Full House Resorts (NYSE AMEX:FLL)

Second Quarter 2010 Highlights

• Management fees for Gaming Entertainment (Michigan), LLC (“GEM”), a 50%-owned joint venture that manages FireKeepers Casino, were $6.0 million. FireKeepers Casino opened August 5, 2009.
• EBITDA, net of RAM’s share of GEM results, was $3.2 million versus $0.8 million in the prior-year period.
• As of June 30, 2010, Full House Resorts had $15.4 million in cash, no outstanding debt and approximately $8.2 million of availability on its revolving credit facility.

“The second quarter of 2010 saw another period of record revenue and earnings per share for Full House as FireKeepers continues to perform very well,” said Andre Hilliou, Chairman and Chief Executive Officer of Full House. “GEM has earned approximately $22 million in management fees in the first 11 months of operations for FireKeepers, and we have been very pleased by FireKeepers’ solid results. Stockman’s Casino continues to be affected by the economic weakness in Northern Nevada; however, we continue to have a strong market share premium. As of the end of the second quarter, we now have over $15 million in cash on hand, approximately $8 million of availability on our line of credit and no outstanding debt. Our liquidity resources continue to grow in preparation for a meaningful acquisition opportunity which we are actively pursuing.”

“The first quarter of 2010 was another successful one for Full House, as we once again achieved record revenue and earnings per share,” said Andre Hilliou, Chairman and Chief Executive Officer of Full House. “FireKeepers continues to impress since its opening last summer, and we have been very pleased with its results, as GEM earned approximately $16 million in management fees in the first eight months of operations. Stockman’s Casino had a challenging quarter due to poor weather and continued economic weakness in Northern Nevada; however, our market share of slot revenue remained steady. With significant cash on hand and no outstanding debt, we are in prime position this year to take advantage of acquisition and management opportunities that will provide our shareholders with long-term value.”

On December 1, 2009 we coded Full House Resorts as a GeoSpecial. We plan on interviewing management in the near future.

Positive Points That Influenced Our Decision

• The stock is exhibiting strong price momentum.
• Full House reported strong third quarter financial results.
• The Company announced that it paid down a portion of its debt obligations. Source:Business Wire (November 30, 2009)
• 4 Analyst estimates are strong, indicating EPS of $0.26 for 2009 and $0.41 for 2010.  Full House reported GAAP EPS of $0.08 in 2008. Source: Business Wire (November 9, 2009)

We Still Need to Interview Management With Emphasis on the Following Items

• The third quarter included $5.8 million in revenue due to management fees, a number that greatly contributed to revenues. We need to ascertain if this will be recurring revenue.
• The Company still has $5 million in short-term debt on the balance sheet.
• We need to verify if the strong third quarter was an aberration or a new level that can be upheld.
• We need to verify analyst estimates.
• The GeoTeam® still needs to address some non-GAAP issues in the Company's financial statements.