Certain statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations which are not historical facts are forward-looking statements such as statements relating to future operating results, existing and expected competition, financing and refinancing sources and availability and plans for future development or expansion activities and capital expenditures. Such forward-looking statements involve a number of risks and uncertainties that may significantly affect our liquidity and results in the future and, accordingly, actual results may differ materially from those expressed in any forward-looking statements. Such risks and uncertainties include, but are not limited to, those related to effects of competition, leverage and debt service financing and refinancing efforts, general economic conditions, changes in gaming laws or regulations (including the legalization of gaming in various jurisdictions) and risks related to development and construction activities. The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report.

Overview

We operate in the domestic gaming industry. We were organized as a holding company for the purpose of acquiring and operating casinos, gaming properties and other related interests.

As of June 30, 2009, our operating subsidiaries were Casinos USA, Inc. ("Casinos USA," a Colorado corporation), which owns and operates the Bull Durham Saloon and Casino ("Bull Durham"), located in the limited stakes gaming district of Black Hawk, Colorado, and Doc Holliday Casino II, LLC (a Colorado limited liability company), which operates the Doc Holliday Casino ("Doc Holliday"), located in the limited stakes gaming district of Central City, Colorado. Doc Holliday Casino II, LLC was incorporated in the state of Colorado on June 15, 2007 for the purpose of acquiring substantially all the assets and certain liabilities of the Doc Holliday Casino, and to operate the casino. The acquisition was completed on March 18, 2008. The results of Doc Holliday's operations have been included in the consolidated financial statements since that date.

Our operations are seasonal. Our casinos typically experience a significant increase in business during the summer tourist season.

We operate in a highly regulated environment subject to the political process.
Our retail gaming licenses are subject to annual renewal by the Colorado Division of Gaming. Changes to existing statutes and regulations could have a negative effect on our operations.

Results of Operations - Year Ended June 30, 2009 Compared to the Year Ended June 30, 2008

We recognized a net loss attributable to common shareholders after $56,778 of dividends on our Series D preferred stock of $(68,245) ($(0.01) per share) for the year ended June 30, 2009, compared to net income attributable to common shareholders after dividends of $17,856, of $105,780 ($0.02 per share) for the year ended June 30, 2008. The decrease in our net income attributable to common shareholders is primarily due to the preferred stock dividends, increases in our corporate expenses of

Revenues

Casino revenues for the year ended June 30, 2009 were $6,551,412 compared to $4,561,095 for the year ended June 30, 2008, an increase of $1,990,317 or 43.6%.
Total full period revenues for the Bull Durham were $3,989,928, while revenues for Doc Holliday were $2,561,484 for the year ended June 30, 2009. The full period coin-in for the Bull Durham casino was up 4.7% for the year ended June 30, 2009 over the year ended June 30, 2008, and we also experienced a 0.02% increase in our hold percentage for the year ended June 30, 2009 over the year ended June 30, 2008.

Promotional allowances primarily include anticipated redemptions associated with the Bull Durham Casino's Sharpshooter's Club which awards customers with cash payouts dependent upon the frequency and amount of their gaming activities on our slot machines. The total allowances increased by $4,955 from $158,641 to $163,596 for the years ended June 30, 2008 and 2009, respectively.

Operating Expenses

Casino operations: Includes all expenses associated with the operations of the Bull Durham Casino and the Doc Holliday casino for the years ended June 30, 2009 and 2008. As noted elsewhere, operations for the Doc Holliday Casino began on March 19, 2008, and therefore expenses attributable to Doc Holliday for the year ended March 31, 2008 include only approximately three months. The following table summarizes such expenses for comparison and discussion purposes:

                                      For the years ended
                                 June 30, 2009   June 30, 2008     $ Variance     % Variance
Labor & Benefits                  $  2,202,784    $   1,547,141    $   655,643      42.4%
Marketing & Advertising             1,248,133         735,897         512,236       69.6%
Depreciation & Amortization           612,707         523,936          88,771       16.9%
Food & Beverage                       357,091         239,753         117,338       48.9%
Repair, Maintenance & Supplies        224,882         189,524          35,358       18.7%
Device fees                           434,180         231,896         202,284       87.2%
Professional fees                     132,995         104,438          28,557       27.3%
Insurance, Taxes & Licenses           218,504         138,202          80,302       58.1%
Utilities & Telephone                 181,773         109,739          72,034       65.6%
Occupancy                             206,805             -           206,805        n/a
Other casino expenses                 108,238         128,513         (20,275)      -15.8%
                                  $  5,928,092    $   3,949,039    $  1,979,053     50.1%

Labor & Benefits: Includes all salary and contract labor costs associated with the operations of the casinos, payroll taxes, as well as costs associated with the casinos' employee benefit and health insurance plans. The 42.4% increase is primarily attributable to Doc Holliday operations. Total labor and benefits costs for the Bull Durham operations increased 3.4%, from $1,254,832 to $1,297,864 for the years ended June 30, 2008 and 2009, respectively, and are primarily attributed to normal annual merit increases and performance bonuses.
Total labor and benefits costs as a percentage of casino revenues decreased slightly from 33.9% to 33.6% for the years ended June 30, 2008 and 2009, respectively.

Marketing & Advertising: Includes all costs associated with our advertising and marketing efforts including promotional activities designed to drive customers to our casinos, and programs designed to foster customer loyalty. Approximately $472,000 of the increase is attributed to the Doc Holliday operations for the year ended June 30, 2009. The remaining approximately $40,000 of the increase is attributed to increased promotional activity at the Bull Durham Casino including charter bus arrangements and customer mailings which are both designed to drive customers to the casino.

Depreciation & Amortization: Primarily includes depreciation on our gaming equipment, casino building improvements, furniture and fixtures, as well as amortization on our customer tracking software. The increase of $88,771 is attributable to depreciation of the furniture and fixtures, and gaming assets of the Doc Holliday Casino for the year ended June 30, 2009. We are continuing our efforts to upgrade and maintain the quality and appearance of the machines in both casinos as part of our strategy to provide the best customer experience possible to enhance customer loyalty.

Food & Beverage: Includes all costs associated with our bar and limited menu food services. The $117,338 increase from the year ended June 30, 2008 is primarily the result of Doc Holliday operations for the year ended June 30, 2009. Total food and beverage costs as a percentage of casino revenues was 5.5% for the year ended June 30, 2009 compared to 5.3% for the year ended June 30, 2008.

Repair, Maintenance & Supplies: Includes costs associated with the general upkeep of the facility, as well as parts and repair efforts to maintain the quality of our slot machines. The increase of $35,358 is primarily attributable to Doc Holliday operations for the year ended June 30, 2009. Total repair, maintenance and supplies costs as a percentage of casino revenues decreased from 4.2% to 3.4% for the years ended June 30, 2008 and 2009, respectively.

Device Fees: Includes fees paid to the local jurisdictions of the casinos based on the number of slot machines in operation. The increase of $202,284 is attributed entirely to Doc Holliday operations for the year ended June 30, 2009.

Professional Fees: Includes all costs and fees associated with legal services, accounting and auditing services, and the Board of Directors of Casinos USA (d/b/a The Bull Durham Saloon & Casino). The increase of $28,557 is primarily attributed to a bonus paid to the directors of Casinos USA in November 2008.

Insurance, Taxes & Licenses: Includes all non-payroll taxes, liability and property insurance, and licenses associated with the operation of the casinos.
The increase of $80,302 is attributed to Doc Holliday operations for the year ended June 30, 2009. Total insurance, taxes and licenses as a

Utilities & Telephone: Includes all costs associated with the casinos' telephone systems, cell phone usage, and utility costs. The increase of $72,034 is primarily attributed to the Doc Holliday operations for the year ended June 30, 2009, and to a lesser degree general increases in utility costs, particularly water, gas and electricity. Total utilities and telephone costs as a percentage of revenues increased from 2.4% to 2.8% for the years ended June 30, 2008 and 2009, respectively.

Occupancy: Includes lease costs of the Doc Holliday Casino, which leases approximately 13,000 square feet of space used for its gaming activities, supporting offices and storage space under an operating lease that terminates in July 2015. Effective August 1, 2008, the monthly lease payments escalated to $25,362 from $17,029 per month. The lease requires the Casino to pay for a portion of the building expenses until the landlord secures additional tenants to occupy the remaining building space. To the extent the Casino pays total building expenses in excess of the Casino's portion as defined by the lease, any excess amounts paid are credited to the following lease year's rent payments.
As of June 30, 2009, prepaid rent credits available to offset future rent payments was approximately $88,000 and are recorded as prepaid expenses and other current assets. For the year ended June 30, 2009, the total cash paid for rent at the Casino was $223,564. The difference between the amount recorded as occupancy expense and the cash paid for rent is due to the accrual of prepaid rent credits for 2009 resulting from certain payments of building expenses as discussed above.

Other Casino Expenses: Includes all other costs of the casino operations not included in the above categories, including travel, armored car services, postage, casino entertainment, employee education programs, and lease costs associated with off-site storage units. Total other casino expenses as a percentage of revenues was 1.7% and 2.8% for the years ended March 31, 2009 and 2008, respectively.

Operating, general, and administrative expenses: Generally includes all expenses associated with the operations of the parent entity, Global Casinos, Inc., including legal and executive services provided by the company's principal executive officer, accounting services provided by the company's principal accounting officer, as well as clerical and bookkeeping services, corporate marketing efforts, stock-based compensation costs relating to the company's executive officers, directors, and subsidiary management, and occupancy costs associated with the corporate office.

For the year ended June 30, 2009, total operating, general, and administrative costs were $249,213, as compared to $215,112 for the years ended June 30, 2009 and 2008, respectively, a net increase of $34,101 or 15.9%, and is attributable to three primary factors as well as the corporate occupancy costs discussed below. First, on September 2, 2008 the Company awarded an aggregate of 90,000 shares of common stock valued at $45,000 ($.50 per share) in consideration of services provided by the Company's directors and executive officers. No stock compensation expense was incurred during the year ended June 30, 2008. Second, on April 1, 2008 we entered into a consulting agreement with an independent contractor to provide corporate development services. The agreement required us to pay the consultant a fee equal to $50,000 payable in sums of not less than $10,000 per month. For the year ended June 30, 2009, $21,680 was charged to consulting expense under the agreement. For the year ended June 30, 2008, $28,320 was charged under the agreement. Finally, in August 2008 we entered into a consulting agreement to provide public and shareholder relation services.
The agreement requires monthly retainer fees of $2,000, plus certain expenses. During the year ended June 30, 2009, we have paid approximately $27,000 under this agreement.

Corporate occupancy: Prior to January 2006, we leased approximately 4,200 square feet of space used as its corporate offices. The lease required monthly payments of approximately $3,500. A portion of the space was subleased for monthly rental income of approximately $2,500. In January 2006, the lease with the landlord was terminated and assumed by Gunpark Asset Management, LLC (Gunpark), a company operated by the Company's former President and Director.
Concurrently, the Company entered into a Shared Services Agreement with Gunpark. The agreement required Gunpark provide sufficient office space to the Company, and requires the Company make monthly payments directly to the landlord of $3,000. The monthly payment was allocated as $2,000 to rent expense, and $1,000 to clerical services. In March 2008, the agreement was modified by both parties due to changes in the delivery of clerical services to be provided under the previous agreement. By mutual agreement of both parties, the current agreement expired June 1, 2008. Net rent expense after giving effect to sublease income received was $-0- and $22,000 for the years ended June 30, 2009 and 2008, respectively, and is included in operating, general and administrative expenses. Upon termination of the Shared Services Agreement, we began utilizing certain office functions and systems managed by the Company's president and chief executive officer in Boulder, Colorado. As such, we have significantly reduced our corporate office space requirements and do not expect additional further office space or services will be required under the current corporate operating structure.

Other than the above discussed items, there were no significant variances in operating, general, and administrative costs between the comparable periods.

Stock based compensation: In fiscal year ending June 30, 2007, we adopted the provisions of, and account for stock-based compensation in accordance with, the Financial Accounting Standards Board's ("FASB") Statement of Financial Accounting Standards No. 123-revised 2004 ("SFAS 123R"), "Share-Based Payment" which replaced` Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation" and supersedes APB Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees." Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the period during which the holder is required to provide services in exchange for the award, i.e., the vesting period. We elected the modified-prospective method, under which prior periods are not revised for comparative purposes. For the year ended June 30, 2009 we recognized $45,000 of stock based compensation associated with the stock awards to the Company's directors and executive officers as discussed above. No stock compensation expense was incurred during the year ended June 30, 2008

Interest Expense

Interest expense was $157,851 for the year ended June 30, 2009 compared to $105,979 for the year ended June 30, 2008, and primarily represents regularly scheduled payments on various senior and junior mortgages collateralized by the Bull Durham Saloon and Casino real estate, as well as certain debt incurred to facilitate the acquisition of the Doc Holliday Casino in March 2008. The increase is generally attributable to the debt issued associated with the acquisition of the Doc Holliday Casino in March 2008, and to a lesser degree an increase in the interest rate in March 2008 from 7% to 12% on the senior mortgage secured by the Bull Durham Casino. Interest expense is partially offset by interest income earned on certain cash balances maintained at financial institutions.

During the year ended June 30, 2009 we disposed certain casino equipment with a book value of $3,680, for which we received $400. The resulting $3,280 loss was recorded as a loss on asset disposals. No disposals were made during the year ended June 30, 2008.

Other

Global Gaming Technologies: On February 28, 2006, we entered into an Organization Agreement with a certain individual to form a for-profit limited liability company under the name of Global Gaming Technologies, LLC ("GGT").
GGT was formed for the purpose of bringing to market two games of poker developed by the other party to the agreement, whose contribution included all of his intellectual property rights related to the two games which he developed.
At the present time, both games are still under development and neither has been approved for use in any gaming jurisdiction. At this time GGT has no revenues and none are expected until such time that patent protections are secured and significant marketing of the games can commence. The investment is being accounted for under the equity method. Its cash outlays have primarily been related to investigating patent protection for the products under development and for various product development and organizational costs. For the years ended June 30, 2009 and 2008 we recorded $10,437 and $8,688, respectively, for various GGT organizational, product development and marketing expenditures.

During the quarter ended June 30, 2009 we determined the investment in GGT was impaired due to GGT's inability to secure patents for the games in a reasonable time period which has provided significant uncertainty regarding the outcome of the patent process. Should patent protections not be obtained, the exclusivity of the games could be severely impaired, thereby significantly reducing the potential value of the games to GGT. Because of these uncertainties we believe the investment impairment is other than temporary, and as such we have recorded an impairment charge of $50,410 at June 30, 2009.

Series D Preferred Stock: In March 2008 we sold 700,000 shares of Series D preferred stock at its stated value of $1.00 per share. The proceeds from the sale were used as partial compensation to the seller of the Doc Holliday casino.
The holders of the preferred shares are entitled to receive dividends at the rate of 8% per year, declared quarterly and payable the 15th day of April, July, October and January of each year. For the year ended June 30, 2008, dividends of $56,778 were declared on the Series D Preferred Stock, of which $42,622 had been paid as of June 30, 2009. The remaining unpaid dividends declared on June 30, 2009 are included in accrued expenses at June 30, 2009.

Net Operating Loss Carryover: For federal income tax purposes, Global has a net operating loss carryover (NOL) approximating $5,700,000, which can be used to offset future taxable income, if any. Under the Tax Reform Act of 1986, the amounts of and the benefits from NOL's are subject to certain limitations including restrictions imposed when there is a loss of business continuity or when ownership changes in excess of 50% of outstanding shares, under certain circumstances. We do not believe the acquisition of Doc Holliday will result in impairment of our NOL. However, there is no guarantee that Global will be able to utilize its NOL before it expires and accordingly, no potential benefit has been recorded in the financial statements.

Inflation did not have a material impact on the Company's operations for the period.

Liquidity and Capital Resources

Our primary source of cash is internally generated through operations. As of June 30, 2009, neither the Company nor its subsidiaries have commercial bank credit facilities. Consequently, we believe that cash necessary for future operating needs must be internally generated though operations. Cash flow at one of the Company's operating subsidiaries, Bull Durham, has been sufficient to fund operations and we believe that cash flow will be sufficient during the next twelve months to continue our operations. Cash flows from our other operating subsidiary, Doc Holliday, have not been sufficient to fund its operations and necessary capital improvements, however operating changes we have implemented since its acquisition have stabilized its cash flows to near break-even for fiscal year ended June 30, 2009, our first full year of operating this casino.
From time to time, we have depended on funds received through debt and equity financing to address operating shortfalls and capital requirements. We have also relied, from time to time, upon loans from affiliates to meet immediate cash demands. There can be no assurance that these affiliates or other related parties will continue to provide funds to us in the future if necessary, as there is no legal obligation on these parties to provide such loans.

At June 30, 2009, the Company had cash and cash equivalents of $1,378,074, substantially all of which was utilized in our casino operations. Pursuant to state gaming regulations, the casinos are required to maintain cash balances sufficient to pay potential jackpot awards. Our cash balances at June 30, 2009 were in excess of funds required by gaming regulations.

Our working capital decreased by $1,263,961 to a working capital deficit of $(1,154,348) at June 30, 2009 from working capital of $109,613 at June 30, 2008.
The decrease in our working capital is principally due to our mortgage debt and debt associated with the acquisition of the Doc Holliday casino now due or maturing within one year, and as such is classified as short term liabilities at June 30, 2009. Cash flows generated from our operations have been sufficient to service the monthly installments on the mortgage debt. We are currently exploring options to refinance all our debt. There can be no assurance these efforts will be successful. In the event such efforts are not successful, we intend to work with the various creditors to extend or restructure the outstanding debt.

Cash provided by operating activities was $767,642 for the year ended June 30, 2009. For the year ended June 30, 2008, operating activities provided net cash of $584,466. The increase in cash provided by operating activities of $183,176 was primarily the result of increases in certain non-cash charges including depreciation, impairment on our investment in Global Gaming Technologies, stock based compensation, and amortization of a debt discount, as well as favorable changes in certain operating assets and liabilities during the year ended June 30, 2009.

Cash used by investing activities was $210,685 for the year ended June 30, 2009, and represents purchases of gaming and security equipment, as well as $400 of proceeds received on the disposal of certain equipment. Also during the year ended June 30, 2009 we acquired $51,606 of gaming equipment in non-cash vendor financing arrangements. During the year ended June 30, 2008 we purchased a total of $47,350 of gaming equipment. In addition, we acquired $44,804 of gaming equipment in non-cash vendor financing arrangements. Lacking other financing options, we expect

For the year ended June 30, 2010 we expect to acquire approximately $250,000 in gaming equipment and other capital items, primarily to continue our efforts to upgrade and purchase new slot machines and improve the customer experience. We are also contemplating installing a customer tracking system at the Doc Holliday casino similar to the system operating at the Bull Durham casino. Such a system would require the outlay of approximately $400,000, and as of the date of this report no specific financing has been obtained.

On March 18, 2008 we completed the acquisition of substantially all the assets and certain liabilities of the Doc Holliday casino. The Asset Purchase and Sale Agreement ("Agreement") required us to deposit into escrow $100,000 as earnest money, which was done during fiscal year 2007. Upon closing of the acquisition, these funds were released from escrow. The aggregate purchase price was $2,900,471, including $1,665,376 in cash, 450,000 shares of the Company's common stock valued at $.75 per share totaling $337,500, and a business personal property appraisal expense of $7,000, as well as $365,580 of liabilities assumed, and new short-term debt of $525,015.

On February 28, 2006, we entered into an Organization Agreement with a certain individual to form a for-profit limited liability company under the name of Global Gaming Technologies, LLC ("GGT"). GGT was formed for the purpose of bringing to market two games of poker under development by the other party to the agreement, whose contribution included all of his intellectual property rights related to the two games which he developed. At the present time, both games are still under development and neither has been approved for use in any gaming jurisdiction. At this time GGT has no revenues and none are expected until such time that patent protections are secured and marketing of the games can commence. Under the terms of the agreement we agreed to make an initial cash contribution to GGT of $100,000 in exchange for a 25% equity interest. As of June 30, 2009, we had made total cash contributions totaling $74,150. The balance due of $25,850 under the terms of the agreement has been recorded as a current liability. The timing of the future cash payments required under the . . .