Edgar Filing: NEVADA GOLD & CASINOS INC

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________

FORM 10-K

x		Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		for fiscal year ended April 30, 2009
		or
o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
		for the transition period from to

Commission File No. 001-15517

Nevada Gold & Casinos, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		88-0142032
(State or other jurisdiction of Incorporation or organization)		(IRS Employer Identification No.)

50 Briar Hollow Lane, Suite 500W, Houston, Texas		77027
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (713) 621-2245

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered

Common stock, $0.12 par value		New York Stock Exchange Alternext U.S.

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o Yes x No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files).

x Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

o Yes x No

As of June 22, 2009 the aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing price per share of $1.30, as reported on the New York Stock Exchange, was $16,820,869.

As of June 30, 2009, the registrant had 12,939,130 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the registrant’s 2009 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the registrant’s fiscal year end of April 30, 2009 are incorporated by reference into Part III of this report.

NEVADA GOLD & CASINOS, INC.

TABLE OF CONTENTS

		Page

PART I

ITEM 1.	BUSINESS		1
ITEM 1A.	RISK FACTORS		6
ITEM 1B.	UNRESOLVED STAFF COMMENTS		8
ITEM 2.	PROPERTIES		9
ITEM 3.	LEGAL PROCEEDINGS		9
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		9

PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		10
ITEM 6.	SELECTED FINANCIAL DATA		11
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		11
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		21
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA		21
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		21
ITEM 9A.	CONTROLS AND PROCEDURES		21
ITEM 9B.	OTHER INFORMATION		22

PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		22
ITEM 11.	EXECUTIVE COMPENSATION		23
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		23
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE		23
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES		23

PART IV

ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES		23

FORWARD-LOOKING STATEMENTS

Factors that May Affect Future Results

(Cautionary Statements Under the Private Securities Litigation Reform Act of 1995)

Certain information included in this Form 10-K and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company or its representatives) contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Statements that include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or other words or expressions of similar meaning, may identify forward-looking statements. We have based these forward-looking statements on our current expectations about future events. Forward-looking statements include statements that reflect management’s beliefs, plans, objectives, goals, expectations, anticipations, intentions with respect to the financial condition, results of operations, future performance and the business of the Company, including statements relating to our business strategy and our current and future development plans.

Although we believe that the assumptions underlying these forward-looking statements are reasonable, any or all of the forward-looking statements in this report and in any other public statements that are made may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this report, such as the competitive environment and government regulation, will be important in determining the Company’s future performance. Consequently, actual results may differ materially from those that might be anticipated from forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this report or other public communications that we might make as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Any further disclosures made on related subjects in the Company’s subsequent reports filed with the Securities and Exchange Commission should be consulted.

Part I

Item 1. Business

Overview

Nevada Gold & Casinos, Inc., a Nevada corporation, was formed in 1977 and, since 1994 has been primarily a gaming company involved in financing, developing, owning and operating gaming projects.

Commercial Gaming Projects.

We own and operate the Colorado Grande Casino in Cripple Creek, Colorado.

From July 1997 through January 27, 2008, we held a 43% interest in Isle of Capri - Black Hawk, LLC ("IC-BH") which owned and operated two commercial casino properties in Black Hawk, Colorado - the Isle of Capri-Black Hawk Casino and Colorado Central Station Casino. On January 27, 2008, we sold our membership interest to our partner, Isle of Capri Casinos, Inc. (“Isle”).

From November 2005 through June 14, 2007, we held an equity investment in American Racing and Entertainment, L.L.C. (“American Racing”) which was formed to pursue racing and gaming opportunities in the State of New York. In addition, we had an agreement with American Racing to manage the two racing and gaming facilities owned by American Racing. In April 2007, we entered into a Letter Agreement for the sale of our interest in American Racing to two of our joint venture partners. The sale was completed on June 14, 2007. Our ownership percentage was initially 50% and was reduced over time to 15.67% at the date of the sale.

In November 2007 we signed a Purchase and Sale Agreement to acquire the Horizon Casino and Hotel in Vicksburg, Mississippi from Tropicana Entertainment. In December 2007, we submitted our application for approval by the Mississippi Gaming Commission to become a licensed gaming operator in Mississippi. In May 2008, Tropicana Entertainment filed a petition for bankruptcy reorganization and we were informed by the staff at the Mississippi Gaming Commission that it would not move on a recommendation on our application until the bankruptcy court approved the proposed sale. Talks related to the acquisition ended September 17, 2008. Refundable deposits were collected in December, 2008, and unrecoverable costs were written off as of October 31, 2008.

In January 2009 we signed a letter of intent to purchase three mini-casinos in Washington State, the Crazy Moose-Pasco, Crazy Moose-Mountlake Terrace, and Coyote Bob-Kennewick. On May 12, 2009, the sale closed. See Note 19 of our Consolidated Financial Statements.

Native American Gaming Project.

As of May 2007, we owned a 40% interest in Buena Vista Development Company, LLC (“Buena Vista Development”) which is developing a casino for a Native American tribe in Amador County, California. Effective November 25, 2008, through our wholly owned subsidiary, Nevada Gold BVR, L.L.C., we sold our 40% interest in Buena Vista Development, L.L.C (BVD) to B.V. Oro, L.L.C. (BVO), which is owned by our former partner and related parties for $16 million cash and a $4 million receivable from BVD which is due no later than two years after the opening of a gaming/entertainment facility to to be built by BVD for the Buena Vista Rancheria of Me-Wuk Indians. This receivable bears interest at the rate of prime plus 1% and is guaranteed by BVO. In addition we are entitled to a 5% carried interest in the Class B membership interest.

Management Agreements.

Effective November 2008, the Company has a management contract with Oceans Casino Cruises, Inc., owner of SunCruz Casinos. The contract extends to December 31, 2010.

We also have real-estate interests in Colorado which are currently offered for sale.

We report our operations in two segments - gaming projects and non-core assets. For a summary of financial information concerning these two segments, please refer to the information provided in Note 13 to our Consolidated Financial Statements.

Objective and Strategies

Our primary business objective is to increase long-term returns to shareholders through appreciation in the value of our common shares. To achieve this objective, we intend to grow our assets and our earnings by following three business strategies:

enhancing the return from, and the value of, the gaming properties in which we own interests;

acquiring or developing additional gaming properties;

assisting in finding financing, developing and/or managing of, or providing consulting services to gaming projects.

Current Commercial Casino Projects

The Colorado Grande Casino-Cripple Creek

On April 25, 2005, we acquired the Colorado Grande Casino located in Cripple Creek, Colorado, from IC-BH for $6.5 million. The Colorado Grande Casino is located at a primary intersection, near the center of the Cripple Creek market. The property currently consists of a casino with approximately 195 slot machines, no table games, a restaurant and 44 parking spaces. In 2005 we invested approximately $2.0 million to upgrade the facility and purchase new gaming equipment in order to maximize the earnings potential of the property. In November 2008, Colorado passed Amendment 50 which effective July 2, 2009, increases bet limits from $5 to $100, permits craps, roulette, poker, blackjack, and other table games, allows 24 hour gaming, and lower gaming tax rates. To take advantage of this and remain competitive in the market, we are investing an additional $600,000 in the property to provide blackjack, roulette, house-banked poker, and a food outlet on the casino floor.

Cripple Creek is 40 miles west of Colorado Springs, Colorado, which is 65 miles south of Denver, Colorado. We believe that the Cripple Creek market attracts customers primarily from Colorado Springs, Pueblo, Fort Carson and smaller areas south of Denver.

Previous Commercial Casino Projects

Isle of Capri Black Hawk, L.L.C

We owned 43% of IC-BH which owned two casinos in Black Hawk, Colorado. Isle (ISLE:NASDAQ) owned the remaining 57% of IC-BH. Isle operated the casinos under a management agreement with IC-BH for a management fee based upon a percentage of the revenues and operating profit of the casinos. IC-BH’s gaming properties were the Isle of Capri-Black Hawk Casino and the Colorado Central Station Casino-Black Hawk.

On January 27, 2008, we sold our interest in IC-BH to our partner, Isle, for $64.6 million. Our percentage of the financial results of IC-BH have been reflected as part of equity in earnings of unconsolidated subsidiaries through January 27, 2008.

American Racing and Entertainment, L.L.C.

On June 14, 2007, we sold our 15.67% membership interest in American Racing to our partners, Southern Tier Acquisition II LLC and Oneida Entertainment LLC. The Company received three payments totaling $4.3 million for its membership interest: $2.1 million cash was received upon closing, $1.1 million was received in June 2008 and $1.1 million was received in June 2009. The transaction also included the July 12, 2007 release of a certificate of deposit of approximately $1.1 million previously pledged by us on behalf of American Racing. The following is a background discussion of the project.

American Racing owns Tioga Downs, in Nichols, New York and Vernon Downs, located in Vernon, New York. We acquired a 50% interest in American Racing in November 2005. An additional member was added to American Racing in March, 2006 and our interest was reduced to 40%. During fiscal 2007, the Company elected to discontinue making additional capital contributions to American Racing due to a lack of liquidity to meet the cash call commitments. As a result, our ownership percentage in American Racing declined from 40% to 15.67% as of June 14, 2007.

We operated both facilities for which we earned management fees based on the revenues and cash flows of each facility. In connection with the sale, we terminated our Management Agreements with Tioga Downs and Vernon Downs and received approximately $110,000 in management fees due.

In addition, we were indemnified by the purchasers in connection with the guarantees of approximately $11 million of debt or any other obligations of American Racing. We were released from these guarantees on March 31, 2008 when the debt was refinanced.

Our percentage of the financial results of American Racing has been reflected as part of equity in earnings of unconsolidated subsidiaries through June 14, 2007.

Native American Casino Projects

Buena Vista Rancheria of Me-Wuk Indians; Ione, Amador County, California

On May 4, 2005, we, through our wholly owned subsidiary, Nevada Gold BVR, L.L.C., acquired a 20% interest in BVD in exchange for an approximately $14.8 million loan and an equity investment of approximately $200,000. Our initial 20% ownership interest in BVD increased by five percentage points at the end of every six month period the loan remained outstanding, up to a maximum of an additional 20%, for a total of 40%. At April 27, 2008, we owned a 40% interest in BVD.

Effective November 25, 2008, through our wholly owned subsidiary, Nevada Gold BVR, L.L.C., we sold our 40% interest in BVD to BVO, which is owned by our former partner and related parties, for $16 million cash and a $4 million receivable from BVD which is due no later than two years after the opening of a gaming/entertainment facility to to be built by BVD for the Buena Vista Rancheria of Me-Wuk Indians. This receivable bears interest at the rate of prime plus 1% and is guaranteed by BVO. In addition we are entitled to a 5% carried interest in the Class B membership interest

We cannot predict the future performance of the casino. We expect the casino’s primary market to include Sacramento and Stockton, California. In this market, the casino will most directly compete with the Jackson Rancheria Casino located in Jackson, California, approximately 10 miles from the proposed Buena Vista Casino, the Cache Creek Casino located approximately 45 miles northwest of Sacramento, Thunder Valley Casino located a few miles northeast of Sacramento and the Shingle Springs Casinos located just east of Sacramento on Highway 50.

La Jolla Band of Luiseno Mission Indians; Pauma Valley, California

On March 23, 2007, we received a letter from the La Jolla Band of Luiseno Mission Indians (“Tribe”) stating that it wished to terminate its existing contractual relationship with the Company. Also, on July 2, 2007, the NIGC informed us and the Tribe that the agreements previously entered into with the Tribe required NIGC approval. We have attempted to negotiate a mutual settlement of the outstanding issues but the Tribe has renounced all of the agreements with the Company and we are no longer in active negotiations with the Tribe. No assurances can be given that we will be able to negotiate a mutually acceptable agreement with the Tribe. As a result, we have written-off the notes receivable, the related accrued interest and our equity investment in the La Jolla development project as of April 27, 2008. The following is a background discussion of the project.

In August 2004, we (through our wholly owned subsidiary, Gold River, L.L.C.) entered into a Development Agreement with the Tribe, a federally recognized Indian tribe, pursuant to which we agreed to assist the tribe in developing and constructing a multi-phase gaming facility. A Management Agreement with the Tribe was signed in June 2005 for the first phase pursuant to which we would provide management services for the gaming facility. The Development Agreement was found by the NIGC to require modification. As a result, both parties agreed to terminate the Development Agreement and, as of July 30, 2006, signed a Development Consulting Services Agreement, a Pre-Opening Consulting Services Agreement, and a Post-Opening Consulting Services Agreement, collectively referred to as “Transaction Documents.” On July 2, 2007, the NIGC informed us and the Tribe that based on the content of the Transaction Documents, the NIGC is required to approve these agreements.

The multi-phase project was planned to be developed on the La Jolla Indian Reservation in Pauma Valley, California. The first phase would include the construction of a casino with approximately 349 slot machines, 12 table games, dining facilities and parking. Subsequent phases may include an expanded casino, a hotel, RV-park, additional restaurants and other entertainment venues. We agreed to advance certain pre-development expenses of the first phase of the project up to $1.5 million. Under the Transaction Documents, we agreed to assist the Tribe in obtaining third party financing for the project.

We cannot predict when, if ever, the casino will open or what the ultimate outcome of our negotiation will be for a number of reasons, including additional regulatory processes and failure to obtain financing for the project.

The La Jolla Casino would be located in the heart of Pauma Valley, California which is approximately 28 miles east of Temecula, California and 65 miles north of San Diego, California. This southern California casino market has experienced significant growth with five major Native American casinos within 25 miles of the proposed La Jolla Casino. They include Harrah’s Rincon Casino, Casino Pauma, The Pala Casino, Valley View Casino, and Pechanga Resort & Casino. These casinos are larger, have established customers and are closer to the Temecula and San Diego markets than the proposed La Jolla casino and most gaming customers will have to drive by those casinos before they arrive at La Jolla. The greater San Diego region also includes the Cahuilla Creek Casino, Casino Morongo, San Manuel Indian Bingo & Casino, Barona, Viejas, Sycuan, and Golden Acorn casinos which are also competitors to the La Jolla casino.

Other Casino Projects

Route 66 Casino; Albuquerque, New Mexico

We owned a 51% interest in Route 66 which we accounted for using the equity method. We received no cash distributions from the Route 66 Casinos venture. Our portion of the earnings of the Route 66 Casinos venture was estimated and recorded based on available financial information. In April 2008, we signed a settlement agreement with American Heritage, Inc. and Fred Gillman, the principal of American Heritage, Inc. (“The Gillmann Group”). Per the agreement, The Gillmann Group paid us $1 million on May 1, 2008, $1.3 million on June 2, 2008 and is obligated to pay us $2.3 million by April 15, 2010. The agreement also provides collateral that can be attached if full payment is not timely received. See Note 17 to the accompanying Consolidated Financial Statements for a discussion of our accounting for the settlement agreement and our former investment in this joint venture.

Management Contracts

Oceans Casino Cruises, Inc.

On November 10, 2008, the Company signed a contract to manage the SunCruz Casinos for Oceans Casino Cruises, Inc. The contract extends to December 31, 2010. The Company will receive a base fee of $1.0 million annually plus an incentive fee based on a minimum threshold to be established annually.

Regulation and Licensing

Colorado

The ownership and operation of gaming facilities in Colorado are subject to extensive state and local regulations. No gaming may be conducted in Colorado unless licenses are obtained from the Colorado Limited Gaming Control Commission (the “Gaming Commission”). In addition, the State of Colorado created the Division of Gaming (the “CDG”) within its Department of Revenue to license, implement, regulate, and supervise the conduct of limited stakes gaming. The Director of the CDG (“CDG Director”), under the supervision of the Gaming Commission, has been granted broad powers to ensure compliance with the laws and regulations. The Gaming Commission, CDG and CDG Director that have responsibility for regulation of gaming are collectively referred to as the “Colorado Gaming Authorities.”

The laws, regulations, and supervisory procedures of the Colorado Gaming Authorities seek to maintain public confidence and trust that licensed limited gaming is conducted honestly and competitively, that the rights of the creditors of licensees are protected, and that gaming is free from criminal and corruptive elements. The Colorado Gaming Authorities’ stated policy is that public confidence and trust can be maintained only by strict regulation of all persons, locations, practices, associations, and activities related to the operation of the licensed gaming establishments and the manufacture and distribution of gaming devices and equipment.

The Gaming Commission is empowered to issue five types of gaming and related licenses. To operate our Colorado casino we are required to maintain a retail gaming license, which must be renewed each year, and the Colorado Commission has broad discretion to revoke, suspend, condition, limit, or restrict the licensee at any time. Under Colorado gaming regulations, no person or entity can have an ownership interest in more than three retail licenses, and our business opportunities will be limited accordingly. The Colorado Casinos’ licenses are renewable annually, subject to continued compliance with gaming regulations. The failure or inability of the Colorado Grande-Cripple Creek (the "Colorado Casino"), or the failure or inability of others associated with the Colorado Casino to maintain necessary gaming licenses or approvals would have a material adverse effect on our operations.

The Colorado Casino must meet specified architectural requirements, fire safety standards and standards for access for disabled persons. It also must not exceed specified gaming square footage limits as a total of each floor and the full building may operate only between 8:00 a.m. and 2:00 a.m., and may permit only individuals 21 or older to gamble in the casino. It may permit slot machines, blackjack and poker, with a maximum single bet of $5.00. Effective July 2, 2009, the maximum bet limit has been increased to $100, casinos may operate 24 hours daily and additional types of table games are permitted, such as craps and roulette. No Colorado Casino may provide credit to its gaming patrons.

The Colorado Constitution permits a gaming tax of up to 20% on adjusted gross gaming proceeds, and authorizes the Gaming Commission to change the rate annually. The current gaming tax rate is 0.25% on adjusted gross gaming proceeds of up to and including $2 million, 2% over $2 million up to and including $5 million, 9% over $5 million up to and including $8 million, 11% over $8 million up to and including $10 million, 16% over $10 million up to and including $13 million and 20% on adjusted gross proceeds in excess of $13 million.

Colorado law requires that every officer, director or stockholder holding either a 5% or greater interest or controlling interest of a publicly traded corporation, or owners of an applicant or licensee, shall be a person of good moral character and submit to a full background investigation conducted by the Gaming Commission. The Gaming Commission may require any person having an interest in a license or a licensee to undergo a full background investigation and pay the cost of investigation in the same manner as an applicant. Persons found unsuitable by the Gaming Commission may be required to immediately terminate any interest in, association or agreement with, or relationship to, a licensee. A finding of unsuitability with respect to any officer, director, employee, associate, lender or beneficial owner of a licensee or applicant may also jeopardize the licensee’s license or applicant’s license application. Licenses may be conditioned upon termination of any relationship with unsuitable persons.

The rules impose certain additional restrictions and reporting and filing requirements on publicly traded entities holding gaming licenses in Colorado. A licensee or affiliated company or any controlling person of a licensee or affiliated company, which commences a public offering of voting securities, must notify the Gaming Commission with regard to a public offering to be registered with the Securities and Exchange Commission ("SEC"), no later than ten business days after the initial filing of a registration statement with the SEC, or, with regard to any other type of public offering, no later than ten business days prior to the public use or distribution of any offering document, if: 1) the licensee, affiliated company or a controlling person thereof, intending to issue the voting securities is not a publicly traded corporation; or 2) if the licensee, affiliated company or controlling person thereof, intending to issue the voting securities is a publicly traded corporation, and if the proceeds of the offering, in whole or in part, are intended to be used: a) to pay for construction of gaming facilities in Colorado to be owned and operated by the licensee; b) to acquire any direct or indirect interest in gaming facilities in Colorado; c) to finance the operation by the licensee of gaming facilities in Colorado; or d) to retire or extend obligations incurred for one or more of the purposes set forth in subsections a, b, or c above.

We may not issue any voting securities except in accordance with the provisions of the Colorado Limited Gaming Act and the regulations promulgated thereunder. The issuance of any voting securities in violation will be void and the voting securities will be deemed not to be issued and outstanding. No voting securities may be transferred, except in accordance with the provisions of the Colorado Limited Gaming Act and the regulations promulgated thereunder. Any transfer in violation of these provisions will be void. If the Colorado Limited Gaming Control Commission at any time determines that a holder of our voting securities is unsuitable to hold the securities, then we may, within sixty (60) days after the finding of unsuitability, purchase the voting securities of the unsuitable person at the lesser of (a) the cash equivalent of such person’s investment, or (b) the current market price as of the date of the finding of unsuitability, unless such voting securities are transferred to a suitable person within sixty (60) days after the finding of unsuitability. Until our voting securities are owned by persons found by the Commission to be suitable to own them, (a) we are not permitted to pay any dividends or interest with regard to the voting securities, (b) the holder of such voting securities will not be entitled to vote and the voting securities will not for any purposes be included in the voting securities entitled to vote, and (c) we may not pay any remuneration in any form to the holder of the voting securities, except in exchange for the voting securities.

New York

As of June 14, 2007, we are no longer engaged in business activities in the State of New York.

Native American Gaming

Although it may seek new agreements, the Company does not currently operate gaming facilities on behalf of any Native American tribe nor is it receiving compensation pursuant to any consulting, financing or advisory agreement. Reference is made to “Native American Casino Projects” above.

The terms and conditions of management contracts and the operation of all gaming, including casinos, on Native American land in the United States are subject to the Indian Gaming Regulatory Act of 1988 (“IGRA”), which is administered by the NIGC, and if provided for in a tribal-state compact, the gaming regulatory agencies of state governments. IGRA is subject to interpretation by both the NIGC and courts, as well as future legislative actions.

IGRA establishes three classes of tribal gaming-Class I, Class II and Class III. Class I gaming includes all traditional or social games solely for prizes of minimal value played by a tribe in connection with celebrations or ceremonies. Class II gaming includes games such as bingo, pull-tabs, punchboards, instant bingo and non-banked card games (those that are not played against the house), such as poker. Class III gaming is other forms of gaming, including banked table games such as blackjack, craps and roulette, and gaming machines such as slots, video poker, lotteries and pari-mutuel wagering.

Class I gaming on Indian lands is within the exclusive jurisdiction of Indian tribes and is not subject to federal regulation under IGRA. Class II gaming is permitted on Indian lands if the state in which the Indian lands lie permits that gaming, for any purpose by any person, organization or entity and if certain other requirements are met. IGRA prohibits all forms of Class III gaming unless the tribe has entered into a written agreement with the state that specifically authorizes the types of Class III gaming the tribe may offer (a “tribal-state compact”). These compacts often provide for, among other things, the manner and extent to which the state will conduct background investigations and certify the suitability of the manager, its officers, directors, and key employees to conduct gaming on Native American lands.

The Buena Vista Tribe has entered into an amended tribal-state compact with the State of California which will allow it to operate up to 2,000 Class III slot machines and 80 table games, in accordance with provisions contained in the compact.

Native American tribes are sovereign with their own governmental systems, which have primary regulatory authority over gaming on land within the tribes’ jurisdiction. Therefore, persons engaged in gaming activities, including us, are subject to the provisions of tribal ordinances and regulations on gaming. These ordinances are subject to review by the NIGC under certain standards established by IGRA. The NIGC may determine that some or all of the ordinances require amendment, and that additional requirements, including additional licensing requirements, may be imposed on us.

IGRA requires NIGC approval of management contracts for Class II and Class III gaming, as well as the review of all agreements collateral to the management contracts. The NIGC will not approve a management contract if anyone with a direct or indirect financial interest in, or having management responsibility for, a management contract (i) is an elected member of the Indian tribal government that owns the facility purchasing or leasing the games, (ii) has been or is convicted of a felony gaming offense, (iii) has knowingly and willfully provided materially false information to the NIGC or the tribe, (iv) has refused to respond to questions from the NIGC, or (v) is a person whose prior history, reputation and associations pose a threat to the public interest or to effective gaming regulation and control, or create or enhance the chance of unsuitable activities in gaming or the business and financial arrangements incidental thereto. In addition, the NIGC will not approve a management contract if (a) the management company or any of its agents have attempted to unduly influence any decision or process of tribal government relating to gaming, (b) the management company has materially breached the terms of the management contract or the tribe's gaming ordinance, or (c) a trustee, exercising common skill and diligence, would not approve such management contract.

A management contract can be approved only after NIGC determines that the contract provides, among other things, for (i) adequate accounting procedures and verifiable financial reports, which must be furnished to the tribe, (ii) tribal access to the daily operations of the gaming enterprise, including the right to verify daily gross revenues and income, (iii) minimum guaranteed payments to the tribe, which must have priority over the retirement of development and construction costs, and (iv) a ceiling on the repayment of such development and construction costs, and (v) a contract term not exceeding five years and a management fee not exceeding 30% of profits; provided that the NIGC may approve up to a seven year term and a management fee not to exceed 40% of profits if NIGC is satisfied that the capital investment required and income projections for the gaming operation require the additional term and fee.

In the past few years, the NIGC’s office of general counsel has issued a number of opinions concluding that contracts with non-managers violated IGRA’s requirements that a tribe must have the "sole proprietary interest" in its gaming operations. Generally, these opinions have been rendered where the non-manager received a percentage of the casino's revenues as compensation for the contractor’s services, and where the general counsel’s office determined that the compensation was disproportionately large in comparison to the value of the services provided or the risks assumed by the contractor. Where a contractor’s compensation is based on a percentage of a tribal casino’s revenues, tribes or the contractors commonly submit these non-management contracts to the NIGC for a determination that the contracts are not management contracts and do not grant any "proprietary interest" in the tribe's gaming operations.

General Gaming Regulations in Other Jurisdictions

If we become involved in gaming operations in any other jurisdictions, such gaming operations will subject us and certain of our officers, directors, key employees, stockholders and other affiliates to strict legal and regulatory requirements, including mandatory licensing and approval requirements, suitability requirements, and ongoing regulatory oversight with respect to such gaming operations. There can be no assurance that we will obtain all of the necessary licenses, approvals and findings of suitability or that our officers, directors, key employees, other affiliates and certain other stockholders will satisfy the suitability requirements in one or more jurisdictions, or that such licenses, approvals and findings of suitability, if obtained, will not be revoked, limited, suspended or not renewed in the future.

Failure by the Company to obtain, or the loss or suspension of, any necessary licenses, approval or findings of suitability would prevent us from conducting gaming operations in such jurisdiction and possibly in other jurisdictions.

Other Assets

Gold Mountain Development. Through our wholly-owned subsidiary, Gold Mountain Development, L.L.C., we own approximately 270 acres of real property in the vicinity of Black Hawk, Colorado. In November 2004, the Central City Business Improvement District completed the construction of a new 8.4 mile four-lane road connecting Interstate 70 to Central City, Colorado. The new road is adjacent to a portion of our 270 acres. The 270 acres is for sale and has been listed with a broker.

NG Washington, LLC. Through our wholly-owned subsidiary, NG Washington LLC, we have signed a Purchase and Sale Agreement in January 2009, to acquire three mini casinos in Washington State. We have escrowed $0.5 million as a deposit and spent additional funds for licensing and other matters pertaining to the acquisition. On May 12, 2009, the sale closed. See Note 19 of our Consolidated Financial Statements.

Employees

As of April 30, 2009, we employed 81 people.

Available Information

We make available on our website (www.nevadagold.com) under “Investor Relations - SEC Filings,” free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after we electronically file such material with the Securities and Exchange Commission.

Item 1A. Risk Factors

The following is a description of what we consider our key challenges and risks:

Financing future acquisitions may be difficult.

The principal challenge facing the Company is the necessity to obtain financing in order to expand gaming operations, generate cash flow, and service debt obligations. There can be no assurance that such financing will be obtained.

If our key personnel leave us, our business could be adversely affected.

Our success is largely dependent upon the efforts and skills of our key executive officers. The loss of the services of any key executive officer could have a material adverse effect on us. There can be no assurance that we would be able to attract and hire suitable replacements in the event of any such loss of services. We currently have employment agreements with our Chief Executive Officer, Senior Vice President/General Counsel/Chief Compliance Officer, and our Executive Vice President/Chief Financial Officer.

Indebtedness could adversely affect our financial health.

Effective March 1, 2008, our $55 million revolving credit facility was replaced by a $15.6 million interest only promissory note which matures on June 30, 2013.

As of April 30, 2009, we had $6.0 million of indebtedness outstanding. Although we have substantially reduced our debt, our indebtedness could have important consequences and significant effects on our business and future operations. For example, it could:

increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;

limit our ability to fund future working capital, capital expenditures and other general operating requirements;

place us at a competitive disadvantage compared to our competitors that have less debt or greater resources; and

limit our ability to borrow additional funds.

The occurrence of any one of these events or conditions could have a material adverse effect on our business, financial condition, results of operations, prospects, ability to service or otherwise satisfy our obligations.

We will require cash to service our indebtedness and fund our gaming operations. Our ability to generate cash depends on many factors beyond our control.

Our ability to fund our gaming operations will depend on our ability to generate cash flow from our gaming operations and borrow or refinance a minimum of $6.0 million by June 30, 2013. Our ability to generate sufficient cash flow to satisfy our debt obligations will depend on our future operating performance that is subject to many economic, competitive, regulatory and business factors that are beyond our control. If we are unable to generate sufficient cash flow to service our debt obligations, we will need to refinance or restructure our debt, sell assets, reduce or delay capital investments or seek to raise additional capital. These measures may not be available to us or, if available, they may not be sufficient to enable us to satisfy our obligations and may restrict our ability to pay operating expenses. If our cash flow is insufficient and we are unable to implement one or more of these alternatives, we may not be able to service our debt obligations or fund our gaming operations.

We face significant competition from other gaming operations that could have a material adverse effect on our future operations.

There is intense competition among companies in the gaming industry, many of which have significantly greater resources than we do. We compete with numerous casinos of varying quality and size in market areas where our properties are located. The gaming business is characterized by competitors that vary considerably by their size, quality of facilities, number of operations, brand identities, marketing and growth strategies, financial strength and capabilities, level of amenities, management talent and geographic diversity. In most markets, we compete directly with other casino facilities in the immediate and surrounding market areas. If our competitors operate more successfully, if competitors' properties are enhanced or expanded, or if additional casinos are established in and around locations in which we conduct business, we may lose market share. The expansion of casino gaming in or near any geographic area from which we attract or expect to attract a significant number of our customers could have a significant adverse effect on our business, financial condition and results of operations.

We are subject to extensive governmental gaming regulation that could adversely affect us. We could be prevented from pursuing future development projects due to changes in the laws, regulations and ordinances (including tribal or local laws) that apply to gaming facilities or the inability of us or our key personnel, significant shareholders or joint venture partners to obtain or retain gaming regulatory licenses.

The gaming industry is highly regulated and we must maintain our licenses in order to continue our operations. Each of our gaming operations is subject to extensive regulation under the laws, rules and regulations of the jurisdiction where located. These laws, rules and regulations generally concern the responsibility, financial stability and character of the owners, managers, and persons with financial interests in the gaming operations. Certain jurisdictions empower their regulators to investigate participation by licensees in gaming outside their jurisdiction and require access to and periodic reports concerning the gaming activities. Violations of laws in one jurisdiction could result in disciplinary action in other jurisdictions. Regulatory authorities have broad powers with respect to the licensing of casino operations and may revoke, suspend, condition or limit our gaming or other licenses, impose substantial fines and take other actions, any one of which could have a significant adverse effect on our business, financial condition and results of operations.

The rapidly changing political and regulatory environment governing the gaming industry (including gaming operations which are conducted on Indian land) makes it impossible for us to accurately predict the effects that an adoption of or changes in the gaming laws, regulations and ordinances will have on us. However, the failure of us, or any of our key personnel, significant shareholders or joint venture partners, to obtain or retain required gaming regulatory licenses could prevent us from expanding into new markets, prohibit us from generating revenues in certain jurisdictions, and subject us to sanctions and fines.

Our business is subject to various federal, state and local laws and regulations in addition to gaming regulations. These laws and regulations include, but are not limited to, restrictions and conditions concerning alcoholic beverages, environmental matters, employees, currency transactions, taxation, zoning and building codes, and marketing and advertising. Such laws and regulations could change or could be interpreted differently in the future, or new laws and regulations could be enacted. Material changes, new laws or regulations, or material differences in interpretations by courts or governmental authorities could adversely affect our results of operations and financial condition.

We cannot ensure that we will be able to comply with or conduct business in accordance with applicable regulations.

We could fail to monetize recorded assets.

The Company has a receivable that is projected to be collected within fiscal year 2010. This asset pertains to a settlement agreement. If the Company is not able to collect or monetize this asset timely then the lack of such collection may have a negative impact on the Company’s projected cash flow. The occurrence of monetizing our recorded assets could have a material adverse effect on our business, financial condition, results of operations, prospects, ability to service or otherwise satisfy our obligations.

There are significant risks in the development and management of commercial and Native American Casinos that could adversely affect our financial results.

The development and management of casinos require the satisfaction of various conditions, many of which are beyond our control. The failure to satisfy any of such conditions may significantly delay the completion of a project or prevent a project's completion altogether.

The opening of any facility will be contingent upon, among other things, the receipt of all regulatory licenses, permits, approvals and authorizations, the completion of construction and the hiring and training of sufficient personnel. The scope of the approvals to construct and open a casino is extensive, and the failure to obtain such approvals could prevent or delay the completion of construction or opening of all or part of such casino.

No assurance can be given that development activities will begin or will be completed, or that the budget for such a project will not be exceeded, or that we will have the continuing support of the community.

In addition, the regulatory approvals necessary for the construction and operation of casinos are often challenged in litigation brought by government entities, citizens groups and other organizations and individuals. Such litigation can significantly delay the construction and opening of casinos.

Major construction projects entail significant risks, including shortages of materials or skilled labor, unforeseen engineering, environmental and/or geological problems, work stoppages, weather interference, and unanticipated cost increases. Delays or difficulties in obtaining any of the requisite licenses, permits, allocations and authorizations from regulatory authorities could increase the total cost, delay or prevent the construction or opening of any casino development. In addition, once developed, no assurances can be given that we will be able to manage the casino on a profitable basis or to attract a sufficient number of guests, gaming customers and other visitors to make the operation profitable.

With each project, we are subject to the risk that our investment may be lost if the project cannot obtain adequate financing to complete development and open the casino successfully. In some cases, we may be forced to provide more financing than originally planned in order to complete development, increasing the risk to us.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Colorado Grande Casino-Cripple Creek. We lease (through our wholly-owned subsidiary, Colorado Grande Enterprises, Inc.) a portion of a building in Cripple Creek, Colorado, and an adjacent parking lot, for use in connection with the Colorado Grande Casino facilities. We lease this property at an annual rent of the greater of $144,000 or 5% of Colorado Grande-Cripple Creek’s adjusted gross gaming revenues, as defined, with an annual cap of $400,000. On July 7, 2005, we exercised the option to extend the lease to January 2021. On April 1, 2008 we negotiated an extension of the lease to January 2033 at a flat annual rent of $400,000 from February 2021 through January 2033. In addition, we own an additional parcel of land adjacent to the Colorado Grande, which is used for parking.

Office Lease. We currently lease approximately 6,110 square feet of office space in Houston, Texas. We moved into the office space on November 15, 2007. The lease expires March 31, 2011. The total monthly rental for this office space is currently $8,700.

Item 3. Legal Proceedings

None

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

During the fourth quarter of our fiscal year ended April 30, 2009, the Company held a special meeting of shareholders for the purpose of approving the 2009 Equity Incentive Plan (the “Plan”). At the meeting held on April 14, 2009 in Houston, Texas, the shareholders approved the Plan.

Part II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the New York Exchange Alternext U.S. under the symbol UWN. The following table sets forth the high and low sales prices per share of the common stock for the last two fiscal years.

	Fiscal Years Ended
	April 30, 2009						April 27, 2008
	High			Low			High			Low

First Quarter		$	1.34		$	1.02		$	2.79		$	1.88
Second Quarter			1.29			.53			2.05			1.09
Third Quarter			.89			.38			1.69			1.09
Fourth Quarter			.84			.66			1.59			1.08

Holders of Common Stock

As of May 20, 2009, we had approximately 4,751 shareholders of record.

Dividends

We have not paid any dividends during the last three fiscal years and our current policy is to retain earnings to provide for the growth of the Company. Consequently, no cash dividends are expected to be paid on our common stock in the foreseeable future.

Equity Compensation Plan

The following table gives information about our shares of common stock that may be issued upon the exercise of options, warrants, and rights under all of our existing equity compensation plans as of April 30, 2009 including the 1999 Stock Option Plan and the 2009 Equity Incentive Plan, as well as shares of our common stock that may be issued under individual compensation arrangements that were not approved by our stockholders (such grants, the “Non-Plan Grants”).

Plan Category	Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights (A)	Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (B)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A) (C)

Equity Compensation Plans Approved by Security Holders	1,136,000	$	2.54	1,725,000
Equity Compensation Plans Not Approved by Security Holders	—	$	—	—
Total	1,136,000	$	2.54	1,725,000

Recent Sales of Unregistered Securities

Not applicable.

Issuer Purchases of Equity Securities

We previously approved the repurchase of up to 200,000 shares of our common stock in the open market in September 2002 and June 2003. In fiscal year 2005, we announced an increase of 500,000 shares to our stock buyback program. In fiscal year 2006, we announced another increase of 900,000 shares to our stock buyback program. Under this program, we repurchased 54,200 and 942,000 shares of our common stock for an average price of $8.03 and $10.38 per share during fiscal years ended April 29, 2007 and April 30, 2006, respectively. During the years ended April 30, 2009 and April 27, 2008, we made no repurchases of our common stock.

Stock Performance Graph

The following graph sets forth the cumulative total stockholder return (assuming reinvestment of dividends) to the Company’s stockholders during the five-year period ended April 30, 2009, as well as an overall stock market index (NYSE Arca Major Market Index) and the Company’s peer group index (Dow Jones US Gambling Index):

ASSUMES $100 INVESTED ON MAR. 31, 2005

ASSUMES DIVIDEND REINVESTMENT

FISCAL YEAR ENDING APRIL 30, 2009

Item 6. Selected Financial Data

Not required for smaller reporting companies.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis (“MD&A”) should be read in conjunction with our Consolidated Financial Statements and Notes thereto contained in Item 8 herein. Management is of the opinion that inflation and changing prices, including foreign exchange fluctuations, will have little, if any, effect on our consolidated financial position or results of our operations.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates involve the use of complicated processes, assumptions, estimates and/or judgments in the preparation of our consolidated financial statements. An accounting estimate is an approximation made by management of a financial statement element, item or account in the consolidated financial statements. Accounting estimates in our historical consolidated financial statements measure the effects of past business transactions or events, or the present status of an asset or liability. The accounting estimates described below require us to make assumptions about matters that are uncertain at the time the estimate is made. Additionally, different estimates that we could have used or changes in an accounting estimate that are reasonably likely to occur could have a material impact on the presentation of our consolidated financial condition or results of operations. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments. These estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Our significant accounting policies are discussed in Note 3 to our Consolidated Financial Statements included in Item 8 of this report. We have discussed the development and selection of our critical accounting policies and related disclosures with the Audit Committee of the Board of Directors and have identified the following critical accounting policies for the current fiscal year.

Principles of Consolidation

We consolidate entities when we have the ability to control the operating and financial decisions and policies of that entity and record the portion we do not own as minority interest. The determination of our ability to control or exert significant influence over an entity involves the use of judgment. We apply the equity method of accounting where we can exert significant influence over, but do not control, the policies and decisions of an entity. We use the cost method of accounting where we are unable to exert significant influence over the entity.

Change in Fiscal Year

On April 28, 2008, we changed our fiscal year to end on April 30th rather than the last Sunday in April. We previously ended our fiscal year on the last Sunday in April due to our previous relationship with IC-BH and Isle which used this year end. As a result, fiscal year 2009 began on April 28, 2008 and will end April 30, 2009. We believe this fiscal year creates more comparability to other companies in the casino industry. Fiscal year 2008 commenced on April 29, 2007 and ended on April 27, 2008. There are no factors, seasonal or otherwise, that would impact the comparability of information or trends

Equity Method of Accounting

Our previous investments in IC-BH, American Racing, RCI, Buena Vista Development and Route 66 Sunrise were accounted for using the equity method of accounting because the investment gave us the ability to exercise significant influence, but not control, over the investees. Significant influence is generally deemed to exist where we have an ownership interest in the investee of between 20% and 50%, although other factors such as the degree of ultimate control, representation on the investee's Board of Directors or similar oversight body are considered in determining whether the equity method of accounting is appropriate. We recorded our equity in the income or losses of our investees using the same reporting periods as presented, except we reported our equity in income or losses one month in arrears for RCI and American Racing (which had a calendar fiscal year), and one month in arrears for Buena Vista Development and Sunrise (which had a fiscal year end of March 31). Deferred tax assets or liabilities are recorded for allocated earnings or losses of our equity investments that were not currently reportable or deductible for federal income tax purposes.

We utilized the equity method of accounting for our 51% interest in Route 66 Casinos because the operating activities of the joint venture were controlled by the minority venturer. We were involved in legal proceedings with the minority venturer in Route 66 Casinos in which the minority venturer asserted that the operating agreement governing the venture was void and unenforceable. We assessed whether this circumstance indicated utilization of the cost method of accounting for this investment was appropriate and concluded that the equity method best reflected the underlying nature of our investment. The operating agreement provided that all material decisions of the joint venture were made by the members, including us, on a unanimous basis. We believed the operating agreement to be binding and enforceable on the venture and our joint venture partner and, therefore, we concluded that we had significant influence over the affairs of the venture.

Capitalized Development Costs

We capitalize certain third party legal, professional, and other miscellaneous fees directly related to the procurement, evaluation and establishment of contracts for development projects. Development costs are recorded on the cost basis and are amortized over the estimated economic term of the contract. We review each project on a quarterly basis to assess whether any changes to our estimates are appropriate. If accumulated costs of a specific project exceed the net realizable value of such project or the project is abandoned, the costs are charged to earnings.

We amortize capitalized development costs of Oceans Casino Cruises, Inc. (“SunCruz”), over the contractual two-year term of the management contract. Each month we recognize as expense a percentage of our capitalized development costs determined by dividing actual accrued costs incurred with the procurement of the contract divided over the life of the contract. We believe this method is appropriate because it provides income and expenses over the term of the contract. We receive a monthly management fee from SunCruz as well as reimbursement for any reasonable expenses incurred.

Goodwill and Other Intangibles

In connection with our acquisition of the Colorado Grande casino on April 25, 2005, we have goodwill with an indefinite useful life of $5.5 million. Statement of Financial Accounting Standards ("SFAS") No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”), requires that goodwill and intangible assets with indefinite useful lives be tested for impairment annually, or more frequently if an event occurs or circumstances change that may reduce the fair value of our goodwill below its carrying value. We completed an impairment test as required under SFAS No. 142 in the fourth quarter of fiscal year 2009 and determined that the goodwill was not impaired. For properties with goodwill with indefinite lives, this test requires the comparison of the implied fair value of each property to its carrying value. The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions and represent our best estimates of the cash flows expected to result from the use of the assets and their eventual disposition. Changes in estimates or application of alternative assumptions and definitions could produce significantly different results.

Asset and Investment Impairments

We apply the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," and Accounting Principles Board Opinion (“APB”) No. 18, "The Equity Method of Accounting for Investments in Common Stock," to account for asset and investment impairments. Under these standards, we evaluate an asset or investment for impairment when events or circumstances indicate that its carrying value may not be recovered. These events include market declines that are believed to be other than temporary, changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset or investment and adverse changes in the legal or business environment such as adverse actions by regulators. When an event occurs, we evaluate the recoverability of our carrying value based on either (i) the long-lived asset’s ability to generate future cash flows on an undiscounted basis or (ii) the fair value of our investment in unconsolidated affiliates. If an impairment is indicated or if we decide to exit or sell a long-lived asset or group of assets, we adjust the carrying value of these assets downward, if necessary, to their estimated fair value, less costs to sell. Our fair value estimates are generally based on market data obtained through the sales process or an analysis of expected discounted cash flows. The magnitude of any impairments are impacted by a number of factors, including the nature of the assets to be sold and our established time frame for completing the sales, among other factors. We also reclassify the asset or assets as either held-for-sale or as discontinued operations, depending on, among other criteria, whether we will have any continuing involvement in the cash flows of those assets after they are sold. Based upon this policy, we reduced our investment in Horizon Casino Vicksburg by $1.2 million as of April 30, 2009, and in fiscal year 2008, we reduced our investment in Sunrise Land & Minerals Corporation (“Sunrise”) by $100,000, reduced a note receivable and related accrued interest from Big City Capital by $2.3 million and wrote-off $1.9 million of notes receivable, related accrued interest and our equity investment in the La Jolla gaming development project as of April 27, 2008.

Allowance for Doubtful Accounts

We establish provisions for losses on accounts and notes receivable if we determine that we will not collect all or part of the outstanding balance. We regularly review collectibility and establish or adjust our allowance as necessary using the specific identification method. We make advances to Indian tribes and other third parties under executed promissory notes for project costs related to the development of gaming and entertainment properties. Due diligence is conducted by our management with the assistance of legal counsel prior to entering into arrangements with Indian tribes and other third parties to provide financing in connection with their efforts to secure and develop the properties. Repayment terms are largely dependent upon the operating performance of each opportunity for which the funds have been loaned. Interest income is not accrued until it is reasonably assured that the project will be completed and that there will be sufficient profits from the facility to cover the interest to be earned under the respective note. If projected cash flows are not sufficient to recover amounts due, the note is evaluated in accordance with SFAS No. 114, “Accounting by Creditors for Impairment of a Loan,” to determine the appropriate discount to be recorded on the note for it to be considered a performing loan. If the note is performing, interest is recorded using the effective interest method based on the value of the discounted note balance. See Note 6 to our Consolidated Financial Statements.

We review on a quarterly basis each of our notes receivable to evaluate whether the collection of such note receivable is still probable. In our analysis, we review the economic feasibility and the current financial, legislative and development status of the project. If our analysis indicates that the project is no longer economically feasible then the note receivable would be written down to its estimated fair value.

Revenue Recognition

We record revenues from management fees, interest on notes receivable and royalties on the accrual basis as earned. The dates on which payments are collected may vary depending upon the term of the contracts or note receivable agreements. Interest income related to notes receivable is recorded when earned and its collectibility is reasonably certain.

The retail value of food and beverage and other services furnished to guests without charge is included in gross revenue and deducted as promotional allowances. Net revenues do not include the retail amount of food, beverage and other items provided gratuitously to customers. The Company records the redemption of coupons and points for cash as a reduction of revenue. These amounts are included in promotional allowances in the accompanying consolidated statements of operations. The estimated cost of providing such complimentary services that is included in casino expense in the accompanying consolidated statements of operations was as follows:

	Fiscal Year Ended
	April 30, 2009		April 27, 2008
Food and beverage	$	595,499	$	652,705
Other		5,994		8,616
Total cost of complimentary services	$	601,493	$	661,321

Accrued Jackpot Liability

We accrue jackpot liability as games are played under a matching concept of coin-in.

Income Taxes

Income taxes are accounted for in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires the use of an asset and liability approach for financial accounting and reporting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We record current income taxes based on our current taxable income, and we provide for deferred income taxes to reflect estimated future tax payments and receipts. We account for tax credits under the flow-through method, which reduces the provision for income taxes in the year the tax credits first become available. Deferred tax assets are reduced by a valuation allowance when, based on our estimates, it is more likely than not that a portion of those assets will not be realized in a future period. The estimates utilized in recognition of deferred tax assets are subject to revision, either up or down, in future periods based on new facts or circumstances.

Accrued Litigation Liability

We assess our exposure to loss contingencies including legal matters. If the potential loss is justified to be probable and estimable, we will provide for the exposure. If the actual loss from a contingency differs from management’s estimate, operating results could be impacted. As of April 30, 2009, we did not record any accrued litigation liability.

Restatement

As discussed in Item 9A, the Company did not maintain effective control over financial reporting as it relates to its tax provision as of April 27, 2008. To mitigate the material weakness, management has engaged a tax expert to assist in preparation and review of the Company’s tax provision during 2009. As a result of the new control in place, management identified an error in prior year tax provision; accordingly, the following items in the previously reported consolidated financial statements are restated.

Consolidated Statement of Operations:

	Year ended April 27, 2008
	Originally
	Reported			Adjustment			As Restated

Deferred tax benefit	$	(1,885,726	)	$	1,000,000		$	(885,726	)
Net income		23,707,802			(1,000,000	)		22,707,802
Earnings per share - basic		1.83			(0.08	)		1.75
Earnings per share - diluted		1.83			(0.08	)		1.75

Consolidating Balance Sheet:

	April 27, 2008
	Originally
	Reported		Adjustment			As Restated

Deferred tax assets	$	1,885,726	$	(1,000,000	)	$	885,726
Retained earnings		29,401,890		(1,000,000	)		28,401,890

All footnotes, where applicable, have been adjusted to confirm to this restatement.

Executive Overview

We were formed in 1977 and since 1994, have primarily been a gaming company involved in financing, developing, owning and operating gaming projects. Our gaming facility operations are located in the United States of America (“U.S.”), specifically in the states of Colorado and Florida. On April 25, 2005, we acquired the Colorado Grande Casino from IC-BH. Our business strategy will continue to focus on gaming projects but with a greater emphasis on owning and operating gaming establishments. If we are successful, both our future revenues and costs and our profitability can be expected to increase. Our net revenues were $5.9 million, and $6.7 million for fiscal years 2009 and 2008, respectively.

We held investments in various unconsolidated affiliates which were accounted for using the equity method of accounting. Our principal equity method investees were gaming facilities.. As of April 30, 2009, we have no unconsolidated affiliates. Our net ownership interest, investments in and our earnings from unconsolidated affiliates are as follows (see Note 5 to our Consolidated Financial Statements):

									Earnings (Loss)
	Net Ownership Interest				Investment				Fiscal Years Ended
Unconsolidated affiliates:	April 30, 2009		April 27, 2008		April 30, 2009		April 27, 2008		April 30, 2009			April 27, 2008
	(Percent)
Isle of Capri - Black Hawk, L.L.C. (1)		-		-	$	-	$	-	$	-		$	4,860,613
American Racing and Entertainment, L.L.C. (2)		-		-		-		-		-			(840,368	)
Buena Vista Development Company, L.L.C. (3)		-		40		-		154,969		(7,863	)		(16,200	)
Sunrise Land and Mineral Corporation (4)		-		-		-		-		-			51,401
Restaurant Connections International, Inc. (5)		-		34		- -		-		-			-
Total investments in unconsolidated affiliates					$	-	$	154,969

Total earnings (loss) from unconsolidated affiliates									$	(7,863	)	$	4,055,446

(1)

Separate financial statements for this entity are included herein. On January 27, 2008, we sold our ownership interest in IC-BH to the ISLE.

(2)

On June 14, 2007, we sold our ownership interest to two of our partners.

(3)

Effective November 25, 2008, we sold our interest for $16 million cash and a $4 million receivable to our partner and related parties.

(4)

This asset was sold as of January 8, 2008 to our partner.

(5)

Investment in RCI was reduced to zero in fiscal year 2000. This asset was held for sale as of April 27, 2008. We increased our ownership from 34% to 56% effective May 16, 2008. This asset was sold July 31, 2008.

We also hold investments in various development projects that we consolidate. Our net ownership interest and capitalized development costs in development projects are as follows (see Note 5 to the Consolidated Financial Statements):

	Net Ownership Interest				Capitalized Development Costs
Development Projects:	April 30, 2009		April 27, 2008		April 30, 2009		April 27, 2008
	(Percent)
Gold Mountain Development, L.L.C. (1)		100		100	$	3,437,932	$	3,437,932
NG Washington, LLC (2)		100		-		617,071		-
Nevada Gold Vicksburg, LLC (3)		100		100		-		2,191,899
Other (4)						128,953		215,663
Total investments– development projects					$	4,183,956	$	5,845,494

(1)

Acquisition and development costs incurred for 270 acres of real property in the vicinity of Black Hawk, Colorado.

(2)

Refundable deposits and license costs incurred for three mini-casinos in Washington State.

(3)

Deposit and acquisition costs related to acquisition of Horizon Casino/Hotel in Vicksburg, Mississippi.

(4)

Development costs incurred for other development projects.

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the fiscal years ended April 30, 2009 and April 27, 2008:

	Fiscal Years Ended
	April 30,			April 27,
	2009			2008
				(Restated)
Revenues:
Casino	$	5,356,885		$	6,636,652
Food and beverage		1,395,130			1,414,423
Other		49,366			101,203
Management fees		493,382			40,174
Gross revenues		7,294,763			8,192,452
Less promotional allowances		(1,426,511	)		(1,459,539	)
Net revenues		5,868,252			6,732,913
Operating expenses:
Casino		1,750,014			1,935,791
Food and beverage		614,779			674,961
Marketing and administrative		2,485,881			2,900,887
Facility		362,009			377,608
Corporate expense		4,366,670			5,001,190
Legal expenses		403,694			871,428
Depreciation and amortization		627,618			743,783
Write-off of notes receviable related to gaming projects		-			4,026,893
Impairment of equity investment		-			308,350
Write-off of project development cost		1,215,383			-
Other		145,018			67,439
Total operating expenses		11,971,066			16,908,330
Operating loss		(6,102,814	)		(10,175,417	)
Non-operating income (expenses):
Earnings (loss) from unconsolidated affiliates		(7,863	)		4,055,446
Gain on sale of equity investees and assets		403,388			40,715,552
Interest income		975,490			2,007,898
Interest expense		(1,307,296	)		(3,864,552	)
Amortization of loan issue costs		(128,266	)		(764,329	)
Loss on extinguishment of debt		-			(203,160	)
Income (loss) before income tax expense (benefit)		(6,167,361	)		31,771,438
Income tax expense (benefit)
Current		(2,265,155	)		9,949,362
Deferred and change in valuation allowance		285,930			(885,726	)
Total income tax expense (benefit)		(1,979,225	)		9,063,636

Net income (loss)	$	(4,188,136	)	$	22,707,802

Per share information:
Net income (loss) per common share - basic	$	(0.32	)	$	1.75
Net income (loss) per common share - diluted	$	(0.32	)	$	1.75

Basic weighted average number of shares outstanding		12,939,130			12,939,130
Diluted weighted average number of shares outstanding		12,939,130			12,945,151

Comparison of Fiscal Years Ended April 30, 2009 and April 27, 2008

Net revenues. Net revenues for fiscal year 2009 decreased 12.8%, or $ .9 million, to $5.9 million compared to fiscal year 2008. Net casino revenues from Colorado decreased $1.3 million due to Colorado implementing a smoking ban effective January 1, 2008, the addition of a new casino in our market as of June, 2008, and the general economic downturn. In November, 2008, a bet limit initiative which allows $100 gaming limits, craps, roulette and 24 hour gaming was passed by Colorado voters followed by Cripple Creek voters on December 16, 2008. The approval of the bet limit initiative by local voters required the Colorado regulatory agencies to write rules and regulations pertaining to the changes. As a result, implementation of the bet limit initiative did not occur until July 2, 2009. The reduction in Colorado was offset by an increase in management fees of $.5 million compared to the prior year.

Total operating expenses. Total operating expenses for fiscal year 2009 decreased 29.2%, or $5.0 million, to $12.0 million compared to fiscal year 2008. Operating expenses, excluding write-offs and impairments, decreased $1.8 million due to our continued efforts to reduce staffing and expenses. Operating expenses at our Colorado Grande Casino decreased $0.7 million, or 11.5%, due to our continued efforts to reduce staffing, marketing, and other expenses due to reduced revenues caused by the January 1, 2008 enactment of a smoking ban in casinos, the introduction of a new casino in our market, and the general economic downturn.. We experienced a $.6 million decrease or 12.7% less corporate expense primarily due to a $.4 million decrease of payroll expenses and a $.2 million decrease in rent expense from the moving of the Corporate office. Legal expenses for fiscal year 2009 decreased 53.7%, or $0.5 million, to $0.4 million compared to fiscal year 2008. The decrease is primarily due to hiring an in-house general counsel in an effort to prepare legal documents internally and a reduction in litigation activity. Write-off of notes receivable related to gaming projects of $4.0 million and impairment of equity investment of $0.3 million both decreased to $0 compared to fiscal year 2008. Write off of project development costs increased 100%, or $1.2 million compared to 2008. Our only write off in 2009 was the project development costs related to the purchase of the Horizon Casino in Vicksburg, Mississippi.

Earnings from unconsolidated affiliates. Earnings from unconsolidated affiliates for fiscal year 2009 decreased 100.2%, or $4.0 million, to a loss of $8,000, compared to fiscal year 2008 This is primarily due to the sale of IC-BH in January, 2008 and American Racing in June, 2007. As a result of the sale of our interest in BVD, we are no longer recording any earnings from unconsolidated affiliates.

Interest expense, net. Interest expense, net consists of a net balance of interest expense, loss on extinguishment of debt and amortization of loan issue cost, offset by interest income. Interest expense for fiscal year 2009 decreased 66.2%, or $2.6 million, to $1.3 million compared to fiscal year 2008. The decrease is primarily due to the repayment of approximately $9.6 million of debt during fiscal 2009. Interest income for fiscal year 2009 decreased 51.4%, or $1.0 million, to $1.0 million compared to fiscal year 2008. The decrease is primarily due to a lower weighted average notes receivable balance and the sale of the BVR note of $14.8 million. Amortization of loan issue cost was $128,000 and $764,000 for fiscal years 2009 and 2008, respectively.

Other non-operating income and expenses. During fiscal year 2008, we recorded a $39.6 million gain related to the sale of our interest in IC-BH and a $1.3 million gain related to the sale of our interest in American Racing, offset by losses on abandonment of $128,000 and a loss on the sale of Sunrise of $72,000, compared to gains of $.4 million related to the sale of our development and loan agreement with BVR in 2009.

Net (loss) income. Fiscal year 2009 reflects a net loss of $4.2 million compared to a net income of $22.7 million for fiscal year 2008. The decrease of $26.9 million is primarily related to the $40.9 million gains on the sales of ICBH and American Racing in 2008, decreased net revenues of $.9 million, elimination of $4.1 of earnings from IC-BH and American Racing, offset by $1.1 million reduction in Corporate and Legal expenses, reduction of $2.4 million in net interest expense, reduction of $3.1 million in write offs, a $0.7 million reduction of casino expenses, $11.0 million reduction of income tax expense, and a $0.4 million gain on sale of equity investments. The effective tax rate for fiscal years 2009 and 2008 was (32.1)% and 28.5%, respectively.

Liquidity and Capital Resources

Historical Cash Flows

The following table sets forth our consolidated net cash provided by (used in) operating, investing and financing activities for fiscal years 2009 and 2008:

	Fiscal Years Ended
	April 30, 2009			April 27, 2008
				(Restated)
Cash provided by (used in):
Operating activities	$	(5,507,059	)	$	(12,559,597	)
Investing activities	$	27,507,309		$	52,914,899
Financing activities	$	(9,562,019	)	$	(41,762,549	)

Operating activities. Net cash used in operating activities during fiscal year 2009 decreased $7.1 million compared to fiscal year 2008 mainly due to decreased net income of $26.9 million, a decrease of stock option expense of $.2 million, a decrease in write-offs and impairments of $3.1 million, reduction of distributions from unconsolidated affiliates by $2.6 million, changes in operating assets and liabilities, deferred income tax expense and amortization of deferred loan issue costs, of $4.2 million net, mainly due to $3.6 million of income tax payments in 2009, offset by a net reduction of $40.3 million of equity investment gains and the $4.1 million of earnings of unconsolidated affiliates recorded in 2008.

Investing activities. Net cash provided by investing activities during fiscal year 2009 decreased to $27.5 million compared to $52.9 million provided during fiscal year 2008. The $25.4 million decrease is primarily due to $50.8 million decrease of proceeds from sale of assets compared to 2008, offset by an increase of $5.7 million of collections of notes receivable, a $12.0 million investment in restricted cash in fiscal 2008 compared to a release of restricted cash of $7.0 million during fiscal 2009 and a decrease of $1.5 million of investments in development projects compared to 2008.

Financing activities. Net cash used in financing activities was $9.6 million for fiscal year 2009 compared to $41.8 million net cash used in financing activities for fiscal year 2008. During fiscal year 2009, we repaid a net $9.6 million of our credit facility compared to a net $39.6 to our credit facility and $2.1 million repaid on our term loans in fiscal year 2008.

Future Sources and Uses of Cash

We expect that our future liquidity and capital requirements will be affected by:

- capital requirements related to future acquisitions;

- cash flow from acquisitions;

- management contracts;

- working capital requirements;

- obtaining funds via long-term subordinated debt instruments;

- debt service requirements; and

- disposition of non-gaming related assets.

At April 30, 2009, outstanding indebtedness was $6.0 million which is not due until June 30, 2013. Historically, tax distributions from IC-BH, monetizing non-core assets, and repayments from affiliates have been sufficient to satisfy our current debt obligations and working capital needs. We no longer receive cash flow from these sources. In addition to cash flow expected to be generated from the Colorado Grande Casino and existing management contracts, we anticipate that cash flow from notes receivable and the recently acquired mini-casinos in Washington State will generate sufficient cash flow.

On June 14, 2007, we sold our membership interest in American Racing and Entertainment. We received $2.1 million cash and two notes for $1.1 million each. The notes bear interest of 5% and were paid on June 15, 2008 and 2009, respectively. On June 18, 2007, we used the proceeds from the sale of American Racing to repay $2.2 million of our previously held $55 million Credit Facility (“Credit Facility”). In addition to the cash received from the sale of American Racing, certificates of deposit of approximately $1.1 million pledged as collateral for a bank line of credit for American Racing was released to us on July 13, 2007. We used $950,000 of the certificates of deposit proceeds to pay down the Credit Facility. On June 26, 2007, we drew down $1.0 million from the Credit Facility. In addition, in conjunction with the sale agreement we were indemnified by the purchasers in connection with the guarantees of approximately $11 million of debt or any other obligations of American Racing. On March 31, 2008, the $11 million debt was refinanced and the Company was released from being a guarantor.

We have continued to examine our corporate overhead. As a result, we have implemented several cost saving measures that have saved approximately $2.5 million of general and administrative expenses annually. These measures included the elimination of several senior level positions and a number of corporate staff positions which resulted in a 60% reduction in our corporate full time equivalents. These cost savings have continued during fiscal year 2009.

On January 27, 2008, we sold our ownership interest in IC-BH to our partner for $64.6 million in cash. On the same date we repaid $38.8 million of the Credit Facility. In addition, from proceeds of the sale a $13.0 million Project Fund was established and a $2.0 million deposit was escrowed in regards to our proposed acquisition of the Vicksburg Horizon Casino and Hotel in Vicksburg, Mississippi. The remaining funds were made available to pay transaction fees, income taxes and fund our continuing operations.

On July 31, 2008, RCI sold its principal asset, International Restaurants of Brazil, which consisted of 16 Pizza Huts in San Paulo, Brazil, for $5.5 million. On August 12, 2008, the company received $4.7 million from RCI as payment in full of the outstanding note and accrued interest.

On December 15, 2008 the Company received $16 million in cash for our 40% ownership of BVD. The cash and a $4 million receivable due no later than two years after the gaming/entertainment facility opens, paid in full the $14.8 million note receivable and accrued interest.

We have listed the 270 acres in Black Hawk, CO with a real estate broker. If the acreage is sold we will use the proceeds to pay operating expenses or debt or, reinvest the funds into acquisition opportunities.

On April 30, 2009, excluding restricted cash of $6.0 million, we had cash and cash equivalents of $13.8 million. The restricted cash is the Project Fund referred to above.

Our Consolidated Financial Statements have been prepared assuming that we will have adequate availability of cash resources to satisfy our liabilities in the normal course of business. We have made, and are in the process of making, arrangements to ensure that we have sufficient working capital to fund our obligations as they come due. These potential funding transactions include divesting of non-core assets and obtaining long-term financing. We believe that some or all of these sources of funds will be funded in a timely manner and will provide sufficient working capital for us to meet our obligations as they come due; however, there can be no assurance that we will be successful in divesting of the non-core assets or achieving the desired level of working capital at terms that are favorable to us. Should cash resources not be sufficient to meet our current obligations as they come due, repay or refinance our long-term debt due on June 30, 2010 and, acquire operations that generate positive cash flow, we would be required to curtail our activities and grow at a pace that cash resources could support which may require a restructuring of our debt or selling core assets of the Company.

Indebtedness

Effective March 1, 2008, we entered into a $15.6 million loan agreement with our lender that replaced the $55.0 million Credit Facility with the same lender. The principal bears interest at 10.0% per annum and has a maturity date of June 30, 2010. The loan is secured by substantially all of our assets. In fiscal year 2009, we repaid $9.6 million of Notes Payable. As of April 30, 2009, we had $6.0 million in outstanding debt under the loan agreement.

Off-Balance Sheet Arrangements

None.

Contractual Obligations

The following table sets forth estimates of our contractual obligations as of April 30, 2009 to make future payments in fiscal year 2010 through fiscal year 2014 and thereafter:

			Fiscal Year
Estimated Contractual Obligations:	Total		2010		2011		2012		2013		2014		Thereafter
Long-term debt (1)	$	6,000,000	$	—	$	—	$	—	$	—	$	6,000,000	$	—
Estimated interest payments (2)		2,680,000		600,000		650,000		660,000		660,000		110,000		—
Operating lease commitments (3)		9,694,092		490,171		503,921		400,000		400,000		400,000		7,500,000
Other commitments(3)		—		—		—		—		—		—		—
Total	$	18,374,092	$	1,090,171	$	1,153,921	$	1,060,000	$	1,060,000	$	6,510,000	$	7,500,000

(1)	See Notes 5 and 19 to our Consolidated Financial Statements in this Annual Report.

(2)	Estimated interest payments are based on the outstanding balance of our debt as of April 30, 2009.

(3)	See Note 16 to our Consolidated Financial Statement in this Annual Report.

Recent Accounting Pronouncements

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157 “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements. The FASB has previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurements. However, for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 (the Company’s fiscal year 2009), and interim periods within those years. The Company has assessed the effect of the implementation of this pronouncement on its financial statements and concluded that application of SFAS No. 157 does not materially change current practice.

Fair Value Option for Financial Assets and Liabilities

In February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities, Including an Amendment of FASB Statement No. 115” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007 (the Company’s fiscal year 2009). The Company has assessed the effect of implementation of this pronouncement on its financial statements and concluded that application of SFAS No. 159 does not materially change current practice.

New Accounting Pronouncements Issued But Not Yet Adopted

As of April 30, 2009, there were several accounting standards and interpretations that had not yet been adopted by us. Below is a discussion of significant standards that may impact us.

Business Combinations

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements to recognize the assets acquired and liabilities assumed in an acquisition transaction and determines what information to disclose to investors regarding the business combination. SFAS No. 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual period beginning after December 15, 2008. The Company will assess the effect of the implementation of this pronouncement on the financial statements as a result of the May 12, 2009 acquisition of three mini-casinos in Washington State.

Noncontrolling Interests in Consolidated Financial Statements

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting standards with respect to the disclosure of a noncontrolling ownership interest in the statement of financial position within equity, the presentation of the share of consolidated net income attributable to the parent and noncontrolling interest on the consolidated statement of income, the accounting treatment of changes in a parent’s ownership interest while the parent retains a controlling interest and the accounting for the deconsolidation of a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company currently has no noncontrolling ownership interests in consolidated subsidiaries and does not expect a material impact from SFAS No. 160 on its consolidated financial statements.

Disclosures About Derivative Instruments and Hedging Activities

In March 2008, the FASB issued SFAS No. 161, "Disclosures About Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133" ("SFAS No. 161"). SFAS No. 161 expands the disclosure requirements in SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," regarding an entity's derivative instruments and hedging activities. SFAS No. 161 is effective for the Company's fiscal year beginning May 1, 2009. SFAS No. 161 relates specifically to disclosures, and is not expected to have a material impact on the Company's consolidated financial statements.

The Hierarchy of General Accepted Accounting Principles and The FASB Accounting Standard Codification and the Hierarchy of Generally Accepted Accounting Principles – replacement of FASB Statement No. 162

In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS No. 162"), which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with GAAP. In June 2009, SFAS No. 162 was replaced by SFAS No. 168, “The FASB Accounting Standard Codification and the Hierarchy of Generally Accepted Accounting Principles – replacement of FASB Statement No. 162”. SFAS No. 168 will become the source of authoritative U.S. generally accepted accounting principles recognized by FASB. SFAS No. 168 becomes effective for financial statements issued for interim and annual periods ending after September 15, 2009. The Company plans to adopt SFAS No. 168 when it becomes effective. The adoption of SFAS No. 168 will have no material impact on the Company's consolidated financial statements.

Subsequent Events

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS No. 165"). SFAS No. 165 expands the disclosure requirements for subsequent events. SFAS No. 165 is effective for the Company's fiscal year beginning May 1, 2009. SFAS No.165 relates specifically to disclosures, and is not expected to have a material impact on the Company's consolidated financial statements.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, including interest rates, foreign currency exchange rates, credit risk, commodity price and equity prices. Our primary exposure to market risk is credit risk concentrations. We do not believe we are subject to material interest risk.

All of our borrowings are at fixed interest rates; thus an interest rate change would not have a significant impact on our operations.

Item 8.

Financial Statements and Supplementary Data

The information required under Item 310(a) of Regulation S-K is included in this report as set forth in the “Index to Consolidated Financial Statements.” See Index to Consolidated Financial Statements.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.

Controls and Procedures

(a) Disclosure Controls and Procedures.

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. As described below under Management’s Annual Report on Internal Control over Financial Reporting, our CEO and CFO have concluded that, as of the end of the period covered by this Annual Report on Form 10-K, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

(b) Management’s Annual Report on Internal Control over Financial Reporting.

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:

Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2009. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management has concluded that the internal control over financial reporting was effective as of April 30, 2009.

A material weakness noted in our Form 10-K for the year ended April 27, 2008, is listed below:

In conjunction with the preparation of the tax provision for the year ended April 27, 2008, a material unreconciled difference was identified that was not appropriately researched and resolved. Management later completed its reconciliation of the identified difference and a material adjustment was required to be recorded to bring the accounting records into agreement with the final tax provision. Additionally, corresponding tax disclosures were required to be adjusted. Management believes that the material weakness was caused by the lack of tax expertise on its accounting staff.

Based on such assessment and those criteria, management believes that the Company did not maintain effective internal control over financial reporting as of April 27, 2008.

To mitigate this material weakness, management has engaged a tax expert to assist in the preparation and review of the Company’s tax provision and related disclosures to ensure that they have been prepared consistent with the requirements of SFAS No. 109. Management believes that by engaging this expert that this material weakness has been mitigated to a level of risk that the likelihood of material misstatement to occur would be deemed to be remote.

(d)

Report of Independent Registered Public Accounting Firm.

This annual report does not include an attestations report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the temporary rules of the SEC that permit the Company to provide only Management’s report in this annual report.

Item 9B.

Other Information

None.

Part III

Item 10.

Directors, Executive Officers and Corporate Governance

We have adopted a Code of Ethics that applies to directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting officer. Our Code of Ethics is posted on our website at http://www.nevadagold.com, under Investor Relations - Investor Info. Changes to and waivers granted with respect to this Code of Ethics related to our officers, other executive officers and directors are required to be disclosed pursuant to applicable rules and regulations of the Securities and Exchange Commission will also be posted on our website and a Current Report on Form 8-K will be filed within 4 business days of the change or waiver.

The other information required by this item is incorporated by reference to our definitive proxy statement for our 2009 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

Item 11.

Executive Compensation

The information required by this item is incorporated by reference to our definitive proxy statement for our 2009 Annual Meeting to be filed with the Securities and Exchange Commission pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this report.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.

Certain Relationships and Related Party Transactions and Director Independence

Item 14.

Principal Accountant Fees and Services

Part IV

Item 15.

Exhibits and Financial Statement Schedules

(a) 1. Financial Statements.

Included in Part II of this Report:

Consolidated Financial Statements of Nevada Gold & Casinos, Inc.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of April 30, 2009 and April 27, 2008

Consolidated Statements of Operations for fiscal years ended April 30, 2009 and April 27, 2008

Consolidated Statements of Stockholders’ Equity for fiscal years ended April 30, 2009 and April 27, 2008

Consolidated Statements of Cash Flows for fiscal years ended April 30, 2009 and April 27, 2008

Notes to Consolidated Financial Statements

Consolidated Financial Statements of Isle of Capri Black Hawk, L.L.C.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheet as of January 27, 2008

Consolidated Statement of Income for the fiscal year ended January 27, 2008

Consolidated Statement of Members' Equity for the fiscal year ended January 27, 2008

Consolidated Statement of Cash Flows for the fiscal year ended January 27, 2008

Notes to Consolidated Financial Statements

(a) 2. Financial Statement Schedules.

We have omitted all schedules because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements.

(a) 3. Exhibits

EXHIBIT NUMBER		DESCRIPTION

3.1A		Amended and Restated Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit A to the Company's definitive proxy statement filed on Schedule 14A on July 30, 2001)

3.1B		Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 4.2 to the Company’s Form S-8 filed October 11, 2002)

3.1C		Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.3 to the Company’s Form 10-Q filed November 9, 2004)

3.1D		Certificate of Amendment to the Articles of Incorporation of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.1 to the Company’s Form 8-K filed October 17, 2007)

3.2		Amended and Restated Bylaws of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 3.2 to the Company’s From 10-QSB filed August 14, 2002)

3.3		Amended and Restated Bylaws of Nevada Gold & Casinos, Inc., effective July 24, 2007 (filed previously as Exhibit 3.2 to the Company’s From 8-K filed July 27, 2007)

4.1		Common Stock Certificate of Nevada Gold & Casinos, Inc. (filed previously as Exhibit 4.1 to the Company’s Form S-8/A, file no. 333-79867)

4.2		Second Amended and Restated Nevada Gold & Casinos, Inc. 1999 Stock Option Plan (filed previously as Exhibit 4.6 to the Company’s Form S-8, file no. 333-126027)

4.3		Nevada Gold & Casinos, Inc.’s 2009 Equity Incentive Plan (filed previously as Exhibit 10.1 to the Company’s Form S-8, file no. 333-158576)

10.1		Stock Purchase Agreement dated as of April 25, 2005 among Isle of Capri Black Hawk, L.L.C., IC Holdings Colorado, Inc., Colorado Grande Enterprise, Inc., and CGC Holdings, L.L.C. (filed previously as Exhibit 2.1 to the Company’s Form 8-K filed April 29, 2005)

10.2		Unit Purchase Agreement among Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd., Casino America of Colorado, Inc. and Isle of Capri Casinos, Inc. dated November 13, 2007 (filed previously as Exhibit 10.5 to the Company’s Form 8-K filed November 13, 2007)

10.3		Purchase and Sale Agreement among Nevada Gold & Casinos, Inc. Nevada Gold NY, Inc., Southern Tier Acquisition, LLC and Oneida Entertainment LLC (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed June 21, 2007)

10.4		Purchase Agreement dated November 25, 2008 between Nevada Gold BVR, LLC and B.V. Oro, LLC (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed December 12, 2008)

10.5		Management Agreement dated November 10, 2008 between Nevada Gold & Casinos, Inc. and Oceans Casino Cruises, Inc. (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed November 12, 2008)

10.6		Settlement Agreement and Release dated April 15, 2008 among Nevada Gold & Casinos, Inc., American Heritage, Inc. and Frederick C. Gillmann (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed April 16, 2008)

10.7		Asset Purchase Agreement dated March 12, 2009 among Crazy Moose Casino, Inc., Crazy Moose Casino II, Inc., Coyote Bob’s, Inc. and Gullwing III, LLC, as sellers, and NG Washington, LLC, as purchaser (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed March 13, 2009)

10.8 (**)		Amended and Restated Credit Facility dated January 19, 2006 (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.15 to the Company's Form 8-K filed January 25, 2006)

10.9 (**)		Form of Guarantee of Credit Facility among Nevada Gold and Casinos, Inc., each of Black Hawk Gold, LTD, Gold River, LLC, Nevada Gold BVR, LLC, and Nevada Gold NY, Inc., and the Lender signing as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.16 to the Company’s Form 10-Q filed March 3, 2006)

10.10 (**)		January 2006 Security Agreement dated January 19, 2006, by and between Nevada Gold & Casinos, Inc., its wholly-owned subsidiary, Black Hawk Gold, Ltd., and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.17 to the Company’s Form 10-Q filed March 3, 2006)

10.11 (**)		Commercial Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos, Inc., Black Hawk Gold, LTD, and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.18 to the Company’s Form 10-Q filed March 3, 2006)

10.12 (**)		Commercial Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos, Inc., Nevada Gold BVR, and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.19 to the Company’s Form 10-Q filed March 3, 2006)

10.13 (**)		Commercial Pledge Agreement dated January 19, 2006 among Nevada Gold & Casinos, Inc., Gold River, LLC, and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.20 to the Company’s Form 10-Q filed March 3, 2006)

10.14 (**)		Commercial Pledge Agreement dated January 19, 2006, among Nevada Gold & Casinos, Inc., Nevada Gold NY, Inc., and the Lender listed as a party thereto (portions of this exhibit have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment in accordance with Rule 24b-2 under the Exchange Act) (filed previously as Exhibit 10.21 to the Company’s Form 10-Q filed March 3, 2006)

10.15		Amendment to the Amended and Restated Credit Facility dated January 19, 2006 among Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd. and Louise H. Rogers dated July 30, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed July 30, 2007)

10.16		Amendment to the Amended and Restated Credit Facility dated January 19, 2006 between Nevada Gold & Casinos, Inc. and Louise H. Rogers dated October 12, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed October 15, 2007)

10.17		Amendment to the Amended and Restated Credit Facility dated January 19, 2006 between Nevada Gold & Casinos, Inc. and Louise H. Rogers dated December 20, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed December 21, 2007)

10.18		Agreement Regarding Use of Proceeds of IC-BH Sale and Regarding Remaining Amount Due Under the Amended and Restated Credit Facility among Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd. and Louise H. Rogers dated November 13, 2007 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed November 13, 2007)

10.19		Amendment to the January 2006 Security Agreement among Nevada Gold & Casinos, Inc., Black Hawk Gold, Ltd. and Louise H. Rogers dated November 13, 2007 (filed previously as Exhibit 10.2 to the Company’s Form 8-K filed November 13, 2007)

10.20		Agreement Regarding Use of Proceeds from RCI/CCH Notes Receivable between Nevada Gold & Casinos, Inc. and Louise H. Rogers dated November 13, 2007 (filed previously as Exhibit 10.3 to the Company’s Form 8-K filed November 13, 2007)

10.21		Promissory Note issued by Nevada Gold & Casinos, Inc. to Louise H. Rogers dated November 13, 2007 (filed previously as Exhibit 10.4 to the Company’s Form 8-K filed November 13, 2007)

10.22		Agreement Regarding Loans effective March 1, 2008 between Nevada Gold & Casinos, Inc. and Louise H. Rogers (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed June 17, 2008)

10.23		Amended and Restated Security Agreement effective March 1, 2008 between Nevada Gold & Casinos, Inc. and Louise H. Rogers (filed previously as Exhibit 10.2 to the Company’s Form 8-K filed June 17, 2008)

10.24		Schedule of Collateral, Notes, Security Interests and Ownership Interests effective March 1, 2008 between Nevada Gold & Casinos, Inc. and Louise H. Rogers (filed previously as Exhibit 10.3 to the Company’s Form 8-K filed June 17, 2008)

10.25		Promissory Note issued by Nevada Gold & Casinos, Inc. to Louise H. Rogers effective March 1, 2008 (filed previously as Exhibit 10.4 to the Company’s Form 8-K filed June 17, 2008)

10.26 (+)		Form of Indemnification Agreement between Nevada Gold & Casinos, Inc. and each officer and director (filed previously as Exhibit 10.5 to the Company’s Form 10-QSB, filed February 14, 2002)

10.27A (+)		Employment Agreement dated November 27, 2006 by and between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.27 to the Company’s Form 10-Q filed December 15, 2006)

10.27B (+)		Amendment to the Employment Agreement dated August 30, 2007 by and between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 99.1 to the Company’s Form 8-K filed August 31, 2007)

10.27C (+)		Amendment to the Employment Agreement dated October 30, 2007 by and between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 99.1 to the Company’s Form 8-K filed October 30, 2007)

10.27D (+)		Second Amendment to the Employment Agreement dated January 23, 2008 by and between Robert B. Sturges and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed January 24, 2008)

10.28A (+)		Employment Agreement dated October 24, 2006 by and between James J. Kohn and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.28 to the Company’s Form 10-Q filed March 9, 2007)

10.28B(+)		First Amendment to the Employment Agreement dated April 14, 2008 by and between James J. Kohn and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.24B to the Company’s Form 10-Q filed September 9, 2008)

10.29A (+)		Employment Agreement dated December 29, 2006 by and between Ernest E. East and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.28 to the Company’s Form 10-Q filed March 9, 2007)

10.29B (+)		First Amendment to the Employment Agreement dated April 14, 2008 by and between Ernest E. East and Nevada Gold & Casinos, Inc. (filed previously as Exhibit 10.25B to the Company’s Form 10-Q filed September 9, 2008)

10.29C (+)		Second Amendment to Employment Agreement between Nevada Gold & Casinos, Inc. and Ernest E. East dated June 8, 2009 (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed June 8, 2009)

10.30 (+)		Separation Agreement and Release between Nevada Gold & Casinos, Inc. and H. Thomas Winn (filed previously as Exhibit 10.1 to the Company’s Form 8-K filed July 9, 2007)

21.1(*)		Subsidiaries of the Company

23.1(*)		Consent of Independent Registered Public Accounting Firm

23.2(*)		Consent of Independent Registered Public Accounting Firm

31.1(*)		Chief Executive Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act.

31.2(*)		Chief Financial Officer Certification Pursuant to Section 13a-14 of the Securities Exchange Act.

32.1(*)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2(*)		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

+	Management contract or compensatory plan, or arrangement.
*	Filed herewith.
**	Portions of these exhibits have been omitted pursuant to a request for confidential treatment.

SIGNATURES

Pursuant to Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Nevada Gold & Casinos, Inc.

	By:	/s/ James J. Kohn
	James J. Kohn
	Chief Financial Officer

	Date: July 07, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ JOSEPH A. JULIANO
Joseph A. Juliano	Chairman of the Board of Directors	July 07, 2009
/s/ WILLIAM J. SHERLOCK	Director
William J. Sherlock		July 07, 2009
/s/ WILLIAM G. JAYROE
William G. Jayroe	Director	July 07, 2009
/s/ FRANK CATANIA
Frank Catania	Director	July 07, 2009
/s/ FRANCIS M. RICCI
Francis M. Ricci	Director	July 07, 2009
/s/ WAYNE H. WHITE
Wayne H. White	Director	July 07, 2009
/s/ ROBERT B. STURGES	Director and Chief Executive Officer
Robert B. Sturges	(principal executive officer)	July 07, 2009

/s/ JAMES J. KOHN
James J. Kohn	EVP and Chief Financial Officer (principal financial officer and principal accounting officer)	July 07, 2009

Index to Consolidated Financial Statements

Consolidated Financial Statements of Nevada Gold & Casinos, Inc.

		Page

Report of Independent Registered Public Accounting Firm		30
Consolidated Balance Sheets as of April 30, 2009 and April 27, 2008 (restated)		31
Consolidated Statements of Operations for fiscal years ended April 30, 2009 and April 27, 2008 (restated)		32
Consolidated Statements of Stockholders’ Equity for fiscal years ended April 30, 2009, and April 27, 2008 (restated)		33
Consolidated Statements of Cash Flows for fiscal years ended April 30, 2009, and April 27, 2008 (restated)		34
Notes to Consolidated Financial Statements		35

Consolidated Financial Statements of Isle of Capri Black Hawk, L.L.C.

Report of Independent Registered Public Accounting Firm		58
Consolidated Balance Sheet as of January 27, 2008		59
Consolidated Statement of Income for nine months ended January 27, 2008		60
Consolidated Statement of Members' Equity for nine months ended January 27, 2008		61
Consolidated Statement of Cash Flows for nine months ended January 27, 2008		62
Notes to Consolidated Financial Statements		63

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Nevada Gold & Casinos, Inc.

We have audited the accompanying consolidated balance sheets of Nevada Gold & Casinos, Inc. and Subsidiaries as of April 30, 2009 and April 27, 2008 and the related consolidated statements of operations, stockholders’ equity and cash flows for the years ended April 30, 2009, and April 27, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As referred to in Note 20, the Company has elected to restate its consolidated financial statements for the year ended April 27, 2008 to correct an error related to deferred tax expense and liability.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nevada Gold & Casinos, Inc. and Subsidiaries as of April 30, 2009 and April 27, 2008 and the results of their operations and their cash flows for the years ended April 30, 2009 and April 27, 2008 in conformity with U.S. generally accepted accounting principles.

/s/ Pannell Kerr Forster of Texas, P.C.

Houston, Texas

July 7, 2009

Nevada Gold & Casinos, Inc.

Consolidated Balance Sheets

	April 30,			April 27,
	2009			2008
				(Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	13,834,544		$	1,396,313
Restricted cash		6,000,000			13,014,000
Accounts receivable		12,342			2,313,593
Accounts receivable - affilates		—			57,359
Prepaid expenses		235,847			369,025
Income tax receivable		1,872,369			—
Notes receivable, current portion		1,100,000			1,100,000
Other current assets		46,444			54,446
Total current assets		23,101,546			18,304,736

Investments in unconsolidated affiliates		—			154,969
Investments in development projects		746,024			2,407,562
Investments in development projects held for sale		3,437,932			3,437,932
Notes receivable		—			1,100,000
Notes receivable - affiliates		—			3,521,066
Notes receivable - development projects, net of allowances		1,700,000			16,510,200
Goodwill		5,462,918			5,462,918
Property and equipment, net of accumulated depreciation of $2,408,595 and $1,808,883 at April 30, 2009 and April 27, 2008, respectively		1,091,549			1,327,275
Deferred tax asset		599,797			885,726
Other assets		5,915,220			6,780,317
Total assets	$	42,054,986		$	59,892,701

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	846,062		$	1,097,277
Accrued interest payable		—			115,027
Other accrued liabilities		197,833			203,071
Taxes payable		—			3,911,475
Total current liabilities		1,043,895			5,326,850

Long-term debt, net of current portion		6,000,000			15,550,000
Other liabilities		44,487			56,505
Total liabilities		7,088,382			20,933,355

Commitments and contingencies		—			—

Stockholders' equity:
Common stock, $0.12 par value per share; 50,000,000 shares authorized; 13,935,330 shares issued and 12,939,130 shares outstanding at April 30, 2009 and April 27, 2008, respectively		1,672,240			1,672,240
Additional paid-in capital		19,297,560			19,092,706
Retained earnings		24,213,754			28,401,890
Treasury stock, 996,200 shares at April 30, 2009 and April 27, 2008, respectively, at cost		(10,216,950	)		(10,216,950	)
Accumulated other comprehensive income		—			9,460
Total stockholders' equity		34,966,604			38,959,346
Total liabilities and stockholders' equity	$	42,054,986		$	59,892,701

The accompanying notes are an integral part of these consolidated financial statements.

Nevada Gold & Casinos, Inc.

Consolidated Statements of Operations

	Fiscal Years Ended
	April 30,			April 27,
	2009			2008
				(Restated)
Revenues:
Casino	$	5,356,885		$	6,636,652
Food and beverage		1,395,130			1,414,423
Other		49,366			101,203
Management fees		493,382			40,174
Gross revenues		7,294,763			8,192,452
Less promotional allowances		(1,426,511	)		(1,459,539	)
Net revenues		5,868,252			6,732,913

Operating expenses:
Casino		1,750,014			1,935,791
Food and beverage		614,779			674,961
Marketing and administrative		2,485,881			2,900,887
Facility		362,009			377,608
Corporate expense		4,366,670			5,001,190
Legal expenses		403,694			871,428
Depreciation and amortization		627,618			743,783
Write-off of notes receivable related to gaming projects		-			4,026,893
Impairment of equity investment		-			308,350
Write-off of project development cost		1,215,383			-
Other		145,018			67,439
Total operating expenses		11,971,066			16,908,330
Operating loss		(6,102,814	)		(10,175,417	)
Non-operating income (expenses):
Earnings (loss) from unconsolidated affiliates		(7,863	)		4,055,446
Gain on sale of equity investees		403,388			40,715,552
Interest income		975,490			2,007,898
Interest expense		(1,307,296	)		(3,864,552	)
Amortization of loan issue costs		(128,266	)		(764,329	)
Loss on extinguishment of debt		-			(203,160	)
Income (loss) before income tax expense (benefit)		(6,167,361	)		31,771,438
Income tax expense (benefit)
Current		(2,265,155	)		9,949,362
Deferred and change in valuation allowance		285,930			(885,726	)
Total income tax expense (benefit)		(1,979,225	)		9,063,636
Net income (loss)	$	(4,188,136	)	$	22,707,802

Per share information:
Net income (loss) per common share - basic	$	(0.32	)	$	1.75
Net income (loss) per common share - diluted	$	(0.32	)	$	1.75

Basic weighted average number of shares outstanding		12,939,130			12,939,130
Diluted weighted average number of shares outstanding		12,939,130			12,945,151

The accompanying notes are an integral part of these consolidated financial statements.

Nevada Gold & Casinos, Inc.

Consolidated Statements of Stockholders' Equity

													Accumulated
					Additional								Other			Total
	Common Stock				Paid-in		Retained			Treasury			Comprehensive			Stockholders'
	Shares		Amount		Capital		Earnings			Stock			Income			Equity
Balance at April 29, 2007		13,935,330	$	1,672,240	$	18,484,448	$	5,694,088		$	(10,216,950	)	$	7,460		$	15,641,286
Comprehensive income:
Net income (restated)		—		—		—		22,707,802			—			—			22,707,802
Unrealized gain on securities available for sale, net of tax benefit		—		—		—		—			—			2,000			2,000
Comprehensive income (restated)																	22,709,802
Stock options issued as severance						199,587		—			—			—			199,587
Stock based compensation		—		—		408,671		—			—			—			408,671
Balance at April 27, 2008 (restated)		13,935,330	$	1,672,240	$	19,092,706	$	28,401,890		$	(10,216,950	)	$	9,460		$	38,959,346
Net loss		—		—		—		(4,188,136	)		—			—			(4,188,136	)
Unrealized loss on securities available for sale, net of tax benefit		—		—		—		—			—			(9,460	)		(9,460	)
Comprehensive loss						—											(4,197,596	)
Stock based compensation		—		—		204,854		—			—			—			204,854
Balance at April 30, 2009		13,935,330	$	1,672,240	$	19,297,560	$	24,213,754		$	(10,216,950	)	$	-		$	34,966,604

The accompanying notes are an integral part of these consolidated financial statements.

Nevada Gold & Casinos, Inc.

Consolidated Statements of Cash Flows

	Fiscal Years Ended
	April 30,			April 27,
	2009			2008
				(Restated)
Cash flows from operating activities:
Net income (loss)	$	(4,188,136	)	$	22,707,802
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		627,618			743,783
Stock based compensation		204,854			408,671
Write-off of notes receivable and accrued interest					4,044,693
(Gain on settlement) write-off of project development costs		1,215,383			(14,500	)
Impairment of equity investment		—			308,350
Amortization of deferred loan issuance costs		128,266			764,329
Gain on sale of equity investments, net		(403,388	)		(40,715,552	)
Distributions from unconsolidated affiliates		3,917			2,555,000
(Earnings) loss from unconsolidated affiliates		7,863			(4,055,446	)
Loss on extinguishment of debt		—			203,160
Deferred income tax expense		285,930			(885,726	)
Changes in operating assets and liabilities:
Receivables and other assets		1,043,587			(1,604,249	)
Accounts payable and accrued liabilities		(4,432,953	)		2,980,088
Net cash used in operating activities		(5,507,059	)		(12,559,597	)
Cash flows from investing activities:
Purchases of real estate and assets held for development		(803,499	)		(2,303,208	)
Advances on development projects held for sale		—			(3,979	)
Equity investment in unconsolidated affiliates		(25,000	)		—
Purchase of property and equipment		(167,038	)		(154,520	)
Investment in Colorado Grande expansion		(212,258	)		—
Net proceeds from sale of fixed assets		—			30,533
Net proceeds from sale of equity investments, marketable securities and assets securities and assets		16,000,000			66,810,073
Net proceeds from sale of development projects		—			500,000
Collections of notes receivable		4,601,104			—
Collections of notes receivable - affiliates		1,100,000			—
(Investment in) release of restricted cash		7,014,000			(11,950,000	)
Investment in certificate of deposit		—			(14,000	)
Net cash provided by investing activities		27,507,309			52,914,899
Cash flows from financing activities:
Repayment on term loans		(9,550,000	)		(46,037,549	)
Proceeds from term loans		—			2,000,000
Borrowing on credit facilities, net		—			2,500,000
Deferred loan issuance costs		—			(225,000	)
Payments on capital lease		(12,019	)		—
Net cash used in financing activities		(9,562,019	)		(41,762,549	)
Net increase (decrease) in cash and cash equivalents		12,438,231			(1,407,247	)
Cash and cash equivalents at beginning of period		1,396,313			2,803,560
Cash and cash equivalents at end of period	$	13,834,544		$	1,396,313

Supplemental cash flow information:
Cash paid for interest	$	1,416,164		$	3,498,078
Income tax payments	$	3,638,421		$	6,037,916

Non-cash investing and financing activities:
Equity investment conversion to accounts receivable	$	1,035,000		$	3,897,183
Extinguishment of guaranty with sale of American Racing	$	—		$	4,610,000
Stock options issued in settlement of severance obligation	$	—		$	199,587
Receivable issued to purchasers of unconsolidated affiliate	$	—		$	2,200,000
Unrealized gain (loss) on marketable securities	$	(9,460	)	$	2,000
Capital leases	$	—		$	68,004
Investment in unconsolidated affiliate exchanged for forgiveness of accounts payable	$	—		$	284,000

The accompanying notes are an integral part of these consolidated financial statements.

Nevada Gold & Casinos, Inc.

Notes to Consolidated Financial Statements

Note 1. Background and Basis of Presentation

Background

Nevada Gold & Casinos, Inc. (the “Company”), a Nevada corporation, was formed in 1977 and since 1994, has primarily been a gaming company involved in gaming projects and gaming operations. Our gaming operations are located in the United States of America (“U.S.”), specifically in the states of Colorado and Florida. Our business strategy will continue to focus on gaming projects.

Basis of Presentation

Our consolidated financial statements include the accounts of all majority-owned and controlled subsidiaries after the elimination of all significant intercompany accounts and transactions. Additionally, our financial statements for prior periods include reclassifications that were made to conform to the current year presentation. Those reclassifications did not impact working capital, total assets, total liabilities, our reported net income or stockholders’ equity.

Note 2. Change in Fiscal Year

On April 28, 2008, we changed our fiscal year to end on April 30th rather than the last Sunday in April. We previously ended our fiscal year on the last Sunday in April due to our previous relationship with IC-BH and Isle which used this year end. As a result, fiscal year 2009 began on April 28, 2008 ended April 30, 2009. We believe this fiscal year creates more comparability to other companies in the casino industry and state revenue reporting. Fiscal year 2008 commenced on April 30, 2007 and ended on April 27, 2008. We believe that the twelve months ended April 30, 2009 and April 27, 2008 provide a meaningful comparison. There are no factors, seasonal or otherwise, that would impact the comparability of information or trends.

Note 3. Summary of Significant Accounting Policies

Principles of Consolidation

We consolidate entities when we have the ability to control the operating and financial decisions and policies of that entity and record the portion we do not own as minority interest. The determination of our ability to control or exert significant influence over an entity involves the use of judgment. We apply the equity method of accounting where we can exert significant influence over, but do not control, the policies and decisions of an entity. See Note 5 to our Consolidated Financial Statements for our equity method investments. We use the cost method of accounting where we are unable to exert significant influence over the entity.

Equity Method of Accounting

Restaurant Connections, Inc. (“RCI”), Buena Vista Development, Route 66 Casinos, L.L.C. (“Route 66”), Isle of Capri - Black Hawk (IC-BH”), American Racing and Entertainment, LLC (“American Racing”), and Sunrise Land and Mineral Corporation (“Sunrise”) were accounted for using the equity method of accounting because the investment gives us the ability to exercise significant influence, but not control, over the investees. Significant influence is generally deemed to exist where we have an ownership interest in the investee of between 20% and 50%, although other factors such as the degree of ultimate control, representation on the investee's Board of Directors or similar oversight body are considered in determining whether the equity method of accounting is appropriate. We recorded our equity in the income or losses of our investees using the same reporting periods as presented, except we reported our equity in income or losses one month in arrears for RCI and American Racing (which have a calendar fiscal year), and one month in arrears for Buena Vista Development and Sunrise (which had a fiscal year end of March 31). Deferred tax assets or liabilities are recorded for allocated earnings or losses of our equity investments that are not currently reportable or deductible for federal income tax purposes.

We utilized the equity method of accounting for our 51% interest in Route 66 Casinos because the operating activities of the joint venture were controlled by the minority venturer. We were involved in legal proceedings with the minority venturer in Route 66 Casinos in which the minority venturer had asserted that the operating agreement governing the venture was void and unenforceable. We have assessed whether this circumstance indicates utilization of the cost method of accounting for this investment was appropriate and concluded that the equity method best reflected the underlying nature of our investment. The operating agreement provided that all material decisions of the joint venture were made by the members, including us, on a unanimous basis. We believe the operating agreement to be binding and enforceable on the venture and our joint venture partner and, therefore, conclude that we have significant influence over the affairs of the venture.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenues and expenses during the reporting period. Actual results can, and often do, differ from those estimates.

Cash and Cash Equivalents

We consider short-term investments with an original maturity of less than three months to be cash equivalents.

We maintain cash accounts in major U.S. financial institutions. The terms of these deposits are on demand to minimize risk. The balances of these accounts occasionally exceed the federally insured limits, although no losses have been incurred in connection with such cash balances.

Allowance for Doubtful Accounts

We establish provisions for losses on accounts and notes receivable if we determine that we will not collect all or part of the outstanding balance. We regularly review collectibility and establish or adjust our allowance as necessary using the specific identification method. We make advances to Indian tribes and other third parties under executed promissory notes for project costs related to the development of gaming and entertainment properties. Due diligence is conducted by our management with the assistance of legal counsel prior to entering into arrangements with Indian tribes and other third parties to provide financing in connection with their efforts to secure and develop the properties. Repayment terms are largely dependent upon the operating performance of each opportunity for which the funds have been loaned. Interest income is not accrued until it is reasonably assured that the project will be completed and that there will be sufficient profits from the facility to cover the interest to be earned under the respective note. If projected cash flows are not sufficient to recover amounts due, the note is evaluated in accordance with Statement of Financial Accounting Standards (“SFAS”) No 114, “Accounting by Creditors for Impairment of a Loan,” to determine the appropriate discount to be recorded on the note for it to be considered a performing loan. If the note is performing, interest is recorded using the effective interest method based on the value of the discounted note balance. See Note 6 to our Consolidated Financial Statements.

Capitalized Development Cost

Real Estate Held for Development

Real estate held for development consists of undeveloped land located in and around Black Hawk, Colorado and related development costs and capitalized interest. Property held for development is carried at the lower of cost or net realizable value.

Property and Equipment

Expenditures for furniture, fixtures, and equipment are capitalized at cost. We depreciate furniture, fixtures, and equipment over their respective estimated useful lives, ranging from two to seven years, using the straight-line method. When items are retired or otherwise disposed of, a gain or loss is recorded for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to earnings, and replacements and betterments are capitalized.

	April 30,			April 27,			Service Life
	2009			2008			in Years
Leasehold improvements	$	333,431		$	333,431		7-25
Gaming equipment		1,995,809			1,852,038		3-5
Furniture and office equipment		916,646			908,689		3-7
Land		42,000			42,000
Construction in Progress		212,258			-
		3,500,144			3,136,158
Less accumulated depreciation		(2,408,595	)		(1,808,883	)

Property and equipment, net	$	1,091,549		$	1,327,275

Deferred Loan Issuance Costs

Debt issuance costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the expected terms of the related debt agreements and are included in other assets on our consolidated balance sheets.

Goodwill and Other Intangible Assets

In connection with our acquisition of the Colorado Grande Casino on April 25, 2005, we have goodwill with an indefinite useful life of $5.5 million. SFAS No. 142 “Goodwill and Other Intangible Assets” (“SFAS No. 142”), requires that goodwill and intangible assets with indefinite useful lives be tested for impairment annually, or more frequently if an event occurs or circumstances change that may reduce the fair value of our goodwill below its carrying value. We completed an impairment test as required under SFAS No. 142 in the fourth quarter of fiscal year 2009 and determined that the goodwill was not impaired. For properties with goodwill with indefinite lives, this test requires the comparison of the implied fair value of each property to its carrying value. The implied fair value includes estimates of future cash flows that are based on reasonable and supportable assumptions and represent our best estimates of the cash flows expected to result from the use of the assets and their eventual disposition. Changes in estimates or application of alternative assumptions and definitions could produce significantly different results.

Slot Club Awards

We reward our slot customers for their loyalty based on the dollar amount of play on slot machines. We accrue for these slot club awards based on an estimate of the value of the outstanding awards utilizing the age and prior history of redemptions. Future events such as a change in our marketing strategy or new competition could result in a change in the value of the awards.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising expense related primarily to our casino operations and for the years ended April 30, 2009 and April 27, 2008 was approximately $161,000 and $206,000, respectively.

Marketable Securities Available for Sale

Marketable securities consist of shares of publicly traded securities held by us. The marketable securities available for sale are primarily equity securities which we buy with the intention of holding as a long-term investment. These securities are carried at fair value with changes in fair value recorded in other comprehensive income in the stockholders’ equity section of our consolidated balance sheet. As of April 30, 2009 we had marketable equity securities available for sale at fair market value of $7,020. Unrealized gain (loss) of ($9,460) and $2,000 was recorded in the stockholders’ equity section for the years ended April 30, 2009 and April 27, 2008, respectively. In addition, in fiscal years 2009 and 2008, we realized no gains or losses on sales of equity securities classified as marketable securities available for sale.

Asset and Investment Impairments

We apply the provisions of SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," and Accounting Principles Board Opinion (“APB”) No. 18, "The Equity Method of Accounting for Investments in Common Stock," to account for asset and investment impairments. Under these standards, we evaluate an asset or investment for impairment when events or circumstances indicate that its carrying value may not be recovered. These events include market declines that are believed to be other than temporary, changes in the manner in which we intend to use a long-lived asset, decisions to sell an asset or investment and adverse changes in the legal or business environment such as adverse actions by regulators. When an event occurs, we evaluate the recoverability of our carrying value based on either (i) the long-lived asset’s ability to generate future cash flows on an undiscounted basis or (ii) the fair value of our investment in unconsolidated affiliates. If an impairment is indicated, or if we decide to exit or sell a long-lived asset or group of assets, we adjust the carrying value of these assets downward, if necessary, to their estimated fair value, less costs to sell. Our fair value estimates are generally based on market data obtained through the sales process or an analysis of expected discounted cash flows. The magnitude of any impairments are impacted by a number of factors, including the nature of the assets to be sold and our established time frame for completing the sales, among other factors. We also reclassify the asset or assets as either held-for-sale or as discontinued operations, depending on, among other criteria, whether we will have any continuing involvement in the cash flows of those assets after they are sold.

Revenue Recognition

We record revenues from casino operations, interest on notes receivable and management fees on the accrual basis as earned. The dates on which payments are collected may vary depending upon the term of the contracts or note receivable agreements. Interest income related to notes receivable is recorded when earned and its collectibility is reasonably certain.

The retail value of food and beverage and other services furnished to guests without charge is included in gross revenue and deducted as promotional allowances. Net revenues do not include the retail amount of food, beverage and other items provided gratuitously to customers. The Company records the redemption of coupons and points for cash as a reduction of revenue as they are earned. These amounts are included in promotional allowances in the accompanying consolidated statements of operations. The estimated cost of providing such complimentary services that is included in casino expense in the accompanying consolidated statements of operations was as follows:

	Fiscal Year Ended		Fiscal Year Ended
	April 30, 2009		April 27, 2008
Food and beverage	$	595,499	$	652,705
Other		5,994		8,616

Total cost of complimentary services	$	601,493	$	661,321

Accrued Jackpot Liability

We accrue jackpot liability as games are played under a matching concept of coin-in.

Income Taxes

Income taxes are accounted for in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires the use of an asset and liability approach for financial accounting and reporting for income taxes. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences, using currently enacted tax laws, attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis. We record current income taxes based on our current taxable income, and we provide for deferred income taxes to reflect estimated future tax payments and receipts. We account for tax credits under the flow-through method, which reduces the provision for income taxes in the year the tax credits first become available. We reduce deferred tax assets by a valuation allowance when, based on our estimates, it is more likely than not that a portion of those assets will not be realized in a future period.

We maintain a tax accrual policy to record both regular and alternative minimum taxes for companies included in our consolidated federal and state income tax returns. The policy provides, among other things, that (i) each company in a taxable income position will accrue a current expense equivalent to its federal and state income taxes, and (ii) each company in a tax loss position will accrue a benefit to the extent its deductions, including general business credits, can be utilized in the consolidated returns. We pay all consolidated U.S. federal and state income taxes directly to the appropriate taxing jurisdictions and, under a separate tax billing agreement, we may bill or refund our subsidiaries for their portion of these income tax payments.

We adopted the Financial Accounting Standards Board’s Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”), effective April, 30, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in financial statements and requires the impact of a tax position to be recognized in the financial statements if that position is more likely than not of being sustained by the taxing authority. The adoption of FIN 48 did not have a material effect on the Company’s consolidated financial position or results of operations. Should interest and penalty be incurred as a result of a review of our income tax returns, we will record the interest and penalty in accordance with FIN 48.

Fair value of financial instruments

The recorded amounts of cash, accounts receivable, notes receivable, accounts payable, accrued liabilities, notes payable and debt, as presented in the consolidated financial statements, approximate fair value because of the maturity of these instruments.

Comprehensive Income

We follow the provisions of SFAS No. 130, “Reporting Comprehensive Income.” SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components. SFAS No. 130 requires that all items that are required to be recognized as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. In accordance with the provisions of SFAS No. 130, we have presented the components of comprehensive income below net income on the face of the consolidated statements of stockholders’ equity.

Stock-Based Compensation

Effective May 1, 2006, the Company adopted SFAS No. 123(R), “Share-based Payment” (“SFAS No. 123(R)”). Prior to the adoption of SFAS No. 123(R), the Company utilized the intrinsic value method under APB Opinion No. 25, “Accounting for Stock Issued to Employee.” As permitted by SFAS No. 123(R), the Company has adopted the requirements of No. 123(R) using the modified prospective method. In accordance with the modified prospective method of adoption, the financial statement amounts for periods prior to May 1, 2006 have not been restated to reflect the fair value method of recognizing compensation cost. Total stock-based compensation for the years ended April 30, 2009 and April 27, 2008 was $204,854 and $408,671, repectively.

Earnings Per Share

Earnings per share are accounted for in accordance with the provisions of SFAS No. 128, “Earnings Per Share,” which requires the presentation of basic and diluted earnings per share on the consolidated statement of operations. Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding during each period. Diluted earnings per share assumes the exercise of all stock options having exercise prices less than the average market price of the common stock using the “treasury stock method” and for convertible debt securities using the “if converted method” (See Note 11).

Accrued Litigation Liability

We assess our exposure to loss contingencies including legal matters. If the potential loss is justified to be probable and estimable, we will provide for the exposure. If the actual loss from a contingency differs from management’s estimate, operating results could be impacted. As of April 30, 2009 and April 27, 2008, we did not record any accrued litigation liability.

Recent Accounting Pronouncements Issued

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157 “Fair Value Measurements” (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies to other accounting pronouncements that require or permit fair value measurements. The FASB has previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No. 157 does not require any new fair value measurements. However, for some entities, the application of SFAS No. 157 will change current practice. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007 (the Company’s fiscal year 2009), and interim periods within those years. The Company has assessed the effect of the implementation of this pronouncement on its financial statements and concluded that application of SFAS No. 157 does not materially change current practice.

Fair Value Option for Financial Assets and Liabilities

New Accounting Pronouncements Issued But Not Yet Adopted

As of April 30, 2009, there were several accounting standards and interpretations that had not yet been adopted by us. Below is a discussion of significant standards that may impact us.

Business Combinations

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) establishes principles and requirements to recognize the assets acquired and liabilities assumed in an acquisition transaction and determines what information to disclose to investors regarding the business combination. SFAS No. 141(R) is effective for business combinations for which the acquisition date is on or after the beginning of the first annual period beginning after December 15, 2008. The Company will assess the effect of the implementation of this pronouncement on the financial statements as a result of the May 12, 2009, acquisition of three mini-casinos in Washington State.

Noncontrolling Interests in Consolidated Financial Statements

Disclosures About Derivative Instruments and Hedging Activities

Subsequent Events

Note 4. Restricted Cash

As a result of our sale of the Isle of Capri-Black Hawk, L.L.C. (see Note 5) we agreed with our senior lender to segregate $13,000,000 into a Project Fund to be used for future acquisitions. In addition, we purchased a $14,000 certificate of deposit as collateral for an equivalent letter of credit we issued to our landlord related to our office lease. The letter of credit matured on March 15, 2008 and the certificate of deposit matured on May 15, 2008 and was released to us at maturity. As a result of debt repayments to our senior lender during fiscal year 2009, $7.0 million of the Project Fund was released, leaving $6.0 million restricted cash at April 30, 2009.

During fiscal year 2007, we pledged a $1,050,000 Certificate of Deposit to secure a $1.0 million operating line of credit for American Racing. These funds were returned to us during fiscal year 2008 as part of our sale of our interest in American Racing when the underlying pledge obligation was released.

Note 5. Investments in Unconsolidated Affiliates and Investments in Development Projects

We held investments in various unconsolidated affiliates which were accounted for using the equity method of accounting. Our principal equity method investees were gaming facilities. We had two equity investees RCI and Buena Vista Development Company, which were divested in fiscal 2009. During fiscal 2008, the Company divested itself of its other equity investments which were IC-BH, Route 66, American Racing and Sunrise. As of April 27, 2008, the amount of consolidated accumulated deficits which represented losses from our unconsolidated affiliates was approximately $1.4 million. Our net ownership interest, investments in and earnings (losses) from our unconsolidated affiliates are as follows:

									Earnings (Loss)
	Net Ownership Interest				Investment				Fiscal Years Ended
Unconsolidated affiliates:	April 30, 2009		April 27, 2008		April 30, 2009		April 27, 2008		April 30, 2009			April 27, 2008
	(Percent)
Isle of Capri - Black Hawk, L.L.C. (1)		—		—	$	—	$	—	$	—		$	4,860,613
American Racing and Entertainment,
L.L.C. (2)		—		—		—		—		—			(840,368	)
Buena Vista Development Company,
L.L.C. (3)		—		40		—		154,969		(7,863	)		(16,200	)
Sunrise Land and Mineral Corporation (4)		—		—		—		—		—			51,401
Restaurant Connections International,
Inc. (5)		—		34		—		—		—			—
Total investments in unconsolidated affiliates					$	-	$	154,969

Total earnings (loss) from unconsolidated affiliates									$	(7,863	)	$	4,055,446

(1)

Separate financial statements for this entity are included herein. On January 27, 2008, we sold our ownership interest in IC-BH to the ISLE.

(2)

On June 14, 2007, we sold our ownership interest to two of our partners.

(3)

Effective November 25, 2008, we sold our 40% interest for $16 million cash and a $4 million receivable to our partner and related parties.

(4)

This asset was sold as of January 8, 2008 to our partner.

(5)

Investment in RCI was reduced to zero in fiscal year 2000. This asset was held for sale as of April 27, 2008. We increased our ownership from 34% to 56% effective May 16, 2008. The primary asset owned by RCI was sold on July 31, 2008. RCI was dissolved in February, 2009.

We also hold investments in various development projects that we consolidate. Our net ownership interest and capitalized development costs in development projects are as follows:

	Net Ownership Interest				Capitalized Development Costs
Development Projects:	April 30, 2009		April 27, 2008		April 30, 2009		April 27, 2008
	(Percent)

Gold Mountain Development, L.L.C. (1)		100		100	$	3,437,932	$	3,437,932
NG Washington, LLC (2)		100		-		617,071		-
Nevada Gold Vicksburg, LLC (3)		100		100		-		2,191,899
Other (4)						128,953		215,663
Total investments– development projects					$	4,183,956	$	5,845,494

(1)

Acquisition and development costs incurred for 270 acres of real property in the vicinity of Black Hawk, Colorado.

(2)

Refundable deposits and license costs incurred for three mini casinos in Washington State.

(3)

Deposit and acquisition costs related to acquisition of Horizon Casino/Hotel in Vicksburg, Mississippi.

(4)

Development cost incurred for other development projects.

Investments in Unconsolidated Affiliates

Isle of Capri - Black Hawk, L.L.C.

As of January 27, 2008 we sold our 43% interest in this equity investee and no longer have an ownership interest in the IC-BH. We sold our ownership interest to our partner, Isle of Capri Casinos, Inc. (“Isle”), for $64.6 million in cash and recorded a $39.6 million gain. Isle is now the 100% operating owner. We used the equity method of accounting to account for our investment in IC-BH. Our investment was stated at cost, adjusted for our equity in the undistributed earnings or losses of the project and for distributions we received. Our earnings from IC-BH totaled $4,860,613 for fiscal year 2008. During fiscal year 2008, we received tax distributions of $2,555,000. Our investment in IC-BH was $0 as of April 27, 2008.

Summarized financial information, as of and for the nine month period ended January 27, 2008, for IC-BH is presented below:

	Period Ended
	January 27, 2008
	(in thousands)
Total Assets	$	280,807
Total Liabilities		212,090

Gross Revenue	$	141,685
Total Expenses		131,353
Income tax benefit		988
Net income	$	11,320

Route 66 Casinos, L.L.C.

We were a 51% non-operating owner of Route 66. American Heritage, Inc., d/b/a The Gillmann Group (“The Gillmann Group”) was the 49% operating owner. We used the equity method of accounting to account for our investment in Route 66 Casinos. Our investment was stated at cost, adjusted for our undistributed earnings or losses of the project since inception. We did not record earnings from Route 66 Casinos for all of fiscal year 2009 or all of fiscal year 2008. During fiscal years 2009 and 2008, we did not receive any cash distributions from Route 66 Casinos. On March 28, 2008, the Company was awarded a judgement against the Gillman Group for which we will receive $4.6 million. We signed a Settlement Agreement with the Gillmann Group and related parties as of April 15, 2008 and ultimately sold our investment in Route 66 back to the Gillmann Group (See Note 17). As a result, our investment in Route 66 Casinos was $0 as of April 30, 2009 and April 27, 2008.

We received $1 million in May, 2008, and $1.3 million in June, 2008. The remaining $2.3 million is due April 15, 2010 and we will book any gain at that time.

American Racing and Entertainment, L.L.C.

On June 14, 2007, we sold our 15.67% membership interest in American Racing to our partners, Southern Tier Acquisition II LLC and Oneida Entertainment LLC. The Company will receive three payments totaling $4.3 million for its membership interest: $2.1 million cash was received upon closing, $1.1 million was received in June 2008 and $1.1 million was received in June 2009. The transaction also included the July 12, 2007 release of a certificate of deposit of approximately $1.1 million previously pledged by us on behalf of American Racing.

In addition, we were indemnified by the purchasers in connection with the guarantees of approximately $11.0 million of debt or any other obligations of American Racing. We were released from these guarantees as of March 31, 2008.

Our percentage of the financial results of American Racing has been reflected as part of equity in earnings of unconsolidated subsidiaries through June 14, 2007.

Sunrise Land and Mineral Corporation

On January 8, 2008, we sold our ownership interest to our partners in exchange for forgiveness of approximately $284,000 of debt we owed to Sunrise Land and Mineral Corporation. Equity in earnings recorded for fiscal year 2008 includes the period of April 30, 2007 through January 8, 2008.

Restaurant Connections International, Inc.

We were a founding shareholder of RCI, and owned a 34% interest in RCI as of April 27, 2008. RCI owned the sole Pizza Hut franchise in Sao Paulo, Brazil, giving RCI ownership and operation of 16 Pizza Hut restaurants in Sao Paulo, Brazil. We increased our ownership interest to 56% as of May 15, 2008.

Our 34% ownership of RCI was being accounted for using the equity method of accounting. Our investment in RCI was stated at cost, adjusted for our undistributed earnings or losses of RCI. RCI's earnings allocable to us for fiscal year 2008 totaled $121,600 which was not included in our statement of operations for fiscal year 2008. In accordance with the equity method of accounting, our investment account balance was reduced to zero in fiscal year 2000 and the remaining allocated loss of $617,200 incurred since April 1, 2000 has not been reflected in our financial statements, since we had no further funding obligations with respect to RCI, nor did we guarantee any of their obligations. This asset was held for sale and was presented accordingly in our balance sheet as of April 27, 2008.

On May 12, 2008, the Company entered into a settlement agreement with Clay County Holdings, Inc. (“CCH”), Service Interactive, Inc. (“SI”) and Restaurant Connections, International (“RCI”). The settlement agreement terminated CCH and SI’s respective debts to the Company, which combined totaled approximately $4.6 million, and dismissed our collection lawsuits against CCH and SI in the District Courts of Harris County, Texas. In exchange, RCI issued a promissory note in the amount equal to the combined principal and interest owed to the Company by CCH and SI, CCH cancelled the promissory note from RCI in the amount of $4 million and RCI issued a new note to CCH in amount of $57,000. In addition, the Company increased its ownership in RCI from 34% to 56% and appointed a majority of the Board of Directors. On July 31, 2008, RCI sold its principle asset, International Restaurant of Brazil, for $5.5 million. On August 12, 2008, the Company received $4.7 million from RCI as payment in full of the outstanding note and accrued interest. RCI was dissolved on February 11, 2009.

Investments in Development Projects

Gold Mountain Development, L.L.C.

Through our wholly-owned subsidiary, Gold Mountain Development, L.L.C. (“Gold Mountain”), we own approximately 270 acres of real property in the vicinity of Black Hawk, Colorado which is located in an Environmental Protection Agency National Priorities list area. In November 2004, the Central City Business Improvement District completed the construction of a new 8.4 mile four-lane road connecting Interstate 70 to Central City, Colorado. The new road is adjacent to a portion of our 270 acres. We have listed this property with a real estate broker and therefore have reflected it as an asset that is held for sale. Our capitalized development costs were $3,437,932 as of April 30, 2009 and April 27, 2008. During fiscal year 2009 and 2008, we capitalized development costs of $0 and $3,979, respectively. No interest was capitalized in fiscal year 2009 or 2008. This asset is held for sale and has been presented accordingly in our balance sheets as of April 30, 2009 and April 27, 2008.

Goldfield Resources, Inc.

In June 1998, Goldfield Resources, Inc. (“Goldfield”), was organized as our wholly-owned subsidiary. We approved the transfer of our land and Bureau of Land Management mining claims in the State of Nevada, totaling approximately 9,000 acres, to Goldfield in exchange for all of the shares of common stock of Goldfield. Goldfield was not directly involved in mining operations. In August 1998, Goldfield secured a mining lease for its properties with Metallic Goldfield, Inc. (“Metallic”), and retained a royalty interest under the lease. This lease permitted Goldfield to benefit financially from successful mining operations without incurring the significant labor and machinery costs of operating mining projects.

Prior to August 1, 2003, under the terms of our lease with Metallic, Metallic had been making an advance royalty payment of $4,500 per month. Effective August 1, 2003, the monthly payment was subject to adjustments based on changes in the Consumer Price Index using the August 1, 1998, effective date as the base year. All advance royalty payments were credited to the production royalty payable under the lease.

We sold Goldfield to Metallic on October 18, 2007. As a result of the sale we recorded a gain of $19,000. Prior to sale of the asset, royalty income was $33,805 for fiscal year 2008.

Note 6. Notes Receivable

Notes Receivable

Southern Tier Acquisition II, LLC and Oneida Entertainment, LLC

On June 14, 2007, we sold our membership interest of American Racing to two of our former partners, Southern Tier Acquisition II, LLC (“Southern Tier”) and Oneida Entertainment , LLC (“Oneida”). At April 30, 2009, we had notes receivable of $550,000 from both Southern Tier and Oneida. The notes bear interest of 5% per annum. The notes receivable and accrued interest were paid in full on June 15, 2009.

Notes Receivable - Development Projects

From time to time, we make advances to third parties related to the development of gaming/entertainment projects. We make these advances after undertaking extensive due diligence. On a quarterly basis, we review each of our notes receivable to evaluate whether the collection of our note receivable is still probable. In our analysis, we review the economic feasibility and the current financial, legislative and development status of the project. If our analysis indicates that the project is no longer economically feasible, the note receivable will be written down to its estimated fair value. During fiscal 2008, we determined that our ability to collect $859,000 of accrued interest and $1.5 million of the original $3.2 million notes receivable from Big City Capital, LLC (“Big City Capital”) had been impaired. As a result we wrote down the notes receivable to $1.7 million, by establishing a $1.5 million allowance, and we wrote off the accrued interest. Also during fiscal 2008, we determined that our ability to collect a $1.4 million note receivable and $0.5 million of related accrued interest from the La Jolla Band Indian tribe had been impaired and was written off as of April 27, 2008.

At April 30, 2009, we had notes receivable of $1.7 million related to the development of gaming/entertainment projects, net of a $1.5 million allowance, of which $3.2 million is represented by notes receivable from Big City Capital.

The repayment of these loans and accrued interest will be largely dependent upon the ability to obtain financing at each development project and/or the performance of each development project.

Clay County Holdings, Inc. and Service Interactive, Inc.

On May 12. 2008, the Company entered into a settlement agreement with Clay County Holdings, Inc. (“CCH”), Service Interactive, Inc. (“SI”) and Restaurant Connections, International (“RCI”). The settlement agreement terminated CCH and SI’s respective debts to the Company, which combined totaled approximately $4.6 million, and dismissed our collection lawsuits against CCH and SI in the District Courts of Harris County, Texas. In exchange, RCI issued a promissory note in the amount equal to the combined principal and interest owed to the Company by CCH and SI, CCH cancelled the promissory note from RCI in the amount of $4 million and RCI issued a new note to CCH in amount of $57,000. In addition, the Company increased its ownership in RCI from 34% to 56% and appointed a majority of the Board of Directors. On July 31, 2008, RCI sold its principal asset, International Restaurant of Brazil, for $5.5 million. On August 12, 2008, the Company received $4.7 million from RCI as payment in full of the outstanding note and accrued interest. RCI was dissolved in February, 2009.

Note 7. Long-Term Debt

Long-Term Financing Obligations

Our long-term financing obligations for the fiscal years ended April 30, 2009 and April 27, 2008 are as follows:

	April 30,		April 27,
	2009		2008

$15.55 million Promissory Note, 10%, maturing June 2013	$	6,000,000	$	15,550,000

Total		6,000,000		15,550,000
Less: current maturities		-		-
Long-term debt, less current maturities	$	6,000,000	$	15,550,000

Effective March 1, 2008, our $55 million revolving credit facility (“Credit Facility”) was replaced by a $15.6 million interest only Promissory Note which matures on June 30, 2010. The interest rate on the note is fixed for the term at 10.0%. Subsequent to April 27, 2008, we paid a financial advisor a $300,000 finder’s fee for negotiating the replacement of the Credit Facility. The Company repaid $39.4 million of the Credit Facility with proceeds generated from the sale of IC-BH. The Company recorded a loss on extinguishment of debt of $203,160 upon repayment of the Credit Facility representing the remaining unamortized deferred loan costs.

The Promissory Note is secured by substantially all of our assets. In addition, we granted to the lender certain pledges and security interests in and to all of our interests in the equity securities of our subsidiaries. Amounts borrowed under the Promissory Note are guaranteed on a joint and several basis by certain of our wholly owned subsidiaries. Such guarantees are full and unconditional. The subsidiary guarantors also granted certain pledges and security interests in certain of their assets. Our deferred loan issue costs were $150,306 and $278,571 as of April 30, 2009 and April 27, 2008, respectively. Amortization of deferred loan issue costs was $128,266 and $764,329 for fiscal years 2009 and 2008, respectively. Both commitment fees and amortization of loan issue costs were charged to interest expense.

On July 7, 2009, the Company entered into an Amended and Restated Security Agreement (the “ARSA”), and supporting documents, with its principal lender which replaces its previous loan agreement with such lender. Pursuant to ARSA, the Company extended its long term debt in the principal amount of $6.0 million and granted a security interest in and pledged certain collateral. Interest payments on the amount owed will be made monthly at an annual rate of 10% through June 2010 and 11% thereafter, with the principal amount payable on or before June 30, 2013. Under the term of the ARSA, the $6.0 million may only be utilized for future acquisitions by the Company and may be repaid at any time without penalty.

The aggregate principal payments due on total long-term debt over the next five fiscal years and thereafter are as follows:

Fiscal Year Ending

2010	$	-
2011		-
2012		-
2013		-
2014		6,000,000
	$	6,000,000

Note 8. Acquisition

On May 12, 2009, we acquired three mini-casinos in Washington State. See Note 19.

Note 9. Income Taxes

Income taxes are provided for in accordance with SFAS No. 109. Under SFAS No. 109, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of all assets and liabilities, measured by using the enacted statutory tax rates. SFAS No. 109 also provides for the recording of a deferred tax asset for net operating loss carryforwards (“NOLs”). For fiscal year ended April 30, 2009, we have state NOLs of $1,420,084.

As of April 30, 2009 and April 27, 2008 we had deferred tax assets as a result of the future tax benefit attributable to timing differences, determined by applying the enacted statutory rate of 34.0% in 2009 and 35% in 2008. We recorded a deferred tax asset in connection with tax credit carryforwards and for compensation expense in connection with the issuance of stock options, and we recorded a deferred tax liability for allocated earnings of our equity investments that were not currently taxable for federal income tax purposes.

Deferred tax assets and liabilities at April 30, 2009 and April 27, 2008 are comprised of the following:

	April 30, 2009				April 27, 2008
					(Restated)
Deferred tax assets:
Net operating loss carryforwards		$	39,746		$	23,325
Fixed assets			583,401			600,442
Stock options			304,927			236,249
Impairment of note receivable and accrued interest			552,917			881,778
Total deferred tax assets			1,480,991			1,741,794
Deferred tax liabilities:
Equity in allocated earnings of equity investments			-			(81,090	)
Revenue not recognized for tax reporting and other			(881,194	)		(774,978	)
Total deferred tax liabilities			(881,194	)		(856,068	)
Net deferred tax assets before valuation allowance			599,797			885,726
Valuation allowance			-			-
Net deferred tax assets		$	599,797		$	885,726

Reconciliations between the statutory federal income tax expense rate of 34% in 2009 and 35% in 2008 and our effective income tax rate as a percentage of income before income tax expense (benefit) is as follows:

	Years Ended
	April 30, 2009						April 27, 2008 (Restated)
	Percent			Dollars			Percent			Dollars

Income tax expense (benefit) at statutory federal rate		34.0		$	(2,096,903	)		35.0		$	11,120,003
State taxes		0.8			(49,038	)		2.0			624,000

Permanent differences:

Taxable Distribution of Route 66 earnings		—			-			—			—
Tax credit carryforwards		—			—			(0.9	)		(275,530	)
Return to provision (permanent true-up)		—			—			—			—
Current tax true-up		—			—			—			—
Change in valuation allowance and other		(2.7	)		166,716			(7.6	)		(2,404,837	)
Effective income tax rate		32.1		$	(1,979,225	)		28.5		$	9,063,636

Note 10. Equity Transactions, Stock Option Plan and Warrants

Information about our share-based plans

Our 1999 Stock Option Plan, as amended (the “Stock Option Plan”), provided for the granting of awards to our directors, officers, employees and independent contractors. The Stock Option Plan expired in January, 2009 and was replaced with a new plan described below. The number of shares of common stock reserved for issuance under the Stock Option Plan was 3,250,000 shares. The plan was administered by the Compensation Committee (the “Committee”) of the Board of Directors. The Committee had discretion under the plan regarding the vesting and service requirements, exercise price and other conditions

On April 14, 2009, the shareholders of the Company approved the Company’s 2009 Equity Incentive Plan (the “2009 Plan”). The number of shares with respect to which awards may be granted under the 2009 Plan is 1,750,000 shares. The 2009 Plan is similar to the 1999 Stock Option Plan in most respects and continues to provide for awards which may be made subject to time based or performance based vesting. Under the 2009 Plan the Committee is authorized to grant the following types of awards:

Stock Options including Incentive Stock Options (“ISO”)

Options not intended to qualify as ISO’s

Stock Appreciation Rights

Restricted Stock Grants.

To date, the Committee has only awarded stock options and restricted stock under both plans. Our practice has been to issue new shares upon the exercise of stock options. Stock option rights granted prior to fiscal year 2006 under the Stock Option Plan generally have 5-year terms and are fully vested and exercisable immediately. Subsequent option rights granted generally have 3, 5 or 10 year terms and are exercisable in three or five equal annual installments, with some options grants providing for immediate vesting for a portion of the grant.

A summary of activity under the Company’s share-based payment plans for the years ended April 30, 2009 and April 27, 2008 is presented below:

				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
	Shares			Price		Term (Year)		Value
Outstanding at April 29, 2007		880,000		$	8.50
Granted		955,000			1.56
Exercised		-
Forfeited or expired		(501,000	)		7.45

Outstanding at April 27, 2008		1,334,000		$	3.93		4.20	$	-

Exercisable at April 27, 2008		637,330		$	6.25		3.54	$	-

Outstanding at April 27, 2008		1,334,000		$	3.93
Granted		30,000			0.78
Exercised		-
Forfeited or expired		(228,000	)		10.45

Outstanding at April 30, 2009		1,136,000		$	2.54		3.86	$	-

Exercisable at April 30, 2009		765,992		$	2.96		4.15	$	-

The weighted-average grant-date fair value of options granted during the years ended April 30, 2009, and April 27, 2008 was $0.53, and $.81, respectively. There were no stock options or warrants exercised during the years ended April 30, 2009, and April 27, 2008. As of April 30, 2009, there was a total of $76,600 of unamortized compensation cost related to stock options, which cost is expected to be recognized over a weighted-average period of 1.0 years.

Compensation cost for stock options was based on the fair value of each award, measured by applying the Black-Scholes model on the date of grant, using the following weighted-average assumptions:

	Year Ended			Year Ended
	April 30, 2009			April 27, 2008

Expected volatility		127.8	%		84.2	%
Expected term (years)		2.50			2.50
Expected dividend yield		-			-
Risk-free interest rate		1.40	%		3.43	%
Forfeiture rate		-			-

Expected volatility is based on historical volatility on the Company’s stock. The expected term considers the contractual term of the option as well as historical exercise and forfeiture behavior. The risk-free interest rate is based on the rates in effect on the grant date for US Treasury instruments with maturities matching the relevant expected term of the award.

Significant option and warrant groups outstanding at April 30, 2009, and related weighted average exercise price and weighted average remaining contractual life information is as follows:

							Weighted
							Average
					Weighted		Remaining
	Options		Options		Average		Contractual
Grant Date	Outstanding		Exercisable		Exercise Price		Life (Years)
September 2004		70,000		70,000	$	11.40		0.4
October 2006		100,000		100,000	$	4.87		7.5
December 2006		26,000		26,000	$	3.79		7.5
January 2007		30,000		30,000	$	3.24		7.7
July 2007		200,000		50,000	$	2.01		3.2
August 2007		360,000		239,998	$	1.65		3.3
October 2007		25,000		25,000	$	1.35		3.5
January 2008		225,000		150,000	$	1.20		3.7
April 2008		70,000		46,666	$	1.14		4.0
May 2008		5,000		3,328	$	1.14		4.0
April 2009		25,000		25,000	$	.71		5.0
Total		1,136,000		765,992	$	2.96		4.2

Treasury Stock

We previously approved the repurchase of up to 200,000 shares of our common stock in the open market in September 2002 and June 2003. In fiscal year 2005, we announced an increase of 500,000 shares to our stock buyback program. In fiscal year 2006, we announced another increase of 900,000 shares to our stock buyback program. Under this program, we did not repurchase any shares during the fiscal years ended April 30, 2009 and April 27, 2008, respectively.

Note 11. Earnings Per Share

The following is presented as a reconciliation of the numerators and denominators of basic and diluted earnings per share computations, in accordance with SFAS No. 128:

	Fiscal Year Ended
	April 30, 2009			April 27, 2008
				(Restated)
Numerator:
Basic:
Net income (loss) available to common stockholders	$	(4,188,136	)	$	22,707,802
Diluted:
Net income (loss) available to common stockholders	$	(4,188,136	)	$	22,707,802
Denominator:
Basic weighted average number of common shares
outstanding		12,939,130			12,939,130
Dilutive effect of common stock options and warrants					6,021
Diluted weighted average number of common shares
outstanding		12,939,130			12,945,151
Earnings (loss) per share:
Net income (loss) per common share – basic	$	(.32	)	$	1.75
Net income (loss) per common share - diluted	$	(.32	)	$	1.75

For fiscal years 2009 and 2008, potential dilutive common shares issuable under options of 1,136,000 and 1,327,979 were not included in the calculation of diluted earnings per share as they were anti-dilutive.

Note 12. Other Assets

Other assets consisted of the following at April 30, 2009 and April 27,2008:

	April 30, 2009		April 27, 2008

Accrued interest receivable	$	167,731	$	4,904,564
American Heritage Receivable		1,597,183		1,597,183
BVO Receivable		4,000,000		—
Deferred loan issue cost, net		150,306		278,570
Other assets	$	5,915,220	$	6,780,317

The settlement agreement pertains to reclassing a portion of our equity investment in Route 66 after considering a $2.3 million intial reclass to accounts receivable for amounts allocated from our investment in Route 66. This amount represents the remaining equity investment in Route 66 that is now considered a receivable. Per the settlement agreement executed in April 2008, the Gillmann Group is scheduled to pay us $2.3 million on or before April 15, 2010. We will record any gain upon receipt of the funds. The BVO receivable bears interest at the rate of prime plus 1% and is guaranteed by BVO.

Note 13. Segment Reporting

We operate in two major business segments (i) gaming and (ii) non-core. The gaming segment as of and for the fiscal year ended April 30, 2009, consists of the Colorado Grande Casino and Buena Vista Development. The gaming segment as of and for the fiscal year ended April 27, 2008 also includes IC-BH, Route 66 Casino, and American Racing.

Summarized financial information for our reportable segments is shown in the following table. The “Non-Core” column includes corporate-related items, results of insignificant operations, and segment profit (loss) and income and expenses not allocated to reportable segments.

	As of and for the Fiscal Year Ended April 30, 2009
	Gaming			Non-Core			Totals

Gross revenues	$	7,294,763		$	—		$	7,294,763
Segment loss		(6,150,243	)		(17,118	)		(6,167,361	)
Segment assets		16,153,018			3,595,258			19,748,276
Depreciation and amortization		622,290			5,328			627,618
Additions to property and equipment		379,296			—			379,296
Interest expense		1,307,296			—			1,307,296
Interest income		975,490			—			975,490
Income tax benefit		(1,973,731	)		(5,494	)		(1,979,225	)
Loss from Buena Vista Development, L.L.C.		(7,863	)		—			(7,863	)

	As of and for the Fiscal Year Ended April 27, 2008 (Restated)
	Gaming			Non-Core			Totals

Gross revenues	$	8,158,647		$	33,805		$	8,192,452
Segment profit (loss)		31,883,391			(111,953	)		31,771,438
Segment assets		35,142,093			3,733,503			38,875,596
Equity investment:
Buena Vista Development Company, L.L.C.		154,969			—			154,969
Depreciation and amortization		735,684			8,099			743,783
Additions to property and equipment		222,524			—			222,524
Interest expense		4,628,881			—			4,628,881
Interest income		2,007,898			—			2,007,898
Income tax expense (benefit)		9,095,574			(31,938	)		9,063,636
Earnings from Isle of Capri-Black Hawk, L.L.C.		4,860,613			—			4,860,613
Loss from American Racing and Entertainment, L.L.C.		(840,368	)		—			(840,368	)
Loss from Buena Vista Development, L.L.C.		(16,200	)		—			(16,200	)
Earnings from Sunrise Land and Mineral Corporation		—			51,401			51,401

Reconciliation of reportable segment assets to our consolidated totals is as follows:

	April 30,		April 27,
	2009		2008
			(Restated)

Total assets for reportable segments	$	19,748,276	$	38,875,596
Cash not allocated to segments		19,834,544		14,410,313
Notes receivable not allocated to segments		—		5,721,066
Other assets not allocated to segments		2,472,166		885,726
Total assets	$	42,054,986	$	59,892,701

Note 14. 401(k) Plan

We have a 401(k) plan under which employees 21 years of age or older qualify for participation. Participants are permitted to make contributions to the plan on a pre-tax salary reduction basis in accordance with the provisions of Section 401(k) of the Internal Revenue Code. All such contributions are immediately vested and nonforfeitable. Under the provisions of the plan, we may make discretionary matching contributions of 100% of employee contributions up to 3% of employees' compensation and 50% of up to the next 2% of employees' compensation. Employees vest in Company contributions immediately. Our discretionary contributions for fiscal years 2009 and 2008, were $70,086 and $82,003, respectively.

Note 15. Related Party Transactions

None.

Note 16. Commitments and Contingencies

We rent office space in Houston, Texas, under a non-cancelable operating lease which expires on March 31, 2011. Also, we lease (through our wholly-owned subsidiary, Colorado Grande Enterprises, Inc.) a portion of a building in Cripple Creek, Colorado, and an adjacent parking lot, for use in connection with the Colorado Grande Casino facilities. We lease this property at an annual rent of the greater of $144,000 or 5% of Colorado Grande-Cripple Creek’s adjusted gross gaming revenues, as defined, with an annual cap of $400,000. This lease is for an initial term of sixteen years with an option to renew for fifteen years with the final option period concluding January 31, 2021. On July 7, 2005, we exercised the option to extend the lease to January 2021. On April 1, 2008 we extended the lease to January 2033 at a flat annual rent of $400,000 from February 2021 through January 2033.

The expected remaining future annual minimum lease payments as of April 30, 2009 are as follows:

Fiscal Years	Corporate Office Lease Payment		Colorado Grande Building Lease Payment		Total Lease Payment

2010	$	103,921	$	386,250	$	490,171
2011		103,921		400,000		503,921
2012		—		400,000		400,000
2013		—		400,000		400,000
2014		—		400,000		400,000
Thereafter		—		7,500,000		7,500,000
	$	207,842	$	9,486,250	$	9,694,092

Rent expense for our corporate office for fiscal years 2009 and 2008 was $106,021 and $213,027, respectively. Rent expense for Colorado Grande’s casino building was $252,013 and $344,875 for fiscal years 2009 and 2008, respectively.

We continue to pursue additional development opportunities that may require, individually and in the aggregate, significant commitments of capital, extensions of credit, up-front payments to third parties and guarantees by the Company of third-party debt. .

We indemnified our officers and directors for certain events or occurrences while the director or officer is or was serving at our request in such capacity. The maximum potential amount of future payments we could be required to make under these indemnification obligations is unlimited; however, we have a Directors and Officers Liability Insurance policy that limits our exposure and enables us to recover a portion of any future amounts paid, provided that such insurance policy provides coverage.

Note 17. Legal Proceedings

Route 66 Casinos

On April 15, 2008, the Company entered into a Settlement Agreement and Release (“Settlement Agreement”) with American Heritage, Inc. (“AHI”) and Frederick C. Gillmann (“Gillmann”). AHI and Gillmann are referred to collectively as the “AHI Parties”. The Settlement Agreement constitutes a full and final settlement of the Route 66 Casinos litigation subject to the performance of the AHI Parties.

Pursuant to the terms of the Settlement Agreement:

The AHI Parties shall pay $1.0 million to the Company on May 1, 2008;

The AHI Parties shall pay $1.3 million to the Company on May 31, 2008;

The AHI Parties shall pay $2.3 million to the Company no later than April 15, 2010.

Contemporaneously with the execution of the Settlement Agreement, the AHI Parties assigned certain collateral as security for the payment obligations described above.

Also, contemporaneously with the execution of the Settlement Agreement, the AHI Parties executed an agreed final and non-appealable judgment in favor of the Company and against AHI and Gillmann, jointly and severally in the amount of $9,425,602 (the “Agreed Judgment”). The Company will not seek to enforce the Agreed Judgment unless and until the AHI Parties fail to perform any of their obligations under the Settlement Agreement.

As of April 30, 2009, the payment of $1.0 million due on May 1, 2008 and the payment of $1.3 million due on May 31, 2008 have been received.

Note 18. Quarterly Financial Information (Unaudited)

The following table sets forth certain quarterly financial information for each of the fiscal quarters during the years ended April 30, 2009 and April 27, 2008.

			Earnings			Income			Net income			Diluted
			(loss) from			(loss) before			(loss) applicable			earnings (loss)
			unconsolidated			tax benefit			to common			per common
	Net revenues		affiliates			(expense)			stockholders			share (b)
Consolidated Statements of Operations:	(in thousands, except per share amounts)
Fiscal Year ended April 30, 2009
Quarter ended July 31, 2008	$	1,620	$	(4	)	$	(1,331	)	$	(826	)	$	(0.06	)
Quarter ended October 31, 2008		1,498		(4	)		(2,377	)(a)		(1,621	)		(0.13	)
Quarter ended January 31, 2009		1,370		-			(707	)		(467	)		(0.04	)
Quarter ended April 30, 2009		1,380		-			(1,752	)		(1,274	)		(0.09	)
Fiscal Year ended April 27, 2008
Quarter ended July 29, 2007	$	1,980	$	1,190		$	580		$	542		$	0.04
Quarter ended October 28, 2007		1,864		1,954			(604	)		(604	)		(0.05	)
Quarter ended January 27, 2008		1,412		918			35,157	(c)		25,911			2.00
Quarter ended April 27, 2008 (Restated)		1,477		(7	)		(3,362	)		(3,142	)		(0.24	)

(a) During the second quarter of fiscal 2009, we wrote off a $1.2 million investment in Horizon Casino in Vicksburg, Mississippi.

(b) Because income per share amounts are calculated using the weighted average number of common and dilutive common equivalent shares outstanding during each quarter, the sum of the per share amounts for the four quarters may not equal the total income per share amounts for the year.

(c) In the third quarter of fiscal 2008, we sold our ownership interest in IC-BH and recorded a $39.6 million pre-tax gain.

Note 19. Subsequent Event

Acquisition

On May 12, 2009, the Company acquired three casinos in the state of Washington. The casinos are the Crazy Moose Casino, located in Pasco, the Coyote Bob's Roadhouse Casino, located in Kennewick, and the Crazy Moose Casino, located in Mountlake Terrace in close proximity to Seattle, collectively “Washington Casinos”. The Company purchased the three casinos from Crazy Moose Casino, Inc., Crazy Moose Casino II, Inc., Coyote Bob’s Casino, Inc. and Gullwing III, LLC (collectively, the “Sellers”) for $15.75 million, $11.75 million of which was paid in cash and $4.0 million by a promissory note issued by the Company to the Sellers that is due May 12, 2012, and bears an interest rate of 7%. Interest is due quarterly.

The following combined pro-forma combined balance sheet and statement of operations of the Company and Washington Casinos are presented to give effect to the acquisition as if it occurred April 30, 2009 with respect to the balance sheet and April 28, 2008, with respect to the statement of operations.

Nevada Gold & Casinos, Inc.

Pro-forma Balance Sheet as of the Fiscal Year Ended April 30, 2009

	Nevada Gold As reported in Form 10-K			Washington Casinos reported at April 30, 2009			Pro-forma Adjustments			Pro-forma Balance Sheet
				(unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	13,834,544		$	1,378,208		$	(12,234,579	)	$	2,978,173
Restricted cash		6,000,000									6,000,000
Accounts receivable		12,342									12,342
Prepaid expenses		235,847									235,847
Income tax receivable		1,872,369						(558,248	)		1,314,121
Notes receivable, current portion		1,100,000									1,100,000
Other current assets		46,444			124,262						170,706
Total current assets		23,101,546			1,502,470			(12,792,827	)		11,811,189

Investments in development projects		746,024						(672,507	)		73,517
Investments in development projects held for sale		3,437,932									3,437,932
Notes receivable - development projects, net of current portion		1,700,000									1,700,000
Goodwill		5,462,918						10,065,422			15,528,340
Property and equipment, net of accumulated depreciation
of $3,966,635 at April 30, 2009		1,091,549			1,838,842			200,261			3,130,652
Intangible assets, net of accumulated amortization of
of $233,333 at April 30, 2009								3,266,667			3,266,667
Deferred tax asset		599,797									599,797
Other assets		5,915,220			33,726			486,191			6,435,137
Total assets	$	42,054,986		$	3,375,038		$	553,207		$	45,983,231

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	846,062		$	501,201		$	39,642		$	1,386,905
Other accrued liabilities		197,833			171,341						369,174
Long-term debt, current portion
Total current liabilities		1,043,895			672,542			39,642			1,756,079

Long-term debt, net of current portion and discount		6,000,000			541,660			4,000,000			10,541,660
Other liabilities		44,487									44,487
Total liabilities		7,088,382			1,214,202			4,039,642			12,342,226

Commitments and contingencies

Stockholders' equity:
Common stock, $0.12 par value per share; 50,000,000 shares authorized; 13,935,330 shares issued and 12,939,130 shares outstanding at April 30, 2009		1,672,240			30			(30	)		1,672,240
Capital stock					50,000			(50,000	)
Paid-in capital					713,652			(713,652	)
Additional paid-in capital		19,297,560			252,414			(252,414	)		19,297,560
Retained earnings		24,213,754			4,070,836			(5,396,435	)		22,888,155
Dividends Paid					(2,926,096	)		2,926,096
Treasury stock, 996,200 shares at April 30, 2009, at cost		(10,216,950	)								(10,216,950	)
Accumulated other comprehensive income
Total stockholders' equity		34,966,604			2,160,836			(3,486,435	)		33,641,005
Total liabilities and stockholders' equity	$	42,054,986		$	3,375,038		$	553,207		$	45,983,231

Nevada Gold & Casinos, Inc.

Pro-forma Statement of Operations for the Fiscal Year Ended April 30, 2009

	Nevada Gold As reported in Form 10-K			Washington Casinos reported at April 30, 2009			Pro-forma Adjustments			Pro-forma Stmt of Operations
				(unaudited)

Revenues:
Casino	$	5,356,885		$	14,054,949		$			$	19,411,834
Food and beverage		1,395,130			3,312,588						4,707,718
Other		49,366			399,874						449,240
Management fees		493,382			278,068						771,450
Gross revenues		7,294,763			18,045,479						25,340,242
Less promotional allowances		(1,426,511	)		(1,373,483	)					(2,799,994	)
Net revenues		5,868,252			16,671,996						22,540,248

Operating expenses:
Casino		1,750,014			11,140,526						12,890,540
Food and beverage		614,779			1,584,949						2,199,728
Marketing and administrative		2,485,881			768,153						3,254,034
Facility		362,009			218,696						580,705
Corporate expense		4,366,670			349,405						4,716,075
Legal expenses		403,694									403,694
Depreciation and amortization		627,618			160,530			369,232			1,157,380
Write-off of project development cost		1,215,383									1,215,383
Other		145,018									145,018
Total operating expenses		11,971,066			14,222,259			369,232			26,562,557
Operating income (loss)		(6,102,814	)		2,449,737			(369,232	)		(4,022,309	)
Non-operating income (expenses):
Earnings (loss) from unconsolidated affiliates		(7,863	)								(7,863	)
Gain on sale of equity investees		403,388									403,388
Interest income		975,490			17,939			(118,119	)		875,310
Interest expense		(1,307,296	)		(55,493	)		(280,000	)		(1,642,789	)
Amortization of loan issue costs		(128,266	)		(2,927	)					(131,193	)
Income (loss) before income tax expense		(6,167,361	)		2,409,256			(767,351	)		(4,525,456	)
Income tax expense (benefit)
Current		(2,265,155	)					558,248			(1,706,907	)
Deferred and change in valuation allowance		285,930									285,930
Total income tax expense (benefit)		(1,979,225	)					558,248			(1,420,977	)
Net income (loss)	$	(4,188,136	)	$	2,409,256		$	(1,325,599	)	$	(3,104,479	)

Per share information:
Net income (loss) per common share - basic	$	(0.32	)	$	0.19		$	(0.10	)	$	(0.24	)
Net income (loss) per common share - diluted	$	(0.32	)	$	0.19		$	(0.10	)	$	(0.24	)

Basic weighted average number of shares outstanding		12,939,130			12,939,130			12,939,130			12,939,130

Diluted weighted average number of shares outstanding		12,939,130			12,939,130			12,939,130			12,939,130

Pro-forma adjustments to give effect to the acquisition as if it occurred as of April 28, 2008 (the first day of fiscal 2009):

	Debit		Credit
Interest income		118,362
Cash				118,362
To reduce interest income for use of cash to purchase casinos

Interest expense		280,000
Cash				280,000
To account for interest on Seller $4 million Note at 7% simple interest rate

Amortization of intangible assets expense		233,333
Accumulated amortization of intangible assets				233,333
To amortize $3.5 million of intangible assets over 15 years

Depreciation expense		52,565
Accumulated depreciation				52,565
To depreciate stepped up basis of $252,826 fixed assets over 5 years

Depreciation expense		83,333
Accumulated depreciation				83,333
To depreciate stepped up basis of $250,000 other assets over 3 years

Cash		243
Interest income				243
To account for interest on $500,000 deposit made to acquire casinos

Income tax expense-current		819,147
Income tax receivable				819,147
To account for federal income tax at 34% of acquired casinos

Income tax receivable		260,899
Income tax expense-current				260,899

Pro-forma adjustments to give effect to the acquisition as if it occurred April 30, 2009 (the last day of fiscal 2009):

Goodwill	10,065,422
Property, plant & equipment	252,826
Intangible assets	3,500,000
Other assets	569,525
Common stock	30
Capital stock	50,000
Paid-in-capital	713,652
Additional paid-in-capital	252,414
Retained earnings	4,070,836
Cash		11,836,460
Investment in development projects		672,507
Accounts payable		39,642
Long-term debt		4,000,000
Dividends paid		2,926,096

Long Term Debt

On July 7, 2009, the Company entered into an Amended and Restated Security Agreement (the “ARSA”), and supporting documents, with its principal lender which replaces its previous loan agreement with such lender. Pursuant to the ARSA, the Company extended its long term debt in the principal amount of $6.0 million and granted a security interest in, and pledged certain collateral. Interest payments on the amount owed will be made monthly at an annual rate of 10% through June 2010 and 11% thereafter, with the principal amount payable on or before June 30, 2013. Under the terms of the ARSA, the $6.0 million may only be utilized for future acquisitions by the Company and may be repaid at any time without penalty.

Note 20. Restatement

Consolidated Statement of Operations:

	Year ended April 27, 2008
	Originally
	Reported			Adjustment			As Restated

Deferred tax benefit	$	(1,885,726	)	$	1,000,000		$	(885,726	)
Net income		23,707,802			(1,000,000	)		22,707,802
Earnings per share - basic		1.83			0.08			1.75
Earnings per share - diluted		1.83			0.08			1.75

Consolidating Balance Sheet:

	April 27, 2008
	Originally
	Reported		Adjustment			As Restated

Deferred tax assets	$	1,885,726	$	(1,000,000	)	$	885,726
Retained earnings		29,401,890		(1,000,000	)		28,401,890

All footnotes, where applicable, have been adjusted to conform to this restatement.

Isle of Capri Black Hawk, L.L.C.

Consolidated Financial Statements

For the Nine Months Ended January 27, 2008

Report of Independent Auditors			58
Consolidated Financial Statements
Consolidated Balance Sheet, January 27, 2008			59
Consolidated Statement of Income, Nine Months Ended January 27, 2008			60
Consolidated Statement of Members’ Equity, Nine Months Ended January 27, 2008			61
Consolidated Statement of Cash Flows, Nine Months Ended January 27, 2008			62
Notes to Consolidated Financial Statements			63

Report of Independent Registered Public Accounting Firm

The Members of

Isle of Capri Black Hawk, L.L.C.

We have audited the accompanying consolidated balance sheets of the Isle of Capri Black Hawk, L.L.C. (the Company) as of January 27, 2008 and April 29, 2007, and the related consolidated statements of income, members' equity, and cash flows for the nine month period ended January 27, 2008, and the fiscal years ended April 29, 2007, and April 30, 2006. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Isle of Capri Black Hawk, L.L.C. at January 27, 2008, and April 29, 2007 and the consolidated results of its operations and its cash flows for the nine month period ended January 27, 2008, and the fiscal years ended April 29, 2007, and April 30, 2006 in conformity with U.S. generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, on May 1, 2006, the Company changed its method of accounting for share-based payments and adopted the provisions of Securities and Exchange Commission Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements..

/s/ ERNST & YOUNG, LLP

St. Louis, Missouri

July 10, 2008

Isle of Capri Black Hawk, L.L.C.

Consolidated Balance Sheet

(Dollars in thousands)

	January 27, 2008
Assets
Current assets:
Cash and cash equivalents	$	13,691
Accounts receivable - trade, net		358
Accounts receivable - member		41
Deferred income taxes		209
Inventories		1,234
Note receivable - member		-
Prepaid expenses and other		1,796
Total current assets		17,329
Property and equipment, net		227,558
Other assets:
Goodwill		14,665
Other intangible assets		12,200
Deferred financing costs, net of accumulated amortization of $725 and $437		1,615
Prepaid deposits and other		337
Deferred income taxes		7,103
Total assets	$	280,807

Liabilities and members' equity
Current liabilities:
Current maturities of long-term debt	$	2,037
Accounts payable - trade		1,661
Accounts payable - member		10,285
Accrued liabilities:
Interest		1,162
Payroll and related expenses		3,819
Property, gaming and other taxes		5,644
Progressive jackpot and slot club awards		2,034
Other		407
Total current liabilities		27,049

Long-term debt, less current maturities		183,970
Other long-term liabilities		1,071

Members' equity:
Casino America of Colorado, Inc.		38,555
Blackhawk Gold, Ltd.		30,162
Accumulated other comprehensive loss		-
Total members' equity		68,717
Total liabilities and members' equity	$	280,807

See accompanying notes to consolidated financial statements.

Isle of Capri Black Hawk, L.L.C.

Consolidated Statement of Income

(Dollars in thousands)

	Nine Months
	Ended
	January 27, 2008
Revenues:
Casino	$	120,453
Rooms		7,349
Food, beverage and other		13,883
Gross revenues		141,685
Less promotional allowances		29,090
Net revenues		112,595

Operating expenses:
Casino		15,964
Gaming taxes		23,336
Rooms		1,448
Food, beverage and other		2,350
Facilities		5,514
Marketing and administrative		25,026
Management fees		5,199
Depreciation		11,965
Total operating expenses		90,802

Operating income		21,793

Interest expense		(10,958	)
Interest income		41
Other income (expense)		(544	)
Loss on early extinguishment of debt		-

Income from continuing operations before income tax		10,332
Income tax benefit		988
Income from continuing operations		11,320

Loss from discontinued operations		-
Net income	$	11,320

See accompanying notes to consolidated financial statements.

Isle of Capri Black Hawk, L.L.C.

Consolidated Statement of Members’ Equity

(Dollars in thousands)

							Accumulated
							Other			Total
	Casino America			Blackhawk			Comprehensive			Members'
	of Colorado, Inc.			Gold, Ltd.			Loss (Income)			Equity

Balance, April 29, 2007		35,382			27,849			(22	)		63,209
Net income		6,452			4,868						11,320
Reclassification of unrealized loss on interest rate swap contract		-			-			22			22
Comprehensive income											11,342
Stock compensation expense		109			-			-			109
Members' distributions		(3,388	)		(2,555	)		-			(5,943	)
Balance, January 27, 2008	$	38,555		$	30,162		$	-		$	68,717

See accompanying notes to consolidated financial statements.

Isle of Capri Black Hawk, L.L.C.

Consolidated Statement of Cash Flows

(Dollars in thousands)

	Nine Months Ended
	January 27, 2008
Operating activities:
Net income	$	11,320
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		11,965
Amortization of deferred financing costs		288
Gain on disposal of assets		(91	)
Deferred income taxes		(982	)
(Gain) loss on derivative instruments		544
Stock compensation expense		109
Loss on early extinguishment of debt		-
Changes in operating assets and liabilities
Accounts receivable		135
Income tax receivable		(988	)
Prepaid expenses and other assets		(1,245	)
Accounts payable and accrued liabilities		(303	)
Net cash provided by operating activities		20,752

Investing activities:
Purchases of property and equipment, net		(6,661	)
Increase in restricted cash		-
Net cash used in investing activities		(6,661	)

Financing activities:
Proceeds from debt		-
Proceeds from line of credit		1,600
Principal payments on debt		(1,491	)
Principal payments on line of credit		(18,000	)
Intercompany - member		7,891
Deferred financing costs		(591	)
Distributions to members		(4,638	)
Net cash (used in) provided by financing activities		(15,229	)

Net decrease in cash and cash equivalents		(1,138	)
Cash and cash equivalents at beginning of year		14,829
Cash and cash equivalents at end of year	$	13,691

Supplemental disclosure of cash flow information:
Cash payments for interest	$	10,926
Cash payments for income taxes, net of refunds	$	-

Supplemental schedule of noncash investing and financing activities:
Construction costs funded through accounts payable	$	1,972

Supplemental schedule of noncash financing activities:
Reduction of note receivable - member in lieu of cash distribution	$	1,305

See accompanying notes to consolidated financial statements.

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements

(Dollars in thousands)

1. Organization

Organization – The accompanying consolidated financial statements include those of Isle of Capri Black Hawk, L.L.C. (“Parent company”), a Colorado limited liability company and its wholly-owned subsidiaries, CCSC/Blackhawk, Inc., IOC – BH Distribution L.L.C. and IC Holdings Colorado, Inc. (“the Company” or the “Isle-Black Hawk”). This consolidated entity owns and operates two casino entertainment facilities in Black Hawk, Colorado.

The Company member interests are owned 57% by Casino America of Colorado, Inc., a wholly owned subsidiary of Isle of Capri Casinos, Inc., and 43% by Blackhawk Gold, Ltd., a wholly owned subsidiary of Nevada Gold & Casinos, Inc. As of the close of business on January 27, 2008, Blackhawk Holdings, L.L.C., a wholly owned subsidiary of Isle of Capri Casinos, Inc., acquired the 43% member interest from Blackhawk Gold, Ltd. These financial statements are prepared immediately prior to the minority interest purchase

The rights and obligations of the member interests are governed in part by the Amended and Restated Operating Agreement of the Company (the “Agreement”) dated April 22, 2003. The Agreement provides that the Company will continue until December 31, 2096, or until such date that dissolution may occur. Profits and losses of the Company are allocated in proportion to ownership interests.

2. Summary of Significant Accounting Policies

Basis of Presentation – The consolidated financial statements include the accounts of the Company including its subsidiaries. All significant intercompany transactions and balances have been eliminated.

Fiscal Year-End – The Company’s fiscal year ends on the last Sunday of April. For purposes of these interim financial statements, the current nine month period ends on the last Sunday in January. This fiscal year creates more comparability of the Company’s quarterly operations, by generally having an equal number of weeks (13) and weekend days (26) in each quarter. Periodically, this system necessitates a 53-week year.

Interim financial statements - The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows for the periods presented, have been made. The results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents - The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company was required by state regulations to maintain a minimum operating cash balance of approximately $4,900 at January 27, 2008 and April 29, 2007.

Inventories - Inventories generally consist of food and beverage and retail merchandise, and are stated at the lower of cost or market. Cost is determined by the lower of cost (weighted average) or market value.

Property and Equipment - Property and equipment are stated at cost, except for land contributed by Blackhawk Gold, Ltd., which was recorded at appraised value on the date of contribution. The Company capitalizes the cost of purchases of property and equipment and capitalizes the cost of improvements to property and equipment that increases the value or extends the useful lives of the assets. Costs of normal repairs and maintenance are charged to expense as incurred. Gains or losses on dispositions of property and equipment are included in the determination of income.

Depreciation is computed using the straight-line method over the following estimated useful lives of the assets:

	Years
Slot machines, software and computers	3-5
Furniture, fixtures and equipment	5-10
Leasehold improvements	Lesser of life of lease or estimated useful life
Buildings and improvements	7-39.5

Capitalized Interest - The interest cost associated with major development and construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using the weighted-average cost of the Company’s outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period. The Company has not capitalized interest for the nine months ended January 27, 2008 or fiscal 2007. The Company’s capitalized interest for fiscal 2006 was $1,554.

Operating Leases - The Company recognizes rent expense for each lease on the straight line basis, aggregating all future minimum rent payments including any predetermined fixed escalations of the minimum rentals, and allocating such amounts ratably over the period from the date the Company takes possession of the leased premises until the end of the lease term. Other long-term liabilities consist of the aggregate difference between rent expense recorded on the straight-line basis and amounts paid under the leases.

Goodwill and Other Intangible Assets - Goodwill, representing the excess of the cost over the net identifiable tangible and intangible assets of acquired businesses, is stated at cost. Other intangible assets represent the value of trademarks acquired. Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, (“SFAS 142”) requires these assets be reviewed for impairment at least annually. For intangible assets with indefinite lives not subject to amortization, the Company reviews, at least annually, the continued use of an indefinite useful life. If these intangible assets are subsequently determined to have a finite useful life, they will be amortized prospectively over their estimated remaining useful lives.

Long-Lived Assets - The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”). SFAS 144 requires impairment losses be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

Deferred Financing Costs - The costs of issuing long-term debt are capitalized and amortized using the effective interest method over the term of the related debt.

Self Insurance Reserves - The Company’s employee-related health care benefits program is self-funded up to $500 per claim. Claims in excess of this maximum amount are fully insured through a stop-loss insurance policy. The Company’s estimate of liabilities for unpaid claims and incurred but not reported claims totaled $845 and $1,529 at January 27, 2008 and April 29, 2007, respectively, and are included in accrued liabilities - payroll and related expenses in the accompanying consolidated balance sheets. The Company bases its accrual on claims filed and estimates of claims incurred but not reported.

Derivative Instruments and Hedging Activities - Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”) requires the Company to recognize all of its derivative instruments as either assets or liabilities in the statement of financial position at fair value. The Company has utilized derivative financial instruments to manage interest rate risk associated with variable rate borrowings. Derivative financial instruments are intended to reduce the Company’s exposure to interest rate risk. The Company accounts for changes in the fair value of a derivative instrument depending on the intended use of the derivative and the resulting designation, which is established at the inception of a derivative. SFAS 133 requires that a company formally document, at the inception of a hedge, the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge, including identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged, the method used to assess effectiveness and the method that will be used to measure hedge ineffectiveness of derivative instruments that receive hedge accounting treatment. For derivative instruments designated as cash flow hedges, changes in fair value, to the extent the hedge is effective, are recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge effectiveness is to be assessed quarterly based on the total change in the derivatives’ fair value. During the nine months ended January 27, 2008, fiscal 2007 and fiscal 2006, the Company used interest rate derivatives which were not designated as hedging instruments under SFAS 133. Therefore, all fair market valuation gains and losses attributed to the interest rate derivatives are recognized in other income (expense) within the consolidated statements of income.

Revenue Recognition - In accordance with gaming industry practice, the Company recognizes casino revenues as the net win from gaming activities. Casino revenues also are net of accruals for anticipated payouts of progressive slot jackpots and certain table games wherein incremental jackpot amounts owed are accrued for games in which every coin played or wagered adds to the jackpot total. Revenues from hotel, food, beverage, entertainment, and the gift shop are recognized at the time the related service or sale is performed or made.

Promotional Allowances - The retail value of accommodations, food and beverage and other services furnished to guests without charge is included in gross revenues and then deducted as promotional allowances to arrive at net revenues included in the accompanying consolidated statements of income. The Company also records the redemption of coupons and points for cash as a promotional allowance.

The estimated cost of providing such complimentary services that is included in casino expense in the accompanying consolidated statements of income was as follows:

	Nine Months Ended		Fiscal Year Ended
	January 27, 2008		April 29, 2007		April 30, 2006

Rooms	$	1,347	$	2,507	$	1,813
Food and beverage		8,098		11,317		11,350
Other		227		458		388
Total cost of complimentary services	$	9,672	$	14,282	$	13,551

Slot Club Awards - The Company provides slot patrons with rewards based on the dollar amount of play on slot machines. A liability has been established based on an estimate of the value of these outstanding rewards, utilizing the age and prior history of redemptions.

Advertising - Advertising costs are expensed the first time such advertisement appears. Total advertising costs (including direct mail marketing) were $1,658, $3,559 and $4,712 for the nine months ended January 27, 2008 and fiscal 2007 and 2006, respectively.

Income Taxes - The Company records an income tax provision for federal and state income taxes from its C Corporation subsidiaries IC Holdings Colorado, Inc. and CCSC/Blackhawk, Inc. No provision for federal or state income taxes is recorded for the Parent company, as the Company is taxed as a partnership and the income taxes are the responsibility of the respective individual members.

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“SFAS 109”). SFAS 109 requires that the Company recognize a current tax asset or liability for the estimated taxes payable or refundable based upon application of the enacted tax rates to taxable income in the current year. Additionally, the Company is required to recognize a deferred tax liability or asset for the estimated future tax effects attributable to temporary differences. Temporary differences occur when differences arise between: (a) the amount of taxable income and pretax financial income for a year and (b) the tax basis of assets or liabilities and their reported amounts in financial statements. SFAS 109 also requires that any deferred tax asset recognized must be reduced by a valuation allowance for any tax benefits that, in our judgment and based upon available evidence, may not be realizable.

As of April 30, 2007, the Company adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (“FIN 48”). The adoption of FIN 48 did not have any impact on the Company’s consolidated statement of operations or stockholders’ equity within the consolidated balance sheet. FIN 48 requires that tax positions be assessed using a two-step process. A tax position is recognized if it meets a “more likely than not” threshold, and is measured at the largest amount of benefit that is greater than 50 percent likely of being realized. Uncertain tax positions must be reviewed at each balance sheet date. Liabilities recorded as a result of this analysis must generally be recorded separately from any current or deferred income tax accounts, and are classified as current Other accrued liabilities or long-term Other long-term liabilities based on the time until expected payment. The Company had no unrecognized tax benefits as of April 30, 2007 or January 27, 2008, respectively.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense. This policy did not change as a result of the adoption of FIN 48.

Reclassifications - Certain reclassifications of prior years’ financial statements have been made to conform to the current year presentation.

Adoption of New Accounting Pronouncements – During the year ended April 29, 2007, the Company adopted new accounting pronouncements with an effect as follows:

Allocation of Share-Based Payment Expense - Isle of Capri Casinos, Inc. has three stock-based compensation plans, the 1992 Stock Option Plan, the 1993 Stock Option Plan, and the 2000 Stock Option Plan. The plans provide for the issuance of incentive stock options and nonqualified options of Isle of Capri Casinos, Inc. stock which have a maximum term of 10 years and are, generally, exercisable in yearly installments of 20% commencing one year after the date of grant. Additionally, under Isle of Capri Casinos, Inc.’s Deferred Bonus Plan, non-vested stock is issued to eligible officers and employees.

Effective May 1, 2006, Isle of Capri Casinos, Inc. adopted the FASB Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (“SFAS 123(R)”), using the modified prospective method, thus, results for the periods prior to May 1, 2006 have not been restated in relation to the adoption of SFAS 123(R). Isle of Capri Casinos, Inc. recognized stock compensation expense during the nine months ended January 27, 2008 and fiscal 2007 of which $109 and $234, respectively, were allocated to the Company based on where the team members who received the options were employed. This amount was recorded in marketing and administrative expense in the accompanying consolidated statements of income with the offset to Casino America of Colorado, Inc. members’ equity within the consolidated balance sheets.

Adoption of Staff Accounting Bulletin No. 108 - During fiscal year 2007, the Company determined that it had not been appropriately accounting for escalating rent payments relating to one of its land leases. As a result, the rent expense and corresponding liability balance was understated by a cumulative $727 through April 30, 2006. The error was immaterial to prior period financial statements. As a result, the Company elected to apply the provisions of Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, (“SAB 108”) and correct this error through a cumulative effect adjustment to members’ equity as of May 1, 2006. The adjustment to correct the error increased other long term obligations by $727, increased deferred tax assets $276 and decreased members’ equity $451.

It was also determined that Colorado Central Station had erroneously claimed $529 of deductions on its fiscal 2003 and 2004 Federal and Colorado consolidated income tax returns. The correction of this error results in a reduction of the Colorado Central Station’s net operating loss deferred tax asset of $200 with an offsetting increase in deferred tax expense. It was also determined that as of April 30, 2006, the Colorado Central Station’s deferred tax asset and liability balances had been calculated using erroneous tax rates. The correction of this error results in a reduction of the Company’s net deferred tax asset of $173 with an offsetting increase in deferred tax expense. The cumulative effect on members’ equity through April 30, 2006 as it relates to tax accounting was $373. These errors were immaterial to prior period financial statements. As a result, the Company elected to apply the provisions of SAB 108 and correct these errors through a cumulative effect adjustment to members’ equity as of May 1, 2006.

New Pronouncements - In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”) which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. On February 12, 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”), delaying the effective date of FASB 157 to fiscal years beginning after November 15, 2008, for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company is currently evaluating the impact the adoption of SFAS 157, including the deferment provisions of FSP 157-2, will have on the consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing companies with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The fair value option established by SFAS 159 permits all companies to choose to measure eligible items at fair value at specified election dates. At each subsequent reporting date, companies shall report in earnings any unrealized gains and losses on items for which the fair value option have been elected. SFAS 159 is effective as of the beginning of a company’s first fiscal year that begins after November 15, 2007. The Company is currently evaluating whether to adopt the fair value option under SFAS 159 and evaluating what impact such adoption would have on the consolidated financial statements.

3. Property and Equipment

Property and equipment consists of the following:

	January 27, 2008

Land and land improvements	$	45,026
Buildings and improvements		193,053
Furniture, fixtures and equipment		58,555
Construction in progress		2,497
Total property and equipment		299,131
Less accumulated depreciation		71,573
Property and equipment, net	$	227,558

4. Intangible Assets and Goodwill

Intangible assets at January 27, 2008 and April 29, 2007 totaled $12,200 and represent trade names with indefinite useful lives.

The balance of goodwill at January 27, 2008 and April 29, 2007 was $14,665.

5. Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate the value:

Cash and cash equivalents - The carrying amounts approximate fair value because of the short maturity of these instruments.

Notes receivable - The carrying amounts approximate fair value because of the short maturity of these instruments.

Derivatives - The fair value of the interest rate swap agreements represents the estimated amount the Company would have to pay or receive from the counterparty if the Company were to terminate the interest rate swap agreements.

Long-term debt - The fair value of the Company’s long-term debt is estimated based on the discounted cash flow of future payments utilizing current rates available to the Company for debt of similar remaining maturities. Debt obligations with a short remaining maturity are valued at the carrying amount.

The fair values of the Company’s financial instruments approximate its carrying value.

6. Long-Term Debt

Long-term debt consists of the following:

	January 27,
	2008

Senior Secured Credit Facility:
Variable rate term loan Tranche C	$	185,725
Revolver		-
Black Hawk Business Improvement Special Assessment
Bonds District (BID Bonds)		282
		186,007
Less current maturities		2,037
Long-term debt	$	183,970

Senior Secured Credit Facility

On October 24, 2005, the Company entered into a $240.0 million Second Amended and Restated Credit Agreement (“Credit Agreement”). The Credit Agreement, which amends and restates the Company’s existing credit agreement in its entirety, provides for a $50.0 million revolving credit facility maturing the earlier of October 24, 2010 or such date as the term loan facility is repaid in full and a $190.0 million term loan facility maturing on October 24, 2011. At the Company and the lead arranger’s mutual discretion, the Company may increase the size of the revolver and/or term loan facility in an aggregate amount up to $25.0 million subject to certain conditions. The term loans are payable in quarterly principal installments of $475 beginning on December 30, 2005 through September 30, 2010 and $45,125 beginning December 30, 2010 through September 30, 2011.

The revolving loans bear interest at the Company’s option at (1) the higher of 0.5% in excess of the federal funds effective rate plus an applicable margin up to 1.25% or the rate that the lead arranger announces from time to time as its prime lending rate plus an applicable margin up to 1.25% or (2) a rate tied to a LIBOR rate plus an applicable margin up to 2.25%. Interest is paid at varying dates but at least quarterly. As of January 27, 2008, the Company had $38,700 of net availability under its revolving loan until the loan was repaid on January 28, 2008.

The term loan bears interest at the Company’s option at (1) the higher of 0.5% in excess of the federal funds effective rate plus an applicable base rate margin of 1.0% or the rate that the lead arranger announces from time to time as its prime lending rate plus an applicable base rate margin of 1.0% or (2) a rate tied to a LIBOR rate plus an applicable margin of 2.0%. Interest is paid quarterly.

The weighted average effective interest rate of total debt outstanding under the Senior Secured Credit Facility at January 27, 2008, April 29, 2007 and April 30, 2006 was 6.99%, 6.79% and 6.51%, respectively. The Company is required to pay a commitment fee of 0.5% of the unused portion of the revolving loan.

Pursuant to the refinancing in October 2005, the Company recognized a loss on early extinguishment of debt of $2.1 million, due to the write-off of previously deferred financing costs related to its existing senior secured credit facility. The costs of $1.7 million associated with the new senior secured credit facility have been deferred and are being amortized over the term of the new facility.

The Senior Secured Credit Facility provides for certain covenants, including those of a financial nature. The Company was in compliance with these covenants as of January 27, 2008. The Senior Secured Credit Facility is secured by liens on the Company’s assets.

Effective January 26, 2007, the Company executed a First Amendment to the Second Amended and Restated Credit Agreement amending certain covenant requirements for the third and fourth fiscal quarters ended April 29, 2007.

Effective July 20, 2007, the Company executed a Second Amendment to the Second Amended and Restated Credit Agreement to adjust certain financial covenants for the remainder of the term of the agreement.

Interest Rate Swap Agreements – At January 27, 2008 and April 29, 2007, the Company had outstanding interest swap agreements with an aggregate notional value of $40,000 and $80,000, respectively or 21.5% or 39.3%, respectively of its variable rate term loan outstanding under the Company’s Senior Secured Credit Facility. These swap agreements effectively converted portions of the variable rate debt to a fixed-rate basis until their expiration in February 2008. For the nine months ended January 27, 2008 and fiscal year ended April 29, 2007, the Company recorded a loss of $544 and $1,035, respectively, and in fiscal year 2006 recorded a gain of $1,585 in other income (expense) within the accompanying consolidated statements of income related to the change in fair market value of the undesignated swap agreements.

The fair value of the estimated interest differential between the applicable future variable rates and the interest rate swap contracts not designated as hedging instruments, expressed in present value terms, totaled $7 and $528 at January 27, 2008 and April 29, 2007, respectively. Based on the maturity dates of the contracts, these amounts are included as non-current prepaid deposits and other in the accompanying consolidated balance sheets.

Other- In July 1998, the Black Hawk Business Improvement District (the “BID”), issued $2,900 in 6.25% bonds due on December 1, 2009. The proceeds from the sale of the bonds were used to fund road and utility improvements in the Special Improvement District 1997-1 (the “SID”) of which the Company is a member.

Future maturities of long-term debt as of January 27, 2008 are as follows:

Twelve Months Ending, January
2009	$	2,037
2010		2,045
2011		46,550
2012		135,375
2013		-
Thereafter		-
Total	$	186,007

7. Income Taxes

The income tax (benefit) provision for IC Holdings Colorado, Inc. and Colorado Central Station is comprised of the following:

	Fiscal Year Ended
	January 27, 2008			April 29, 2007			April 30, 2006

Current	$	-		$	-		$	(138	)
Deferred		(988	)		(2,333	)		(1,075	)
	$	(988	)	$	(2,333	)	$	(1,213	)

A reconciliation of the income tax (benefit) provision for IC Holdings Colorado, Inc. and Colorado Central Station is comprised of the following:

	Fiscal Year Ended
	January 27, 2008			April 29, 2007			April 30, 2006

Statutory tax(benefit) provision	$	(903	)	$	(2,141	)	$	(1,118	)
Effect of:
State taxes		(79	)		(183	)		(95	)
Other:
Permanent differences		2			18			-
Credits		(8	)		(25	)		6
Other		-			(2	)		(6	)
Income tax benefit (provision) from continuing operations	$	(988	)	$	(2,333	)	$	(1,213	)

Significant components of the IC Holdings Colorado, Inc. and Colorado Central Station net deferred federal and state income tax assets are as follows:

	Fiscal Year Ended
	January 27, 2008			April 29, 2007
Deferred tax assets:
Accrued expenses	$	634		$	656
Net operating losses		9,094			7,866
Capital loss carryforward		1,576			1,576
Other		130			114
Subtotal		11,434			10,212
Valuation allowance		(1,576	)		(1,576	)
Total deferred tax assets		9,858			8,636

Deferred tax liabilities:
Property and equipment		2,514			2,284
Other		32			22
Total deferred tax liabilities		2,546			2,306

Net deferred tax asset	$	7,312		$	6,330

Net current deferred tax asset	$	209		$	295
Net non-current deferred tax asset		7,103			6,035
Net deferred tax asset	$	7,312		$	6,330

IC Holdings Colorado, Inc. and Colorado Central Station have federal and state net operating losses of approximately $23,884 and $24,418, respectively, as of January 27, 2008 and $20,651 and $21,210, respectively, as of April 29, 2007. These carryforwards expire between 2025 and 2029, and can only be utilized to offset income of IC Holdings Colorado, Inc. and Colorado Central Station. No valuation allowance has been established for these assets, as the Company believes that it is more likely than not that the losses will be utilized before their applicable expiration.

IC Holdings Colorado, Inc. and Colorado Central Station have a capital loss carryforward of approximately $4,146 relating to the sale of Colorado Grande. This carryforward expires in 2011 and can only be utilized to offset capital gain income of IC Holdings Colorado, Inc. and Colorado Central Station. A $1,576 valuation allowance has been established against this asset, as the Company does not believe it will recognize the capital gain prior to expiration of the carryforward period.

Isle of Capri Black Hawk, L.L.C.

Consolidated Statement of Income

(Dollars in thousands)

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. As of January 27, 2008, the Company is not subject to examination of its U.S. federal income tax returns filed for tax years prior to 2004, due to statute expirations and settlements. The tax returns for subsequent years are also subject to examination.

8. Employee Benefit Plans

401(k) Plan - The Company participates in a 401(k) plan sponsored by Isle of Capri Casinos, Inc., covering substantially all of its employees. The Company’s contribution expense related to this plan was $195, $150 and $280 for the nine months ended January 27, 2008 and in fiscal 2007 and 2006, respectively. The Company’s contribution is based on a percentage of employee contributions and may include an additional discretionary amount.

9. Related Party Transactions

Insurance – The Isle of Capri Casinos, Inc. and its subsidiaries, including the Company, have established a captive insurance company, Capri Insurance Company (“the Captive”). The Captive underwrites the self-insured portion of the workers’ compensation and general liability claims and charges an annual insurance premium to the Company for first layer claims exposure up to the $300 and $1,000 stop-loss amounts, respectively for workers’ compensation and general liability. The Company paid the Captive $1,944, $2,034 and $1,851 related to premiums for the nine months ended January 27, 2008, fiscal 2007 and 2006, respectively.

Management Agreement - The Company has a management agreement with Isle of Capri Casinos, Inc. Under the agreement, Isle of Capri Casinos, Inc. provides certain management services to the casinos of the Company in exchange for a fee. The management fee is equal to 2% of revenues, as defined, plus 10% of operating income, but not to exceed 4% of revenues, as defined. The Company expensed management fees of $5,199, $6,817, and $7,439 for the nine months ended January 27, 2008 and in fiscal 2007 and 2006, respectively.

Sale of Discontinued Operation - During fiscal 2005, the Company and Colorado Grande executed a Stock Purchase Agreement with a subsidiary of Nevada Gold & Casinos, Inc. to sell all outstanding shares of the common stock of Colorado Grande, a wholly-owned subsidiary of the Company operating a casino in Cripple Creek, Colorado, to a subsidiary of Nevada Gold & Casinos, Inc., a related party. The aggregate estimated sales price agreed to was $6,500 payable: $600 in cash upon closing and $5,900 promissory note secured by the stock of Colorado Grande and Nevada Gold & Casinos, Inc.’s future membership distributions from the Company until the note has been fully repaid. During fiscal 2008, the note receivable was repaid in full with proceeds from member distributions.

During fiscal 2006, the estimated sales price was decreased by $216 for a working capital adjustment as defined by the Sales Agreement. This decrease was reflected as a loss from discontinued operations in the fiscal 2006 consolidated statements of income.

10. Commitments and Contingencies

Future Minimum Lease Payments - Future minimum payments under noncancelable operating leases with initial terms of one year or more consisted of the following at January 27, 2008:

Isle of Capri Black Hawk, L.L.C.

Notes to Consolidated Financial Statements (continued)

(Dollars in thousands)

For the Nine Months Ending January 27, 2008
2009	$	2,578
2010		2,484
2011		2,504
2012		2,560
2013		2,619
Thereafter		132,874
Total minimum lease payments	$	145,619

Total rent expense was $3,298, including contingent rentals of $0, in the nine months ended January 27, 2008; $4,760, including contingent rentals of $48, in fiscal 2007; and $4,213, including contingent rentals of $21, in fiscal 2006.

One of the Company’s leases requires contingent rentals based on the change in the Metro Denver/Boulder annual CPI index with a maximum adjustment of 3% per year. The Company records expense for contingent rentals during the period in which the rent is adjusted. The Company leases land on which the Colorado Central Station hotel and parking garage is located as well as an additional parcel of land utilized for parking under operating leases. Some leases entered into by the Company include options under which the Company may extend the lease term beyond the initial commitment period, subject to terms agreed to at lease inception.

Certain Risks and Uncertainties - The Company’s operations are dependent on the continued licensing or qualification of the Company. Such licensing and qualification is reviewed periodically by the gaming authorities in the State of Colorado.

The Company receives a significant amount of its revenue from patrons within 100 miles of the properties. If economic conditions in these areas were to decline materially or additional casino licenses were awarded in these locations, the Company’s results of operations could be materially affected.

Guaranty - The Company and certain other wholly owned subsidiaries of the Isle of Capri Casinos, Inc. are joint and several guarantors on the $500,000 7.0% Senior Subordinated Notes, and a $1,350,000 Senior Secured Credit Facility. Substantially all of the assets of the Company are pledged as collateral under the terms of the 7% Senior Subordinated Notes and the $1,350,000 Senior Secured Credit Facility.

11. Litigation

The Company is subject to certain claims and lawsuits that have been filed in the normal course of business. Management does not believe these pending claims and litigation will have a material effect on the consolidated cash flows, financial position, or operations of the Company.

12. Subsequent Events

On January 28, 2008, the Company and the Isle of Capri Casinos, Inc. entered into a promissory note related to approximately $191,560 of funds advanced to repay and cancel existing long-term debt. The promissory note bears interest, payable monthly, at the fixed rate of 7% per annum, and the entire principal balance is due on January 28, 2018.

Also on January 28, 2008, the Company fully repaid and cancelled the 2005 Second Amended and Restated Credit Agreement (“Credit Agreement”) with funding provided by Isle of Capri Casinos, Inc. As a result of canceling the Credit Agreement, the Company expensed the remaining deferred financing costs of $1,615 as loss on extinguishment of debt at the time of the extinguishment. The Credit Agreement had provided for a revolving credit facility of up to $50,000 and a term loan of $190,000 which was secured by liens on the Company’s assets.