The following discussion should be read in conjunction with, and is qualified in its entirety by, the financial statements and related notes thereto and other financial information included in "Item 8. Financial Statements and Supplementary Data." Certain statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations are forward-looking.

Executive Overview

Liquidity and Financial Position

We have significant indebtedness and financial commitments in 2009. As of December 31, 2008, we had $141.4 million in debt. In the first quarter of 2009 we borrowed an additional $3.4 million on our Credit Facility, bringing our debt to $144.8 million at March 3, 2009. Currently, the Credit Facility is fully extended and we have no additional availability to borrow against the Credit Facility. We have no other additional sources of borrowing available, except for certain equipment financing as allowed under our Notes and Credit Facility.

In addition to commitments under contractual agreements (see "Contractual Obligations"), our financial commitments and estimated capital expenditures in 2009 (as of December 31 2008) totaled approximately $14.5 million. These financial commitments for 2009 consist of contractual maturities of long-term debt totaling $0.2 million, interest payments on long-term debt, estimated at $13.3 million, and $1.0 million of estimated capital expenditures. In addition, we entered into a contract in 2009 to purchase a new slot accounting and marketing system for $2.5 million, which is being financed over 3 years. The payments are $78,000 per month. To fund our anticipated 2009 financial commitments we have the following sources of funds in 2009: (1) available borrowings under the Credit Facility of $3.4 million, which were borrowed during the first quarter of 2009, (2) limited equipment financing, (3) operating cash flow. Our current expectations for 2009 indicate that operating cash flow will be lower than in 2008. In 2008, we generated approximately $7.4 million in cash from operating activities excluding income from forfeited purchase deposit and extension fees related to the cancelled sale to Hedwigs and before deducting cash paid for interest, which commitments are included in the list above.

Based on our anticipated future operations, we do not believe that cash on hand and expected cash flows will be adequate to meet our anticipated operational expenses, debt service on equipment leases and Credit Facility, capital expenses, and scheduled payments of interest on our Notes. As a result, we will be unable to make the interest payment on the Notes due April 1, 2009. The note holders could declare a default following the expiration of the 30 day grace period provided under the indenture governing the Notes. An event of default under the Notes indenture would allow the Credit Facility lender to declare a default under the Credit Facility. The Notes indenture and Credit Facility contain significant restrictions on our operations. See Risk Factors - Restrictive Covenants. Failure to comply with any restriction of the Notes indenture or the Credit Facility by us will cause a default, subject to any applicable grace periods, under the Notes indenture and/or the Credit Facility. We expect to enter into discussions with the note holders and the Credit Facility lender to attempt to negotiate forbearance agreements pursuant to which they would agree not to declare, for a specified period of time, an event of default under the indenture or the Credit Facility. We have engaged Jefferies & Company, Inc. as our financial advisor to assist us with our evaluation of financial and strategic alternatives, which may include a recapitalization, refinancing, restructuring or reorganization of our obligations or a sale of some or all of our business. We and our advisors are actively working toward such a transaction. We cannot assure you that we will be successful in negotiating a forbearance with the note holders or Credit Facility lender or in undertaking any such alternative in the near term.

If we were not successful in obtaining a forbearance or entering into a transaction to address our liquidity and capital structure, the note holders would have the ability to accelerate repayment of all amounts outstanding under the indenture ($135.7 million at March 31, 2009) and the Credit Facility lender would have the ability to accelerate repayment of all amounts outstanding under the Credit Facility ($14.5 million at March 31, 2009). If either the Notes indebtedness or the Credit Facility indebtedness were to be accelerated upon a default, we would be required to refinance or restructure the payments on that debt. We cannot assure you that we would be successful in completing a refinancing or restructuring, if necessary. If we were unable to do so, we may be required to seek protection under Chapter 11 of the U. S. Bankruptcy Code.

The conditions and events described above raise a substantial doubt about our ability to continue as a going concern. We have classified all of the debt at December 31, 2008 as current in the accompanying financial statements, but they do not include all adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should we be unable to continue as a going concern.

Overview for 155 East Tropicana, LLC

155 East Tropicana, LLC ("we", "us", "our", or "155") was formed on June 17, 2004 to acquire the Hôtel San Rémo Casino and Resort ("Hôtel San Rémo"), from Eastern & Western Hotel Corporation ("Eastern & Western"). Our common membership interests are held two-thirds through Florida Hooters LLC and one-third through EW Common LLC.

Florida Hooters LLC is a joint venture between Hooters Gaming LLC and Lags Ventures, LLC. The owners of Hooters Gaming LLC, which include most of the original founders of the Hooters brand, hold licenses to sell wholesale foods and calendars and to operate hotel casinos in Nevada and Hooters restaurants in Tampa Bay, Florida, Chicago, Illinois, and downtown Manhattan in New York. Lags Ventures, LLC is owned by a holder of the license rights to certain Hooters restaurants in South Florida and the State of Nevada. Pursuant to these license rights, the owners of Florida Hooters LLC operate 39 Hooters restaurants, publish Hooters calendars, and operate a Hooters foods business. The owner of Lags Ventures, LLC is also the founder of the Dan Marino concept restaurants and owns and operates 2 Dan Marino concept restaurants.

Eastern & Western owns 90% of EW Common LLC, while our President owns the balance. Eastern & Western owned the Hôtel San Rémo from November 1988 until our acquisition of the Hôtel San Rémo in 2004.

Our affiliates have granted us assignments of certain license agreements pertaining to the use of the Hooters brand as well as the Dan Marino, "13" Martini Bar and Pete & Shorty's concept restaurants, which will allow us to operate the Hooters Casino Hotel. The original founders of the Hooters brand sold the trademark rights (excluding certain rights they retained for themselves) to Hooters of America in 2001. As a result, Hooters of America is the trademark owner of the Hooters brand and the operator and franchisor of Hooters restaurants. Pursuant to the Hooters license assignment; we are required to pay Hooters of America a royalty fee, which totaled approximately $1.1 million for the year ending December 31, 2008. Aside from the abovementioned royalty fee, we are not otherwise affiliated with Hooters of America.

In August 2004, we agreed to the acquisition of the real property and other assets of the Hôtel San Rémo for approximately $74.6 million including transaction costs and expenses, and as adjusted for final purchase price adjustments.

On March 29, 2005, we issued $130.0 million aggregate principal amount of 8¾% Senior Secured Notes due 2012, or the old notes, in a private placement. The old notes were subsequently exchanged with new notes, or ("Notes"), registered under the Securities Act of 1933 on Form S-4. Interest payments on the Notes are due semi-annually, on each April 1 and October 1. We used the proceeds from the offering to refinance existing indebtedness, and used the remaining proceeds (together with cash from operations and proceeds from equipment financing) to renovate the hotel casino and to provide working capital.

In connection with the offering, we formed a wholly owned subsidiary, 155 East Tropicana Finance Corp., solely for facilitating the offering as a co-issuer of the old notes.

We also entered into a $15.0 million senior secured credit facility ("Credit Facility") concurrently with the offering. At December 31, 2008, $11.1 million was outstanding on the Credit Facility. As of March 3, 2009, $14.5 million was outstanding on the Credit Facility, which, together with a letter of credit in the amount of $0.5 million, represents all of the funds available under the Credit Facility.

Prior to November 1, 2005 we conducted no business operations other than in connection with the acquisition and subsequent leasing of the Hôtel San Rémo. Through October 31, 2005, Eastern & Western held the gaming license in Nevada and owned all gaming assets by the Hôtel San Rémo. Under a casino lease and hotel lease, Eastern & Western operated the Hôtel San Rémo. After obtaining the necessary gaming and liquor licenses to operate the hotel casino in October 2005, we assumed operations of the hotel casino on November 1, 2005 and the leases with Eastern & Western were terminated.

Casino revenue is derived primarily from patrons wagering on slot machines, table games and other gaming activities. Table games include blackjack, craps, roulette, and specialty games. Casino revenue is defined as the win from gaming activities, computed as the difference between gaming wins and losses, not the total amount wagered. "Table game drop" and "slot handle" are casino industry specific terms used to identify the amount wagered by patrons for a casino table game or slot machine, respectively. "Table game hold" and "slot hold" represent the percentage of the total amount wagered by the patron that the casino has won. Hold is derived by dividing the amount won by the casino ("table game win" and "slot win") by the amount wagered by the patron. Casino revenue is recognized at the end of each gaming day.

Casino revenues vary from time to time due to general economic conditions, table game hold, slot hold, and occupancy percentages at the Hooters Casino Hotel and other hotels in Las Vegas. Casino revenues also vary depending upon the amount of gaming activity as well as variations in the odds for different games of chance. Casino revenues, room revenues, food and beverage revenues, and other revenues vary due to general economic conditions and competition.

Room revenue is derived from rooms and suites rented to guests. "Average daily rate" is an industry specific term used to define the average amount of revenue per rented room per day. "Occupancy percentage" defines the total percentage of rooms occupied, and is computed by dividing the number of rooms occupied by the total number of rooms available. Room revenue is recognized at the time the room is provided to the guest.

Food, beverage and entertainment revenues are derived from food and beverage sales in the food, bar and entertainment outlets of the hotel casino, including restaurants, room service, bars, entertainment showroom and banquets. Food, beverage, and entertainment revenue is recognized at the time food and/or beverage is provided to the guest. "Covers" are the number of patrons served in a food outlet. "Average check" is the average amount of food and beverage revenue charged to patrons on their restaurant checks.

The following table summarizes the results of operations of 155 East Tropicana, LLC (in thousands):

                             155 E. Tropicana, LLC      155 E. Tropicana, LLC                      155 E. Tropicana, LLC
                                   Year Ended                 Year Ended                %                Year Ended               %
                                  December 31,               December 31,            Change             December 31,           Change
                                      2008                       2007              2008 - 2007              2006             2007 - 2006
                                                                       (dollars in thousands)
Casino revenues              $               24,951     $               24,993            -0.2 %   $               27,075           -7.7 %
Casino expenses                              14,572                     14,883            -2.1 %                   14,349            3.7 %
Profit margin                                  41.6 %                     40.5 %          47.0 %

Food, beverage and
entertainment revenues       $               22,137     $               23,318            -5.1 %   $               23,621           -1.3 %
Food, beverage and
entertainment expenses                       14,501                     17,722           -18.2 %                   18,974           -6.6 %
Profit margin                                  34.5 %                     24.0 %                                     19.7 %

Hotel and other revenues     $               20,686     $               24,484           -15.5 %   $               22,696            7.9 %
Hotel and other expenses                      8,066                      9,222           -12.5 %                    8,786            5.0 %
Profit margin                                  61.0 %                     62.3 %                                     61.3 %

Promotional allowances       $                7,678     $                6,316            21.6 %   $                5,436           16.2 %
Percent of gross revenues                      11.3 %                      8.7 %                                      7.5 %

General and
administrative expenses      $               17,143     $               17,978            -4.6 %   $               18,248           -1.5 %
Percent of net revenues                        28.4 %                     27.0 %                                     26.9 %

Depreciation expense         $                6,544     $                6,250             4.7 %   $                5,842            7.0 %

Intangible assets
impairment charge            $                3,458     $                    -                     $                    -

Pre-opening expenses         $                    -     $                    -                     $                5,293

Related party royalties
expense                      $                1,362     $                1,387            -1.8 %   $                1,459           -4.9 %

Loss on disposal of
assets                       $                    -     $                    -                     $                1,199

Purchase deposit and
extension fee                $                5,500     $                    -                     $                    -

Interest income              $                  124     $                   91            36.3 %   $                  499          -81.8 %

Interest expense             $               13,324     $               13,248             0.6 %   $               12,746            3.9 %

Comparison of Year Ended December 31, 2008 with the Year ended December 31, 2007

The current state of the economy has negatively impacted our results of operations in 2008 and we expect that impact to continue in 2009. Because we are in the hospitality and recreation business, which is largely dependant on discretionary spending, we believe that the weak housing market, increases in unemployment, decreases in air flights to Las Vegas, decreases in the value of stock and other investments and the general tightening of spending on business travel have all affected visitations to Las Vegas and the spending budget of our customers.

Our operating results of the first quarter of 2009 indicate to us that there may be further decreases in visitor volumes to Las Vegas and in customer spending, including convention participants. Because of these economic conditions, we have continued to focus on managing costs. For 2009 we froze management salaries, are managing staffing levels, will not make matching contributions to the 401K plan and will continue to eliminate other operating expenses where possible.

Net loss of $13.3 million was generated for the year ended December 31, 2008 compared to a net loss of $14.1 million for the year ended 2007. The $0.8 million improvement was due to $5.5 million in income from forfeited deposits and extension fees as described in more detail in the paragraphs below, netted against a non-cash impairment charge to intangible assets of $3.5 million and a decline in net revenue.

The operating loss of $5.6 million for the year ended December 31, 2008 increased by $4.6 million from a loss of $1.0 million in the same period last year. We charged a $3.5 million write-down of goodwill and other intangible assets to operations in 2008. In addition, the remaining decrease in profitability from operations was due to a decline in revenues of $6.4 million, partially offset by a cost savings of $5.3 million in other operating expenses.

Net operating revenues for the year ended December 31, 2008 were $60.1 million; a decrease of $6.4 million or 9.6%, from $66.5 million of net operating revenues for the year ended December 31, 2007 and were largely as a result of the $3.8 million or 15.5% decline in hotel and other revenues.

Casino. Casino revenues were flat at $25.0 million for both years ended December 31, 2008 and 2007, in spite of a decline on the Las Vegas Strip of 10.6% in gaming revenue for the year ended December 31, 2008 according to Gaming Revenue Report issued by the Nevada State Gaming Control Board. We outperformed the market due to new aggressive slot promotions offered during the year.

Table games revenue was $8.9 million for the year ended December 31, 2008, a decrease of $0.7 million, or 7.2%, compared to the table games revenue of $9.6 million from the prior year. Table game drop decreased to $51.9 million, or by 9.0%, for the year ended December 31, 2008 compared to $57.0 million for the year ended December 31, 2007, while table game hold percentage increased from 16.8% in 2007 to 17.1% in 2008. The table games generated an average win per table of $932 per day for the year ended 2008 compared to $873 for the year ended 2007. Slot revenue of $15.5 million for the year ended December 31, 2008 was an increase of $0.8 million or 5.5% compared to $14.7 million in the same period in 2007. The average win per machine per day was $67 for the year ended December 31, 2008 compared to $62 for the same period in 2007.

Casino expenses decreased by $0.3 million or 2.1% to $14.6 million for the year ended December 31, 2008 compared to $14.9 million for the year ended December 31, 2007. The decrease was due to controls over payroll and benefits in the table games department that saved $0.7 million in expenses, partially offset by additional casino marketing expense. The profit margin for casino operations increased from 40.5% during the year ended December 31, 2007 to 41.6% during the year ended December 31, 2008.

Food, beverage and entertainment. Food, beverage and entertainment revenue was $22.1 million for the year ended December 31, 2008 as compared to $23.3 million for December 31, 2007, a decrease of $1.2 million or 5.1%. The food revenues decreased $0.7 million or 5.6% to $12.2 million for the year ending December 31, 2008 compared to $12.9 million for the year ending December 31, 2007. Beverage revenue (which includes complimentary beverages) decreased by $1.0 million or 10.4% to $8.5 million for the year ended December 31, 2008 from $9.5 million during the year ended December 31, 2007. Showroom revenue increased $0.6 million in 2008 to $1.4 million as compared to showroom revenue of $0.8 million in 2007.

Food, beverage and entertainment expenses decreased from $17.7 million during the year ended December 31, 2007 to $14.5 million during the year ended December 31, 2008, a decrease of $3.2 million or 18.2%. The cost savings were due to the consolidation of food operations from three restaurants to two and the elimination of excess labor in food preparation. The profit margin for food, beverage and entertainment operations increased from 24.0% during the year ended December 31, 2007 to 34.5% during the year ended December 31, 2008 due to operational efficiencies in payroll and cost of sales.

Hotel and other. Hotel and other revenue (which includes hotel room revenue, retail, spa and other miscellaneous revenue) decreased by $3.8 million, or 15.5%, to $20.7 million for the year ended December 31, 2008 from $24.5 million for the year ended December 31, 2007. Room revenue decreased $3.0 million or 16.2% to $15.2 million for the year ended December 31, 2008 compared to $18.2 million in 2007 due to a drop in average daily room rate ("ADR"). The ADR decreased by 18.5% to $66 for the year ended December 31, 2008 compared to $81 for the prior year. This drop in ADR exceeds the Las Vegas average decline in ADR of 9.8% as published for 2008 by the Las Vegas Convention and Visitor Authority ("LVCVA"). Occupancy for the year ended December 31, 2008 increased to 91.6% compared to 89.6% for year ended December 31, 2007, an increase of 2.0% in the hotel occupancy. According to the LVCVA, the average occupancy in Las Vegas dropped 4.4% and visitor counts dropped 4.4% in 2008.

Sales from the retail outlets was $4.4 million in the year ended December 31, 2008, a decrease of $0.5 million from the year ended December 31, 2007.

Hotel and other expenses decreased by $1.1 million or 12.5% from $9.2 million during the year ended December 31, 2007 to $8.1 million during the year ended December 31, 2008 due to operational efficiencies in payroll and departmental expenses. The profit margin for hotel and other was 61.0% for the year ended December 31, 2008 compared to 62.3% for the same period in the prior year.

General and administrative. General and administrative expense includes costs associated with marketing, information technology, and finance, accounting, property operations and in 2008, corporate restructuring costs. General and administrative expense decreased $0.9 million or 4.6% to $17.1 million for the year ended December 31, 2008 compared to $18.0 million for the year ended December 31, 2007. This decrease was principally due to a $0.3 million decrease in payroll and benefits, $0.1 million in insurance, $0.2 million in utilities, $0.2 in advertising expenses, $0.6 million in general expenses, offset by $0.5 million spent for corporate restructuring consultants.

Depreciation and amortization expense. Depreciation and amortization expense of $6.5 million for the year ended December 31, 2008 increased by $0.3 million, or 4.7%, from $6.2 million for the year ended December 31, 2007.

Intangible assets impairment charge. With respect to our goodwill and other indefinite-lived intangible assets, we performed our annual test during the fourth quarter of 2008. As a result of this analysis, we recognized a non-cash impairment charge of $2.2 million to write-off the goodwill associated with the acquisition of the San Remo Hotel & Casino in 2004 and a non-cash $1.3 million write-down of the Hooters licensing, trademark. The impairment charges resulted from factors impacted by current economic conditions. We lowered our forecasts of cash flows from operations in future years and applied a higher discount rate as a result of the turmoil in the credit and equity markets.

Related party royalties expense. Beginning on February 3, 2006, we incurred related party royalty fees pursuant to agreements with Hooters Gaming Corporation, Lags Ventures, Inc., and Las Vegas Wings, Inc. These related party royalties expense totaled $1.4 million during both the years ended December 31, 2008 and 2007. The payment of the related party royalties is restricted under the Notes indenture. The fees can only be paid after the close of the fiscal year and only if our debt coverage ratio is 1.5 to 1 for that fiscal year. The payments of the royalty fees are further limited to the sum of 2% of revenue and 3% of EBITDA as defined in the indenture.

Income on purchase deposit and extension fee. In June of 2008, we recorded income on forfeited deposits and extension fees of $5.5 million in connection with the termination of the purchase agreement (the "Purchase Agreement") with Hedwigs Las Vegas Top Tier, LLC. ("Hedwigs").

Interest income. Interest income was $124,000 for the year ended December 31, 2008, compared to $91,000 for the year ended December 31, 2007.

Interest expense. Interest expense was $13.3 million for the year ended December 31, 2008, compared to $13.2 million for the year ended December 31, 2007, an increase of $0.1 million due to an increase in the debt outstanding on the line of credit. .

Provision for income taxes. 155 is a limited-liability company and is treated as a partnership for federal income tax purposes. Accordingly, a provision for federal income taxes is not recorded on our consolidated financial statements. Taxable income or loss will be included in the income tax returns of the members.

Comparison of Year Ended December 31, 2007 with the Year ended December 31, 2006

In comparing the ended December 31, 2007 to 2006, it should be noted that the Hooters Casino Hotel was open for business for the full year ended December 31, 2007. The results of operations for the year ended December 31, 2006 include the month of January 2006 when the property was essentially closed for remodeling and the first eleven months of operations of the Hooters Casino Hotel from February 3, 2006 through December 31, 2006.

In spite of the negative effect of remodeling in January 2006, net operating revenues for the year ended December 31, 2007 were $66.5 million, a decrease of $1.5 million or 2.2%, from $68.0 million generated during the previous year. A decrease of $0.9 million in net revenue was the result of increased promotional allowances because of increased slot club cash back of $0.4 million and other complimentaries given away. Entertainment complimentaries totaled $0.5 million given away to promote trips to the property The media and excitement that accompanied the grand opening of the Hooter's Casino Hotel in February 2006 caused a three month spike in revenues resulting from trial visitations. The decline in gross revenues in 2007 is largely attributable to a decline in casino revenues. Table games and slot revenues both declined, due to a decrease in casino table drop and coin-in volumes.

Casino.Casino revenues decreased by $2.1 million or 7.7% to $25.0 million for the year ended December 31, 2007, compared to $27.1 million for the year ended . . .