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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

For the quarterly period ended September 30, 2013

or

For the transition period from           to         

Commission File Number: 000-53894

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

(Exact name of registrant as specified in its charter)

3801 Las Vegas Boulevard South

Las Vegas, Nevada 89109

(Address of principal executive offices and zip code)

(702) 739-2722

(Registrant’s telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

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. Yes ☒ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of October 31, 2013, there were 4,666,151 shares outstanding of the registrant’s Class A Common Stock, $0.01 par value and no shares outstanding of the registrant’s Class B Common Stock, $0.01 par value. The issued and outstanding equity securities of the registrant are not publicly traded.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

FORM 10-Q

INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(amounts in thousands, except share data)

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

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

AND COMPREHENSIVE (LOSS) INCOME

(amounts in thousands, except per share data)

(Unaudited)

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

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

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

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Nature of Business

Tropicana Las Vegas Hotel and Casino, Inc., is a Delaware corporation formed in June 2009 for the primary purpose of owning and operating Tropicana Las Vegas Intermediate Holdings, Inc., and its wholly owned subsidiary Tropicana Las Vegas, Inc. (collectively, “Tropicana Las Vegas”). Tropicana Las Vegas offers casino gaming, hotel accommodations, dining, entertainment, retail shopping and other resort amenities. Tropicana Las Vegas is conveniently located on 35 acres at the corner of Tropicana Avenue and Las Vegas Boulevard on the Las Vegas Strip. Our property currently offers 1,467 remodeled hotel rooms and suites, a 50,000 square foot casino floor, three restaurants, three casual dining venues, two entertainment venues, beach club and special event venue, and more than 60,000 square feet of flexible convention and meeting space. We also offer a state of the art spa and fitness facility, race and sports book, and retail space, all leased to various third parties.

As a casino-based company, our operating results are highly dependent on a number of factors including the state of the United States economy, the amount of discretionary consumer and corporate spending in Las Vegas, and the level of competition in the Las Vegas casino/hotel market. We have been operating at a loss with negative cash flow since we commenced operations on July 1, 2009. Our primary sources of liquidity have been comprised of a revolving line of credit and four rights offerings totaling $200 million.

We believe that our existing cash balance, cash flows from operations and revolving line of credit will be more than adequate to meet our financial, operating and debt obligations over the next twelve months. However, we will continue to closely monitor and manage our cash position given the current economic environment. If our sources of capital are inadequate to fund our long-term liquidity requirements including our need to service our existing debt obligations as they come due, we will attempt to procure additional debt or equity financing to fund our operations, capital expenditures and debt service requirements. We can provide no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available in amounts sufficient to enable us to pay our indebtedness or to fund our other liquidity needs including capital improvements.

References herein to “we,” “us,” “our,” “management” or “Company” refer to Tropicana Las Vegas Hotel and Casino, Inc. and/or its consolidated subsidiaries, unless the context specifically requires otherwise.

2. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for fair presentation of the results for the interim periods were included. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the entire year.

The condensed consolidated balance sheet as of December 31, 2012 was derived from our audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.

These condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2012.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates used by the Company include estimated useful lives for depreciable and amortizable assets, certain accrued liabilities and the estimated allowances for receivables, customer loyalty program liability, and self-insurance reserves. Actual results may differ from those estimates.

Fair Value Measurement

The fair values of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate carrying values due to the short maturity of these items. The fair value of the revolving credit facility approximates its carrying value due to its recent renegotiation of terms and conditions. Our majority stockholder participated in the renegotiation of the revolving credit facility providing resources and size to obtain the new terms and conditions. Given the assistance by our majority stockholder, it is unlikely that the Company could obtain similar financing on the same terms with a third-party in an arm’s length transaction. The fair value of the other long-term obligations approximates carrying value.

Fair value is defined in the authoritative guidance as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The guidance also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value framework requires the categorization of assets and liabilities into three levels based upon assumptions (inputs) used to price the assets and liabilities. Level 1 provides the most reliable measure of fair value, whereas, Level 3 generally requires significant management judgment. The three levels are defined as follows: Level 1: quoted market prices in active markets for identical assets or liabilities; Level 2: observable market-based inputs or unobservable inputs that are corroborated by market data and Level 3: unobservable inputs that are not corroborated by market data. As of September 30, 2013, the Company had no assets or liabilities measured at fair value on a recurring basis.

3. Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued an update to Accounting Standards Codification (“ASC”) No. 220, Presentation of Comprehensive Income, which eliminates the option to present other comprehensive income and its components in the statement of stockholders’ equity. We could elect to present the items of net income and other comprehensive income in a single continuous statement of comprehensive income or in two separate, but consecutive statements. The provisions of ASC No. 220 were adopted by the Company in the first quarter of 2012, which is the period it became effective for the Company. We elected to present the items of net income and comprehensive income in one single continuous statement for this presentation. In December 2011, certain provisions of this new guidance related to the presentation of reclassification adjustments out of accumulated other comprehensive income were temporarily deferred. In February 2013, an effective date was established for the provisions that had been deferred. These provisions are effective prospectively for interim and annual reporting periods beginning after December 15, 2012. The adoption of these provisions, which relates to presentation only, did not have a material impact on our financial position or results of operations.

No other new accounting pronouncements issued or effective during 2013 have had or are expected to have a material impact on the Company’s financial position or results of operations. A variety of proposed or otherwise potential accounting standards are currently under consideration by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, we have not yet determined the effect, if any, that the implementation of such proposed standards would have on our financial statements.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

4. Property and Equipment, net

Property and equipment, net consists of the following ($ in thousands):

Interest associated with major construction projects is capitalized as part of the cost of the constructed assets. When no specific debt is incurred for a project, interest is capitalized on cash expenditures for the project using our weighted average cost of borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period. There was no capitalization of interest for the three and nine months ended September 30, 2013 and 2012, respectively.

5. Debt

Long-term debt consists of the following ($ in thousands):

Loan Agreement

Effective December 21, 2012, we amended and restated our $65.0 million loan agreement (the “Amended and Restated Loan”). The Amended and Restated Loan is comprised of a $50.0 million revolving credit facility (the “Revolver A”), a $5.0 million revolving credit facility (the “Revolver B”), and a $10.0 million revolving credit facility (the “Revolver C”). The Revolver A bears interest at 4% per annum, Revolver B bears interest at 5% per annum and Revolver C bears interest at 6% per annum. The fee for any unfunded portion of the Revolver A, Revolver B or Revolver C is 0.50%. Each revolving credit facility has a stated maturity date of April 2, 2018.

The Amended and Restated Loan contains customary affirmative, negative and financial covenants. The covenants, among other things, restrict, subject to certain exceptions, our ability to: incur additional indebtedness; create liens on property or assets; make certain investments; engage in mergers or consolidations; sell assets; pay dividends or make distributions; engage in certain transactions with affiliates; enter into sale-leaseback transactions; and pay management fees. In addition, the Amended and Restated Loan requires us to: maintain a $2.0 million cash balance; deposit $5.0 million into an interest reserve account (deposited December 2012); meet certain EBITDA minimums on a quarterly basis for the periods from March 31, 2015 through March 31, 2018 with a standard cure provision if the EBITDA minimums are not met; and limits the annual aggregate capital expenditures to $18.0 million in 2013 and 2014. As of September 30, 2013, we are in compliance with all of our covenants.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Substantially all of the assets of Tropicana Las Vegas are pledged as collateral under the Amended and Restated Loan and priority of liens and security interest were granted to our lenders. The lenders have agreed to release its security interest in a one acre (approximately) parcel for future development. Pursuant to the terms of the Amended and Restated Loan, we are required to maintain an interest reserve account for payments of quarterly interest. As of September 30, 2013 and December 31, 2012, the interest reserve account had a balance of $4.3 million and $5.9 million, respectively. The following table provides interest incurred on the Amended and Restated Loan for the periods indicated ($ in thousands).

Debt issuance costs incurred in connection with the issuance of long-term debt are deferred and amortized to interest expense over the expected terms of the related debt agreements and are included in other assets, net on our condensed consolidated balance sheets. The following table provides amortization incurred in association with the Loan Agreement for the periods indicated ($ in thousands).

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other Long-Term Debt

We lease certain equipment under capital leases. These agreements are capitalized at the present value of the future minimum lease payments at inception and are included in property and equipment. Under the terms, certain lease agreements are non-interest bearing. As a result, no imputed interest was recorded as it was not material to the financial statements. We have the following capital leases:

6. Related Party Transactions

Armenco Lease

On June 22, 2009, we entered into the Armenco Lease (“Armenco”) in which we leased the real and non-gaming personal property of our hotel and casino, including the restaurants, lounges, retail shops and other related support facilities, and the operation thereof to Armenco until such time as we were able to obtain all governmental registrations, findings of suitability, licenses, qualifications, permits and approvals pursuant to the gaming laws and regulations of the State of Nevada and Clark County liquor and gaming codes necessary for us to own and operate our gaming facility directly. Effective December 1, 2010, we received all approvals necessary for us to own and operate our gaming property directly.

Under the terms of the lease, we were required to pay a fee equal to 2% of net revenues and 5% of EBITDA, each as defined, to Armenco. Armenco was required to pay rent in the amount of $1.00 per month. We incurred approximately $1.7 million in management fees related to the Armenco Lease which was terminated on November 30, 2010. These fees have not been paid and will not accrue interest due to restrictions under the Amended and Restated Loan Agreement.

Management Agreement

Effective December 1, 2010, we received the necessary approvals and licenses for us to own and operate our gaming facility directly and as a result, the Armenco Lease was terminated and the operation of our hotel and casino was thereafter managed by Trilliant Management, LP (“Trilliant”), pursuant to the terms of the management agreement entered into in May 2010 (the “Management Agreement”). Trilliant is controlled by its general partner, Trilliant Gaming Nevada Inc. (“Trilliant Gaming”), which is owned by each of Mr. Alex Yemenidjian, our Chairman of the Board, Chief Executive Officer and President, Mr. Timothy Duncanson, a director of the Company, and Mr. Gerald Schwartz, the Chairman and controlling stockholder of Onex Corporation. Together Messrs. Yemenidjian, Duncanson and Schwartz own 100% of the outstanding voting securities of Trilliant Gaming.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Management Agreement provides for Trilliant to assist us in the management and operation of Tropicana Las Vegas beginning December 1, 2010 and terminating on November 30, 2020. For each fiscal year or portion thereof during the term of the Management Agreement, we will pay Trilliant a fee equal to the sum of 2% of all revenue from the operation of Tropicana Las Vegas (the “Revenue Fee”) and 5% of EBITDA after reduction of the Revenue Fee (each as defined). The following table provides Trilliant management fees recorded for the periods indicated and is included in selling, general and administrative expenses on the accompanying condensed consolidated statements of operations and comprehensive (loss) income ($ in thousands).

For both Armenco and Trilliant, the Amended and Restated Loan restricts our payments of management fees until the earlier of a) the date on which the outstanding principal has been repaid in full or b) the date on which EBITDA for the prior 12 month period is equal to or greater than $20.0 million, and upon the condition that no default or event of default is continuing under the Amended and Restated Loan. However, the Amended and Restated Loan does permit the Company to pay a portion of the management fees for reimbursement of tax liabilities actually incurred and paid. In July 2013, we were refunded $67,963 for previously paid management fees associated with the income tax liability reimbursement covering years 2009 through 2011 and we paid Trilliant $64,892 for management fees associated with income tax reimbursement of 2012. As of September 30, 2013 and December 31, 2012, we have $6.7 million and $5.2 million, respectively, recorded as accrued management fees due Armenco and Trilliant. We have not accrued interest on these management fees since these fees are subject to restrictions under the Amended and Restated Loan.

7. Commitments and Contingencies

Letters of Credit

We maintain two irrevocable standby letters of credit. The first irrevocable standby letter of credit is with the State of Nevada, Division of Insurance which acts as a security deposit providing coverage for workers compensation claims/liabilities since the Company is self-insured. This is reviewed annually by the State of Nevada and can be adjusted based on the Company’s prior workers compensation claims experience. The outstanding balance is currently $200,000 and automatically renews on an annual basis. The second irrevocable standby letter of credit is with Starbucks Coffee Company for $35,000. This is to ensure performance of the Company’s obligations to Starbucks for the term of the ten year licensing agreement which commenced on December 14, 2010.

Self-Insurance Reserves

We are self-insured up to certain stop-loss amounts for employee health coverage for non-union employees as well as workers compensation and general liability cost. Insurance claims and reserves include accruals of estimated settlements for known claims as provided by a third party. In estimating these accruals, we consider historical loss experience and make judgments about the expected levels of costs per claim. We believe our estimates of future liability are reasonable based upon our methodology; however, changes in health care costs, accident frequency and severity and other factors could materially affect the estimate for these liabilities. We continually monitor changes in claim type and incident and evaluate the insurance accrual making necessary adjustments based on the evaluation of these qualitative data points. As of September 30, 2013 and December 31, 2012, the estimated liabilities for unpaid and incurred but not reported claims totaled $0.9 million and $0.9 million, respectively.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Customer Loyalty Program

We provide a customer loyalty program (the “Program”) at our casino, which allows customers to redeem points earned from their gaming activity for slot play, food, beverage, rooms or merchandise. Under the Program, customers are able to accumulate points which may be redeemed in the future, subject to certain limitations and the terms of the Program. We record a liability for the estimated cost of the outstanding points under the Program that we believe will ultimately be redeemed which is calculated based on the total number of points earned, converted to a redemption value based on the average number of points needed to convert to rewards. We estimate the cost and accrue for this expense as the points are earned from gaming play, which is recorded as casino expense. In July 2013, we revised the Program to increase the amount of points earned through play as well as decrease the value of points redeemed. The offset for this $0.3 million liability adjustment is recorded in casino revenue.

We also have a new member promotion, Even the Odds Program (“Even the Odds”), which allows first-time customers to be reimbursed for their losses up to $200. Under the current promotion rules, a customer’s actual rated slot loss up to $200 is reimbursed in free slot play with 50% reimbursement on the first day of sign up and the remaining 50% is reimbursed thirty days after their loss up to one year from initial play. We record a liability for the estimated cost of the reimbursements under Even the Odds based on our estimate of redemption. As of September 30, 2013 and December 31, 2012, the estimated accrual for the costs of the Program and Even the Odds redemption totaled $0.3 million and $0.6 million, respectively.

Sales and Use Tax on Complimentary Meals

In February 2012, the Nevada Department of Taxation imposed sales tax on complimentary meals provided to gaming patrons and for meals provided to employees for free on a regular basis. For complimentary meals provided to gaming patrons the sales tax would be imposed on the retail value of the food and for employees on the cost of the food for the meal. The new regulations came after a 2008 ruling where the Nevada Supreme Court rendered a decision stating complimentary meals to gaming patrons and employees were exempt from use tax. The ruling however provided the State the opportunity to collect a sales tax on the complimentary meals if it could show consideration for the meals. On February 14, 2012, the Nevada Tax Commission issued a ruling that consideration does exist for complimentary meals to gaming patrons “if you are providing meals to patrons through a program whereby the patron gambles and decisions to provide complimentary meals to that patron are based on that gaming activity”. The sales tax would apply to all complimentary meals on or after February 15, 2012 and would not be due until July 31, 2012. In July 2012, the Nevada Department of Taxation announced that sales taxes applicable to such meals were due and payable without penalty or interest at the earlier of certain regulatory, judicial or legislative events or June 30, 2013. 

On October 17, 2012, a Clark County District Court issued a ruling that complimentary meals provided to customers were subject to sales tax, while meals provided to employees were not subject to sales tax. The ruling was immediately appealed to the Nevada Supreme Court. On May 29, 2013, the Nevada Tax Commission signed a $233 million settlement with all the state’s casinos to free the casinos from paying sales taxes on the complimentary meals provided to patrons and employees in exchange for the casinos dropping their lawsuits seeking refunds on back taxes previously paid. The settlement provides that no sales tax is due for these complimentary meals for any past years and for a six year period starting February 2, 2013. In addition, we received a $94,996 credit of tax ($64,825) and interest ($29,171) covering the period of March 2003 through March 2008 from the state. Credits are to be applied against future sales and use tax returns filed after September 1, 2013.

Execution of a Theater Lease

On September 24, 2013, the Company entered into a theater agreement with MAMMA MIA LAS VEGAS LIMITED PARTNERSHIP, who will produce, stage and direct the musical play entitled “MAMMA MIA” in our theater. It is anticipated that the play’s opening will be May 15, 2014 with seven shows per week for a four year period plus a mutual extension option. The Company has agreed to increase the theater’s seating capacity to 1,199 seats and to provide certain on-property advertising for the show. The Company will receive reimbursement of costs associated with maintaining and operating the theater as well as a per ticket service fee. In addition, after recoupment of the producer’s cost of production, the Company will receive rent derived from a percentage of revenues.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Termination of a Property Lease

Effective July 29, 2013, the BBCLV, LLC and The One Group relinquished the operation of the nightclub and beach club to us. We are currently in the process of negotiating a settlement agreement which would terminate the 10 year lease. We have begun operating the upscale venues for private events and renamed the venues, Havana Room and Beach Club.

General Litigation

We are occasionally party to routine lawsuits arising from the normal operations of a hotel and casino. As with all ligation, no assurance can be provided as to the outcome of such matters. Other than the items discussed below under “Bankruptcy Litigation”, there are no other pending legal proceedings to which we are party to and that are material in relation to our condensed consolidated financial statements.

Bankruptcy Litigation

The Company was formed in June 2009 for the purpose of owning and operating Tropicana Las Vegas Holdings, LLC and its subsidiaries (the “Predecessor”), including the operations of Tropicana Las Vegas Hotel and Casino, LLC (“Tropicana Las Vegas”) in connection with the reorganization of Tropicana Entertainment Holdings, LLC (“TEH”) and certain of its subsidiaries, under Chapter 11 of Title 11 of the United States Code or Bankruptcy Code.

On May 5, 2008 (the “Petition Date”), TEH together with certain of its subsidiaries, including the Predecessor, filed voluntary petitions in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) for relief, seeking to reorganize their businesses under the provisions of the Bankruptcy Code (the “Chapter 11 Cases”). As TEH and certain of its subsidiaries progressed towards an exit from the Chapter 11 Cases, it was determined that given their capital structures and the claims arising there under, as well as the nature of the business operations, two separate plans were warranted. Accordingly, TEH proposed two separate plans of reorganization, one for the Predecessor (“the Bankruptcy Plan”) and one for TEH’s other gaming properties. The Bankruptcy Plan was confirmed by the Bankruptcy Court on May 5, 2009 and became effective on July 1, 2009 (the “Effective Date”).

Pursuant to the Bankruptcy Plan, among other things, we assumed certain obligations and liabilities of the Predecessor. The following represents the current status of such obligations as well as remaining litigation matters. We assumed to pay $0.4 million in satisfaction of the Predecessor’s unsecured claims. To date, we have paid $0.2 million in unsecured claims and have a remaining $0.2 million in unsecured claims recorded as a liability in accounts payable. With regard to allowed priority and cure claims and non-professional fee administrative expenses, we have paid approximately $2.9 million with the exception of certain disputed administrative/priority claims (“Disputed Claims”) in the aggregate asserted amount of approximately $1.5 million with the significant Disputed Claims discussed below. We do not anticipate any material additions to such claims or expenses and given our position we have not recognized any additional liability.

The professionals employed at the expense of the bankruptcy estates of the Predecessor and other debtors have filed applications for allowance of approximately $13.5 million in professional fees and expenses against the Predecessor. We dispute and have objected to many of those applications in advance of hearings before the Bankruptcy Court, the first of which occurred on May 11, 2011, and addressed issues of allocation of fees and expenses between the Predecessor and TEH. Following the May 11, 2011 hearing, the Bankruptcy Court requested post-hearing submissions from the parties, which were filed on June 30, 2011. A second hearing on all other issues subject to the objections will occur approximately eight (8) weeks after the resolution of the allocation issues submitted to the Bankruptcy Court. We are awaiting the Bankruptcy Court ruling. We believe that our potential liability in respect to such claimed professional fees and expenses is approximately $3.4 million. Management cannot predict the outcome of these Bankruptcy claims and proceedings, therefore, no assurance can be provided as to the ultimate amount that will be paid. We currently have approximately $5.0 million in restricted funds in connection with the reorganization of the Predecessor for the purpose of satisfying liabilities related to professional services incurred as part of the Chapter 11 Cases.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

With regard to the Disputed Claims discussed above, Wimar Tahoe Corporation (“Wimar”) and Columbia Sussex Corporation (“CSC”) are companies related by common ownership to the Predecessor that provided management services and incurred expenses through September 2008 which were charged to the Predecessor. Both these companies seek administrative expenses and/or priority claims in the aggregate amount of $0.8 million. Oral arguments on the summary judgment motions were conducted on September 27, 2011 and we are awaiting the Bankruptcy Court decision. We currently have recorded a liability in the amount of $0.8 million in accounts payable for this claim.

Finally, TEH has asserted two claims. The first claim is in regard to the Disputed Claims discussed above, it is an administrative/priority claim for approximately $0.5 million covering management fees and an unliquidated contingent claim relating to alleged workers’ compensation liabilities. We dispute the workers’ compensation liabilities claim in its entirety and a portion of the claimed management fees. Given our position, we have not recorded any liability associated with this Disputed Claim. With regard to the second claim, TEH has asserted that the Predecessor should be responsible for payment of the entire amount of fees and expenses ultimately allocated to the Predecessor, an amount that TEH asserts should be 50% of the entire amount requested. The Company, on the other hand, has taken the position that, pursuant to the Bankruptcy Plan, it is responsible only for the Predecessor’s appropriate allocation of professional fees and expenses that were unpaid at the time of confirmation of the Bankruptcy Plan, which would be an amount less than the amount of fees and expenses that the Company’s objections concede should be allocated to the Predecessor. Given our position, we have not recorded any liability associated with this claim. Management cannot predict the outcome and no assurance can be given that the claims asserted will be ultimately disallowed or will not have a material adverse impact on the Company.

Contingencies

In the ordinary course of business, we enter into numerous agreements that contain standard guarantees and indemnities whereby we indemnify another party for breaches of representations and warranties. Many of these parties are also indemnified against any third party claim resulting from the transaction that is contemplated in the underlying agreement such as a lease agreement. While some of these guarantees extend only for the duration of the underlying agreement, many survive the expiration of the term of the agreement. There are no explicit limitations on the maximum potential amount of future payments that we could be required to make under some of these guarantees. We are unable to develop an estimate of the maximum potential amount of future payments to be made under these guarantees as the triggering events are not predictable. We maintain insurance coverage that mitigates some potential payments to be made.

Environmental Matters

Portions of Tropicana Las Vegas are known to contain asbestos as well as other environmental conditions, which may include the presence of mold. The environmental conditions may require remediation in isolated areas. The extent of such potential conditions cannot be determined definitively, and may result in additional expense in the event that additional or currently unknown conditions are detected.

8. Stockholders’ Equity and Net Loss Per Share

Changes Stockholders’ Equity`

Changes in stockholders’ equity for the nine months ended September 30, 2013 were as follows ($ in thousands):

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Net Loss per Share

Basic net loss per share includes no dilution and is calculated by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share reflects the potential dilution of securities that could share in the earnings or losses of the entity. Due to the net loss in all periods presented, the calculation of diluted per share amounts would create an anti-dilutive result and therefore is not presented. As a result, basic EPS is equal to diluted EPS for the three and nine months ended September 30, 2013 and 2012. The following table shows the number of shares which were excluded from the computation of diluted loss per share for the periods indicated, as they were anti-dilutive (shares in thousands):

Common Stock

We are authorized to issue up to 16,500,000 shares of our Class A Common Stock (“Class A Common”), $0.01 par value per share. As of September 30, 2013 and December 31, 2012, 4,666,151 and 4,662,151 shares of the Class A Common were outstanding, respectively. We are authorized to issue up to 16,500,000 shares of our Class B Common Stock (Class B Common”) and no shares were issued as of September 30, 2013 and December 31, 2012. Except as otherwise provided by our articles of incorporation or Nevada law, each holder of the Class A Common is entitled to one vote, in person or by proxy, for each share standing in such holder’s name on our stock transfer records. To the fullest extent permitted by law, holders of Class B Common will not be entitled to vote on any matter submitted to a vote of our stockholders. Each share of Class A Common is convertible into a share of Class B Common, in each case as adjusted for any stock dividends, splits, combinations, recapitalizations, reclassifications and similar events. Each share of Class B Common is convertible into a share of Class A Common, in each case as adjusted for any stock dividends, splits, combinations, recapitalizations, reclassifications and similar events, provided that such conversion is in compliance with, and such holder has, all necessary approvals and licenses under all applicable gaming laws.

Preferred Stock

We are authorized to issue up to 750,000 shares of our Class A Convertible Participating Preferred Stock (“Series 1 Preferred”), 545,702 shares of our Class A Series 2 Convertible Participating Preferred Stock (“Series 2 Preferred”), 350,000 shares of our Class A Series 3 Convertible Participating Preferred Stock (“Series 3 Preferred”), $0.01 par value per share, 416,500 shares of our Class A Series 4 Convertible Participating Preferred Stock (“Series 4 Preferred”), $0.01 par value per share (all series of preferred stock collectively known as “Preferred Stock”), of which 750,000 shares, 545,585 shares, 350,000 and 416,500 shares of Series 1 Preferred, Series 2 Preferred, Series 3 Preferred and Series 4 Preferred, respectively, were outstanding at September  30, 2013.

In January 2013, we issued an additional 13,000 shares of Series 4 Preferred to the lead arranger and administrative agent of the Amended and Restated Loan as consideration for amending and restating the loan agreement.

Each share of Preferred Stock is convertible into shares of common stock. Each holder of the Preferred Stock is entitled to convert any and all shares of such stock into shares of Class A Common or Class B Common (at the option of such holder) provided that the conversion of Preferred Stock to Class A Common will not be permitted unless such conversion is in compliance with, and such holder has, all necessary approvals and licenses under all applicable gaming laws. The number of shares of Class A Common or Class B Common (at the option of such holder) that each Preferred Stock can be converted into can be determined by dividing (i) the sum of the $100 per share original purchase price of the Preferred Stock and the amount of cumulated and unpaid dividends for any prior dividend periods by (ii) the conversion price at the time of the conversion. The initial conversion price is $25 for Series 1 Preferred and Series 2 Preferred, $15 for Series 3 Preferred and $10 for Series 4 Preferred. Each outstanding share of Preferred Stock will automatically convert into a number of shares of Class A Common or Class B Common, as the case may be, upon any initial public offering of our common stock on a national stock exchange.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dividends on the Preferred Stock are calculated at a rate of 12.5% per annum and are payable semi-annually in arrears, commencing in February 2010 for the Series 1 Preferred, August 2010 for the Series 2 Preferred, August 2011 for the Series 3 Preferred and February 2012 for the Series 4 Preferred. Dividends payable for each dividend period are computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends on the Preferred Stock are cumulative. If for any reason our board of directors does not declare a dividend on the Preferred Stock for a particular dividend period, or if our board of directors declares less than a full dividend, we will remain obligated to pay the unpaid portion of the dividend for that period and the unpaid dividend will compound on each subsequent dividend date (meaning that dividends for future dividend periods will be calculated on any unpaid dividend amounts for prior dividend periods).

There have been no cash dividends declared on our preferred stock since we issued each preferred stock series. We do not intend to pay cash dividends on our preferred stock for the foreseeable future. Our Amended and Restated Loan prohibits us from declaring dividends as long as there is outstanding debt. As of September 30, 2013, we had approximately $93.5 million in unrecorded dividend liability.

9. Share-Based Compensation

In August 2013, our board of directors approved and we adopted, the 2013 Non-Employee Director Restricted Stock Plan (“the 2013 Plan”) which provided for the grant of restricted common stock to a new non-employee director. We granted 4,000 restricted stock awards under the 2013 Plan, of which 1,000 common shares vested on July 1, 2013 and the remaining shares will vest equally over three years on the anniversary grant date. The 2013 Plan and stock grants are consistent with our previous two Non-Employee Director Restricted Stock Plans of 2010 and 2011.

A summary of the status and changes of the unvested restricted stock is as follows for the three months ending September 30, 2013:

We account for share-based awards exchanged for services in accordance with the authoritative accounting guidance for share-based payments. Under the guidance, share-based compensation expense is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of estimated forfeitures, on a straight-line basis over the requisite service period of the award. The following table provides the share-based compensation expense recorded for the periods indicated and is included in selling, general and administrative expenses on the accompanying condensed consolidated statements of operations and comprehensive (loss) income.

TROPICANA LAS VEGAS HOTEL AND CASINO, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. Employee Benefit Plans

Multi-employer pension plans

We contribute to multi-employer defined benefit pension plans (collectively, “the Plans”) for certain of our union employees under the terms of the applicable bargaining agreements. Risks of participating in a multi-employer plan differs from single-employer plans for the following reasons: (1) assets contributed to a multi-employer plan by one employer may be used to provide benefits to employees of other participating employers; (2) if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (3) if a participating employer stops participating, it may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability. The table below includes information on each of our multi-employer defined pension plans and the employer contributions made for the periods indicated:

Retirement Plan

We have a 401(k) defined contribution plan that covers substantially all employees who are not covered by various collective bargaining agreements identified above. The plan allows employees, at their discretion, to make contributions of their before-tax earnings to an annual maximum amount allowed by law. We currently make no employer matching contributions.

11. Subsequent Events

We have evaluated all activity through the issuance date of the condensed consolidated financial statements, and concluded that no material subsequent events have occurred that require recognition in the condensed consolidated financial statements or disclosure in the notes to the condensed consolidated financial statements.

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion in conjunction with management’s discussion and analysis contained in our 2012 Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K, as well as the condensed consolidated financial statements and the notes hereto included in this Quarterly Report on Form 10-Q. This discussion contains certain “forward-looking statements,” including information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation and availability of resources. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. Our actual results may differ materially from those discussed in these forward-looking statements because of the risks and uncertainties inherent in future events.

Overview and Recent Events

Our primary business is the ownership and operation of Tropicana Las Vegas which offers casino gaming, hotel accommodations, dining, entertainment, retail shopping and other resort amenities. Tropicana Las Vegas is conveniently located on 35 acres at the corner of Tropicana Avenue and Las Vegas Boulevard on the Las Vegas Strip. Our property currently offers 1,467 remodeled hotel rooms and suites, a 50,000 square foot casino floor, three restaurants, three casual dining venues, several lounges, two entertainment venues, beach club, special events venue, more than 60,000 square feet of flexible convention and meeting space and third party leases related to our state of the art spa and fitness facility, race and sports book, and retail space.

Our financial results are dependent upon the number of patrons that we attract to our property and the amounts those guests spend per visit. Additionally, our operating results may be affected by, among other things, overall economic conditions impacting the disposable income of our guests, achieving and maintaining cost efficiencies, competition on the Las Vegas Strip, gaming tax increases and other regulatory changes, the commencement of new gaming operations, charges associated with debt refinancing, construction at our facilities and general public sentiment regarding travel. We may experience significant fluctuations in our quarterly operating results due to seasonality, variations in gaming hold percentages and other factors. Consequently, our operating results for any quarter or year are not necessarily comparable and may not be indicative of future periods’ results.

Current Economic Conditions. Over the past 20 years, Las Vegas has become one of the fastest growing and largest entertainment markets in the United States. Since 2008, however, the Las Vegas market has generally experienced a contraction in growth as gaming and other revenues have fallen from prior periods. The Las Vegas market is showing signs of a modest recovery with visitor volumes reaching 37.3 million in 2010, 38.9 million in 2011 and 39.7 million in 2012; representing a 2.1% increase from 2011 to 2012 and a 6.4% increase from 2010 to 2012. Gaming revenues in Clark County are also recovering modestly reaching approximately $9.4 billion in 2012 compared to $9.2 billion in 2011, an increase of approximately 1.9%. On the Las Vegas Strip, gaming revenues increased 2.3% to $6.2 billion in 2012. Volume and gaming statistics noted above are released by the Las Vegas Convention and Visitors Authority.

Competition. We face significant competition in the Las Vegas market, as well as from other states. Such competition may intensify if new gaming operations open or existing competitors expand their operations. During 2012, several competitors announced investments in new hotel offerings, restaurants and clubs in Las Vegas. These new offerings are slated to begin opening in 2013. Additionally, there are a number of large projects with additional hotel rooms slated to open over the next few years. We also compete for customers with other casino operators in other markets, including casinos located on Native American reservations, and other forms of gaming, such as lotteries and internet gaming. Many of our competitors are larger and have substantially greater name recognition and marketing and financial resources. We believe that increased legalized gaming in other areas, the development or expansion of Native American gaming, the expansion or additional developments in Las Vegas, and the potential expansion of the legalization of internet gaming, which has occurred in Nevada and New Jersey, could create additional competition for us and could adversely affect our operations.

Seasonality. The Las Vegas hotel, resort and casino industry is seasonal in nature. A variety of factors contribute to the seasonality of the Las Vegas market, including the timing of major Las Vegas conventions, major holidays such as New Year’s and Chinese New Year and major sporting events, particularly the Super Bowl. These factors can drive additional business to the Las Vegas market. Visitor volumes typically are lower during off-peak times, such as most mid-week periods or during traditional slower leisure periods such as between Thanksgiving and New Year’s.

Property Updates - Franchise Agreement. In late October 2012, we announced a franchise agreement with Hilton Worldwide (“Hilton”) linking our hotel to Hilton’s fastest growing full-service chain, Doubletree by Hilton. The agreement offers Hilton’s loyalty program members the opportunity to earn and redeem points on the Las Vegas Strip after a nearly 14-year absence. We integrated into Hilton’s websites and toll-free reservations number in mid-January of this year. The partnership affords us the opportunity to maintain our individuality and culture, while taking advantage of the sales and marketing scale of the worldwide Hilton organization.

Property Updates – New Bungalows. In early February 2013, we unveiled 121 bungalow-styled rooms and 6 pool villas which provide our guests with a South Beach experience adjacent to our award-winning pool and gardens. These spacious pool villas feature our best in class room amenities.

Property Updates – Remodeled Theater. In late February 2013, our showroom was completely renovated into a 1,045-seat theater. Seating is wide and inviting with VIP cocktail tables and booths in the front of the theater. The theater features all new seating, lighting and sound upgrades to enhance the audience entertainment experience. In October 2013, we announced that MAMMA MIA will be opening in our theater beginning the spring of 2014.

Property Updates – Expanding Meeting and Convention Facilities. In early June 2013, we announced plans to significantly expand our meeting and convention facilities to more than 100,000 square feet. Our conference center is the ideal venue due to its flexible options and ability to hosts events of nearly any size from intimate gatherings to large events for up to 3,000 guests. Phase I of the expansion includes five 650 square-foot breakout rooms with natural lighting and private restrooms. Phase II of the expansion will include the Tropicana Pavilion offering more than 55,000 square feet that can be used for large exhibits and general session with the utmost flexibility in size configuration. Phase II will be completed in 2014.

Property Updates – New Event Venues. In September 2013, we announced the addition of two distinctive special event venues, the Havana Room and the Beach Club. The Havana Room is lavishly designed with a magnificent crystal chandelier surrounded by more than 40 custom-built banquette-seating areas for up to 300 guests, three full-service bars, a dance floor, and premium sound and lighting technology. The Beach Club is the ideal outdoor party location featuring two pools, two Olympic size sand volleyball courts, full-service bars, and state of the art audio technology. The new venues are the perfect backdrop for Las Vegas weddings, special events, elaborate dinners and corporate holiday parties.

Property Updates – New Villas. In early October 2013, we unveiled six sky villas designed with emphasis on “modern glamour” while providing dazzling skyline views. The sky villas are elegantly appointed with every luxury to create a lifetime of memories in one stay.

Key Financial Metrics

Casino Revenue. Casino revenue is derived primarily from customers wagering on slot machines, table games and other gaming activities. Table games generally include blackjack or twenty one, craps, mini-baccarat, roulette and other specialty games. Other gaming activities include poker. Casino revenue is defined as the net win from gaming activities, computed as the difference between gaming wins and losses, not the total amounts wagered. “Table game drop” and “slot handle” are casino industry specific terms that are used to identify the amount wagered by customers at tables and slot machines, respectively. “Table game hold” and “slot hold” represent the percentage of the total amount wagered by customers that the casino has won. Hold is derived by dividing the amount won by the casino by the amount wagered by customers. Casino revenue is recognized at the end of each gaming day. Casino revenue varies from time to time due to table game hold, slot hold and the amount of gaming activity.

Room Revenue. Room revenue is derived from hotel rooms and suites rented to guests. “Average daily rate” is an industry specific term used to define the average amount of revenue per room per rented room day. “Occupancy percentage” defines the total percentage of rooms occupied and is computed by dividing the number of rooms occupied by the total number of rooms available. “Revenue per available room” (“RevPAR”) is an industry specific term used to define the average amount of revenue per room per available room day and is computed by dividing total room revenue by total rooms available. Room revenue is recognized at the time the rooms are provided to guests. Hotel room revenue varies depending upon the occupancy level of the hotel and the rates that can be charged.

Food and Beverage Revenue. Food and beverage revenue is derived from food and beverage sales in the food outlets of the hotel and casino, including restaurants, room service and banquets. Food and beverage revenue is recognized at the time the relevant food or beverage service is provided to guests.

Operating Costs and Expenses. Operating costs and expenses include the direct costs associated with, among other things, operating the casino, hotel, food and beverage outlets and other casino and hotel operations (including retail amenities, concessions, entertainment offerings and certain other ancillary services conducted at the casino). These direct costs primarily relate to payroll, supplies, costs of goods sold and gaming taxes and licenses. Gaming taxes and license fees are based upon such factors as a percentage of the gross revenues or net gaming proceeds received and the number of gaming devices and table games operated. Gaming license fees and taxes may also vary with changes in applicable legislation. Operating costs and expenses also include the costs of marketing, advertising and promotions, general and administrative costs and the costs of maintenance and utilities in addition to depreciation and amortization expense.

Results of Operation

The following table highlights our results of operations ($ in thousands):

The following table highlights our various sources of revenues and expenses as compared to the prior period ($ in thousands):

Three months ended September 30, 2013 (“Current Quarter”) compared to the three months ended September 30, 2012 (“Prior Year Quarter”)

Net Revenue. Net revenues increased by $2.3 million or 10% for the Current Quarter as compared to the Prior Year Quarter primarily as a result of a 19% increase in room revenues, 5% increase in food and beverage revenues and 2% increase in casino revenues.

Operating Loss. The operating loss decreased by $3.5 million or 40% for the Current Quarter as compared to the Prior Year Quarter primarily as a result of the higher net revenues noted above and a 4% reduction in operating expenses.

Casino. Casino revenues increased $0.2 million or 2% for the Current Quarter as compared to the Prior Year Quarter. Slot revenues accounted for a $0.4 million increase in casino revenues due primarily to 9% increase in the slot handle. However, table game revenues were lower by $0.2 million as a result of a 9% decrease in the table game drop. Casino expenses decreased by $1.3 million or 16% for the Current Quarter as compared to the Prior Year Quarter due primarily to decrease in payroll, advertising, commissions, special events, gaming taxes and the reclassification of second quarter’s one-time reversal of sales tax liability on complimentary meals to patrons and employees of $0.4 million. The reversal of sales tax liability was a result of the casino industry reaching a settlement with the Nevada Tax Commission that eliminated sales tax on complimentary meals. As a result of the decreased casino expenses, the casino operating margin increased 14 percentage points in the Current Quarter as compared to the Prior Year Quarter.

Room. Room revenue increased $1.7 million or 19% for the Current Quarter as compared to the Prior Year Quarter, which was attributable to an increase in average daily rate to $82 from $74 offset by a slight decrease in occupancy percentage to 85.9% from 86.4% for the same previous period. The drop in the occupancy rate is due to 6.4% increase in room availability associated with the bungalow rooms being added to our hotel mix while not achieving a commensurate increase in occupancy. RevPAR was $70.45 and $63.92 for the Current Quarter as compared to the Prior Year Quarter, respectively. Room expenses increased by $0.6 million or 14% for the Current Quarter as compared to the Prior Year Quarter due to increases in payroll, credit card fees, laundry services and fees associated with the Hilton agreement. As a result of the increased hotel revenues, the hotel operating margin increased 3 percentage points in the Current Quarter as compared to the Prior Year Quarter.

Food and Beverage. Food and beverage revenues increased $0.3 million or 5% for the Current Quarter as compared to the Prior Year Quarter. The increase was primarily due to banquets. Food and beverage expenses decreased $0.4 million or 7% for the Current Quarter as compared to the Prior Year Quarter primarily due to our cost reduction initiatives. As the result of the reduction in food and beverage expenses, the food and beverage operating margin improved 10 percentage points in the Current Quarter as compared to the Prior Year Quarter.

Other. Other revenues primarily include income from convention services, entertainment and leased outlets. Other revenues increased by $0.1 million or 12% for the Current Quarter as compared to the Prior Year Quarter reflecting an increase in convention business.

Selling, General and Administrative. Selling, general and administrative expenses increased $0.3 million or 6% for the Current Quarter as compared to the Prior Year Quarter reflecting higher marketing costs and the reclassification to various operating departments, primarily casino, of second quarter’s one-time reversal of sales tax liability on complimentary meals to patrons and employees.

Maintenance and Utilities. Maintenance and utilities expense decreased $0.3 million or 8 % for the Current Quarter as compared to the Prior Year Quarter primarily due to our cost reduction initiatives.

Depreciation and Amortization. Depreciation and amortization expense decreased $0.2 million or 5% for the Current Quarter as compared to the Prior Year Quarter primarily due to retiring certain assets.

Interest Expense. Interest expense decreased $0.3 million or 28% for the Current Quarter, as compared to the Prior Year Quarter. In November 2012, we completed a $40.0 million rights offering of our Series 4 Preferred. This additional equity allowed us to pay down a substantial portion of our outstanding revolving credit facility, thus lowering our Current Quarter interest expense. In addition, we recognized $30,000 in interest income related to the sales and use tax settlement on complimentary meals.

Nine months ended September 30, 2013 (“Current Period”) compared to the nine months ended September 30, 2012 (“Prior Year Period”)

Net Revenue. Net revenues increased $1.4 million or 2% for the Current Period as compared to the Prior Year Period primarily due to higher room revenue which was partially offset by lower casino revenue resulting from lower hold percentage in table games during the first quarter of 2013.

Operating Loss. The operating loss decreased by $2.2 million or 11% for the Current Period as compared to the Prior Year Period primarily as result of the higher net revenues noted above and 1% reduction in operating expenses.

Casino. Casino revenues decreased $1.6 million or 5% for the Current Period as compared to the Prior Year Period. Table game revenues accounted for $2.6 million of the decrease in casino revenues as a result of lower hold percentage in the first quarter of 2013. The poker room revenue accounted for $0.3 million of the decrease in casino revenues as result of closing of the poker room in the third quarter of 2012. Offsetting some of the loss were slot revenues, which accounted for $1.3 million increase in casino revenues due to a 9% increase in the handle. Casino expenses decreased $0.3 million for the Current Period, as compared to the Prior Year Period. The majority of the decrease was associated with the closing of the New Jersey branch office. As a result of lower casino revenues, the casino operating margin decreased 3 percentage points in the Current Period as compared to the Prior Year Period.

Room. Room revenue increased $2.8 million or 10% for the Current Period as compared to the Prior Year Period, which was attributable to an increase in average daily rate to $84 from $77 offset by a decrease in occupancy percentage to 83.0% from 86.0% for the same period. The drop in the occupancy rate is due to 4.9% increase in room availability associated with the bungalow rooms being added to our hotel mix while not achieving a commensurate increase in occupancy. The transition to the Hilton reservation system also contributed to lower occupancy during the period. RevPAR was $69.58 and $66.61 for the Current Period as compared to the Prior Year Period, respectively. Room expense increased $1.2 million for the Current Period as compared to the Prior Year Period, due to increases in payroll, credit card fees, laundry services, uniforms, and fees associated with the Hilton agreement. The hotel operating margin improved 1 percentage point in the Current Period as compared to the Prior Year Period.

Food and Beverage. Food and beverage revenues decreased $0.7 million or 4% for the Current Period as compared to the Prior Year Period. The decrease was primarily due to the closing of nightclub and beach club in March 2012. Food and beverage expenses decreased $1.6 million or 10% for the Current Period as compared to the Prior Year Period primarily due to the aforementioned closing of the nightclub and beach club and lower payroll and operating expenses resulting from our cost reduction initiatives. As a result of the closing of the nightclub and beach club and cost controls, the food and beverage operating margin increased 6 percentage points in the Current Period as compared to the Prior Year Period.

Other. Other revenues primarily include income from convention services, entertainment, and leased outlets. Other revenues increased by $0.5 million or 16% for the Current Period as compared to the Prior Year Period, primarily as a result of increase in lease income.

Selling, General and Administrative. Selling, general and administrative expenses increased $0.3 million or 2% for the Current Period as compared to the Prior Year Period reflecting an increase in general liability claims, higher payroll expenses and higher property taxes.

Maintenance and Utilities. Maintenance and utilities expense decreased $0.1 million or 1% for the Current Period as compared to the Prior Year Period due to our cost reduction initiatives.

Depreciation and Amortization. Depreciation and amortization expense decreased $0.4 million or 3% for the Current Period as compared to the Prior Year Period primarily due to retiring certain assets.

Loss on Assets Disposals. We wrote off $0.3 million for the Current Period due to the retiring of certain assets.

Interest Expense. Interest expense decreased $0.9 million or 31% for the Current Period, as compared to the Prior Year Period. In November 2012, we completed a $40.0 million rights offering of our Series 4 Preferred. This additional equity allowed us to pay down a substantial portion of our outstanding revolving credit facility, thus lowering our Current Period interest expense. In addition, we recognized $30,000 in interest income related to the sales and use tax settlement on complimentary meals.

Liquidity and Capital Resources

Amended and Restated Loan Agreement

Effective December 21, 2012, we agreed to amend and restate our $65.0 million loan agreement. The Amended and Restated Loan is comprised of a $50.0 million Revolver A facility, a $5.0 million Revolver B facility, and a $10.0 million Revolver C facility. The Revolver A bears interest at 4% per annum, Revolver B bears interest at 5% per annum and Revolver C bears interest at 6% per annum. The fee for any unfunded portion of the Revolver A, Revolver B or Revolver C is 0.50%. Each revolving credit facility has a stated maturity date of April 2, 2018.

The Amended and Restated Loan contains customary affirmative, negative and financial covenants. The covenants, among other things, restrict, subject to certain exceptions, our ability to: incur additional indebtedness; create liens on property or assets; make certain investments; engage in mergers or consolidations; sell assets; pay dividends or make distributions; engage in certain transactions with affiliates; enter into sale-leaseback transactions; and pay management fees. In addition, the Amended and Restated Loan requires us to: maintain a $2.0 million cash balance; deposit $5.0 million into an interest reserve account (deposited December 2012); meet certain EBITDA minimums on a quarterly basis for the periods from March 31, 2015 through March 31, 2018 with a standard cure provision if the EBITDA minimums are not met; and limits the annual aggregate capital expenditures to $18.0 million in 2013 and 2014. As of September 30, 2013, we are in compliance with all of our covenants.

Substantially all of the assets of Tropicana Las Vegas are pledged as collateral under the Amended and Restated Loan and priority of liens and security interest were granted to our lenders. The lenders have agreed to release its security interest in a one acre (approximately) parcel for future development. Pursuant to the terms of the Amended and Restated Loan, we are required to establish an interest reserve account for payments of quarterly interest. As of September 30, 2013, the interest reserve account had a balance of $4.3 million.

Liquidity Outlook

We have been operating at a loss with negative cash flow since we commenced operations on July 1, 2009. Our ability to generate cash from operations in the future depends, in significant part, upon the state of the hotel and gaming industry in Las Vegas, which in turn depends upon a number of factors including the state of the United States economy, the amount of discretionary consumer and corporate spending in Las Vegas and the level of competition in the Las Vegas market.

Our primary sources of liquidity have been comprised of a revolving line of credit totaling $65 million and four rights offerings which raised $200 million. We believe that our existing cash balance, cash flows from operations, and existing revolver line will be more than adequate to meet our financial and operating obligations over the next twelve months. However, we will continue to closely monitor and manage our cash position given the current economic environment. If our sources of capital are inadequate to fund our long-term liquidity requirements, including our need to service our existing debt obligations as they come due, we will attempt to procure additional debt or equity financing, to fund our operations, capital expenditures and debt service requirements.

We can provide no assurance that our business will generate sufficient cash flow from operations or that future borrowings will be available in amounts sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. Moreover, we may need to refinance all or a portion of our indebtedness on or before maturity. We cannot make assurances that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

Cash Flows from Operating Activities

During the Current Period, cash flows used in operating activities were $2.0 million as compared to $4.1 million for the Prior Year Period, reflecting improved operating results with higher net revenues and lower operating and finance expenses.

Cash Flows Used in Investing Activities

Cash used for capital expenditures were approximately $14.1 million for the Current Period. The increase in cash used for capital expenditures is the result of the completion of our bungalow-styled room renovations, theater remodel, bathroom renovations and the construction of our sky villas. During the Prior Year Period, cash used for capital expenditures was approximately $5.0 million.

Cash Flows Provided by Financing Activities

During the Current Period, we borrowed $26.2 million to complete capital expenditures and to pay down our Revolver C loan of $10 million. Revolver C carries a higher interest rate than Revolver A, thus allowing us to lower our overall financing cost. In addition, we paid $0.6 million in principal payments under capital leases compared to $0.2 million for the Prior Year Period. This increase represents $1.2 million in additional slot machine capital leases entered into during 2013. As of September 30, 2013, we had remaining borrowing base of $9.0 million under the Amended and Restated Loan.

Off-Balance Sheet Arrangements

We have no special purpose entities, financing partnerships, guarantees or off-balance sheet arrangements other than $0.2 million of outstanding letter of credits discussed in Note 7 “Commitments and Contingencies” to the condensed consolidated financial statements.

Contractual Obligations

With the exception of payments made in relationship to our capital leases, there were no material changes during the three months ended September 30, 2013 to our contractual obligations as disclosed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2012.

Critical Accounting Policies

A description of our critical accounting policies can be found in the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2012. For a further discussion of our accounting policies, see Note 2 to the condensed consolidated financial statements in this Form 10-Q. There were no material changes to our critical accounting policies during the three months ended September 30, 2013.

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. Our use of debt exposes us to interest rate risk. As of September 30, 2013, all of our long-term debt and capital leases had fixed interest rates which eliminated our exposure to fluctuation of interest rates. However, as our fixed rate debt matures, and if additional debt is acquired to fund the debt payment, future earnings and cash flows may be affected by changes in interest rates. The following table set forth our long-term debt obligations and the related interest rates as of September 30, 2013 ($ in thousands):

Item 4.      Controls and Procedures.

Disclosure Controls and Procedures

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) have concluded that the design and operation of our disclosure controls and procedures are effective as of the end of the period covered by this report. This conclusion is based on an evaluation as required by Rule 13a-15(e) under the Exchange Act conducted under the supervision and participation of the principal executive officer and principal financial officer along with the Company’s management. Disclosure controls and procedures are those controls and procedures which ensure that information required to be disclosed in this filing is accumulated and communicated to management and is recorded, processed, summarized and reported in a timely manner and in accordance with Securities and Exchange Commission (“SEC”) rules and regulations.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter to which this report relates that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.      Legal Proceedings

Reference is made to the legal proceedings reported under Note 7 “Commitments and Contingencies” of the condensed consolidated financial statements included in this Form 10-Q.

Item 1A.   Risk Factors

Our business has many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity are described under “Risk Factors” in Item I of our Annual Report on Form 10-K for the year ended December 31, 2012. This information should be considered carefully, together with other information in this report and other reports and materials we file with the Securities and Exchange Commission.

Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.      Defaults Upon Senior Securities

None.

Item 4.      Mine Safety Disclosures

Not applicable.

Item 5.      Other Information

None.

Item 6. Exhibits

 SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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