrip has become and is likely to remain popular with Las Vegas locals. TheBoulder Strip is known as a popular “off Strip” gaming destination for visitorsto Las Vegas who are looking for a less costly gaming experience than thatoffered on the Las Vegas Strip. Many of the casinos along the Boulder Stripoffer entertainment amenities beyond gambling, including movie theaters,bowling alleys and dining establishments.

*Pennsylvania Gaming Market*

The Meadows Racetrack islocated in North Strabane Township, Washington County, Pennsylvania. NorthStrabane Township is part of the greater Pittsburgh metropolitan area and islocated twenty-five miles from the city of Pittsburgh. CCR management believesthat a casino at The Meadows will compete in a large market that includeswestern Pennsylvania, eastern Ohio and northern West Virginia, although itsprimary market would likely be the greater Pittsburgh metropolitan area. Of thestates in the Meadows casino’s greater market, only West Virginia hasestablished slot machine gaming. Slot machine gaming is new to Pennsylvania,and only one slots casino is currently operating in the greater Pittsburghmetropolitan area: Presque Isle Downs & Casino in Erie, Pennsylvania, whichis approximately 146 miles from the Meadows Racetrack. Ohio does not permitslot machine gaming.

***Competition***

The casino-hotel industryis a highly fragmented and competitive industry. The gaming industry includesland-based casinos, dockside casinos, riverboat casinos, casinos located onNative American reservations and other forms of legalized gaming. CCRmanagement believes that the primary competition to CCR’s casinos currentlycomes from other casinos that cater to the Las Vegas locals gaming market. Inaddition, to a lesser extent, CCR’s casinos face competition from casinoslocated on the Las Vegas Strip and in downtown Las Vegas. Competition with theCompany’s casino at The Meadows, once it is completed and commences operations,is likely to come from racetrack-based casinos in West Virginia. Thecompetition among companies in the gaming industry is intense and many of CCR’scompetitors have significantly greater resources than CCR.

Under the terms of CCR’samended and restated operating agreement, Millennium and its affiliates, on theone hand, and AcquisitionCo and its affiliates (including the Company), on theother, must offer gaming opportunities first to CCR prior to pursuing any suchopportunity outside CCR. Generally, no manager of CCR may serve as a manager,officer, director or employee of any casino operating or holding company,except that a manager may serve in such capacities with respect to CCR or itssubsidiaries or entities that hold equity in the Company (other than Oaktree orinvestors in the Oaktree Funds). Nevertheless, a manager may serve as amanager, officer, director 

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or employee of: (i) acasino operating or holding company formed to pursue a gaming opportunityoffered to but not accepted by CCR; (ii) a casino operating or holding companyformed to pursue certain opportunities in Mexico; (iii) in the case of Mr.Wortman, Renata’s Casino in Henderson, Nevada; or (iv) in the case of Mr.Wortman or Mr. Paulos, the Greektown Casino in Detroit, Michigan.

*Las Vegas Locals Gaming Market*

The growth in gamingrevenue in the Las Vegas locals gaming market has led to a highly competitivemarket to attract business of Las Vegas locals. In addition to establishedcasinos, CCR faces competition from smaller casinos, supermarkets, bars andconvenience stores that offer gaming.

The closest casinocompetitors to The Cannery are Aliante Station and Santa Fe Station (which, asof March 29, 2007, is still under construction), which are approximately fiveand six miles, respectively, from the site of the casino, although outside ofThe Cannery’s primary market area. Other competitors (each more than six milesfrom The Cannery) include Texas Station Gambling Hall and Fiesta Rancho. Eachof these four competitors is owned by Station Casinos, Inc., a publicly tradedcompany. Together, they account for over 6,500 slots, over 100 tables and over500 hotel rooms and suites. The closest competitor to the Rampart Casino isSuncoast Casino, which is within close proximity to the Rampart Casino. Inaddition, a nearby Red Rock Station casino opened April 18, 2006 and hasresulted in significant competition for the Rampart Casino. The next closestcompetitors, Texas Station, Fiesta Station, and Arizona Charlie’s — Decatur,are each more than five miles away, outside of the Rampart Casino’s primarymarket area. The Boulder Strip, where Nevada Palace is located and Cannery Eastwill be located, is home to many competitors. Prominent casinos along theBoulder Strip include Sam’s Town Hall & Gambling Hall, operated by BoydGaming Corporation; and Sunset Station, Boulder Station, Green Valley Ranch andFiesta Henderson, each owned by Station Casinos, Inc. These competitorsgenerally have from 1,500 to over 3,100 slots, 25 to 70 tables (includingpoker) and 200 to over 600 hotel rooms and suites. Nevada Palace and a fewother smaller casinos along the Boulder Strip lack the necessary facilities andother amenities to effectively compete in this prominent sub-market.

*Las Vegas Strip and Downtown LasVegas Gaming Market*

The Las Vegas Strip isthe location of dozens of casinos, including the largest and newestmega-casinos that Las Vegas has to offer. In addition, the downtown Las Vegasarea includes approximately 15 casinos on or near Fremont Street in old LasVegas. Casinos located on the Las Vegas Strip or in downtown Las Vegas aretypically tourist destinations and generally do not target the locals gamingmarket.

*The Neighborhood Casino Act*

In 1997, the NevadaLegislature passed Senate Bill No. 208 (the “*NeighborhoodCasino Act*”), enacting laws which possibly create significantbarriers to new competition in CCR’s local gaming markets by limiting futurecasino development in certain areas of Clark County, Nevada. Those laws wereamended in 2001. With certain specified exemptions, the Neighborhood Casino Actrestricts non-restricted gaming to certain designated gaming enterprisedistricts, and imposes potentially burdensome requirements on applicantsproposing to have new locations designated as gaming enterprise districts bythe applicable county, city or town body with jurisdiction.

*Pennsylvania Gaming Market*

The primary establishedcompetition for the casino at The Meadows is likely to be two racetrack-basedcasinos located in West Virginia: the Wheeling Island Racetrack and GamingCenter in Wheeling, West Virginia, and the Mountaineer Racetrack and GamingResort in Chester, West Virginia. The Wheeling Casino is approximately 34 milesfrom the Meadows Racetrack and is an established racetrack and slot machinegaming center with approximately 2,400 slots. The Mountaineer Casino isapproximately 50 miles from the Meadows Racetrack and is an establishedracetrack and slot machine gaming center with approximately 3,200 slots.Pennsylvania has licensed 11 slot machine gaming facilities throughout thestate. In addition, one harness racetrack-based casino license and two hotelresort-based casino licenses remain available. Competitors to a casino at TheMeadows would depend upon the allocation of the slot machine licenses by thePennsylvania Board. The closest licensed in-state racetrack-based casino isPresque Isle Downs & Casino, located in Erie, Pennsylvania, which isapproximately 146 miles from the Meadows Racetrack. In addition, onDecember 20, 2006, the Pennsylvania Board awarded to PITG Gaming, LLC theone license reserved in Pittsburgh (approximately 35 miles north of the MeadowsRacetrack) for 

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a stand-alone slotmachine casino permitting operation of up to 3,000 slot machines (and up to anadditional 2,000 slot machines after six months of operation). Two hotelresorts located within a 100-mile radius of the Meadows Racetrack, SevenSprings Mountain Resort and Nemacolin Woodland Resort, applied and thenwithdrew applications for resort hotel-based slot machine licenses permittingthe operation of up to 500 slot machines. The Pennsylvania Board is currentlycontemplating accepting new applications for the two authorized resort hotel-basedslot machine licenses.

***Businessand Marketing Strategy***

CCR aims to target thelocals gaming market and capitalize on strong demographic trends. In addition,CCR seeks to position its gaming assets to cater to the propensity of the localresidents to participate in casino-style gaming in proximity to where theylive. CCR management believes that CCR’s Las Vegas casinos also benefit fromNevada regulatory restrictions that have the effect of limiting competition inthe gaming industry, including the Neighborhood Casino Act. For moreinformation on the Neighborhood Casino Act, see “Item 1. Cannery CasinoResorts—Competition—The Neighborhood Casino Act” above.

*Strong Management Team*.

The day-to-day operationsof CCR are managed by Mr. Paulos and Mr. Wortman, each of whom have hadsignificant gaming industry experience. Mr. Paulos previously served asPresident of Primadonna Resorts, Inc., which through subsidiaries owned andoperated various casino-hotel properties, including Buffalo Bill’s, WhiskeyPete’s, the Primm Valley Inn and Resort, and New York-New York Casino Resort,where he also served on the board of directors. Mr. Paulos has served as ChiefOperating Officer of Crown Casino Limited, where he was responsible for theconstruction and opening of its casino in Melbourne, Australia, and as SeniorVice President of Circus Circus Enterprises, Inc., where he had primaryresponsibility for the development of the Excalibur and Luxor casinos. Mr.Wortman previously served as Chairman and Chief Executive Officer of PalaceCasinos, Inc. In addition to Nevada Palace, he previously owned and operatedthe Fallon Nugget and Bonanza Inn in Fallon, Nevada and Renata’s/Sunset Lanesin Henderson, Nevada. Mr. Wortman held various senior positions at CaesarsPalace Las Vegas, including Treasurer, Chief Financial Officer, Vice Presidentof Administration and Vice President of Hotel Operations, and served asPresident and Chief Operating Officer of Caesars Tahoe.

*Targeted Customer Base*.

CCR’s operating strategyaims to attract and retain customers primarily from the locals market throughinnovative, frequent and high-profile promotional programs, focused marketingefforts and convenient locations. CCR’s primary customers are located within afive-mile radius of its casinos, and CCR focuses its marketing efforts on thosepatrons.

*High-Value Customer Experience*.

In order to provide ahigh-value gaming experience, CCR focuses on slot and video poker machine play.CCR management believes that by offering a wide variety of high quality slotand video poker games, its casinos attract locals and repeat visitors. CCRmanagement is committed to providing a high-value entertainment experiencethrough restaurant, hotel and other entertainment amenities to attract localgaming patrons.

*Creative Marketing andPromotional Programs*.

CCR management believesthat promotions and  promotional eventsare one of the primary factors to success in the locals gaming market. CCRemploys a marketing strategy that utilizes innovative, frequent and high-profilepromotional programs in order to attract and retain customers and establish ahigh level of name recognition for CCR’s casinos. In addition to aggressivemarketing through television, radio and newspaper advertising, CCR creates andsponsors promotional events and has established and promotes an exclusiveplayers club.

*Operating Efficiencies*.

By operating casinos witha similar marketing focus and target customer, CCR realizes certain operatingefficiencies. For example, The Cannery and the Rampart Casino participate inthe same players club, which provides casino patrons with the opportunity towin points at either location and enables management to run larger joint 

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promotions. CCR alsobenefits from joint purchasing programs for food and other supplies andavailable quantity discounts. In addition, CCR realizes equipment cost savingsfrom, among other things, identical player tracking systems in its casinos.These player tracking systems provide CCR with access to a larger database ofcustomers for purposes of cross-marketing and promotions. Finally, theaccounting, personnel and other administrative functions of CCR’s casinos arecentralized to reduce costs.

***Employees***

As of December 31, 2006,CCR and its subsidiaries had approximately 2,146 active employees andapproximately 1,673 full-time equivalent employees. Of these employees, 74 areunionized. CCR recognizes that its employees are critical to its success andhas sought to foster a productive work culture. Employees are offeredcompetitive salaries and a benefits package.

***EnvironmentalMatters***

The operations andproperties of The Cannery, the Rampart Casino and the Nevada Palace (and, whenconstructed, Cannery East) are and will continue to be subject to a widevariety of complex and stringent environmental laws. CCR management and NP Landmanagement believe that their respective operations and properties are incompliance in all material respects with all applicable environmental laws.Based upon their experience to date, CCR management and NP Land managementbelieve that the future cost of compliance with and liability under existingenvironmental laws will not have a material adverse effect on their respectivefinancial condition or results of operations.

The operations andproperties of the Meadows racetrack also are and will continue to be subject toa wide variety of complex and stringent environmental laws. CCR managementbelieves that these operations and properties are in compliance in all materialrespects with all environmental laws. In addition, pursuant to the terms of theStock Purchase Agreement between PA Meadows and MEC and the Racing ServicesAgreement with the MEC Operator, MEC and the MEC Operator have agreed toindemnify PA Meadows against certain losses arising from liabilities under theenvironmental laws and related to acts, omissions, conduct or circumstancesoccurring prior to the closing of the transactions contemplated by the StockPurchase Agreement. As a result, CCR management believes that the future costof compliance with and liability under existing environmental laws applicableto the Meadows racetrack will not have a material adverse effect on PA Meadows’financial condition or results of operations.

**REGULATORY MATTERS**

The Company is subject togaming regulation in Nevada and gaming and harness racing regulation inPennsylvania. The ownership and operation of casino gaming facilities in Nevadaare subject to the gaming laws and regulations of the State of Nevada,including the Nevada Gaming Control Act (such laws and regulations, the “*Nevada Act*”), and the licensing and regulatory control ofthe Nevada Gaming Control Board (the “*Nevada Board*”),the Nevada Gaming Commission (the “*Nevada Commission*”),the Clark County Liquor and Gaming Licensing Board, the City of Las Vegas andthe City of North Las Vegas (collectively, the “*NevadaGaming Authorities*”). The ownership and operation of slot machinefacilities in Pennsylvania are subject to the Pennsylvania Race HorseDevelopment and Gaming Act (such laws and regulations, the “*Pennsylvania Act*”) and the licensing and regulatory controlof the Pennsylvania Board. The ownership and operation of harness racing tracksin Pennsylvania are subject to the harness racing laws and regulations of theCommonwealth of Pennsylvania, including the Race Horse Industry Reform Act(such laws and regulations, the “*RHIRA*”), andthe licensing and regulatory control of the Pennsylvania State Harness RacingCommission (“*Pennsylvania Commission*”).

***NevadaGaming Laws and Regulations***

The Nevada Act and theregulations and supervisory procedures of the Nevada Gaming Authorities arebased upon declarations of public policy that are concerned with, among otherthings, the prevention of unsavory or unsuitable persons from having a director indirect involvement with gaming at any time or in any capacity and thestrict regulation of all persons, locations, practices, associations andactivities related to the operation of licensed gaming establishments. Changesin such laws, regulations and procedures could have an adverse effect on CCR’sgaming operations and the Company’s indirect investment in CCR.

 

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*Licensing Requirements and 2006Approvals*

In 2006, certain requiredapprovals were obtained from the Nevada Gaming Authorities in connection withthe Company’s acquisition of its equity interests in CCR and NP Land. Suchapprovals included:

·                  theCompany was registered as a “publicly traded corporation” as that term isdefined by the Nevada Act (a “*Registered Company*”);

·                  theCompany, VoteCo, and AcquisitionCo were registered as holding or intermediarycompanies and found suitable; and

·                  theVoteCo Equityholders received various approvals including licensure as membersand managers, as applicable, of VoteCo and findings of suitability ascontrolling members and managers, as applicable, of the Company.

While the direct andindirect holders of Class B Membership Units of the Company were notmandatorily required to be found suitable in connection with the Company’sacquisition of equity interests in CCR and NP Land, they remain subject to thediscretionary authority of the Nevada Gaming Authorities and can be required tofile an application and have their suitability determined, or to dispose oftheir investment in the Company.

The Nevada GamingAuthorities may require additional licensing or suitability applications. Afinding of suitability is comparable to licensing, and both require submissionof detailed personal and financial information followed by a thoroughinvestigation. An applicant for licensing or an applicant for a finding ofsuitability must pay or must cause to be paid all the costs of the investigation.Changes in licensed positions must be reported to the Nevada Gaming Authoritiesand, in addition to their authority to deny an application for a finding ofsuitability or licensing, the Nevada Gaming Authorities have the jurisdictionto disapprove a change in a corporate position.

*Consequences of Being FoundUnsuitable or Violating Gaming Laws*

If the Nevada GamingAuthorities were to find an officer, manager or key employee of CCR, theCompany, VoteCo or AcquisitionCo unsuitable to continue having a relationshipwith these entities, the companies involved would have to sever allrelationships with such person. The Nevada Gaming Authorities may deny anapplication for any cause which they deem reasonable. Determinations ofsuitability or of questions pertaining to licensing are not subject to judicialreview in Nevada.

If it were determinedthat the Nevada Act was violated by CCR, the Company, VoteCo or AcquisitionCo,the gaming licenses held by CCR’s subsidiaries and affiliates could be limited,conditioned, suspended or revoked, subject to compliance with certain statutoryand regulatory procedures. In addition, any such violator and the personsinvolved could be subject to substantial fines for each separate violation ofthe Nevada Act, or of the regulations of the Nevada Commission, at thediscretion of the Nevada Commission. Furthermore, the Nevada Commission couldappoint a supervisor to operate The Cannery, the Rampart Casino, the NevadaPalace or, when constructed, Cannery East and, under specified circumstances,earnings generated during the supervisor’s appointment (except for thereasonable rental value of the premises) could be forfeited to the State ofNevada. Limitation, conditioning or suspension of any gaming license or theappointment of a supervisor could (and revocation of any gaming license would)impact casino revenues and cause the Company to suffer financial loss.

*Ongoing Obligations of GamingLicensees and Beneficial Securities Holders*

On September 21, 2006,the Nevada Commission issued an order of registration of the Company (the “*Final Order*”), which was immediately effective. The FinalOrder prohibited (1) VoteCo, InvestCo or their respective affiliates fromselling, assigning, transferring, pledging or otherwise disposing of the Company’sClass A Membership Units or Class B Membership Units or any other securityconvertible into or exchangeable for Class A Membership Units or Class BMembership Units, without the prior approval of the Nevada Commission, and (2)the Company from declaring cash dividends or distributions on any class ofmembership unit of the Company beneficially owned in whole or in part byInvestCo, VoteCo, or their respective affiliates, without the prior approval 

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of the Nevada Commission.

After the Final Order wasissued, the Company, VoteCo and AcquisitionCo became subject to detailedongoing financial and operating reporting requirements to the Nevada GamingAuthorities. Substantially all material loans, leases, sales of securities andsimilar financing transactions by the Company, VoteCo and AcquisitionCo must bereported to, or approved by, the Nevada Commission.

Regardless of the numberof shares held, any beneficial holder of a Registered Company’s votingsecurities may be required to file an application, be investigated and havethat person’s suitability as a beneficial holder of voting securitiesdetermined if the Nevada Commission has reason to believe that the ownershipwould otherwise be inconsistent with the declared policies of the State ofNevada. If the beneficial holder of such voting securities who must be foundsuitable is a corporation, partnership, limited partnership, limited liabilitycompany or trust, it must submit detailed business and financial information,including a list of its beneficial owners. The applicant must pay all costs ofthe investigation incurred by the Nevada Gaming Authorities in conducting anyinvestigation.

The Nevada Act requiresany person who individually or in association with others acquires, directly orindirectly, beneficial ownership of more than 5% of a Registered Company’svoting securities to report the acquisition to the Nevada Commission, and suchperson may be required to be found suitable. The Nevada Act requires that eachperson who, individually or in association with others, acquires, directly orindirectly, beneficial ownership of more than 10% of a Registered Company’svoting securities to apply to the Nevada Commission for a finding ofsuitability within 30 days after the Chairman of the Nevada Board mails thewritten notice requiring such filing. Under certain circumstances, an “institutionalinvestor,” as defined in the Nevada Act, which acquires more than 10%, but notmore than 15%, of a Registered Company’s voting securities may apply to theNevada Commission for a waiver of a finding of suitability if the institutionalinvestor holds the voting securities for investment purposes only. Also undercertain circumstances, an institutional investor that has obtained a waiver mayhold up to 19% of a Registered Company’s voting securities for a limited periodof time and maintain the waiver. An institutional investor will not be deemedto hold voting securities for investment purposes unless the voting securitieswere acquired and are held in the ordinary course of business as aninstitutional investor and not for the purpose of causing, directly orindirectly, the election of a majority of the members of the board of directorsof a Registered Company, a change in the corporate charter, bylaws, management,policies or operations of a Registered Company, or any of its gamingaffiliates, or any other action which the Nevada Commission finds to beinconsistent with holding a Registered Company’s voting securities forinvestment purposes only. Activities which are not deemed to be inconsistentwith holding voting securities for investment purposes only include:

·                  votingon all matters voted on by stockholders or interest holders;

·                  makingfinancial and other inquiries of management of the type normally made by securitiesanalysts for informational purposes and not to cause a change in management,policies or operations; and

·                  otheractivities that the Nevada Commission may determine to be consistent with suchinvestment intent.

Any person who fails orrefuses to apply for a finding of suitability or a license within 30 days afterbeing ordered to do so by the Nevada Commission or the Chairman of the NevadaBoard may be found unsuitable. The same restrictions apply to a record owner ofequity securities if the record owner, after request, fails to identify thebeneficial owner. Any member found unsuitable and who holds, directly orindirectly, any beneficial ownership of the equity securities of a RegisteredCompany beyond such period of time as may be prescribed by the NevadaCommission may be guilty of a criminal offense. The Company is subject todisciplinary action if, after it receives notice that a person is unsuitable tobe a member or hold a voting security or other equity security issued by theCompany or to have any other relationship with the Company, the Company:

·                  paysthat person any dividend or interest with respect to voting securities of theCompany;

·                  allowsthat person to exercise, directly or indirectly, any voting right conferredthrough securities held by that person;

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·                  paysremuneration in any form to that person for services rendered or otherwise; or

·                  failsto pursue all lawful efforts to require such unsuitable person to relinquishhis or her voting securities, including, if necessary, the immediate purchaseof said voting securities for cash at fair market value.

The Nevada Commissionmay, in its discretion, require the holder of any debt or non-voting securityof a Registered Company to file applications, be investigated and be foundsuitable to own the debt or non-voting security of a Registered Company. If theNevada Commission determines that a person is unsuitable to own such security,then pursuant to the Nevada Act, the Registered Company can be sanctioned,including by revocation of its approvals, if without the prior approval of theNevada Commission, the Registered Company:

·                  paysto the unsuitable person any dividend, interest, or any distributionwhatsoever;

·                  recognizesany voting right by such unsuitable person in connection with such securities;

·                  paysthe unsuitable person remuneration in any form; or

·                  makesany payment to the unsuitable person by way of principal, redemption,conversion, exchange, liquidation or similar transaction.

The Company may not makea public offering of its securities without the prior approval of the NevadaCommission if the securities or the proceeds therefrom are intended to be usedto construct, acquire or finance gaming facilities in Nevada, or to retire orextend obligations incurred for such purposes.

The Nevada Act providesthat changes in control of the Company through merger, consolidation, stock orasset acquisitions, management or consulting agreements, or any act or conductby a person whereby the person obtains control, may not occur without the priorapproval of the Nevada Commission. Entities and persons seeking to acquirecontrol of a Registered Company must satisfy the Nevada Commission with respectto a variety of stringent standards prior to assuming control of suchRegistered Company. The Nevada Commission may also require controllingstockholders, members, partners, officers, directors and other persons havingan ownership interest in or a material relationship or involvement with theentity proposing to acquire control to be investigated and licensed as part ofthe approval process relating to the transaction.

Any person who islicensed, required to be licensed, registered, required to be registered, orunder common control with such persons, and who proposes to become involved oris involved in a gaming venture outside of Nevada (“*ForeignGaming*”), is required to deposit certain funds with the Nevada Boardin order to pay the expenses of investigation of the Nevada Board of theirparticipation in such Foreign Gaming. Thereafter the licensees are required tocomply with certain reporting requirements imposed by the Nevada Act. Alicensee is also subject to disciplinary action by the Nevada Commission if itknowingly violates any laws of the foreign jurisdiction pertaining to theForeign Gaming operation, fails to conduct the Foreign Gaming operation inaccordance with the standards of honesty and integrity required of Nevadagaming operations, engages in activities or enters into associations that areharmful to the State of  Nevada or its abilityto collect gaming taxes and fees, or employs, contracts with, or associateswith, a person in the Foreign Gaming operation who has been denied a license orfinding of suitability in Nevada on the ground of personal unsuitability.

***PennsylvaniaGaming Laws and Regulations***

The ownership andoperation of slot machine facilities in Pennsylvania are subject to extensivestate regulation by the Pennsylvania Board under the Pennsylvania Act and theregulations of the Pennsylvania Board. The Pennsylvania Board has broaddiscretion regarding the issuance, renewal, revocation and suspension of slotmachine licenses. The Pennsylvania Act, and the regulations promulgatedthereunder, concern primarily the good character, honesty, integrity andfinancial stability of slot machine licensees, their intermediary and holdingcompanies, their employees, their security holders and others financiallyinterested in slot operations.

On December 20, 2006, thePennsylvania Board approved WTA to receive a Category 1 Slot Machine License.The 

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Category 1 Slot MachineLicense was issued upon completion of a background investigation and initialsatisfaction of certain conditions set by the Pennsylvania Board. The holder ofa Category 1 Slot Machine License may operate up to 3,000 slot machines and,with the approval of the Pennsylvania Board, up to an additional 2,000 slotmachines after six months of operation. Prior to the commencement of slotmachine operations, WTA must obtain additional approvals from the Pennsylvania Board,such as approval of internal controls and equipment, licensing of employees andthe successful completion of gaming test days.

As pre-conditions toreceiving its license, WTA had to demonstrate, by clear and convincing evidenceto the satisfaction of the Pennsylvania Board, that WTA and its affiliates arepersons of good character, honesty, integrity and that their prior activities,reputation, habits and associations do not pose a threat to the public interestor the effective regulation and control of slot machine operations or create orenhance the danger of unsuitable, unfair or illegal practices, methods andactivities in the conduct of slot machine operations or in the carrying on ofthe business and financial arrangements incidental thereto. WTA also had todemonstrate by clear and convincing evidence the adequacy of its financialresources, the financial stability, integrity and responsibility of it and itsaffiliates, and the integrity of all financial backers, investors, mortgagees,bondholders and holders of indentures, notes or other evidences ofindebtedness, either in effect or proposed, except that banking or licensedlending institutions and certain institutional investors may be waived from thequalification requirements. WTA had to show by clear and convincing evidencethat it has sufficient business ability and experience to create and maintain asuccessful, efficient operation.

As a licensee, WTA isobligated to develop and implement a diversity plan to assure that all personsare accorded equality of opportunity in employment and contracting, which ithas done. WTA is also required to maintain certain records, which shall be madeavailable to the Pennsylvania Board upon request. In addition, WTA is requiredto hold a license issued by the Pennsylvania Commission to conduct harnessracing meets. WTA holds a license from the Pennsylvania Commission to conductharness racing meets.

As a licensee, WTA isobligated to fully cooperate with the Pennsylvania Board in the conduct of anyinquiry or investigation and provide any supplementary information as may berequested. Currently, there are no such inquiries or investigations beingconducted about WTA or its affiliates, other than the usual and customaryinvestigations of any licensee and investigations related to the constructionand opening of the facility.

No executive-levelPennsylvania state employee, public official or party officer, or any of theirimmediate family members, may have a financial interest in a licensed gamingentity, be employed by any gaming entity or affiliate thereof or solicit oraccept any service or discount not offered to the general public from a gamingentity or affiliate. No applicant, affiliate, intermediary, subsidiary orholding company may possess a greater than one-third ownership or financialinterest in another slot machine licensee or person eligible to apply for aCategory 1 Slot Machine License. A licensed entity or officer, director orprincipal employee of a licensee may not make any contribution to a candidatefor nomination or election to any public office in Pennsylvania.

The Pennsylvania Boardmay deny an application or suspend or revoke a license of a person or applicantwho has failed to prove to the satisfaction of the Pennsylvania Board that theperson or applicant is qualified in accordance with the Pennsylvania Act, whohas violated the Pennsylvania Act, who is disqualified under the criteria setforth in the Pennsylvania Act, who provided false or misleading information tothe Pennsylvania Board, who has materially departed from a representation madein the application for a license or who has failed to comply with applicableFederal or state laws or regulations. If the Pennsylvania Board does notapprove a slot machine license application based on a finding that anindividual who is a principal or has an interest in the entity applying forlicensure does not meet the character requirements or any other eligibilityrequirement or is in violation of the change in ownership and controlprovisions of the Pennsylvania Act, the Pennsylvania Board may permit theindividual or entity the opportunity to divest completely his or her interestin the entity and related entities. The Pennsylvania Board must approve theterms and conditions of divestiture, but the Pennsylvania Act requires that thecompensation for the divested interest not exceed the cost of the interest.

On February 27, 2007, WTApaid a one-time license fee in the amount of $50 million. As a Category 1 SlotMachine licensee, WTA is subject to a daily tax of 34%, a local county shareassessment of 2%, a local municipality share assessment of 2% but no less than$10 million, an additional daily assessment of 5% of its daily gross terminalrevenue, and a 1.5% tax on gross terminal revenue. A licensee shall also pay adaily assessment to the Pennsylvania 

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Race Horse DevelopmentFund in a maximum amount of 12% of daily gross terminal revenue as determinedby the Department of Revenue. WTA is also responsible for the costs ofinvestigation and regulation.

A license or permitissued by the Pennsylvania Board is a privilege and, except as set forth below,may not be sold, transferred or assigned to any person, nor shall a licensee orpermittee pledge or otherwise grant a security interest in a license. Alicensee must notify the Pennsylvania Board prior to or immediately uponbecoming aware of any proposed or contemplated change of ownership by a groupor person which involves (i) more than 5% of the licensee’s ownershipinterests, (ii) more than 5% of the ownership interests of an entity that owns,directly or indirectly, at least 20% of the voting or other ownership interestsof the licensee, (iii) a sale, other than in the ordinary course of business,of a licensee’s assets, or (iv) any other transaction or occurrence deemed tobe relevant by the Pennsylvania Board. A purchaser of the assets of a licenseeother than in the ordinary course of business or of more than 20% of thelicensee’s ownership interests must independently qualify for a license and paya new license issuance fee of $50 million. However, the fee is subject toreduction in the discretion of the Pennsylvania Board.

Slot machine licensesmust be renewed annually. If a completed renewal application is received in atimely manner, the license shall remain in effect unless and until thePennsylvania Board denies or renews the license.

***PennsylvaniaHarness Racing Laws and Regulations***

The ownership andoperation of pari-mutuel harness racing facilities in Pennsylvania is subjectto extensive state regulation by the Pennsylvania Commission under the RHIRAand the regulations of the Pennsylvania Commission. Pursuant to the RHIRA, thePennsylvania Commission is empowered to issue no more than five licenses forthe conduct of pari-mutuel harness racing (each, a “*HarnessRacing License*”). Two subsidiaries of PA Meadows, WTA and MountainLaurel Racing, Inc., each holds one of the five Harness Racing Licenses.Presently, one of the remaining three Harness Racing Licenses remains unissuedand is currently the subject of litigation between the Pennsylvania Commissionand two potential licensees.

Once a Harness RacingLicense has been issued, the RHIRA provides that such license shall remain ineffect so long as the licensee complies with all conditions, rules, regulationsand provisions of the RHIRA. Harness Racing Licenses are not transferable. TheRHIRA requires that each holder of a Harness Racing License shall, within tendays after any transfer of stock comprising an interest of 5% or more of suchlicensee, notify the Pennsylvania Commission of such transfer. Such licenseemust also file with the Pennsylvania Commission affidavits from the proposedtransferees setting forth certain required information regarding the proposedtransfer and the proposed transferee.

Since PA Meadowspurchased the stock of the entities that own and operate The Meadows, the MECOperator has continued to conduct harness racing at the site of the Meadowsracetrack and operate the racing operations. As such, and in connection withsuch activities, the MEC Operator has made appropriate application to thePennsylvania Commission.

If the PennsylvaniaCommission determines that it is inconsistent with the public interest,convenience or necessity, or with the best interest of racing generally, forany person to continue as the holder of an equity interest in a licensee or anyparent or affiliate of a licensee, the Pennsylvania Commission may order suchperson to dispose of such interest in a licensee within a period of timespecified by the Pennsylvania Commission.

The PennsylvaniaCommission may refuse to grant a Harness Racing License or may suspend orrevoke a Harness Racing License without a prior hearing if it determines by apreponderance of the evidence that (i) a licensee, its officers, employees oragents have not complied with the conditions, rules, regulations and provisionsof the RHIRA and (ii) it would be in the public interest, convenience ornecessity to revoke or suspend the subject license. Such refusal, suspension orrevocation may be premised upon, among other things, a determination by thePennsylvania Commission that (a) any officer, director, member or stockholderof the licensee or any parent or affiliate of the licensee (1) has beenconvicted of a crime involving moral turpitude, (2) has engaged in bookmakingor other forms of illegal gambling, (3) has been found guilty of any fraud ormisrepresentation in connection with racing or breeding, (4) has been foundguilty of any violation or attempt to violate any law, rule or regulation ofany racing jurisdiction for which suspension from racing might be imposed insuch jurisdiction or (5) has violated any rule, 

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regulation or order ofthe Pennsylvania Commission, or (b) the experience, character or fitness of anyofficer, director, member or stockholder of the licensee or any parent oraffiliate of the licensee is such that the participation of the person in horseracing or related activities would be inconsistent with the public interest,convenience or necessity or with the best interest of racing. Upon receivingnotice of any such determination by the Pennsylvania Commission, a licenseemay, within ten days after such notice, demand a hearing before thePennsylvania Commission. However, the action of the Pennsylvania Commission inrefusing to grant or in suspending or revoking a Harness Racing License shallremain in full force pending such hearing and final determination.

In addition to its powerto suspend or revoke Harness Racing Licenses, the Pennsylvania Commission isauthorized and empowered to impose fines upon persons and entities thatparticipate in any way in any horse race meet at which pari-mutuel wagering isconducted and violate the RHIRA or the rules and regulations promulgated by thePennsylvania Commission, in an amount not to exceed $5,000 for each violation.

Each entity participatingin the management of a licensee and each licensee must provide the PennsylvaniaCommission on an annual basis with a complete list of all holders of anownership interest in such entity or licensee, indicating the interest of eachsuch owner.

***Reportsto Security Holders***

The Company is requiredto file annual, quarterly and other current reports and information with theCommission. You may read and copy any materials filed by the Company with theCommission at its Public Reference Room at 100 F Street, NE, Room 1580,Washington, D.C. 20549. You may obtain information on the operation of thePublic Reference Room by calling the Commission at 1-800-SEC-0330. The Company’sfilings are also available to the public from commercial document retrievalservices and at the World Wide Web site maintained by the Commission athttp://www.sec.gov.

**Item 2.    Description of Property.**

Neither the registrantnor any of its consolidated subsidiaries owns real property.

**Item 3.    Legal Proceedings.**

As of March 29, 2007,neither the Company nor any of its consolidated subsidiaries is a party to anypending legal proceeding, and to their knowledge, no action, suit or proceedingagainst it or any of its consolidated subsidiaries has been threatened by anyperson.

As of March 29, 2007, nodirector, officer, affiliate or security holder of the Company, and no owner ofrecord or beneficially of more than five percent of the Company’s Class AMembership Units, is adverse to the Company or has a material interest adverseto the Company, in any material proceeding to which such person is a party.

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

No matters weresubmitted to a vote of security holders during the quarter ended December 31,2006.

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**PART II**

**Item 5.    Market forCommon Equity, Related Stockholder Matters and Small Business Issuer Purchasesof Equity Securities.**

On September 23, 2005,the Company issued all of its Class A Membership Units to VoteCo withoutregistration pursuant to Section 4(2) of the Securities Act in exchange for anaggregate capital contribution of $100. On that same date, the Company issuedall of its Class B Membership Units to InvestCo without registration pursuant toSection 4(2) of the Securities Act in exchange for subsequent contributions byInvestCo of (1) all the membership units in OCM LandCo, LLC, a Delaware limitedliability company (“*LandCo*”) whoseprimary asset is its one-third equity interest in NP Land, and (2) $64 million.Except as described immediately above, the Company has not issued any othersecurities.

No established publictrading market exists for the Company’s membership units. There are no plans,proposals, arrangements or understandings with any person with regard to thedevelopment of a trading market in any of the Company’s membership units. Inaddition, the Final Order prohibits VoteCo, InvestCo and their respectiveaffiliates from selling, assigning, transferring, pledging or otherwise disposingof the Company’s Class A Membership Units or Class B Membership Units or anyother security convertible into or exchangeable for Class A Membership Units orClass B Membership Units, without the prior approval of the Nevada Commission.

There are no outstandingoptions or warrants to purchase, or securities convertible into, the Company’smembership units. The Company’s currently outstanding Class A Membership Unitsare “restricted,” which means that they were originally sold in offerings thatwere not subject to a registration statement filed with the Commission.Accordingly, the Company’s membership units are subject to sale in the publicmarket pursuant to Rule 144 under the Securities Act, including the limitationsset forth therein. In general, Rule 144 permits a person or persons whosemembership units are aggregated and who has beneficially owned restricted membershipunits for at least one year to sell in the public market within any three-monthperiod a number of membership units that does not exceed the greater of:

·                  1%of the then outstanding membership units of the class of membership units to besold; or

·                  ifapplicable, the average weekly trading volume of the class of membership unitsto be sold on all national securities exchanges and/or reported through theautomated quotation system of a registered securities association during thefour calendar weeks preceding the date on which notice of sale is filed withthe Commission.

Sales pursuant to Rule144 under the Securities Act are subject to restrictions relating to the mannerof sale, notice and availability of current public information about theCompany. The Company has not agreed with any security holder to register any ofits membership units for sale by any security holder. The Company does notcurrently propose to publicly offer any membership interests of its commonequity.

As of March 29, 2007,VoteCo was the only holder of record of the Company’s Class A Membership Unitsand InvestCo was the only holder of record of the Company’s Class B MembershipUnits.

The Company does not pay,and does not expect to pay in the foreseeable future, any dividends or otherdistributions with respect to its membership units.

The Company does not haveany equity compensation plans and does not expect to authorize securities forissuance pursuant to any equity compensation plans in the foreseeable future.

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**Item6.    Management’s Discussion andAnalysis.**

***Overview***

Thefollowing management’s discussion and analysis of the Company’s financialcondition and results of operations should be read in conjunction with theaudited financial statements and the notes thereto included in Part II, Item 7of this Annual Report on Form 10-KSB.

TheCompany’s current business consists primarily of its ownership of a 42% equityinterest in CCR and a 33-1/3% equity interest in NP Land. CCR operates threeLas Vegas casinos, The Cannery, the Rampart Casino, and the Nevada Palace, and,most recently, acquired The Meadows, a harness racetrack in Pennsylvaniawhere it is constructing a casino. NPLand owns the land of the current site of the Nevada Palace.

***OperationsAnalysis***

OnSeptember 22, 2006, the Company, through a subsidiary, acquired a 33-1/3%equity interest in CCR and a 33-1/3% equity interest in NP Land, both Nevadalimited liability companies, in exchange for cancellation of loans of $64million and $4,282,454, and accrued interest of $5,470,685 and $502,631, respectively. The Company’s acquisition ofthe 33-1/3% equity interest in CCR and a 33-1/3% equity interest in NP Land wascompleted pursuant to the terms and conditions of the CUP Agreement. For moreinformation about the CUP Agreement, see “Item 1 — Description of the Business —The Company — Acquisition of Equity Interest in CCR and NP Land; Acquisition ofThe Meadows.”

OnNovember 14, 2006, the Company, through a subsidiary, contributed an additional$50 million to CCR in exchange for additional equity interests, increasing itsequity interest in CCR from 33-1/3% to 42%. For the year ended December 31,2006, the Company’s equity in the earnings of CCR and NP Land totaled $722,184and $136,544, respectively.

NPLand receives monthly rentals of $163,600 from CCR for the Nevada Palace site.Its expenses consist primarily of interest and depreciation totalingapproximately $35,000 per month.

CCR’snet income for the year ended December 31, 2006 was down approximately$2,563,000 as a result of, among other items, a loss incurred on theextinguishment of debt ($1,360,000) and additional interest expense($2,003,000), primarily associated with the refinancing that occurred inJanuary 2006 and is discussed in greater detail below under “Off Balance SheetArrangements — Credit Agreement.”

CCR’srevenues for 2006 were up 11%, primarily resulting from the opening of facilityadditions at The Cannery in April and August 2006 and, to a lesser extent, fromthe Nevada Palace (which was not part of the prior year results). Such increasewas partially offset by a 3% decline in revenues at the Rampart Casino.Revenues from the Rampart Casino have been negatively impacted by increasedcompetition from a significant new competitor beginning April 2006.

Operatingincome at The Cannery increased 33% year-over-year but was substantially offsetby (i) lower revenues at the Rampart Casino, (ii) pre-opening costs associatedwith the casino currently under construction at The Meadows, which is expectedto open mid-2007, and (iii) market research and project promotion costsincurred in connection with the identification, recruitment, and procurement ofcasino development and management contracts primarily in jurisdictions thatcurrently either lack enabling legislation or certain other criticalentitlements.

***Liquidity andCapital Resources***

Duringthe period from inception (July 22, 2005) through December 31, 2005, theCompany incurred costs associated with the CUP Agreement totaling $1.6 million,and during the year ended December 31, 2006, incurred additional costsassociated with the CUP Agreement of $2.7 million. These costs were partiallyfunded by in-substance distributions from CCR of $3.0 million. The remainingcosts were paid for by member contributions.

Duringthe period from inception through December 31, 2005, and for the year endedDecember 31, 2006, the 

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Companyincurred costs associated with obtaining gaming and related licenses in Nevadaand Pennsylvania totaling $0.9 million and $0.2 million, respectively. Forcosts associated with obtaining Pennsylvania gaming licenses, totaling $0.3million out of the $0.9 million, the Company received reimbursement from CCR inthe fourth quarter of 2006.

At the request and forthe convenience of the Company, substantially all of the disbursements of theCompany and its consolidated subsidiaries for operating expenses, are made byInvestCo and/or its beneficial owners directly to vendors and investees, anddistributions from the Company’s investees are received directly by the Company’smembers. Accordingly, the Company typically carries only nominal cash balances.

***Off BalanceSheet Arrangements***

*Credit Agreement*

As of September 22, 2006,a subsidiary of the Company became an additional guarantor under a limitedrecourse guaranty executed in connection with the syndicated credit agreemententered into by CCR and three of its subsidiaries with Bank of America (the “*Credit Agreement*”). Pursuant to the guaranty, all of theCompany’s equity interest in CCR will be pledged after approval by gamingauthorities was obtained on March 22, 2007. Recourse on the guaranty is limitedto such equity interests.

The Credit Agreement issecured by substantially all of CCR’s real and personal property and iscomprised of a $110 million term loan and a $140 million revolving facility,each of which matures on January 5, 2011. The proceeds from borrowings underthe Credit Agreement were used to refinance $115 million of CCR’s then existingindebtedness, pay distributions, finance capital improvements, and fund generalcorporate operations. As of December 31 2006, the outstanding principal amountof the term loan and revolving facility was $108,900,000 and $38,000,000,respectively. For more information about the Credit Agreement, see the Company’sPost-Effective Amendment No. 2 to Form 10-SB, filed with the Securities andExchange Commission on October 20, 2006.

*AdditionalConditional Commitment - PA Meadows Transaction*

Asof December 31, 2006, the Company is conditionally committed to make upto an additional $25 million of equity investment in CCR to support theoperational needs of CCR’s subsidiary, PA Meadows, but only in certain limitedcircumstances and only to the extent not previously funded.

By way of background, onJuly 26, 2006, CCR, through PA Meadows, acquired all of the capital stock inentities owning and operating The Meadows harness racetrack and issued to theseller a note for $175 million to secure a cash purchase price obligation, anda note for $25 million to secure a holdback obligation. The acquisition waspursuant to two agreements: (i) a Stock Purchase Agreement between PA Meadowsand MEC, dated November 8, 2005, as amended by a first amendment dated July 26,2006, and (ii) a Post-Closing and Note Issuance Agreement dated July 26, 2006by and between PA Meadows, MEC and the parties named therein. On November 14,2006, PA Meadows paid $175 million in cash and delivered a $25 million holdbackagreement to MEC, in full satisfaction of the notes issued to MEC on July 26,2006. The acquisition was financed by a $50 million equity contribution fromthe Company to CCR and proceeds from two syndicated credit facilities. For moreinformation about the terms of the syndicated credit facilities, see theCompany’s Current Report on Form 8-K filed with the Securities and ExchangeCommission on November 20, 2006. In exchange for the Company’s $50 millionequity contribution, CCR issued additional equity interests, causing theCompany’s percentage ownership in CCR to increase from 33-1/3% to 42%.

***CriticalAccounting Estimates and Policies***

Althoughthe Company’s consolidated financial statements necessarily make use of certainaccounting estimates by management, we believe no matters are the subject ofsuch estimates that are so highly uncertain or susceptible to change as topresent a significant risk of a material impact on its financial condition orresults of operations. Moreover, except as discussed below, the Company doesnot now employ any critical accounting policies that are selected from amongavailable alternatives or require the exercise of significant managementjudgment to apply.

 

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*Gamingand related licenses*

Professionalfees and other costs associated with the applications for licensure of theCompany and its consolidated subsidiaries and certain of its beneficial owners,including payments to regulatory agencies, have been capitalized pursuant toguidelines contained in para. 2.06 of the American Institute of CertifiedPublic Accountants’ Audit and Accounting Guide, *Audits ofCasinos*. These fees and costs have been treated as indefinite lifeintangible assets pursuant to Statement of Financial Accounting Standard No.142, *Goodwill and Other Intangible Assets*,based on expectations at the time the costs were incurred and capitalized thatsuch licenses would be granted, as they subsequently were, that they wouldenable the Company and/or its consolidated subsidiaries to hold direct andindirect ownership interests in gaming enterprises, and, therefore, that it wasand is probable that they will benefit future periods through continuedprofitable operations of its investee entities and resultant expected increasesin the value of its investments therein and cash distributions therefrom.Accordingly, such assets are evaluated at least annually (and more frequentlywhen circumstances warrant) to determine if events or changes in circumstancesindicate that the probability that such assets will continue to benefit futureperiods might have been impaired. Examples of such events or changes incircumstances that might indicate impairment of these assets might include anactive or likely regulatory threat to the availability or viability of alicense, specifically, as a result of (i) non-compliance with regulations, (ii)an adverse change in the legal, regulatory or business climate relative togaming nationally or in the jurisdiction or (iii) a significant long termdecline in historical or forecasted earnings or cash flows of the investee orthe fair value of its property or business possibly as a result of competitiveor other economic or political factors.

***RecentAccounting Pronouncements***

In February 2006, theFinancial Accounting Standards Board (“*FASB*”) issuedSFAS No. 155, *Accounting for CertainHybrid Financial Instruments—an amendment of FASB Statements No. 133 and140*. SFAS No. 155 allows financial instruments that haveembedded derivatives to be accounted for as a whole (eliminating the need tobifurcate the derivative from its host) if the holder elects to irrevocablyaccount for the whole instrument on a fair value basis. SFAS No. 155 iseffective for all financial instruments acquired or issued afterDecember 31, 2006. We do not expect the adoption of SFAS No. 155 tohave a material effect on our future consolidated financial statements, as wedo not currently have nor currently contemplate acquiring or issuing anyfinancial instruments that meet the criteria specified under SFAS No. 155.

In July 2006, the FASBissued FASB Interpretation No. 48 (“*FIN 48*”), *Accounting for Uncertainty in Income Taxes—an interpretation of FASBStatement No. 109*. FIN 48 clarifies the accounting for uncertaintyin income taxes recognized in an enterprise’s financial statements inaccordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48prescribes a recognition threshold and measurement attribute for the financialstatement recognition and measurement of a tax position taken or expected to betaken in a tax return. FIN 48 also provides guidance on de-recognition,classification, interest and penalties, accounting in interim periods,disclosure and transition. FIN 48 is effective for fiscal years beginning afterDecember 15, 2006, and applies to all tax positions accounted for inaccordance with SFAS No. 109. We currently expect that the impact ofadoption of FIN 48 on our future consolidated financial statements will not bematerial.

In September 2006, theFASB issued SFAS No. 157, *Fair Value Measurements*,which address how companies should measure fair value when they are required touse a fair value measure for recognition or disclosure purposes under generallyaccepted accounting principals (GAAP) and provides a consistent definition offair value throughout accounting standards. SFAS No. 157 is effective forfiscal years beginning after November 15, 2007. In February 2007, the FASBissued SFAS 159, *The Fair Value Option for Financial Assetsand Financial Liabilities—Including an amendment of FASB Statement No. 115,*whichwill permit the option of choosing to measure certain eligible items at fairvalue at specified election dates and report unrealized gains and losses inearnings. We are currently evaluating the impact that the adoption of SFASs 157and 159 will have on our future consolidated financial statements.

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**Item7.** **FinancialStatements.**

The financial statementsand supplementary data of the Company called for by this item are submittedunder a separate section of this annual report. Reference is made to the Indexof Financial Statements contained on page F-1 hereof.

**Item8.** **Changes In andDisagreements With Accountants on Accounting and Financial Disclosure.**

None.

**Item 8A.Controls and Procedures.**

As of the end of 2006,the Company carried out an evaluation, under the supervision and with theparticipation of the Company’s management, including the Company’s principalexecutive officer and principal financial officer, of the effectiveness of thedesign and operation of the Company’s disclosure controls and procedurespursuant to Rule 13a-15(b) of the Exchange Act. Based upon that evaluation, theprincipal executive officer and principal financial officer concluded that theCompany’s disclosure controls and procedures are effective.

During 2006, and incontemplation of a likely expanded level of future activities with financialreporting implications, the Company engaged an additional accountant, who hasexperience with such financial reporting, to assist in the preparation of itsperiodic and other reports filed with the Commission, including its financialstatements, and plans to consult the services of additional outside accountingexperts as needed.

**Item8B.** **Other Information.**

Not Applicable.

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**PART III**

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

As of March 29, 2007, themanagers of the Company and of CCR are as follows:
| **Name**        | ** ** | **Age** | ** ** | **Position**                      | ** ** |
|-----------------|------------|---------|------------|-----------------------------------|------------|
| Stephen Kaplan  |       | 48      |       | Manager  of the Company & CCR |       |
| Ronald Beck     |       | 51      |       | Manager  of the Company & CCR |       |
| William Paulos  |       | 59      |       | Manager  of CCR                   |       |
| William Wortman |       | 60      |       | Manager of CCR                    |       |

 

STEPHEN KAPLAN has servedas a Manager of the Company since its inception and as manager of CCR and amember of its management committee since September 2006, and is expected tocontinue in these roles. Mr. Kaplan is a Principal at Oaktree and is theco-manager (along with Mr. Beck) of Oaktree’s Principal Group. In 1995, Mr.Kaplan founded Oaktree along with six other principals. Mr. Kaplan graduatedwith a B.S. degree in Political Science summa cum laude from the StateUniversity of New York at Stony Brook and a J.D. from the New York UniversitySchool of Law.

RONALD BECK has served asa Manager of the Company since its inception and as manager of CCR and a memberof its management committee since September 2006, and is expected to continuein these roles. Mr. Beck is a Managing Director of Oaktree and joined Oaktreein 2000. Mr. Beck is the co-manager (along with Mr. Kaplan) of Oaktree’sPrincipal Group. Mr. Beck graduated with a B.A. degree in Economics fromStanford University, a J.D. from Stanford Law School and an M.B.A. fromStanford’s Graduate School of Business.

WILLIAM J. PAULOS hasserved as manager of CCR and a member of its management committee since May2001. Mr. Paulos established Millennium Management Group, LLC in September 1996with Mr. Wortman and has served as its Chief Executive Officer since itsinception. Millennium Management Group, LLC is currently a consultant to theGreektown Casino in Detroit. From January 1995 to September 1996, Mr. Pauloswas President of Primadonna Resorts, Inc. which, through subsidiaries, ownedand operated various casino-hotel properties including Buffalo Bill’s, WhiskeyPete’s, the Primm Valley Inn and Resort and New York-New York Casino Resort.From March 1994 to January 1995, Mr. Paulos was the Chief Operating Officer ofCrown Casino Limited.

WILLIAM C. WORTMAN hasserved as manager of CCR and a member of its management committee since May2001. Mr. Wortman established Millennium Management Group, LLC in September1996 with Mr. Paulos and has served as its President since its inception. In1985, Mr. Wortman became an owner in the Nevada Palace, which he continues toown. Mr. Wortman has also served as President of Nevada First Bankcorp since1999, and has served as Vice-Chairman of the Board of Nevada 1st Bank since1997. From 1993 to 1994, Mr. Wortman served as Chairman and Chief ExecutiveOfficer of Palace Casinos, Inc.

The Company’s namedexecutive officers are Mr. Kaplan and Mr. Beck, who receive no compensation fortheir services as Managers. The Company has no directors.

The Company was foundedby the VoteCo Equityholders for the primary purpose of participating in variousactivities relating to the gaming industry. Seven of the VoteCo Equityholdersare principals of Oaktree and one is a managing director of Oaktree. None wouldbe considered independent under the NASDAQ Stock Market listing standards. TheVoteCo Equityholders did not receive any direct consideration or othercompensation in connection with their activities in founding the Company.

***CorporateGovernance***

*The Company*

Pursuant to the Company’slimited liability company agreement, the Company is managed by two Managers,each of whom is appointed, and may be removed, by VoteCo as the holder of ClassA Membership Units. The two 

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current Managers of theCompany are Mr. Kaplan and Mr. Beck. The Company’s Managers cannot take andcannot cause the Company to take the following actions without the approval ofVoteCo as the holder of Class A Membership Units:

·                  anymaterial change in the business purpose of the Company or the nature of thebusiness;

·                  anyaction that would render it impossible to carry on the ordinary business of theCompany;

·                  anyremoval or appointment of any Manager of the Company;

·                  anyvoluntary withdrawal of any member from the Company;

·                  anyassignment for the benefit of creditors, any voluntary bankruptcy of theCompany, or any transaction to dissolve, wind up or liquidate the company, or

·                  anytransaction between the Company and any member or Manager of the Company, orany affiliate or direct family member of any member or Manager of the Company,that is not made on an arm’s-length basis.

Generally, in all otherrespects, VoteCo has no power or authority to participate in the management ofthe Company or to bind or act on behalf of the Company in any way or to renderit liable for any purpose. Except as otherwise expressly required by applicablelaw, InvestCo as the sole holder of the Company’s Class B Membership Units hasneither any right to vote on any matters to be voted on by the members of theCompany, nor any power or authority to participate in the management of theCompany or bind or act on behalf of the Company in any way or render it liablefor any purpose.

Because the Company hasconducted no operations other than in connection with the ownership of equityinterests in CCR and NP Land, the Company currently has no separately designatedaudit, nominating or compensation committee or committee performing similarfunctions, and the Company does not have an audit committee financial expert.Preparation of the Company’s financial statements is performed by employees ofOaktree, on a contractual basis, and supervised by the Company’s Managers.

*CCR*

In connection with theCompany’s acquisition of its equity interest in CCR, AcquisitionCo andMillennium executed an amended and restated form of operating agreement. Underthe terms of the amended and restated operating agreement, CCR has a managementcommittee composed of four managers, two designated by AcquisitionCo and twodesignated by Millennium. AcquisitionCo designated Mr. Kaplan and Mr. Beck asits initial managers, and Millennium designated Mr. Paulos and Mr. Wortman asits initial managers. Other than powers expressly delegated to MMG II in itsmanagement of CCR’s casino properties, all powers to control and manage thebusiness and affairs of CCR are vested in the Management Committee. Managersare required to be licensed or found suitable by the relevant Nevada gamingauthorities in order to engage in the management of CCR. For furtherinformation about licensing and suitability requirements, see “Item 1.Regulatory Matters—Nevada Gaming Laws and Regulations”.

***Compliance with Section 16(a) of the Exchange Act***

OCM HoldCo, LLCvoluntarily registered its Class A Membership Units pursuant to Section 12(g)of the Securities Exchange Act of 1934 by filing a registration statement onForm 10-SB on June 9, 2006. The registration became effective automatically 60days later on August 8, 2006. Stephen Kaplan, Ronald Beck, John Frank, BruceKarsh, David Kirchheimer, Howard Marks, Richard Masson and Sheldon Stone eachfiled an Initial Statement of Beneficial Ownership of Securities on Form 3 onAugust 16, 2006, which filing was not timely.

***Code of Ethics.***

The Company hasadopted a code of ethics as described in Item 406 of Regulation S-B. We willprovide to any 

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person withoutcharge, upon request, a copy of our code of ethics. Requests may be sent to OCMHoldCo, LLC, c/o Oaktree Capital Management, LLC, 333 South Grand Avenue, 28thFloor, Los Angeles, California  90071.

**Item 10.Executive Compensation.**

Mr. Kaplan and Mr. Beck,the Company’s named executive officers, are not entitled to compensation fromthe Company for any services rendered to or on behalf of the Company, orotherwise, in their capacities as Managers of the Company, and since theinception of the Company have received no such compensation. The Company’sManagers are entitled to reimbursement from the first available funds of theCompany for direct out-of-pocket costs and expenses incurred on behalf of theCompany that directly relate to the business and affairs of the Company.

The VoteCo Equityholdersdid not receive any direct consideration or other compensation in connectionwith their activities in founding the Company.

**Item11. Security Ownership ofCertain Beneficial Owners and Management and Related Stockholder Matters**

TheCompany has no equity compensation plans.

Thefollowing table sets forth, as of March 29, 2007, information regarding thebeneficial ownership of the Company’s voting securities by all persons known tobe the beneficial owners of more than 5% of any voting class of Companysecurities.
| **Name of Beneficial Owner(1)** | ** ** | **Title of Class of  Company Securities** | ** ** | **Amount and Nature of   Beneficial Ownership(2)** | ** ** | **Percent of Class** | ** ** |
|------------------------------------------------|------------|---------------------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|--------------------------------|------------|
| OCM VoteCo, LLC                                |       | Class A  Units                                           |       | .100 Units(3)                                                               |       | 100                            | %(3)       |
| Stephen  Kaplan(4)                             |       | Class A  Units                                           |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
| Ronald Beck(4)                                 |       | Class A  Units                                           |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
| John Frank                                     |       | Class A  Units                                           |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
| Bruce Karsh                                    |       | Class A  Units                                           |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
| David  Kirchheimer                             |       | Class A  Units                                           |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
| Howard Marks                                   |       | Class A  Units                                           |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
| Richard Masson                                 |       | Class A  Units                                           |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
| Sheldon Stone                                  |       | Class A Units                                            |       | .100 Units(5)                                                               |       | 100                            | %(5)       |

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(1)           The address for each beneficial owner is:

c/o OaktreeCapital Management, LLC333 South Grand Ave, 28th FloorLos Angeles, CA 90071

(2)           Beneficial ownership is determined inaccordance with the Exchange Act, as amended, and the rules andregulations promulgated thereunder.

(3)           VoteCo directly owns 100% of the Company’sClass A Membership Units.

(4)           Mr. Kaplan and Mr. Beck are themanagers of VoteCo and the Company.

(5)           Stephen Kaplan, Ronald Beck, John Frank, BruceKarsh, David Kirchheimer, Howard Marks, Richard Masson and Sheldon Stone areeach a voting member of VoteCo holding 12.5 VoteCo units. These individuals maybe deemed to form a “group” holding all 100 VoteCo units and, as a result, eachsuch individual may be deemed to be a beneficial owner of the .100 Class AMembership Units of the Company directly held by VoteCo.

None of the ClassA Membership Units beneficially owned by the persons listed in the table abovehave been pledged as security.

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The followingtable sets forth, as of March 29, 2007, information regarding the beneficialownership by all Managers of the Company, named individually and as a group, ofany class of equity securities of the Company, the Company’s parent or theCompany’s subsidiaries.
| Name of  Executive Officer   Holding Securities(1) | ** ** | **Title of Class of Securities** | ** ** | **Amount and Nature of   Beneficial Ownership(2)** | ** ** | **Percent of Class** | ** ** |
|----------------------------------------------------------------------------------|------------|------------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|--------------------------------|------------|
| Stephen Kaplan(3)                                                                |       | VoteCo Units                                         |       | 12.5 Units(4)                                                               |       | 12.5                           | %(4)       |
|                                                                                  |       | Company Class A  Units                          |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
|                                                                                  |       | Blocker Units                                        |       | 1,000 Units(6)                                                              |       | 100                            | %(6)       |
|                                                                                  |       | AcquisitionCo  Class A Units                    |       | 1,000 Class A  Units(7)                                                |       | 100                            | %(7)       |
|                                                                                  |       | LandCo Units                                         |       | 1,000 Units(8)                                                              |       | 100                            | %(8)       |
|                                                                                  |       | AcquisitionCo II                                     |       | 100% equity interest(9)                                                     |       | 100                            | %(9)       |
|                                                                             |       |                                                 |       |                                                                        |       |                           |       |
| Ronald Beck(3)                                                                   |       | VoteCo Units                                         |       | 12.5 Units(10)                                                              |       | 12.5                           | %(10)      |
|                                                                             |       | Company Class A  Units                          |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
|                                                                             |       | Blocker Units                                        |       | 1,000 Units(6)                                                              |       | 100                            | %(6)       |
|                                                                             |       | AcquisitionCo  Class A Units                    |       | 1,000 Class A  Units(7)                                                |       | 100                            | %(7)       |
|                                                                             |       | LandCo Units                                         |       | 1,000 Units(8)                                                              |       | 100                            | %(8)       |
|                                                                             |       | AcquisitionCo II                                     |       | 100% equity interest(9)                                                     |       | 100                            | %(9)       |
| Executive Officers of the  Company as a Group                                    |       | VoteCo Units                                         |       | 25 Units(11)                                                                |       | 25                             | %(11)      |
|                                                                                  |       | Company Class A  Units                          |       | .100 Units(5)                                                               |       | 100                            | %(5)       |
|                                                                                  |       | Blocker Units                                        |       | 1,000 Units(6)                                                              |       | 100                            | %(6)       |
|                                                                                  |       | AcquisitionCo  Class A Units                    |       | 1,000 Class A  Units(7)                                                |       | 100                            | %(7)       |
|                                                                                  |       | LandCo Units                                         |       | 1,000 Units(8)                                                              |       | 100                            | %(8)       |
|                                                                                  |       | AcquisitionCo II                                     |       | 100% equity interest(9)                                                     |       | 100                            | %(9)       |

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(1)           The address for each Manager of the Company is:

c/o Oaktree CapitalManagement, LLC333 South Grand Ave, 28th FloorLos Angeles, CA 90071

(2)            Beneficialownership is determined in accordance with the Exchange Act, as amended, andthe rules and regulations promulgated thereunder.

(3)           Mr. Kaplan and Mr. Beck are themanagers of VoteCo, the Company, OCM Blocker, LLC (“*Blocker*”),AcquisitionCo, LandCo and AcquisitionCo II. Blocker is a direct, wholly-ownedsubsidiary of the Company and owns nothing other than its interest inAcquisitionCo.

(4)           Mr. Kaplan is the listed owner of thesecurities.

(5)           VoteCo is the listed owner of all .100 CompanyClass A Membership Units. Mr. Kaplan and Mr. Beck each may bedeemed to be a member of a “group” holding all 100 VoteCo Units and, as aresult, each of Mr. Kaplan and Mr. Beck may be deemed to be abeneficial owner of all .100 Company Class A Membership Units directlyheld by VoteCo.

(6)           The Company is the listed owner of all 1,000Blocker Units. Mr. Kaplan and Mr. Beck each may be deemed to be amember of a “group” holding all 100 VoteCo Units and, as a result, each ofMr. Kaplan and Mr. Beck may be deemed to be a beneficial owner of all1,000 Blocker Units directly held by the Company.

(7)           Blocker is the listed owner of all 1,000AcquisitionCo Class A Membership Units. Mr. Kaplan and Mr. Beckeach may be deemed to be a member of a “group” holding all 100 VoteCo Unitsand, as a result, each of Mr. Kaplan and Mr. Beck may be deemed to bea beneficial owner of all 1,000 AcquisitionCo Class A Membership Unitsdirectly held by Blocker.

(8)           AcquisitionCo is the listed owner of all 1,000 LandCo Units.Mr. Kaplan and Mr. Beck each may be deemed to be a member of a “group”holding all 100 VoteCo units and, as a result, each of Mr. Kaplan andMr. Beck may be deemed to be a beneficial owner of all 1,000 LandCo Unitsdirectly held by AcquisitionCo.

 

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(9)          The Company is thelisted owner of all of the equity interests of AcquisitionCo II. Mr. Kaplanand Mr. Beck each maybe deemed to be a member of a “group” holding all 100 VoteCo units and, as aresult, each of Mr. Kaplan and Mr. Beck may be deemed to be abeneficial owner of all of the equity interests of AcquisitionCo II directlyheld by the Company.

(10)    Mr. Beck is the listedowner of the securities.

(11)    Mr. Kaplan andMr. Beck are each a listed owner of 50% of these securities.

None of thesecurities listed in the table above as beneficially owned by the Company’sManagers has been pledged as security.

**Item12. Certain Relationships and Related Transactions.**

***LimitedLiability and Indemnification under the Company’s Limited Liability CompanyAgreement and CCR’s Operating Agreement***

The Company’s limitedliability company agreement provides that no member or Manager of the Companyhas any liability for the obligations of the Company, except to the extentrequired by law. To the maximum extent authorized by law, the Companyindemnifies any person from any loss, damage, claim or liability incurred byhim, her or it as a result of any act or failure to act (other than as a resultof fraud, gross negligence or willful misconduct) performed or not performed bysuch person as a member, Manager, employee, agent or representative of theCompany, including attorneys’ fees, judgments, fines and amounts paid insettlement actually and reasonably incurred.

In addition, a Manager ofthe Company who performs his or her duties in good faith, in a manner he or shereasonably believes to be in the best interests of the Company and with suchcare as an ordinarily prudent person in a like position would use under similarcircumstances, does not have any liability by reason of being or having been aManager of the Company. Furthermore, a Manager of the Company is not liable, asManager of the Company, under any judgment, decree or order of court, or in anyother manner, for any debt, obligation or liability of the Company.

CCR’s operating agreementprovides that under certain circumstances CCR will indemnify any person who isan affiliate of AcquisitionCo who was or is a party or is threatened to be madea party to any threatened, pending or completed action, suit or proceeding, byreason of the fact that he, she or it was serving at the request of CCR as amanager, officer, employee or agent of CCR. CCR’s operating agreement alsoprovides that CCR will reimburse AcquisitionCo and its affiliates in connectionwith the development of gaming opportunities for CCR, at a cap of $250,000 perfiscal year of CCR, and will reimburse the expenses of managers of CCR servingon CCR’s management committee, including those managers who are affiliates ofAcquisitionCo, for certain out-of-pocket expenses reasonably attributable toCCR.

***Company’sParent***

The Company’s only parentis VoteCo, which holds 100% of the voting securities of the Company.

***Transactionsbetween CCR and its Promoters***

*Transactions relating to theCompany’s Acquisition of its Equity Interests in CCR and NP Land*

During 2005 and 2006, theCompany entered into certain transactions with Messrs. Paulos and Wortman inorder to consummate the transactions contemplated by the CUP Agreement. OnSeptember 30, 2005, the Company’s affiliates loaned an aggregate of $10,607,245(the InvestCo NP Loans) and $4,282,454 (the LandCo Loan) to entities controlledby Mr. Wortman to enable Mr. Wortman, and entities controlled by him, toacquire from an unrelated third party all of the interests not otherwise ownedby him in the entities which own the land and assets relating to the NevadaPalace. On January 5, 2006, the Company’s affiliates loaned to MGIM, LLC, aNevada limited liability company controlled by Messrs. Paulos and Wortman, $64million (the AcquisitionCo Loan) and $5,125,000 (the InvestCo/MGIM Loan) toenable MGIM, LLC to acquire from an unrelated third party a 33-1/3% 

25

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interest in CCR for atotal purchase price of $70 million. All of these loans, while outstanding,accrued interest at 12%, but in the case of the LandCo Loan and theAcquisitionCo Loan, interest was waived and considered additional investmentupon the consummation of the Company’s acquisition of its initial 33-1/3%equity interest in CCR and NP Land. The InvestCo NP Loans were secured by allof the membership interests in NP Land and a related entity controlled by Mr.Wortman, and were also secured by the land and assets of the Nevada Palace. TheLandCo Loan was secured by pledges of the membership interests in an entity controlledby Mr. Wortman. The AcqusitionCo Loan and the InvestCo/MGIM Loan were securedby pledges of all of the membership interests in CCR held by MGIM, LLC andMillennium, which pledges were subordinated to the pledge of such interestssecuring CCR’s existing credit agreement. When the transactions contemplated bythe CUP Agreement were consummated, all of the related security interests werereleased.

On September 22, 2006,the Company, through its subsidiaries, acquired MGIM, LLC’s 33-1/3% equityinterest in CCR in exchange for the cancellation of the $64 millionAcquisitionCo Loan to MGIM, LLC, and a 33-1/3% equity interest in NP Land inexchange for the cancellation of the $4,282,454 LandCo Loan. The $10,607,245InvestCo NP Loans and the $5,125,000 InvestCo/MGIM Loan were repaid. Inaddition, a wholly-owned subsidiary of CCR, Nevada Palace, LLC, entered into alease with NP Land of the 22 acres on which the Nevada Palace sits and willconstruct Cannery East. Nevada Palace, LLC also acquired from entities affiliatedwith Mr. Wortman gaming equipment and other operating assets for approximately$8 million and assumed approximately $1,340,000 of slot machine leaseliabilities and $156,000 (accrued as part of the purchase price) of certainother liabilities directly associated with the continuation of operations ofthe Nevada Palace at the time its gaming assets were sold to CCR. The NP Landlease is for a 35-year term at a fixed rental rate of $163,600 per month,subject to periodic inflationary adjustments, and required a $3 millionsecurity deposit.

In addition to the loansand the NP Land lease, certain payments were made to Messrs. Paulos and Wortmanin connection with the transactions contemplated by the CUP Agreement. TheCompany and Millennium are generally responsible for their respective expensesin connection with the CUP Agreement. Each agreed to take in-substanceequalizing distributions from CCR of $3 million and $6 million, respectively,which were applied by the Company to the Company’s obligations, includingconsulting fees ($1,996,155) and amounts due to beneficial owners ($1,003,845),and by Millennium to pre-existing indebtedness. In addition, in 2006 entitiescontrolled by Mr. Wortman were reimbursed for approximately $2.3 million ofcosts and expenses incurred by them primarily in connection with thedevelopment of Cannery East. These costs and expenses included $1.9 million ofexpenses incurred in connection with moving certain power lines relating to thedevelopment of Cannery East, $265,000 in legal and professional fees relatingto the CUP Agreement, $155,000 in title fees and approximately $80,000 inarchitectural and similar fees in connection with construction of Cannery East.

Other than the $6 milliondistribution to Millennium and the $2.3 million reimbursement to entitiescontrolled by Mr. Wortman, there have been no payments by CCR or its affiliatesto Messrs. Paulos or Wortman or their affiliates for fees, expenses or otheramounts paid or payable in connection with the transactions relating to the CUPAgreement, except amounts paid for business expenses reimbursed in the ordinarycourse.

For additionalinformation concerning the transactions relating to the CUP Agreement, see “Item1. Description of Business — The Company — Acquisition of Equity Interests inCCR and NP Land; Acquisition of The Meadows.”

*Transactions Relating to TheMeadows*

Asof December 31, 2006, the Company is conditionally committed to make upto an additional $25 million of equity investment in CCR to support theoperational needs of CCR’s subsidiary, PA Meadows, but only in certain limitedcircumstances and only to the extent not previously funded.

Subsequent to December31, 2006, the Oaktree Funds agreed that, until such obligations are broughtunder PA Meadows, it will support, through member contributions to CCR, lettersof credit issued in favor of the Pennsylvania Department of Transportation foran aggregate stated amount of approximately $18.3 million in support of ahighway occupancy permit required for certain road improvements to be made byCCR in connection with the construction of the temporary and permanent casinofacilities at The Meadows. The Company has agreed with Millennium that if amember bears a greater than *pro rata*portion of such amounts, then such member shall receive, subject to receipt ofall necessary gaming approvals, additional equity interests in CCR. As a resultof this 

26

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arrangement, the Company’spercentage ownership in CCR may increase. In addition, the Company andMillennium agreed to cause PA Meadows or its subsidiaries to reimburse theOaktree Funds for any bank fees charged in connection with the letters ofcredit and pay the Oaktree Funds an additional commitment fee equal to 50% ofthe amount of such bank fees.

*Other Transactions*

Relatives of Messrs.Paulos and Wortman provide the Rampart Casino and The Cannery with AutomatedTeller Machines (ATM) processing services. The Rampart Casino and The Canneryreceived combined commissions of $1,178,883, $1,032,805 and $854,953 in 2006,2005 and 2004, respectively, pursuant to separate agreements with respect toeach of the Rampart Casino and The Cannery. Under these agreements, the providersreceive the exclusive right to provide cash advance and ATM processing servicesat predetermined customer rates in return for providing, maintaining andkeeping supplied ATMs at each location. Each agreement has an initial term thatexpires in 2011, followed by five one-year renewals that are automatic unless aparty gives 90 day notice.

CCR has purchasedpromotional merchandise utilized for casino marketing and as customerincentives from an affiliate of Millennium. CCR incurred costs and paid theaffiliate $3,751,376, $3,420,223 and $2,410,420 in 2006, 2005 and 2004,respectively, in connection with such purchases.

CCR has contracted withMGIM II, an affiliate of Millennium, to operate and manage the Rampart Casinoand The Cannery. Under the terms of these agreements, which expire in 2012,MGIM II receives $2 million and $1 million, respectively, for managing theRampart Casino and The Cannery. In addition, CCR is responsible for all directcosts, fees or expenses incurred by MGIM II on behalf of the casinos for theprovision of management services. CCR paid MGIM II $3 million in 2006, 2005 and2004 in connection with these arrangements. Under the terms of the currentmanagement agreement, MGIM II is paid annually $1 million for managementservices with respect to The Cannery, $2 million for management services withrespect to the Rampart Casino, and an amount equal to 4% of EBITDA, but in noevent less than $750,000, with respect to the Nevada Palace and any other newcasino operations that CCR may in the future open, including Cannery East.

On July 15, 2006, CCRexecuted with Millennium a 10-year lease of an executive office building andadjacent parking spaces. The lease is for a fixed rental rate of $32,000 permonth, subject to periodic inflationary adjustments, and grants Millennium two5-year renewals.

The management of CCRbelieves that the transactions relating to the ATM processing services, theprovision of promotional merchandise, the executive office lease and theoperation and management of the Rampart Casino and The Cannery, are on termsthat are substantially similar to terms that would be available to unaffiliatedthird parties and are expected to continue in the future.

Effective January 1,2006, the Oaktree Funds provide the Company with certain administrative supportservices for an annual fee of $75,000, based on hourly rates of assignedpersonnel.

**Item13. Exhibits.**

Please see the Index ofExhibits beginning on page E-1 herein.

**Item 14.Principal Accountant Fees and Services.**

***AuditFees:***

For 2006 and 2005, we incurred audit and financial statement reviewfees totaling $76,276 and $42,615, respectively, to Piercy Bowler Taylor &Kern, our independent registered public accounting firm.

27

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***Audit-Related Fees:***

For 2006 and 2005, we incurred fees totaling $73,246 and $0,respectively, to Piercy Bowler Taylor & Kern for assurance and relatedservices reasonably related to the performance of audit and financial statementreview.

***TaxFees:***

For 2006 and 2005, we incurred no tax preparation fees to Piercy BowlerTaylor & Kern.

***AllOther Fees:***

For 2006 and 2005, we incurred no other fees to Piercy Bowler Taylor& Kern for products and services other than the services reported above.

***AuditCommittee Policies and Procedures:***

We do not currently have an audit committee. The foregoing serviceswere pre-approved by our Managers.

 

28

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**SIGNATURES**

In accordance withSection 13 or 15(d) of the Exchange Act, the registrant has caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.
| **DATE:**      | **OCM HoldCo, LLC** |
|----------------|---------------------|
|           |                |
|           |                |
| March 29, 2007 | By:                 | /s/ *Stephen A. Kaplan* | * * |
|           |                | * * | * * |
|           |                | Stephen A. Kaplan   Manager |

 

In accordance with theExchange Act, this report has been signed below by the following persons onbehalf of the registrant and in the capacities and on the dates indicated.
| Signatures             | ** ** | **Title** | ** ** | **Date**       |
|------------------------|------------|-----------|------------|----------------|
|                   |       |      |       |           |
|                   |       |      |       |           |
|                   |       |      |       |           |
| /s/*Stephen A. Kaplan* |       | Manager   |       | March 29, 2007 |
| Stephen A. Kaplan      |       |      |       |           |
|                   |       |      |       |           |
|                   |       |      |       |           |
| /s/ *Ronald N. Beck*   |       | Manager   |       | March 29, 2007 |
| Ronald N. Beck         |       |      |       |           |

 

S-1

----

**INDEX OF EXHIBITS**
| EXHIBIT  NUMBER | ** ** | ** **                                                                                                                  |
|-----------------|------------|-----------------------------------------------------------------------------------------------------------------------------|
| 2.1             |       | First Amendment and Restatement of Contribution and  Unit Purchase Agreement, dated as of December 23, 2005 (1)        |
| 3.1             |       | Amended and Restated Certificate of Formation, dated  as of December 1, 2005 (1)                                       |
| 3.2             |       | Limited Liability Company Agreement, dated as of  September 23, 2005 (1)                                               |
| 10.1            |       | Rampart Casino Sublease Agreement, dated April 1,  2002 (2)                                                                 |
| 10.2            |       | Rampart Management Agreement, dated April 1, 2002  (3)                                                                      |
| 10.3            |       | Cannery Management Agreement, dated May 2002 (3)                                                                            |
| 10.4            |       | LandCo Loan Agreement, dated as of  September 30, 2005 (1)                                                             |
| 10.5            |       | InvestCo/Esquire Loan Agreement, dated as of  September 30, 2005 (2)                                                   |
| 10.6            |       | InvestCo/Nevada Palace Loan Agreement, dated as of  September 30, 2005 (2)                                                  |
| 10.7            |       | Stock Purchase Agreement, dated as of  November 8, 2005, between Magna Entertainment Corp. and PA Meadows, LLC  (1)    |
| 10.8            |       | AcquisitionCo Loan Agreement, dated as of  January 5, 2006 (1)                                                         |
| 10.9            |       | InvestCo/MGIM Loan Agreement, dated January 5, 2006  (2)                                                                    |
| 10.10           |       | Limited Continuing Guarantee, dated January 5,  2006 (2)                                                               |
| 10.11           |       | Credit Agreement, dated as of January 5, 2006 (2)                                                                           |
| 10.12           |       | Lease Agreement, dated July 15, 2006, between  Millennium Gaming, Inc. and Cannery Casino Resorts, LLC (4)                  |
| 10.13           |       | Rampart Financial Services Agreement, dated June 18,  2006 (3)                                                              |
| 10.14           |       | Cannery Financial Services Agreement, dated June 18,  2006 (3)                                                              |
| 10.15           |       | First Amendment to Stock Purchase Agreement, dated  July 26, 2006 (2)                                                       |
| 10.16           |       | Racing Services Agreement, dated July 26, 2006  (2)                                                                    |
| 10.17           |       | Post-Closing and Note Issuance Agreement, dated July  26, 2006 (2)                                                          |
| 10.18           |       | Equity Commitment Letter Agreement, dated  July 26, 2006 (2)                                                           |
| 10.19           |       | Form of Amended and Restated Operating  Agreement for Cannery Casino Resorts, LLC (1)                                  |
| 10.20           |       | Form of Ground Lease between Nevada Palace, LLC  and NP Land, LLC (2)                                                  |
| 10.21           |       | Form of Omnibus Management Agreement between  Cannery Casino Resorts, LLC, and Millennium Management Group II, LLC (2) |
| 10.22           |       | Amendment to Continuing Guaranty, dated as of  September 22, 2006 (4)                                                       |

E-1

----

 
| 10.23 |   | First Lien Credit Agreement, dated as of November  14, 2006 (5)                                 |
|-------|--------|-------------------------------------------------------------------------------------------------|
| 10.24 |   | Second Lien Credit Agreement, dated as of November  14, 2006 (5)                                |
| 10.25 |   | First Amendment to Post-Closing and Note Issuance  Agreement, dated as of November 14, 2006 (5) |
| 21.1  |   | Subsidiaries of OCM HoldCo, LLC (1)                                                             |
| 31.1  |   | Section 302 Certification of Principal Executive  Officer                                       |
| 31.2  |   | Section 302 Certification of Principal Financial  Officer                                       |
| 32.1  |   | Certification pursuant to 18 U.S.C. Section 1350                                                |
| 32.2  |   | Certification pursuant to 18 U.S.C. Section 1350                                                |

----

(1) Filed previously with the Company’s Form 10-SBon June 9, 2006.(2) Filed previously with the Company’sAmendment No. 1 to Form 10-SB on July 26, 2006.(3) Filed previously with the Company’sPost-Effective Amendment No. 1 to Form 10-SB on September 8, 2006.(4) Filed previously with the Company’sCurrent Report on Form 8-K on September 27, 2006(5) Filed previously with the Company’sCurrent Report on Form 8-K on November 20, 200

 

E-2

----

**OCMHoldCo, LLC and Subsidiaries**

**Consolidated Financial Statements**

**December31, 2006**

 

**Table ofContents**
| Report of Independent  Registered Public Accounting Firm |   | F-2    |
|----------------------------------------------------------|--------|--------|
|                                                     |   |   |
| Consolidated  Balance Sheet                              |   | F-3    |
|                                                     |   |   |
| Consolidated Statements of Operations                    |   | F-4    |
|                                                     |   |   |
| Consolidated Statements of Members’ Equity          |   | F-5    |
|                                                     |   |   |
| Consolidated Statements of Cash Flows                    |   | F-6    |
|                                                     |   |   |
| Notes  to Consolidated Financial Statements              |   | F-8    |

 

F-1

----

**Report of IndependentRegistered Public Accounting Firm**

Members ofOCMHoldCo, LLC

We have audited theaccompanying consolidated balance sheet of OCM HoldCo, LLC and its subsidiaries(collectively the Company) as of December 31, 2006, and the related consolidatedstatements of operations, members’ equity and cash flows for the year thenended and for the period from inception (July 22, 2005) through December 31,2005. These financial statements are the responsibility of the Company’smanagement.  Our responsibility is toexpress an opinion on these financial statements based on our audit.

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audits toobtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. The Company is not required to have, nor were we engagedto perform, an audit of its internal control over financial reporting. Ouraudit included consideration of internal control over financial reporting as abasis for designing audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of theCompany’s internal control over financial reporting. Accordingly, we express nosuch opinion. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

In our opinion, thefinancial statements referred to above present fairly, in all materialrespects, the consolidated financial position of the Company as of December 31,2006, and its consolidated results of operations and cash flows for the yearthen ended and for the period from inception (July 22, 2005) through December31, 2005, in conformity with accounting principles generally accepted in theUnited States.

**PIERCY BOWLER TAYLOR & KERN**

/s/ Piercy Bowler Taylor& KernCertified Public Accountants &Business AdvisorsA Professional Corporation

Las Vegas, NevadaMarch 5, 2007

F-2

----

**OCM HoldCo, LLC and Subsidiaries**

**Consolidated Balance Sheet**

**December31, 2006**

 
| **ASSETS**                                                                   |   |        |        |
|------------------------------------------------------------------------------|--------|-------------|-------------|
| **Current  assets:**                                                         |   |        |        |
| Cash                                                                         |   | $           | 306         |   |
| ** **                                                                   |   |        |        |
| **Other  assets:**                                                           |   |        |        |
| Investment in Cannery Casino Resorts, LLC                                    |   | 123,232,875 |        |
| Investment in NP Land, LLC                                                   |   | 4,921,629   |        |
| Gaming and related licenses                                                  |   | 816,944     |        |
| Total assets                                                                 |   | $           | 128,971,754 |   |
|                                                                         |   |        |        |
|                                                                         |   |        |        |
| **LIABILITIES  AND MEMBERS’ EQUITY**                                    |   |        |        |
| **Current  liabilities:**                                                    |   |        |        |
| Accounts payable and accrued expenses, including  $75,000 to a related party |   | $           | 110,805     |   |
| Deferred tax liabilities                                                     |   | 247,043     |        |
| Total current liabilities                                                    |   | 357,848     |        |
|                                                                         |   |        |        |
| **Deferred  tax liabilities**                                                |   | 970,394     |        |
|                                                                         |   |        |        |
|                                                                         |   |        |        |
| **Members’  equity**                                                    |   | 127,643,512 |        |
| Total  liabilities and members’ equity                                  |   | $           | 128,971,754 |   |

 

*See notesto consolidated financial statements.*

F-3

----

**OCMHoldCo, LLC and Subsidiaries**

**Consolidated Statements of Operations**

**For theYear Ended December 31, 2006 and for the Period****from Inception (July 22, 2005) through December31, 2005**

 
| ** **                                                                    | ** ** | **2006**  | ** ** | **2005** | ** ** |
|-------------------------------------------------------------------------------|------------|-----------|------------|----------|------------|
|                                                                          |       |      |       |     |       |
| **Income:**                                                                   |       |      |       |     |       |
| Interest income                                                               |       | $         | 5,842,378  |     | $          | 12,672 |   |
| Equity in earnings of unconsolidated investees                                |       | 858,728   |       | —   |       |
| Total income                                                                  |       | 6,701,106 |       | 12,672   |       |
|                                                                          |       |      |       |     |       |
| **Costs  and expenses:**                                                      |       |      |       |     |       |
| Professional fees                                                             |       | 147,816   |       | —   |       |
| Administrative fees and other expenses, including  $75,000 to a related party |       | 182,349   |       | —   |       |
| Total costs and expenses                                                      |       | 330,165   |       | —   |       |
|                                                                          |       |      |       |     |       |
| ** **                                                                    |       |      |       |     |       |
| **Income  before income tax benefit**                                         |       | 6,370,941 |       | 12,672   |       |
|                                                                          |       |      |       |     |       |
| **Income  tax benefit, deferred**                                             |       | 495,563   |       | —   |       |
|                                                                          |       |      |       |     |       |
| **Net  income**                                                               |       | $         | 6,866,504  |     | $          | 12,672 |   |

 

*See notes to consolidatedfinancial statements.*

 

F-4

----

**OCMHoldCo, LLC and Subsidiaries**

**Consolidated Statements of Members’ Equity**

**For theYear Ended December 31, 2006 and for the Period****from Inception (July 22, 2005) through December31, 2005**

 
| ** **                                     | ** ** | **2006**    | ** **  | **2005**  | ** ** |
|------------------------------------------------|------------|-------------|-------------|-----------|------------|
|                                           |       |        |        |      |       |
| **Members’ equity, beginning of  period** |       | $           | 5,164,041   |      | $          | — |   |
|                                           |       |        |        |      |       |
| Net income                                     |       | 6,866,504   |        | 12,672    |       |
|                                           |       |        |        |      |       |
| Distribution to  members                       |       | (3,000,000  | )           | —    |       |
|                                           |       |        |        |      |       |
| Contributions  from members                    |       | 118,612,967 |        | 5,151,369 |       |
|                                           |       |        |        |      |       |
| **Members’ equity, end of period**        |       | $           | 127,643,512 |      | $          | 5,164,041 |   |

 

*See notes to consolidated financialstatements.*

F-5

----

**OCM HoldCo, LLC and Subsidiaries**

**Consolidated Statements of Cash Flows**

**For theYear Ended December 31, 2006 and for the Period****from Inception (July 22, 2005) through December31, 2005**

 
| ** **                                                                                                                                | ** ** | **2006**     | ** ** | **2005**   | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------|------------|------------|------------|
| **Operating activities:**                                                                                                                 |       |         |       |       |       |
| Net income                                                                                                                                |       | $            | 6,866,504  |       | $          | 12,672 |   |
| Equity in  earnings of unconsolidated investees                                                                                           |       | (858,728     | )          | —     |       |
| Adjustments to  reconcile net income to net cash used by operating activities consisting of  increases in operating (assets) liabilities: |       |         |       |       |       |
| Interest  receivable                                                                                                                      |       | (5,842,378   | )          | (12,672    | )          |
| Deferred income  tax benefit                                                                                                              |       | (495,563     | )          |       |       |
| Accounts payable  and accrued expenses                                                                                                    |       | (285,851     | )          | —     |       |
|                                                                                                                                      |       |         |       |       |       |
| Net cash used in  operating activities                                                                                                    |       | (616,016     | )          | —     |       |
|                                                                                                                                      |       |         |       |       |       |
| **Investing activities:**                                                                                                                 |       |         |       |       |       |
| Investment in  note receivable                                                                                                            |       | (64,000,000  | )          | —     |       |
| Investment in  Contribution and Unit Purchase Agreement                                                                                   |       | (2,702,999   | )          | (1,479,852 | )          |
| Distribution  from Cannery Casino Resorts, LLC                                                                                            |       | 3,000,000    |       | —     |       |
| Investment in  Cannery Casino Resort, LLC                                                                                                 |       | (50,000,000  | )          | —     |       |
| Gaming and  related licenses                                                                                                              |       | 99,520       |       | (663,963   | )          |
|                                                                                                                                      |       |         |       |       |       |
| Net cash used in  investing activities                                                                                                    |       | (113,603,479 | )          | (2,143,815 | )          |
|                                                                                                                                      |       |         |       |       |       |
| **Financing activities:**                                                                                                                 |       |         |       |       |       |
| Borrowings from  beneficial owner                                                                                                         |       | —       |       | 1,275,000  |       |
| Repayment of  borrowings to beneficial owner                                                                                              |       | (1,275,000   | )          | —     |       |
| Distribution to  members                                                                                                                  |       | (3,000,000   | )          | —     |       |
| Capital  contributions from members                                                                                                       |       | 118,494,701  |       | 868,915    |       |
|                                                                                                                                      |       |         |       |       |       |
| Net cash  provided by financing activities                                                                                                |       | 114,219,701  |       | 2,143,915  |       |
|                                                                                                                                      |       |         |       |       |       |
| **Net increase in cash**                                                                                                                  |       | 206          |       | 100        |       |
| ** **                                                                                                                                |       |         |       |       |       |
| **Cash, beginning of period**                                                                                                             |       | 100          |       | —     |       |
|                                                                                                                                      |       |         |       |       |       |
| **Cash, end of period**                                                                                                                   |       | $            | 306        |       | $          | 100 |   |

 

*See notes to consolidatedfinancial statements.*

F-6

----

**OCMHoldCo, LLC and Subsidiaries**

**ConsolidatedStatements of Cash Flows***(Continued)*

**For theYear Ended December 31, 2006 and for the Period from Inception (July 22, 2005) through December 31, 2005**
| ** **                                                                                                                                                                                                                                            | ** ** | **2006** | ** ** | **2005** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **Supplemental  cash flow information:**                                                                                                                                                                                                              |       |     |       |     |       |
| Conversion of  $64,000,000 in Notes Receivable, $5,470,685 in Interest Receivable and  $1,072,111 in Investment in CUP Agreement, for a 331¤3%  interest in Cannery Casino Resort, LLC and assumption of deferred tax  liabilities of $1,713,000 |       | $        | 72,255,796 |     |       |   |
|                                                                                                                                                                                                                                                  |       |     |       |     |       |
| Conversion of  $4,282,454 in Notes Receivable and $502,631 in Interest Receivable for a 331¤3 interest in NP Land, LLC                                                                                                                      |       | $        | 4,785,085  |     |       |   |
|                                                                                                                                                                                                                                                  |       |     |       |     |       |
| Contribution of  $118,266 Due to Member to Capital Contributions                                                                                                                                                                                      |       | $        | 118,266    |     |       |   |
|                                                                                                                                                                                                                                                  |       |     |       |     |       |
| Contributions of 100%  interest in OCM LandCo, LLC, valued at estimated fair value of its note  receivable                                                                                                                                            |       |     |       | $        | 4,282,454  |   |
|                                                                                                                                                                                                                                                       |            |          |            |          |            |  |  |

 

*See notesto consolidated financial statements.*

 

F-7

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**OCMHoldCo, LLC and Subsidiaries**

**Notes to Financial Statements**

**December31, 2006**

**NOTE 1 - Organization:**

***BusinessActivities***

TheCompany and its consolidated subsidiaries were formed on July 22, 2005, at thedirection of the Oaktree Funds, each of which is a Delaware limited partnershipand an affiliate of Oaktree, for the purpose of participating in variousactivities relating to the gaming industry.

In 2006, the Company,through a wholly-owned subsidiary, AcquisitionCo, acquired a 42% equityinterest in CCR and a 331¤3% equity interest in NP Land. TheCompany’s current business consists primarily of its ownership of these equityinterests. CCR, through wholly-owned subsidiaries, owns and operates TheCannery, located in North Las Vegas, Nevada, and operates the Rampart Casino,located in the Summerlin area of northwest Las Vegas. CCR also operates theNevada Palace, located in Las Vegas, Nevada, which CCR intends to replace witha new casino and hotel complex, Cannery East. The primary assets of NP Land areapproximately 22 acres of land, the current site of the Nevada Palace, whichland is leased to a wholly-owned subsidiary of CCR. In addition, CCR, through awholly-owned subsidiary, PA Meadows, owns The Meadows, an operating harnessracetrack located in North Strabane Township, Washington County, Pennsylvania,where it is currently constructing a temporary casino and intends to constructa permanent casino.

Allof the Company’s issued and outstanding Class A Units are held by VoteCo, andall of the Company’s issued and outstanding non-voting Class B Units are heldby InvestCo. VoteCo and InvestCo are affiliates of Oaktree. VoteCo isresponsible for the operations of the Company, including the appointment andremoval of managers. VoteCo has a *de**minimus* economic interest in the Company, and its totalequity contributions are limited to $100.

***Concentrations***

The Company and itsconsolidated subsidiaries expect to be economically dependent upon relativelyfew investments in the gaming industry. In addition, the United States isinvolved in a war against terrorism that is likely to have far-reaching effectson the economic activity in the country for an indeterminable period. Thelong-term impact on the gaming industry generally, specific gamingjurisdictions in which the Company’s investee’s operate, and the operations ofthe Company and its consolidated subsidiaries, cannot be predicted at thistime, but may be substantial.

**NOTE 2 - Significant AccountingPolicies:**

***Useof estimates***

Timelypreparation of financial statements in accordance with generally acceptedaccounting principles requires management to make estimates that affect thereported amounts of assets and liabilities at the date of the financialstatements, as well as the reported amounts of income and expenses during thereporting periods. Actual results could differ from those estimates.

F-8

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**OCMHoldCo, LLC and Subsidiaries**

**Notesto Financial Statements***(continued)*

**December31, 2006**

**NOTE 2 -Significant Accounting Policies *(continued)*:**

***Principlesof consolidation***

The accompanyingconsolidated financial statements as of December 31, 2006, and for year endedDecember 31, 2006 and for the period from July 22, 2005 (inception) throughDecember 31, 2005, include the accounts of the Company and its wholly-owned subsidiariesBlocker, AcquisitionCo, OCM AcquisitionCo II, LLC, and LandCo. All significantinter-company accounts and transactions have been eliminated. The Company’sinvestment in CCR and NP Land are accounted for using the equity method.

***Statementof cash flows***

At the request and forthe convenience of the Company, substantially all of the disbursements of theCompany and its consolidated subsidiaries for operating expenses, are made byInvestCo and/or its beneficial owners directly to vendors and investees, anddistributions from the Company’s investees are received directly by the Company’smembers. Accordingly, these activities are treated as constructive cash inflowsand outflows in the statement of cash flows.

***GamingLicenses***

Professionalfees and other costs associated with the applications for licensure of theCompany and its consolidated subsidiaries and certain of its beneficial owners,including payments to regulatory agencies, have been capitalized pursuant toguidelines contained in para. 2.06 of the American Institute of CertifiedPublic Accountants’ Audit and Accounting Guide, *Audits ofCasinos*. These fees and costs have been treated as indefinite lifeintangible assets pursuant to Statement of Financial Accounting Standard No.142, *Goodwill and Other Intangible Assets*,based on expectations at the time the costs were incurred and capitalized thatsuch licenses would be granted, as they subsequently were, that they wouldenable the Company and/or its consolidated subsidiaries to hold direct and indirectownership interests in gaming enterprises, and, therefore, that it was and isprobable that they will benefit future periods through continued profitableoperations of its investee entities and resultant expected increases in thevalue of its investments therein and cash distributions therefrom. Accordingly,such assets are evaluated at least annually (and more frequently whencircumstances warrant) to determine if events or changes in circumstancesindicate that the probability that such assets will continue to benefit futureperiods might have been impaired. Examples of such events or changes incircumstances that might indicate impairment of these assets might include anactive or likely regulatory threat to the availability or viability of a license,specifically, as a result of (i) non-compliance with regulations, (ii) anadverse change in the legal, regulatory or business climate relative to gamingnationally or in the jurisdiction, or (iii) a significant long term decline inhistorical or forecasted earnings or cash flows of the investee or the fairvalue of its property or business possibly as a result of competitive or othereconomic or political factors.

F-9

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**OCMHoldCo, LLC and Subsidiaries**

**Notesto Financial Statements***(continued)*

**December31, 2006**

**NOTE 2 -Significant Accounting Policies *(continued)*:**

***Incometaxes***

Except for Blocker, whichelected to be taxed as a corporation effective January 1, 2006, each entityincluded in this consolidation is treated as a partnership for federal incometax purposes with the tax effect of their activities recognized in the incometax returns of its members. The Company owns 100% of Blocker, which, in turn,owns 100% of the other subsidiaries included in this consolidation.Accordingly, equity in the earnings of CCR and NP Land is taxable to Blocker.Blocker also incurs interest expense ($2,395,208 for 2006) on inter-companyindebtedness ($23,218,683 at December 31, 2006) with the Company that isdeductible for tax purposes (a permanent difference) but is eliminated, alongwith the related debt, in this consolidation. The Company incurs certain othercosts, primarily associated with being a public company, including professionaland other fees, which, for tax purposes, flow through to its members. (See note4.)

***Members’capital***

Allocations of net incomeand distributions to the Members are determined in accordance with the Company’soperating agreement.

**NOTE 3 - Significant EquityInvestee:**

OnSeptember 22, 2006, the Company, through a subsidiary, acquired a 33-1/3%equity interest in CCR and a 33-1/3% equity interest in NP Land, both Nevadalimited liability companies, in exchange for cancellation of loans of $64million and $4,282,454, and accrued interest of $5,470,685 and $502,631, respectively. The Company’s acquisition ofthe 33-1/3% equity interest in CCR and a 33-1/3% equity interest in NP Land wascompleted pursuant to the terms and conditions of the CUP Agreement. OnNovember 14, 2006, the Company, through a subsidiary, contributed an additional$50 million to CCR, increasing its equity interest in CCR from 331¤3% to 42%. For the period ended December 31, 2006, the Company’s equity inthe earnings of CCR and NP Land totaled $722,184 and $136,544, respectively,all but $133,436 of which occurred in the fourth quarter.

**Keyfeatures of the transactions completed during 2005 and 2006 pursuant to the CUPAgreement include the following:**

·                  OnSeptember 30, 2005, the first series of transactions contemplated by the CUPAgreement were consummated. The Company’s affiliates loaned an aggregate of$10,607,245 (the “*InvestCo NP Loans*”) and$4,282,454 (the “*LandCo Loan*”) to entitiescontrolled by Mr. Wortman to enable Mr. Wortman, and entities controlled byhim, to acquire from an unrelated third party all of the interests nototherwise owned by him in the entities which own the land and assets relatingto the Nevada Palace.

·                  OnJanuary 5, 2006, the second series of transactions contemplated by the CUPAgreement were consummated. The Company’s affiliates loaned to MGIM, LLC, aNevada limited liability company controlled by Messrs. Paulos and Wortman, $64million (the “*AcquisitionCo Loan*”) and$5,125,000 (the “*InvestCo/MGIM Loan*”) to enableMGIM, LLC to acquire from an unrelated third party a 33-1/3% interest in CCRfor a total purchase price of $70 million.

F-10

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**OCMHoldCo, LLC and Subsidiaries**

**Notes toFinancial Statements***(continued)*

**December31, 2006**

**NOTE 3 - Significant EquityInvestee***(continued)***:**

·                  TheInvestCo NP Loans, the LandCo Loan, the AcquisitionCo Loan and the InvestCo/MGIMLoan each accrued interest at 12%, but in the case of the LandCo Loan and theAcquisitionCo Loan, interest was waived and considered additional investmentupon the final closing of the equity purchase pursuant to the CUP Agreement.

·                  Interestreceivable accrued from September 30 to December 23, 2005 on the LandCo Loanwas payable by the Company to InvestCo. Upon approval of the Company’s gaminglicense by the Nevada Gaming Commission and the closing of the remainingcontemplated series of transactions, such interest receivable was waived andconsidered additional investment in NP Land.

·                  OnJanuary 5, 2006, the Company, though a subsidiary, received a $3 millionin-substance distribution from CCR from the proceeds of the Credit Agreement,which distribution was used to pay Company obligations, including consultingfees ($1,996,155) and amounts due to beneficial owners ($1,003,845). At thattime, the remaining amount due to beneficial owners ($271,155) was contributedto members’ equity.

The following tablespresent condensed financial information of CCR as of December 31, 2006, and forthe years ended December 31, 2006 and 2005:

| Balance Sheet           | ** ** | **December 31, 2006** | ** **  |
|------------------------------|------------|---------------------------------|-------------|
| Current assets               |       | $                               | 64,987,000  |   |
| Property and  equipment, net |       | 326,830,000                     |        |
| Other                        |       | 126,966,000                     |        |
|                         |       | $                               | 518,783,000 |   |
|                         |       |                            |        |
| Current  liabilities         |       | $                               | 34,256,000  |   |
| Long-term  liabilities       |       | 395,039,000                     |        |
| Member’s equity         |       | 89,488,000                      |        |
|                         |       | $                               | 518,783,000 |   |

 

| Statements of Operations | ** ** | **2006** | ** **  | **2005** | ** ** |
|------------------------------------|------------|----------|-------------|----------|------------|
| Revenue                            |       | $        | 189,961,000 |     | $          | 171,547,000 |   |
| Net income                         |       | $        | 12,914,000  |     | $          | 15,478,000 |   |

 

F-11

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**OCM HoldCo, LLC andSubsidaries**

***Notesto Financial Statements (continued)***

***December31, 2006***

** **

**NOTE 4**- IncomeTaxes:

**Priorto Blocker’s election to be taxable as a corporation, effective January 1,2006, neither the Company nor its consolidated subsidiaries were tax payingentities for federal or state income tax purposes. The following tablesummarizes the deferred federal and state income tax benefit (there is nocurrent provision):**

| Federal |   | $      | 446,124 |   |
|---------|--------|--------|---------|--------|
| State   |   | 49,439 |    |
|    |   |   |    |
|    |   | $      | 495,563 |   |

 

The following tablepresents a reconciliation of the provision (benefit) for income taxes with thatdetermined by applying the statutory U.S. federal income tax rate to incomebefore income taxes:

|                                                                                            | ** ** | ** ** | ** ** | **Percent** | ** ** |
|--------------------------------------------------------------------------------------------|------------|------------|------------|-------------|------------|
| Statutory federal rate                                                                     |       | $          | 2,229,829  |        | 35.0       | % |
| State taxes, net of  impact on federal tax                                                 |       | (32,135    | )          | (0.5        | )%         |
| Miscellaneous CCR  attributes                                                              |       | 74,340     |       | 1.2         | %          |
| Intercompany interest  expense, deductible but eliminated for financial reporting purposes |       | (838,323   | )          | (13.2       | )%         |
| Tax exempt income                                                                          |       | (2,044,832 | )          | (32.1       | )%         |
| Attributes passed  through to members                                                      |       | 115,558    |       | 1.8         | %          |
|                                                                                       |       |       |       |        |       |
| Tax at effective rate                                                                      |       | $          | (495,563   | )           | (7.8       | )% |

 

At December 31, 2006,Blocker had approximately $2,446,000 in federal net operating losscarryforwards expiring in 2021.

Deferred income taxesreflect the net tax effects of temporary differences between the carryingamounts of assets and liabilities for financial reporting purposes and theamounts used to determine taxable income for income tax reporting purposes. Thefollowing table presents the significant components of the non-current deferredtax assets (liabilities) of the Company and its consolidated subsidiariesrelated to its investments in CCR and NP Land (there are no current deferredtax assets and liabilities), including net deferred tax liabilities of$1,713,000 considered in the initial cost of the investments:

| Basis adjustment (Section  754 elections) |   | $          | (336,862   | ) |
|-------------------------------------------|--------|------------|------------|---|
| Other CCR  attributes                     |   | (1,634,048 | )          |
| Other NP Land  attributes                 |   | 19,544     |       |
| Net operating  loss carryforwards         |   | 733,928    |       |
|                                      |   |       |       |
|                                      |   | $          | (1,217,437 | ) |

 

The other CCR attributesshown above consist primarily of depreciation and amortization.

F-12

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**OCM HoldCo, LLC andSubsidaries**

***Notesto Financial Statements (continued)***

**December31, 2006**

**NOTE 5 - Related partytransactions:**

As of September 22, 2006,a subsidiary of the Company became an additional guarantor under a limitedrecourse guaranty executed in connection with the Credit Agreement. Pursuant tothe guaranty, all of the Company’s equity interest in CCR will be pledged afterapproval by gaming authorities was obtained on March 22, 2007. Recourse on theguaranty is limited to such equity interests. This arrangement is in substancea subordination of rights of the Company’s members and, therefore, pursuant toFASB Interpretation No. 45, *Accounting for Guaranteesby Guarantors*, does not require recognition of a liability by theCompany.

The Credit Agreement issecured by substantially all of CCR’s real and personal property and iscomprised of a $110 million term loan and a $140 million revolving facility andmatures on January 5, 2011. The proceeds from borrowings under the CreditAgreement were used to refinance $115 million of CCR’s then existingindebtedness, pay distributions, finance capital improvements, and fund generalcorporate operations. As of December 31, 2006, the outstanding principal amountof the term loan and revolving facility was $108,900,000 and $38,000,000,respectively.

Asof December 31, 2006, the Company is also conditionally committed tomake up to an additional $25 million of equity investment in CCR to support theoperational needs of CCR’s subsidiary, PA Meadows, but only in certain limitedcircumstances and only to the extent not previously funded.

Subsequent to December31, 2006, the Oaktree Funds agreed that, until such obligations are broughtunder PA Meadows, it will support, through member contributions to CCR, lettersof credit issued in favor of the Pennsylvania Department of Transportation foran aggregate stated amount of approximately $18.3 million in support of ahighway occupancy permit required for certain road improvements to be made byCCR in connection with the construction of the temporary and permanent casinofacilities at The Meadows. The Company has agreed with Millennium that if amember bears a greater than *pro rata*portion of such amounts, then such member shall receive, subject to receipt ofall necessary gaming approvals, additional equity interests in CCR. As a resultof this arrangement, the Company’s percentage ownership in CCR may increase.

Effective January 1,2006, an affiliate of one of the Company’s members provides the Company withcertain administrative support services for an annual fee of $75,000 based onhourly rates of assigned personnel.

 

F-13

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