Summary of SOUTHWEST CASINO CORP

NOTE 2 - MANAGEMENT FINANCIAL PLANS

The Company completed a debt financing for $1.55 million in March 2008, see Note
9. On June 17, 2008, the Company sold 2.7 million shares of common stock and warrants to purchase 2.2 million shares of common stock resulting in proceeds of approximately $1.54 million, see Note 5. During the nine months ended September 30, 2008 the Company used $883,500 to make an additional investment in North Metro, see Note 7, and $450,000 to pay in full the Company's line of credit on July 1, 2008, see Note 8. The Company will be required to seek additional debt or equity financing during 2008 to fund operations. If the Company were to raise capital through an equity financing, any sale of equity is likely to require us to issue a significant number of shares and warrants to purchase shares to participants in the June 17, 2008 financing under the anti-dilution provisions of that financing, thus causing further dilution, see Note 5. During the Company's quarterly Board of Directors meeting on November 11, 2008, the Board of Directors and management approved a plan to significantly reduce operating expenditures and preserve the Company's available cash flow during 2009 by reducing salary payments and other operating expenditures. In addition, the Company will need to restructure its outstanding debt or begin to make principal payments on it beginning in February 2009, see Note 9.

NOTE 3 - STOCK OPTIONS AND AWARDS

Stock option plans:

On July 15, 2004, Southwest Casino and Hotel Corp. shareholders approved the Southwest Casino and Hotel Corp. 2004 Stock Incentive Plan that had been adopted by the company's Board of Directors effective June 1, 2004. Under the terms of the reorganization completed July 22, 2004, Southwest Casino Corporation assumed the rights and obligations of Southwest Casino and Hotel Corp. under this plan. The plan permits Southwest Casino Corporation to issue incentive awards to all employees of Southwest Casino Corporation or any of its subsidiaries and any non-employee directors, consultants or independent contractors of the Company or any of its subsidiaries. Incentive awards under the plan include "incentive options" under Section 422 of the Internal Revenue Code of 1986, "non-statutory stock options" that do not qualify for "incentive option" treatment, stock appreciation rights, restricted stock awards, performance units and stock bonuses. The plan was amended by shareholder approval in June 2007, which increased the number of shares of Southwest Casino Corporation common stock reserved for issuance under the plan from 1,500,000 to 3,000,000.

In addition to the assumption of the 2004 Stock Incentive Plan, Southwest Casino Corporation assumed outstanding non-plan options to acquire shares of Southwest Casino and Hotel Corp. common stock as part of its reorganization. The Company assumed obligations in the form of stock options to issue 1,575,000 shares of its common stock at a weighted average price of $.62 per share.

Valuation and Expense Information under SFAS 123(R)

Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment ("SFAS 123(R)") requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company's consolidated statement of operations.

The effect of stock options issued to employees, directors and consultants was to increase the net loss for the three and nine months ended September 30, 2008 by $79,621 and $312,272, respectively and basic loss per share by $0.003 and $0.011, respectively. The effect of stock options issued was to increase the net loss for the three and nine months ended September 30, 2007 by $42,987 and $131,512, respectively and basic loss per share by $0.002 and $0.005, respectively.

Options are granted to employees and directors at prices equal to the market value of the stock on the dates the options are granted. The options granted have terms of 5 to 10 years from the grant date and granted options typically vest quarterly over a one to three year period. The fair value of each option is amortized into compensation expense over the period the option vests. The Company has estimated the fair value of all stock options as of the date of grant by applying the Black-Scholes pricing valuation model.

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SOUTHWEST CASINO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2008

The application of this valuation model involves assumptions that are judgmental and sensitive in the determination of compensation expense. The key assumptions used in determining the fair value of options during the nine months ended September 30, 2008 were:

                                           Nine months ended
                                           September 30, 2008
Expected price volatility                             64% - 66 %
Risk free interest rate                           2.35% - 2.76 %
Weighted average expected life in years       5.0 - 6.76 years
Dividend yield                                               0 %
Pre-vesting forfeiture rate                                  0 %
Weighted average fair value               $               0.28

The Company estimated the expected price volatility using a pro-rata percentage of both historical information for a peer group as well as historical information for the Company from January 4, 2007 through March 20, 2008. The Company's securities began trading publicly in July 2004, however the volume and trading activity was minimal until 2007. As a result the Company used the average volatility for the look back period (which is the expected term of the options) for the companies considered in the peer group and history for the Company from 2007 to March 20, 2008 (the date of grant). The Company weighted the volatility using 80% of the peer group and 20% of the Company's calculated volatility. The Company applied the simplified formula for computing the expected term assumptions for employee and director options in accordance with Staff Accounting Bulletin ("SAB") No. 107 and as modified in SAB No. 110. The Company applied 0% to the dividend yield as the Company has not approved or issued dividends in the past and there are no plans to do so. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the expected life of the option being valued. SFAS 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be zero based primarily on historical experience. If pre-vesting forfeitures occur in the future, the Company will record the benefit related to those forfeitures as the forfeitures occur.

Status of options during the nine months ended September 30, 2008

                                                                             Weighted
                                                             Weighted         Average
                                              Options         Average       Contractual       Aggregate
                                            Outstanding   Exercise Price       Term        Intrinsic Value
Balance at December 31, 2007                  2,500,000   $          0.65
Granted                                       1,867,500   $          0.48
Forfeited/cancelled/expired                           -
Exercised                                       (50,000 ) $          0.12
Balance at September 30, 2008                 4,317,500   $          0.58

Options outstanding at September 30, 2008     4,317,500   $          0.58     6.5 years                   -
Options exercisable at September 30, 2008     2,969,635   $          0.63     5.2 years                   -

As the closing stock price of $0.17 at September 30, 2008 was less than the weighted average exercise price for both options outstanding and options exercisable there was no intrinsic value. As of September 30, 2008, the Company's unrecognized share-based compensation related to stock options issued to employees and directors was approximately $350,607. This cost is expected to be expensed over a weighted average period of three years. See Note 21, Subsequent Events, regarding Repricing of Employee Stock Options.

Effective July 14, 2008, the Company issued 50,000 shares of common stock to a non-management employee upon partial exercise of a non-qualified stock option to purchase 150,000 shares of common stock at a price of $0.12 per share that was originally issued by Southwest Casino and Hotel Corp. in 2003 and assumed by the Company in its July 2004 reorganization.

Included in the Status of options table above are:

† On March 20, 2008, the Board of Directors awarded options to purchase an aggregate of 1,092,500 shares of the Company's common stock to executive officers and employees of the Company. All of the options were granted under the Company's 2004 Stock Incentive Plan. The options have a 10-year term and an exercise price of $0.48 per share, the closing market price for one share of the Company's common stock on the date of grant. The options were immediately exercisable with respect to 25% of the shares awarded and become exercisable with respect to the remaining shares in equal installments on the last day of each fiscal quarter over a three-year period.

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SOUTHWEST CASINO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2008

† Also on March 20, 2008, the Board of Directors granted options to purchase 675,000 shares of the Company's common stock to the independent members of the Board. These options were also granted under the Company's 2004 Stock Incentive Plan. The options have a 10-year term and an exercise price of $0.48 per share, the closing market price for one share of the Company's common stock on the date of grant. The options become exercisable in equal installments on the last day of each fiscal quarter beginning on the last day of the fourth quarter of 2008 (the first quarter after the options granted to our independent directors on January 10, 2006 are fully vested), over a three-year period.

† Consulting option grant:

The Board of Directors awarded two non-qualified options to purchase 50,000 shares of Southwest common stock each to a consultant to the company on March 20, 2008. These options were also granted under the company's 2004 Stock Incentive Plan, have a 10-year term, and an exercise price of $0.48 per share, the closing market price for one share of the Company's common stock on the date of grant. These options become exercisable upon Southwest's achievement of certain goals related to the services provided by the consultant to Southwest. During the three months ended June 30, 2008, 50,000 options became exercisable upon execution of the Company's amended consulting and management contract with Palace Resorts in June 2008, see Note 6.

In accordance with SFAS 123(R) paragraph 7, the Company evaluated the services being provided and determined the fair value of the equity award issued was the more reliable measure of fair value.

The Company has estimated the fair value of these options as of the date of grant by applying the Black-Scholes pricing valuation model. The application of this valuation model involves assumptions that are judgmental and sensitive in the determination of compensation expense. The key assumptions used in determining the fair value of options were:

Expected price volatility             71 %
Risk free interest rate             3.31 %
Contractual life in years       10 years
Dividend yield                         0 %
Pre-vesting forfeiture rate            0 %
Weighted average fair value   $     0.37

The Company is expensing the compensation cost of these options over the expected vesting period based upon the performance conditions and will reassess the likelihood of performance at each reporting date. The Company expensed approximately $4,700 and $28,700 during the three and nine months ended September 30, 2008.

No tax benefit has been recorded on share based compensation expense for the three and nine-month periods ended September 30, 2008 and 2007.

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SOUTHWEST CASINO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2008

NOTE 4 - WARRANTS



Status of warrants:



                                                                  Weighted
                                                 Warrants         Average
                                                Outstanding    Exercise Price
Warrants outstanding as of December 31, 2007      5,946,102   $           0.63
Granted                                           4,543,865   $           0.62
Exercised                                          (145,455 ) $           0.61
Cancelled                                                 0
Warrants outstanding as of September 30, 2008    10,344,512   $           0.62

The Company recognized $27,500 and $82,500 for the three and nine months ended September 30, 2008, respectively related to compensation expense for investor and financial consulting services.

Issuance of Debt

The Company secured debt financing in March 2008, see Note 9. The Company issued five-year fully exercisable warrants to purchase an aggregate of 2,300,000 shares of its common stock at an exercise price of $0.39 per share to the shareholder co-signers and guarantors, including Mr. Druck, Mr. Fox and Mr. Halpern (officers of the Company and guarantors of the debt). The $0.39 per share exercise price of these warrants represented the average closing market price of one share of Southwest Casino Corporation's common stock over the 5 trading days preceding the closing of the loan transaction. Warrant holders also received the right to have the shares of Southwest Casino Corporation common stock purchasable upon exercise of their warrants included in any registration statement that Southwest Casino Corporation may file in the future ("piggy-back rights") under the terms of a separate Registration Rights Agreement dated March 10, 2008.

The Company accounts for transactions in which services are received in exchange for equity instruments issued based on the fair value of such services received from non-employees or of the equity instruments issued, whichever is more reliably measured, in accordance with SFAS No. 123R and Emerging Issues Task Force ("EITF") Issue No. 96-18, "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services." Additionally, the company has accounted for this transaction in accordance with EITF Issue No. 00 - 18 "Accounting Recognition for Certain Transactions involving Equity Instruments Granted to Other Than Employees". The Company has estimated the fair value of the warrants as of the date of grant by applying the Black-Scholes pricing valuation model. The application of this valuation model involves assumptions that are judgmental and sensitive in the determination of expense. The key assumptions used in determining the fair value of the warrants granted on March 10, 2008 were as follows:

Grant date stock price (unregistered common share estimate)   $   0.31
Exercise price of warrant                                     $   0.39
Expected price volatility                                           64 %
Risk free interest rate                                           2.36 %
Contractual term                                               5 years
Dividend yield                                                       0 %
Weighted average fair value                                   $ 0.1545

The Company estimated the expected price volatility using a pro-rata percentage of both historical information for a peer group as well as historical information for the Company from January 4, 2007 through March 10, 2008. The Company became public in July 2004, however the volume and trading activity was minimal until 2007. As a result the Company used the average volatility for the look back period (which is the contractual term of the warrant) for the companies considered in the peer group and history for the Company from 2007 to March 10, 2008 (the date of grant). The Company weighted the volatility using 80% of the peer group and 20% of the Company's calculated volatility. The Company applied 0% to the dividend yield as the Company has not approved or issued dividends. The exercise price of the warrants was based upon the market value of the Company's common stock as reported on the Over the Counter Bulletin Board for SWCC.OB. As the Company has not registered the underlying shares of common stock the Company has applied a 20% discount to the market price of a freely traded share due to the restrictive nature of the award. The risk-free interest rate was selected based upon yields of U.S. Treasury issues with a term equal to the contractual life of the warrants being valued.

The fair value of the warrants in the amount of $355,350 was credited to additional paid in capital and the debit is recorded on the consolidated balance sheet as a deferred financing cost included in Other Assets. The deferred financing cost is being amortized to interest expense over the term of the loan using the effective interest method (properly matching the debt financing cost over the term of the loan). The Company

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SOUTHWEST CASINO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2008

recognized amortization expense (charged to interest expense) of $44,657 and $103,502 during the three and nine months ended September 30, 2008.

Issuance of equity

In connection with the Securities Purchase Agreement ("SPA") entered into on June 17, 2008, the Company issued warrants to purchase 2,045,344 shares of common stock to the investors and warrants to purchase an additional 198,521 shares of common stock to the placement agent in that offering, see Note 5.

NOTE 5 - SALE OF UNREGISTERED SECURITIES

On June 17, 2008, Southwest entered into a Securities Purchase Agreement with certain institutional and other accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended, pursuant to which Southwest sold in a private placement an aggregate of 2,693,589 shares of its common stock with accompanying warrants to purchase 2,154,873 shares of its common stock at a price of $0.65 per unit, with each unit consisting of one share of common stock and a warrant to purchase .8 shares of common stock. The warrants are exercisable for a period of five years at an exercise price of $0.85 per share. Southwest received net proceeds from this offering of approximately $1,540,552, after the deduction of estimated offering expenses and other non-cash transactions as reported in the supplemental disclosure of non-cash investing and financing activities in the Consolidated Statement of Cash Flow.

The Securities Purchase Agreement provides that if Southwest determines to file a registration statement for its equity securities, participants in this offering will have the right to request inclusion of their common stock and shares of common stock issuable upon exercise of their warrants in the registration statement (piggy-back registration rights).

If Southwest issues common stock or securities convertible into common stock at an effective price below $0.65 per share before the 6 month anniversary of the date on which the shares sold in this offering can be sold in the public market under an effective registration statement or under SEC Rule 144 (the "Effective Date"), Southwest will issue additional shares of common stock to participants in this offering such that they receive the same purchase price per share as investors in the subsequent offering (a full ratchet adjustment).

Southwest agreed that if it sells additional shares of common stock before the 6 month anniversary of the Effective Date on terms less favorable to the Company than the terms of the Securities Purchase Agreement, the terms of the Securities Purchase Agreement will be amended to incorporate those less favorable terms. Also, if Southwest sells any debt or equity security convertible into its common stock before the 6 month anniversary of the Effective Date, investors in this offering may elect to exchange some or all of the common shares acquired in this offering for the convertible securities sold in the subsequent offering on a dollar-for-dollar basis. If an investor elects to exchange their common shares, they will retain the right to purchase 50 percent of the corresponding shares subject to the warrant received in this offering.

The number of shares issuable upon exercise of the warrants and the exercise price of the warrants are adjustable upon the occurrence of certain events, including stock splits, combinations and reclassifications. Until the 4 month anniversary of the Effective Date, if Southwest issues any security with an effective price per share less than the $0.85 per share exercise price of the warrants, the per share exercise price will be reduced to that lower effective price per share and the number of shares issuable upon exercise of the warrant will be increased so that the aggregate exercise proceeds for each warrant remains the same. At any time that a registration statement covering the resale of the common shares issuable upon exercise of the warrant is not effective, warrant holders may exercise the warrant through a "cashless" or "net" exercise. Warrant holders are not permitted to exercise their warrants to the extent their ownership of Southwest common stock would exceed 9.99% of the company's outstanding common stock.

The company's placement agent agreed to accept the cash portion of its placement agent commission in common stock and warrants on the same terms as the investors, which resulted in the placement agent receiving 136,911 shares of common stock and warrants to purchase an aggregate of 109,529 shares of common stock. In addition, the placement agent received a warrant to purchase 88,992 shares of common stock that is exercisable for a period of five years at an exercise price of $1.00 per share.

The following officers and directors of Southwest participated in the private placement on the same terms as the other investors: James B. Druck, Chief Executive Officer and Director; Thomas E. Fox, President and Chief Operating Officer; Jeffrey S. Halpern, Vice President of Government Affairs; Tracie L. Wilson, Chief Financial Officer, and Gus A. Chafoulias, Director. Each of Mr. Druck, Mr. Fox, Mr. Halpern and Ms. Wilson participated by investing the net proceeds of $95,836 (after taxes and other withholding) from deferred bonuses and compensation owed to them by the Company, resulting in a reduction in the Company's outstanding liabilities to these officers of $180,000.

In addition, each of Mr. Druck, Mr. Fox, Mr. Halpern, Ms. Wilson, Mr. Chafoulias and the other members of Southwest's Board of Directors entered into a Lock-up Agreement with Southwest under which they agreed not to sell or transfer any of their Southwest securities (except

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SOUTHWEST CASINO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2008

certain exempt transactions) until after the four month anniversary of the Effective Date. Other than with respect to the Securities Purchase Agreement, there are no material relationships between Southwest, on the one hand, and any of the other investors in the private placement, on the other hand.

The securities that were issued in this private placement were not registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. Pursuant to the Securities Purchase Agreement, Southwest and the investor parties have made other covenants and representations and warranties regarding matters that are customarily included in financings of this nature. If certain of its obligations are not met, Southwest has agreed to make pro-rata cash payments as liquidated damages to each investor.

NOTE 6 - MODIFICATION AND EXTENSION OF CONSULTING AGREEMENT WITH PALACE RESORTS

On June 25, 2008, the Company entered into a Modification and Extension of Consulting Agreement (the "Agreement") with Operadora Dominicana Macao, S.A., a subsidiary of Palace Resorts, under which Southwest will manage the casino at the Moon Palace Casino, Golf and Spa Resort in Punta Cana, Dominican Republic. The casino will be part of a 1700-room, all-inclusive luxury resort that Palace Resorts is constructing on the far eastern tip of the Dominican Republic. Southwest has been consulting with Palace Resorts on the design, development and operation of the casino since September 2007.

Under the new Agreement, Southwest will continue to assist Palace Resorts in all phases of design, game selection, training and equipping the casino as a consultant and then manage the casino for five years after it opens in late 2008 or early 2009. As manager, Southwest will be responsible for all aspects of casino operations including equipping and maintaining the casino, internal controls and accounting, budgeting, casino employment, security and compliance. Southwest will work with Palace Resorts to market the casino and the resort as a gaming destination. Southwest previously received a consulting fee of $50,000 per month under a Consulting Agreement that would have terminated in August 2008. Under the Modification and Extension of Consulting Agreement, Southwest will continue to receive a $50,000 monthly consulting fee until the casino opens.

Beginning in the first full calendar month after the casino opens, Southwest will receive management fees equal to 5 percent of net casino revenue (as . . .