155 East Tropicana reports results

Operating highlights of 155 East Tropicana, LLC for the third quarter ended September 30, 2007 compared to the third quarter of 2006, are as follows:

Net revenues were $16.0 million during the third quarter of 2007 compared to net revenues of $17.0 million in the third quarter of 2006.

Adjusted EBITDA(1) was $1.1 million in the third quarter of 2007, which compares to $1.7 million in the same quarter last year.

"In spite of increased reward club sign-ups, increased occupancy and average rate, the third quarter saw a noticeable decrease of walk-in traffic that negatively impacted our casino and restaurant revenues" according to COO Gary Gregg. "Our heavily promoted 99 cent shrimp cocktail promotion did not achieve the expected results. To reverse this negative trend in the casino, we will be rolling out our most aggressive slot promotion in mid November as well as implementing a major change in the marketing of table games beginning in December and extending through the first quarter of 2008."

Operating Results for the Quarter Ended September 30, 2007 Compared to the Quarter Ended September 30, 2006

Net operating revenues for the quarter ended September 30, 2007 were $16.0 million, a decrease of $1.0 million or 6.2%, from $17.0 million generated during the same period in the previous year.

Casino.

Casino revenues decreased by $0.7 million or 11.7% to $5.7 million for the quarter ended September 30, 2007, compared to $6.4 million for the quarter ended September 30, 2006. This decline in casino revenue is the result of a general decline in the property's visitor traffic for all three months of the quarter. Table games revenue was $2.3 million for the quarter ended September 30, 2007, a decrease of $0.3 million or 12.9% compared to table game revenue of $2.6 million from the prior year's quarter. During the quarter ended September 2007, we had a reduction of table game volume by $3.0 million or 18.6%, which was partially offset by a higher hold percentage. The hold percentage for table game win was 17.3% in 2007 compared to 16.2% for the quarter ended September 30, 2006.

The table games generated an average win per table of $803 per day for the quarter ended September 30, 2007 as compared to $866 per day for the quarter ended September 30, 2006. Slot revenue (net of participation fees) was $3.1 million for the quarter ended September 30, 2007, which was a decrease of $0.5 million or 13.5% compared to $3.6 million in the same period in 2006. The average win per machine per day (before deducting participation fees) was $59 for the quarter ended September 30, 2007 as compared to $68 for the quarter ended September 30, 2006.

Casino expenses of $3.4 million for the quarter ended September 30, 2007 were up $0.1 million from $3.3 million for the quarter ended September 30, 2006 due to increased casino marketing costs, offset partially by decreased operating expenses on the casino floor. The profit margin for casino operations decreased from 48.9% during the quarter ended September 30, 2006 to 39.2% during the quarter ended September 30, 2007.

Food, beverage, and entertainment.

Food, beverage, and entertainment revenue decreased $0.3 million to $6.0 million for the quarters ended September 30, 2007 compared to $6.3 million for the quarter ended September 30, 2006. Beverage revenue of $2.1 million (which includes complimentary beverages) decreased by $0.1 million, or 2.6%, from $2.2 million during the quarter ended September 30, 2006. Our showroom, which opened mid April 2007, generated $0.3 million in entertainment ticket revenues for the quarter ended September 30, 2007.

Food revenue decreased from $4.2 million for the quarter ended September 30, 2006 to $3.6 million for the quarter ended September 30, 2007, a decrease of $0.6 million or 13.7%. The decrease was due to revenue decreases in all restaurants expect for a $0.2 million increase in Marino's. Marino's offered a new dinner special, which generated the additional revenue.

Food, beverage, and entertainment expenses decreased from $4.8 million during the quarter ended September 30, 2006 to $4.7 million during the quarter ended September 30, 2007, a decrease of $0.1 million. The profit margin for food, beverage, and entertainment operations decreased to 22.4% for the quarter ended September 30, 2007 from 23.9% in the same quarter in 2006 primarily due to the decline in revenues.

Hotel and other. Hotel and other revenue (which includes hotel room revenue, retail, spa, and other miscellaneous revenue) increased $0.2 million to $5.9 million for the quarter ended September 30, 2007 from $5.7 million for the quarter ended September 30, 2006.

Room revenue was $4.3 million for the quarter ended September 30, 2007 compared to $4.0 million in 2006. This increase was a result of an increase in occupancy rates, offset by a decrease in average daily room rates. Average daily room rates decreased slightly from $78 for the quarter ended September 30, 2006 to $77 for the quarter ended September 30, 2007, while occupancy rates increased from 80.7% for the quarter ended September 30, 2006 to 87.9% for the quarter ended September 30, 2007. Occupancy rates increased largely because of successful targeted marketing efforts in southern California and increased sales through the wholesalers, internet providers and our group sales.

Sales from our retail outlets selling Hooters logo merchandise decreased 11.3% from $1.5 million for the quarter ended September 2006 to $1.3 million for the quarter ended September 2007. Other miscellaneous revenue remained constant.

Hotel and other expenses remained constant at $2.3 million during both the quarter ended September 30, 2007 and September 30, 2006. The profit margin for room sales was 65.7% in the third quarter of 2007 compared to 61.2% for that same period in the prior year. Retail sales generated a profit margin of 41.2% for the quarter ended September 30, 2007 compared to 45.3% for the quarter ended September 30, 2006.

General and administrative.

General and administrative expense includes costs associated with marketing, information technology, finance, accounting, and property operations. General and administrative expense decreased $0.5 million to $4.4 million for the quarter ended September 30, 2007 compared to $4.9 million for the quarter ended September 30, 2006. This decrease was principally due to significant decreases in advertising and marketing expenses for the quarter ended September 30, 2007 as compared to the same quarter in 2006. As anticipated, our general and administrative expenses are down from the $5.1 million we incurred in the second quarter of 2007, when advertising marketing expenses were high due to advertising our new food specials, promotions and comedy show.

For the nine months ended September 30, 2007, we used $1.6 million of cash in operating activities, largely due to our net loss of $10.6 million, which was offset by $6.8 million of non-cash depreciation and amortization charges and payment-restricted related party royalty fees and an increase of $2.8 million in interest payable.

For the nine months ended September 30, 2007, $1.1 million of cash was used for capital expenditures.

For the nine months ended September 30, 2007, $2.3 million of cash was provided from financing activities. We borrowed $2.3 million on our new line of credit, offset by $1.5 million in principal payments on debt. During the nine months, we also received $1.5 million in non-refundable deposits relating to the possible pending sale of our assets.

Our 8.75% Senior Secured Notes (the "Notes") indenture contains certain provisions, which restrict or limit our ability to, among other things, incur more debt, pay dividends, redeem stock or make other distributions, enter into transactions with affiliates or transfer or sell assets.

Our senior secured credit facility (the "Credit Facility") is a four-year revolving Credit Facility of $15.0 million, maturing on March 30, 2009. We had outstanding draws of $2.9 million at September 30, 2007 and an additional draw of $3.2 million was made on October 1, 2007. All outstanding principal and interest under the Credit Facility is due and payable on March 30, 2009.

We believe that we have the flexibility to cover operational contingencies, working capital needs, capital expenditures, and debt service obligations expected as of September 30, 2007 over the next twelve months through; (1) the use of cash (which totaled $5.8 million at September 30, 2007); (2) our cash generated from operations prior to debt service; and (3) our ability to draw against our Credit Facility (with an unused balance of $8.9 million as of October 1, 2007), along with other available equipment financing.

Update on Asset Purchase Agreement

On April 30, 2007, we entered into an Asset Purchase Agreement (the "Agreement") with Hedwigs Las Vegas Top Tier, LLC (the "Buyer") which was amended on May 7, 2007 and August 8, 2007. Pursuant to the terms of the Agreement, the Buyer has offered to purchase essentially all of our assets for a purchase price of $95.0 million in cash, the payment of certain accrued royalties, and the assumption of certain outstanding debt. The Buyer also agreed to be responsible for the Notes. We received from the Buyer nonrefundable earnest money deposits of $1.5 million, which will be applied against the purchase price if the transaction closes. A final deposit payment of $1.5 million, due by 5:00 p.m. on November 15, 2007, has not yet been received. There can be no assurance that the conditions to closing under the Agreement will ever be satisfied, or any transaction contemplated under the Agreement will be consummated, or if a transaction is consummated, it will be on the same or similar terms as currently provided under the Agreement.

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