UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 333-113140

INN OF THE MOUNTAIN GODS RESORT AND CASINO

(Exact Name of Registrant as Specified in Its Charter)

Not Applicable		75-3158926
(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		Identification Number)
287 Carrizo Canyon Road
Mescalero, New Mexico		88340
(Address of Principal Executive Offices)		(Zip Code)

(575) 464-7777
(Registrant’s Telephone Number, Including Area Code)

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

Title of Each Class		Name of Each Exchange on Which Registered
None		None

Securities registered under
Section 12(g) of the Act:
(Title of Class)
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

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 þ No o

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). o Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o
				(Do not check if smaller reporting company)

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Not applicable

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. Not applicable

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None

 

 

TABLE OF CONTENTS

PART I
Item 1. Business			3
Item 1A. Risk Factors			9
Item 1B. Unresolved Staff Comments			15
Item 2. Properties			15
Item 3. Legal Proceedings			15
Item 4. (Removed and Reserved)			15
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			15
Item 6. Selected Financial Data			16
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation Operations			19
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			35
Item 8. Financial Statements and Supplementary Data Disclosure			35
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure			35
Item 9A. Controls and Procedures			35
Item 9B. Other Information			36
PART III
Item 10. Directors, Executive Officers and Corporate Governance			36
Item 11. Executive Compensation			39
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			41
Item 13. Certain Relationships and Related Transactions, and Director Independence			41
Item 14. Principal Accounting Fees and Services			43
PART IV
Item 15. Exhibits, Financial Statement Schedules			43
SIGNATURES			44
POWER OF ATTORNEY			45
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			46
INDEX TO EXHIBITS
EX-12.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

     References in this Annual Report on Form 10-K (this “Form 10-K” or this “Report”) to (a) the “Tribe” refers to the Mescalero Apache Tribe, a federally recognized Indian tribe, (b) “IMG Resort and Casino” refers to Inn of the Mountain Gods Resort and Casino, a business enterprise of the Tribe, (c) “Casino Apache” refers to Casino Apache, a business enterprise of the Tribe, (d) the “Inn” refers to Inn of the Mountain Gods, a business enterprise of the Tribe, (e) the “Travel Center” refers to Casino Apache Travel Center, a business enterprise of the Tribe and (f) “Ski Apache” refers to Ski Apache, a business enterprise of the Tribe. Each of Casino Apache, the Inn, the Travel Center and Ski Apache is a wholly-owned subsidiary of IMG Resort and Casino. References in this Form 10-K to “we,” “our,” “Resort,” “Company,” “IMGRC” and “us” refer to IMG Resort and Casino.

FORWARD-LOOKING STATEMENTS

     This Form 10-K includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements regarding our expected financial condition, results of operations, business, strategies and financing plans in this Form 10-K are forward-looking statements. In addition, the words “anticipate,” “expect,” “will,” “propose,” “plan,” “intend,” “designed,” “estimate,” “adjust” and similar expressions, as they relate to us or our management, indicate forward-looking statements. These forward-looking statements may prove to be incorrect.

     Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements or industry results to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other important factors are disclosed under “Risk Factors” and elsewhere in this Form 10-K.

     You are urged to consider the below factors carefully in evaluating the forward-looking statements contained in this Form 10-K. All subsequent forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by our cautionary statements. These forward-looking statements are made only as of the filing date of this Form 10-K. We do not intend, and undertake no obligation, to update these forward-looking statements. Important factors that could cause our actual results to differ materially from our expectations include, without limitation:

	•		our level of leverage and ability to meet our debt service obligations;
	•		our dependence on WG-IMC, LLC and its majority owner, William W. Warner, to manage our facilities;
	•		whether the exchange offer currently underway with respect to our existing debt securities is successful;
	•		our financial performance;
	•		restrictive covenants in our debt instruments;
	•		realizing the benefits of our business plan and business strategies;
	•		changes in gaming laws or regulations, including potential legalization of gaming in certain jurisdictions;
	•		the impact of competition in our markets;
	•		our ability to attract increasing numbers of customers;
	•		general local, domestic and global economic conditions; and
	•		other risks identified in this Form 10-K.

PART I.

Item 1. Business

Overview

Our Company

     We are a wholly-owned enterprise of the Tribe with the exclusive power to conduct gaming activities on the Tribe’s reservation. We operate New Mexico’s only all-season gaming destination resort on the Tribe’s 725 square mile reservation in south-central New Mexico. Our areas of operation are (all statistics in the following bullets are as of September 30, 2010):

	•		Gaming. Approximately 47,000 square feet of combined gaming space, featuring 1,301 slot machines and 31 table games between our facilities at the IMG Resort and Casino (opened in March 2005) and Travel Center (opened in May 2003).
	•		Food and Beverage. IMG Resort and Casino features: Wendell’s, a 116-seat casual and fine dining restaurant; Gathering of Nations Buffet, a 260-seat buffet style restaurant; a 72-seat sports bar; an 80-seat night club featuring live entertainment, dancing and DJ music; Wendell’s Lounge, a “piano” lounge featuring an oversized fireplace; and the Apache Summit BBQ, an 88-seat casual restaurant in the golf clubhouse which operates as a seasonal dining alternative catering primarily to guests at our golf course. Travel Center features Smokey B’s, a 130-seat casual dining restaurant, and one sports bar. Ski Apache operates one main restaurant and five satellite food and beverage outlets.
	•		Hotel. The Inn features 273 luxury hotel rooms. The hotel varies between four and eight stories in height, depending upon the location along the hotel corridor, and allows for easy access to and from the casino and events center. Our over-sized deluxe guest rooms are either 480 square feet or 610 square feet and our suites are 1,200 square feet (with the ability to connect to a 480 square foot deluxe guest room, providing a total of 1,680 square feet in that configuration). All rooms feature a balcony view of Lake Mescalero, Sierra Blanca Mountain or the forest-lined golf course. The hotel also features an indoor swimming pool and fitness center, steam and sauna facilities for both men and women and a family locker area.
	•		Recreation and Other. Our all-season recreational operations include Ski Apache, the second largest ski area in New Mexico with 11 ski lifts covering 55 trails over 750 acres, an 18-hole championship golf course, seasonal big-game hunts, a shooting range, horseback riding and boating and fishing on Lake Mescalero. Our ski resort is typically open from Thanksgiving until Easter, while our golf course generally operates from April through November. Our retail outlets include a gift shop, golf and pro shop and ski shop, as well as a 2,500-square foot convenience store and a fuel station with 12 gasoline and eight diesel pumping stations at the Travel Center.

Management Agreement

     On January 6, 2010, we entered into a management agreement with WG-IMG, LLC (a majority interest in which is owned by
William W. Warner) pursuant to which WG-IMG, LLC manages, operates and maintains our casino and other businesses and trains the Tribe in the operation and maintenance thereof. The management agreement became effective following approval by the National Indian Gaming Commission (“NIGC”) in a letter dated January 19, 2010, and has a term of five years thereafter. Prior to entering into the management agreement, WG-IMG, LLC, pursuant to a consulting agreement, dated as of February 10, 2009, evaluated and made recommendations with respect to our casino and other business operations.

Exchange Offer Regarding Existing Senior Notes

     We have incurred significant losses and have not made the scheduled semi-annual $12.0 million interest payments on our 12% Senior Notes due 2010 (the “Senior Notes”) since November 15, 2008. The Senior Notes matured on November 15, 2010. We did not pay the principal due at maturity. This constitutes an event of default under the indenture governing the Senior Notes and the trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes could declare all of such notes immediately due and payable. On November 24, 2010, we commenced a private offer to exchange our outstanding Senior Notes for (1) new 8.750% Senior Notes due 2020, (2) new Senior PIK Notes due 2020 and (3) a pro rata amount of $18 million in cash. The exchange offer was scheduled to expire at 5:00 p.m., New York City time, on January 7, 2011. The exchange offer has been extended to expire at 5:00 p.m., New York City time, on January 21, 2011, unless extended further or terminated. The purpose of the extension is to allow sufficient time for the receipt of regulatory approvals necessary for the exchange offer.

Business Strategy

     For the past fiscal year, our management continued its focus on cost control and guest service that began in the prior year. In addition, management placed a focus on growing revenues through (1) targeted marketing efforts, (2) enhanced gaming product and new casino floor layouts, (3) a focus on hotel rates and occupancy and (4) enhanced food offerings. The goal of these revenue growth strategies is to generate incremental guest traffic during non-peak

times through offerings such as discounted buffet pricing, database offers and hotel room discounts, while maximizing revenues during the busiest times by yielding higher hotel rates, offering premium food options, and having the most popular gaming product. Our business is highly seasonal, which requires management to employ strategies for both peak and non-peak times in order to maximize profitability. Management also continued to execute a business strategy that aims at combining consistency in the delivery of quality in all products and services as well as the cross marketing of all our amenities.

	•		The Inn of the Mountain Gods Resort and Casino — In 2010, the Resort launched a new brand campaign, “Above & Beyond,” representing the exceptional service, amenities and overall experience it offers. The revised brand strategy included a new advertising campaign that was executed internally, externally and through social media efforts. The Resort continues to be marketed and branded as the best all-season resort destination in the Southwest. The combination of premium quality facilities that are situated in the naturally beautiful mountains of Mescalero, distinguish the Inn from its competition within the region. To further refine the Inn’s brand, consistency in the delivery of quality in all services and amenities has been essential to attracting new guests as well as retaining existing ones. The Resort has used cross marketing opportunities with the enterprise’s other amenities to increase hotel occupancy and attract new customers.
	•		Casino Apache Travel Center — Casino Apache has developed a strong local customer base which fuels a year-round revenue stream. The facility is located directly off Highway 70, with more than 5.9 million vehicles passing by each year. Mid-week food and gaming promotions are offered and showcased on the electronic reader board. The grill-type restaurant features larger portion sizes of high-quality food at reasonable prices. A wide variety of slots is offered with a concentration in the lower denominations.
	•		Ski Apache — Business at Ski Apache has historically been highly dependent on the weather. For the fiscal year ended September 30, 2010, Ski Apache generated strong results due to significant snowfall. In 2008, however, Ski Apache’s results suffered due to the lack of snowfall. We have invested in snow making equipment that should mitigate some of the risk of poor snowfall in the future. The management team continues to concentrate on service, maintenance and improved labor utilization to improve operating results. Ski Apache is cross-marketed with the Resort in an effort to generate increases in non-gaming revenues.
	•		Championship Golf — The Ted Robinson-designed championship golf course serves as an important amenity for the Inn of the Mountain Gods Resort. The golf course was originally opened in 1975 and has developed a reputation for providing a high-quality golf experience in a uniquely beautiful mountain setting. The golf course brand has also been enhanced by serving as the host location for the top two professional tournaments held in the State of New Mexico for the past four years. The hotel sales department has also been successful using the golf course as a cross-marketing tool to attract guests.
	•		Big Game Hunting — We believe Mescalero Big Game Hunts is one of the top bull elk operations in North America. Co-branding alliance with Christensen Arms, a premium firearms manufacturer, has expanded awareness and boosted recognition not only of the hunts but also of IMG Resort and Casino. In particular, the Inn has successfully marketed the hunt program to attract customers from outside of our regional customer base.

Gaming in New Mexico

Competition

     Our primary market area encompasses southern New Mexico, including the cities of Ruidoso, Alamogordo, Las Cruces and Roswell, western Texas, including the cities of El Paso, Lubbock and Odessa and northern Mexico, including Ciudad Juárez. According to the U.S. Census Bureau and Desarrollo Economico de Ciudad Juárez/INEGI, as of March 2010, there were an estimated 2.6 million people in our primary market area.

     Currently, we compete with 15 tribal gaming casinos and non-tribal racinos operated within 200 miles of our location, one of which, Ruidoso Downs, is approximately 10 miles away from us in Ruidoso, and another, Sunland Park Racetrack and Casino, is approximately 125 miles away from us in Sunland Park, New Mexico. Ruidoso Downs offers quarter horse and thoroughbred racing from May through September, as well as a 20,000 square foot casino featuring approximately 300 slot machines and a buffet restaurant. Sunland Park offers quarter horse and thoroughbred racing from mid-November to early-April, a 36,000 square foot casino featuring approximately 700

slot machines and five restaurants. The other 11 tribal gaming casinos and one racino are located in and around Albuquerque and Santa Fe, New Mexico, all of which are outside of our primary market area. There is also a racino in Hobbs, New Mexico, which is outside of our primary market area, but impacts our west Texas customers. Further, the Department of Interior recently announced that it is reconsidering its denial of the Pueblo of Jemez’s application to put land into trust. The Pueblo of Jemez is seeking trust status in order to conduct gaming on its land in Anthony, New Mexico, which is located approximately 120 miles from our casino and approximately 20 miles north of El Paso, Texas.

     We also compete with other forms of legal gaming in New Mexico, Texas and Northern Mexico, including horse racing, Class II gaming, pari-mutuel wagering, the New Mexico State Lottery, the Texas State Lottery, as well as non-gaming leisure activities.

Mescalero Apache Tribe

Tribal Administration

     The Tribe is a federally recognized Indian tribe located on a 725 square mile reservation in south-central New Mexico and as of September 30, 2010, had approximately 4,681 members. The Indian Reorganization Act of 1934 and subsequent federal legislation govern the relationship between the Tribe and the United States government. The Tribe operates under a constitution approved by the United States Secretary of the Interior on March 25, 1936, revised on January 12, 1965, and amended on May 31, 1985.

     In accordance with its Constitution, the Tribe is governed by and enacts laws through ordinances and resolutions of the Mescalero Apache Tribal Council, or the Tribal Council, which is comprised of a President, Vice President and eight Council Members, each of whom is elected by a majority vote of the eligible adult enrolled members of the Tribe. The President is a non-voting member of the Tribal Council and the Vice President only votes if necessary to break a tie. Each member of the Tribal Council serves a two-year term, with the terms of the voting members staggered so that each year four of those eight positions are up for election. The Tribal Council has the power, by ordinance, to establish the principles and policies governing the operation and control of all enterprises of the Tribe. The Tribal President has the power to contract for the Tribe upon authorization from the Tribal Council. The Tribal Executive Committee, or the Executive Committee, has responsibility for oversight of all business activities on behalf of the Tribal Council. The Executive Committee is comprised of the President and Vice President as well as a Secretary and Treasurer. The Secretary and Treasurer are appointed by the President from the present Tribal Council.

Tribal Court System

     The Constitution and Tribal Code provides for the establishment of the tribal court known as the Mescalero Apache Tribal Court, or Tribal Court. The jurisdiction of the Tribal Court extends to all matters, criminal and civil, except where prohibited by the Constitution, laws or treaties of the United States of America, and except as this jurisdiction may be otherwise limited from time to time by ordinance of the Tribal Council. The criminal offenses over which the Tribal Court has jurisdiction may be embodied in a Code of Laws, adopted by ordinance of the Tribal Council, and subject to review by the Secretary of the Interior. The duties and procedures of the Tribal Court are determined by ordinance of the Tribal Council.

     The Tribal Court consists of a chief judge and two associate judges, appointed by the President of the Tribe, with the concurrence of not less than a three-fourths majority vote of the whole membership of the Tribal Council. The Tribal Council also sits as a court of appeals whenever necessary and may hear appeals at any regular or special meeting. The tenure and salary of tribal judges is established by resolution of the Tribal Council.

     A judge of the Tribal Court must be an Indian as defined in the Tribal Code, not less than thirty-five years or more than seventy years of age, and cannot have been convicted of a felony, or, within one year, of a misdemeanor. The Tribal Code defines an “Indian” as someone who possesses at least one-quarter Indian blood, and is a member of any federally recognized tribe, nation, or band of Indians, or is an Eskimo, Aleut, or other Alaskan.

     The Tribe has adopted its own rules of procedure and evidence, which are found in the Tribal Code. In determining cases, a tribal court judge relies on the applicable laws in the following order of precedence: (a) Tribal Constitution, Tribal Code, ordinances, traditions and customs and (b) federal laws not in conflict with tribal laws and customs.

Mescalero Apache Tribal Gaming Commission

     On August 20, 1999, the Tribe formed the Mescalero Apache Tribal Gaming Commission as a governmental subdivision of the Tribe. The Mescalero Apache Tribal Gaming Commission consists of 4 members, including a Chairman, Vice Chairman and Secretary-Treasurer and Commissioner. The Mescalero Apache Tribal Gaming Commission is vested with the authority to regulate all licenses and gaming activity conducted on tribal lands, including licensing persons, vendors, financial sources and contractors employed by the casino, ensuring compliance with internal control standards established by the National Indian Gaming Commission, or the NIGC, an independent agency within the U.S. Department of the Interior, and establishing technical specifications for gaming devices. The Mescalero Apache Tribal Gaming Commission is responsible for carrying out the Tribe’s regulatory responsibilities under federal, state and tribal law and the 2001 Compact.

Government Regulation

General

     We are subject to federal and tribal laws governing commercial relationships with Indians, Indian gaming and the management and financing of casinos owned by an Indian tribe. In addition, we are regulated by federal and Mescalero Apache tribal laws and regulations applicable to the Indian gaming industry and to the distribution of gaming equipment. The conduct of class III “Las Vegas-style gaming” by the Tribe is also subject to regulation by the State of New Mexico in accordance with the terms of the 2001 Compact. The following description of the regulatory environment in which Indian gaming takes place and in which we operate our casinos is only a summary and not a complete recitation of all applicable law. We cannot predict how certain provisions will be interpreted from time to time or whether they will remain intact. Changes in these laws could have a material adverse impact on our business and results of operations and our ability to meet our debt service obligations.

Tribal Law and Legal Systems

     Applicability of Federal Law. Federally recognized Indian tribes are independent governments, with sovereign powers, except as those powers may have been limited by treaty or by the U.S. Congress. The power of Indian tribes to enact their own laws to regulate gaming derives from the inherent sovereignty of Indian tribes as confirmed by the Indian Gaming Regulatory Act of 1988 (the “IGRA”). Indian tribes maintain their own governmental systems and often their own judicial systems. Indian tribes have the right to tax persons and businesses operating on tribal lands, and also have the right to require licenses and to impose other forms of regulations and regulatory fees on persons and businesses operating on their lands.

     Waiver of Sovereign Immunity; Jurisdiction; Exhaustion of Tribal Remedies. Indian tribes enjoy sovereign immunity from un-consented suit similar to that of the states and the United States. To sue an Indian tribe (or an enterprise, agency or instrumentality of an Indian tribe, such as us), the tribe must have effectively waived its sovereign immunity with respect to the matter in dispute. Further, in most commercial disputes with Indian tribes, the jurisdiction of the federal courts, which are courts of limited jurisdiction, may be difficult or impossible to obtain. A commercial dispute is unlikely to present a federal question, and courts have ruled that an Indian tribe (or enterprise, agency or instrumentality thereof) as a party is not a citizen of any state for purposes of establishing diversity jurisdiction in the federal courts. The remedies available against an Indian tribe also depend, at least in part, on the rules of comity requiring initial exhaustion of remedies of tribal tribunals and, as to most judicial remedies, the terms of the tribe’s consent to be sued contained in the disputed agreements. Under U.S. Supreme Court case law, where a tribal court exists, the remedies in that forum first may have to be exhausted before any dispute arising on or involving the affected tribe’s reservation and to which the tribe, a tribal enterprise such as us or a tribal member is a party, can be properly heard by federal or state courts which might otherwise have jurisdiction. Generally, where a dispute as to the existence of jurisdiction in the tribal forum exists, the tribal court first may need to rule as to the limits of its own jurisdiction, subject to certain limited exceptions enumerated by the U.S. Supreme Court.

The Indian Gaming Regulatory Act of 1988

     Regulatory Authority. The operation of casinos and of all gaming on Indian land is subject to the IGRA. IGRA is administered by the NIGC which exercises primary federal regulatory responsibility over Indian gaming. The NIGC has exclusive authority to issue regulations governing tribal gaming activities, approve tribal ordinances for regulating Class II and Class III gaming (as described below), approve management agreements for gaming facilities, and conduct investigations and generally monitor tribal gaming. The Bureau of Indian Affairs, or the BIA, which is a bureau of the Department of the Interior, retains certain responsibilities under IGRA (such as the approval of per capita distribution plans to tribal members and the approval of transfers of lands into trust status for gaming). The BIA also has responsibility to review and approve land leases and other agreements relating to Indian lands. Criminal enforcement is a shared responsibility of the U.S. Department of Justice and the Tribe, in accordance with federal law, and perhaps by the state in which the Tribe is located if provided for in a tribal state compact regarding the conduct of class III “Las Vegas-style gaming.”

     The NIGC is empowered to impose civil penalties for violations of IGRA. IGRA also provides for federal criminal penalties for illegal gaming on Indian land and for theft from Indian gaming facilities. The NIGC has adopted rules implementing certain provisions of IGRA. These rules govern, among other things, the submission and approval of tribal gaming ordinances or resolutions and require an Indian tribe to have the sole proprietary interest in and responsibility for the conduct of any gaming on its lands. Tribes are required to issue gaming licenses only under articulated standards, conduct or commission financial audits of their gaming enterprises, perform or commission background investigations for primary management officials and key employees and maintain facilities in a manner that adequately protects the environment and the public health and safety. These rules also set out review and reporting procedures for tribal licensing of gaming operation employees.

     Classes of Gaming. IGRA classifies games that may be conducted on Indian lands into three categories. Class I gaming includes social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as part of, or in connection with, tribal ceremonies or celebrations. Class II gaming includes bingo, pull tabs, lotto, punch boards, non-banked card games, tip jars, instant bingo and other games similar to bingo, if those games are played at the same location as bingo is played. Class III gaming includes all other forms of gaming, such as slot machines, video casino games, banked table games and other commercial gaming, such as sports betting and pari-mutuel wagering.

     Class III gaming is permitted on Indian lands if the conditions applicable to Class II gaming are met and, in addition, the gaming is conducted in conformity with the terms of a tribal-state compact, which is a written agreement between the tribal government and the government of the state within whose boundaries the tribe’s lands lie. IGRA requires Indian tribes to enter into tribal-state compacts in order to conduct Class III gaming. Such compacts must be approved by the Secretary of the Department of the Interior in order to become effective.

     Tribal-State Compacts. Tribal-state compacts may include provisions for the allocation of criminal and civil jurisdiction between the state and the Indian tribe necessary for the enforcement of these laws and regulations, taxation by the Indian tribe of the Class III gaming activity in amounts comparable to those amounts assessed by the state for comparable activities, remedies for breach, standards for the operation of the Class III gaming activity and maintenance of the gaming facility, including licensing and any other subjects that are directly related to the operation of gaming activities. While the terms of tribal-state compacts vary from state to state, compacts within one state tend to be substantially similar. Tribal-state compacts usually specify the types of permitted games, establish technical standards for video gaming machines, set maximum and minimum machine payout percentages, entitle the state to inspect casinos, require background investigations and licensing of casino employees and may require the tribe to pay a portion of the state’s expenses for establishing and maintaining regulatory agencies. Some tribal-state compacts are for set terms, while others are for indefinite duration.

     Tribal Ordinances. Under IGRA, except to the extent otherwise provided in a tribal-state compact as described below, Indian tribal governments have primary regulatory authority over Class III gaming on land within a tribe’s jurisdiction. Therefore, a tribe’s gaming operations and persons engaged in gaming activities are guided by and subject to the provisions of that tribe’s ordinances and regulations regarding gaming.

     IGRA requires that the NIGC review tribal gaming ordinances and authorizes the NIGC to approve these ordinances only if they meet requirements relating to:

	•		the ownership, security, personnel background, recordkeeping and auditing of a tribe’s gaming enterprises;
	•		the use of the revenues from that gaming; and
	•		the protection of the environment and the public health and safety.

     Possible Changes in Federal Law. While there have been a number of technical amendments to the law, to date there have been no material changes to IGRA. Any amendment of IGRA could change the governmental structure and requirements within which we could conduct gaming, and may have an adverse effect on our business and results of operations or impose additional regulatory or operational burdens.

Employee and Labor Relations

     As of September 30, 2010, we had 819 full-time team members, excluding approximately 63 additional seasonal team members during the ski season, which typically runs from Thanksgiving to Easter. We have developed and implemented training programs for our hotel and resort team members and believe that we will be able to hire and train a sufficient number of employees for the operation of the Resort. Our team members are not covered by any collective bargaining agreements. We have good labor relations with our team members, over 45% of whom are tribal members or tribal affiliates.

Item 1A. Risk Factors

RISK FACTORS

     In addition to other information contained in this Report, you should carefully consider the following cautionary statements and risk factors. The risks and uncertainties described below are not the only risks and uncertainties we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks actually occur, our business, financial condition, and results of operations could suffer. The risks discussed below also include forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements. See “Forward-Looking Statements.”

Risks Relating to Our Business

The report of our Independent Registered Public Accounting Firm contains an explanatory paragraph expressing substantial doubt about our ability to continue as a “going concern.”

     Our failure to make scheduled interest payments on the Senior Notes since November 15, 2008, together with our history of recurring losses, negative working capital and limited access to capital, has caused our independent registered public accounting firm to express substantial doubts about our ability to continue as a going concern in their audit of our financial statements for the fiscal year ended September 30, 2010. Historically, we have not generated sufficient cash flow from operations to satisfy our capital requirements and we have relied upon debt financing arrangements to satisfy such requirements. There can be no assurance that our future cash flows and capital resources will be sufficient to meet our capital requirements. If we are unable to generate sufficient cash flow from operations and refinance or restructure our debt, we will be left without sufficient liquidity and may be forced to continue to reduce or delay activities and capital expenditures and may not be able to meet our debt service requirements and repayment obligations.

We have a substantial amount of indebtedness, which could adversely affect our financial condition.

     As of September 30, 2010, we had an aggregate of $252.2 million of indebtedness outstanding, which includes $200.0 million of principal and $51.8 million of accrued interest in connection with our 12% Senior Notes due 2010. This substantial indebtedness could have important consequences to you and significant effects on our business and future operations. For example, it could:

	•		make it more difficult for us to satisfy our debt service obligations;
	•		increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;

	•		limit our ability to fund future working capital, capital expenditures and other general operating requirements;
	•		require us to dedicate a substantial portion of our cash flow from operations to service our outstanding indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, and other general operating requirements;
	•		place us at a competitive disadvantage compared to our competitors that have less debt; and
	•		limit our ability to borrow additional funds.

     Our indebtedness could result in a material adverse effect on our business, financial condition and results of operations. If we incur additional debt in the future, these adverse consequences could intensify.

Our failure to generate sufficient cash flow from our gaming and other resort operations could adversely affect our ability to meet our debt service obligations.

     Our ability to make payments on and repay or refinance our debt will depend on our ability to generate cash flow from the operations of our gaming and other resort operations. Our ability to generate sufficient cash flow from operations to satisfy our obligations will depend on our future operating performance, which is subject to many economic, competitive, regulatory and other factors that are beyond our control. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. For the following reasons, among others, these alternatives may not be available to us on reasonable terms or at all, or, if available, they may not be available in amounts adequate to enable us to satisfy our debt service obligations:

	•		unlike non-governmental businesses, we are prohibited by law from generating cash through an offering of equity securities;
	•		our ability to incur additional debt is or is expected to be limited by the covenants of the indentures governing our 12% Senior Notes due 2010 and any notes issued in exchange for such notes; and
	•		the indentures governing our 12% Senior Notes due 2010 and any notes issued in exchange for such notes include or are expected to include covenants which limit our ability to create liens on or sell our assets.
	•		If our cash flow is insufficient and we are unable to raise additional capital, we may not be able meet our debt service obligations.

Our failure to make scheduled payments on our Senior Notes due 2010 constitutes an event of default and the notes could be declared immediately due and payable. After consummation of the exchange offer, if any, our 12% Senior Notes due 2010 will remain in default and we may determine not to make any further payments on the Senior Notes due 2010, in which case holders of such notes may need to pursue remedies against us.

     We have not made the scheduled semi-annual $12.0 million interest payments on our 12% Senior Notes due 2010 (the “Senior Notes”) since November 15, 2008. The Senior Notes matured on November 15, 2010. We did not pay the principal due at maturity. Our failure to make these payments constitutes an event of default under the indenture governing the Senior Notes and the trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes could declare all of such notes immediately due and payable. After the consummation of the exchange offer, if any, an event of default will continue to exist under the indenture governing the Senior Notes, with respect to any Senior Notes that remain outstanding. We may determine not to make any further payments on the Senior Notes, in which case holders of such notes may need to pursue remedies against us.

If our Senior Notes due 2010 are declared immediately due and payable, it would constitute a default under the terms of our furniture and equipment loan and the lenders thereunder could declare the outstanding loan to be immediately due and payable and may enforce their rights to the collateral securing the loan, which would have a material adverse effect on our business.

     In 2004, we borrowed an aggregate of $15.0 million to finance the purchase of furniture and equipment for the Resort. As of September 30, 2010, we had $8,912 outstanding under the loan. The loan is secured by substantially all of the gaming equipment and other furniture and equipment at the Resort. It would be a default under the loan if our Senior Notes were to be declared due and payable immediately. In addition, a default under the loan would exist if, among other things, (1) we or any of our subsidiaries becomes insolvent or makes an

assignment for the benefit of creditors or (2) there has been a material adverse change in our financial condition or the financial condition of any of our subsidiaries since any funding under the loan. Upon the occurrence of a default under the loan, the lenders may declare the loan to be due and payable immediately and would be able to enforce their rights to the collateral securing the loan. Foreclosure on a material portion of the collateral securing the loan could significantly impair our ability to operate the Resort, which would have a material adverse effect on our business.

Failure to consummate the exchange offer successfully will cause the Senior Notes to remain in default and the Senior Notes could become immediately due and payable.

     On November 24, 2010, we commenced a private offer to exchange our outstanding Senior Notes for two series of new notes and cash. The exchange offer is subject to several conditions which must be satisfied or waived, including at least 99.5% of the outstanding principal amount of the Senior Notes being tendered and our receipt of a letter from the NIGC providing that the indenture governing the notes to be issued in exchange for the Senior Notes and the primary collateral documents securing such exchange notes are not management contracts required to be approved by the chairperson of the NIGC. We also have the right to terminate the exchange offer at any time. The exchange offer is part of our ongoing strategy to refinance and restructure our existing indebtedness. If we fail to consummate the exchange offer successfully, an event of default will continue to exist under the indenture governing the Senior Notes and the trustee or holders of at least 25% of the outstanding principal amount of the Senior Notes could declare all of the Senior Notes immediately due and payable.

We are dependent on WG-IMG, LLC and its majority owner, William W. Warner, as manager of the casino and our other businesses, and the loss of either could have an adverse impact on our business and results of operations.

     The success of our business will significantly depend on the efforts and skills of our management company, WG-IMG, LLC and its majority owner, William W. Warner. Our management agreement with WG-IMG, LLC has a term of five years from the date the NIGC approved the agreement, which occurred on January 19, 2010. Should we lose the services of WG-IMG, LLC for any reason, we would be able to hire on a salaried basis individual managers to manage our casino resort, but we would be unable to engage another company to manage our casino resort until the NIGC approves the contractual arrangement and conducts necessary background investigations of the new management company and its key employees. This process typically takes between nine and 24 months for a company that has not previously undergone a background investigation conducted by the NIGC. If we lose WG-IMC, LLC as our manager and we are unable to promptly engage qualified managerial employees or a qualified management company on terms favorable to us, our business and results of operations may be adversely affected and we may be unable to make payments on the New Notes.

     Additionally, the loss of William W. Warner, the majority owner of WG-IMG, LLC, would result in a significant loss of expertise, which in turn could have a material adverse effect on WG-IMG, LLC’s ability to manage our casino resort.

Restrictive covenants in the indentures governing our Senior Notes due 2010 and any notes issued in exchange thereof may limit our ability to expand our operations and capitalize on our business opportunities.

     The indenture governing our Senior Notes due 2010 currently includes, and the indenture to govern any notes issued in exchange thereof is expected to include, covenants which limit our ability to borrow money, make investments, create liens, sell assets, engage in transactions with affiliates, engage in other businesses and engage in mergers or consolidations. These restrictive covenants may limit our ability to expand our operations and capitalize on business opportunities. If we are unable to expand our operation or otherwise capitalize on our business opportunities, our business, financial condition and results of operations could be materially adversely affected and we may not be able to meet our debt service obligations.

If we are unable to realize the benefits of our business strategy, our business and results of operations could be adversely affected.

     Our business strategy is to offer an all-season gaming destination resort, with a focus on cost-control, internal controls and guest services across each of the Tribe’s hospitality enterprises. Implementation of our business

strategy could be adversely affected by a number of factors beyond our control, including general or local economic conditions, increased competition or other changes in our industry. In particular, we may not be able to attract a sufficient number of guests, gaming customers and other visitors in order to achieve our performance goals. Furthermore, we may not be successful in our plan to promote our customers’ utilization of our various resort amenities, including our gaming, hotel, entertainment and other amenities to a degree that will allow us to achieve our performance goals. Additionally, our business strategy, intended to capitalize on the spending levels of our patrons, attract customers from new target markets and reduce seasonality, may not achieve its intended results. A failure to effectively implement our business strategy could have a material adverse effect on our business, financial condition, results of operations and our ability to meet our debt service obligations.

Federal, state and tribal laws and regulations, and our gaming compact, regulate our gaming operations and noncompliance with these laws and regulations by us or the Tribe, as well as changes in these laws and regulations (which are susceptible to changes in public policy) or future interpretations thereof, could have a material adverse effect on our ability to conduct gaming, and thus on our ability to meet our debt service obligations.

     Federal, state and tribal laws and regulations, and our gaming compact, regulate our gaming operations. For example, various regulatory bodies, including the NIGC, the Mescalero Apache Tribal Gaming Commission and the New Mexico Gaming Control Board have oversight of our gaming operations. In addition, the U.S. Congress has authority over Indian affairs and can establish and change the terms upon which Indian tribes may conduct gaming. The operation of all gaming on Indian lands is subject to IGRA.

     The legal and regulatory environment governing our activities, which involve gaming and commercial relations with Indian tribes, is susceptible to changes in public policy regarding these matters and we cannot predict the ramifications of future legislative acts. Changes in applicable laws or regulations, or a change in the interpretation of these laws or regulations or our gaming compact with the State of New Mexico could limit or materially affect the types of gaming, if any, that we may offer. Any restrictions with respect to gaming could have a material adverse effect on our business, financial condition, results of operations and our ability to meet our debt service obligations.

We compete with casinos, other forms of gaming and other resort properties. If we are not able to successfully compete, we will not be able to generate sufficient cash flow to meet our debt service obligations.

     The gaming industry is very competitive. Currently, we compete with 15 tribal gaming casinos and non-tribal racinos operated within 200 miles of our location, one of which, Ruidoso Downs, is approximately 10 miles away from us in Ruidoso, and another, Sunland Park Racetrack and Casino, is approximately 125 miles away from us in Sunland Park, New Mexico. Ruidoso Downs offers quarter horse and thoroughbred racing from May through September, as well as a 20,000 square foot casino featuring approximately 300 slot machines and a buffet restaurant. Sunland Park offers quarter horse and thoroughbred racing from mid-November to early-April, a 36,000 square foot casino featuring approximately 700 slot machines and five restaurants. The other 11 tribal gaming casinos and one racino are located in and around Albuquerque and Santa Fe, New Mexico, all of which are outside of our primary market area. There is also a racino in Hobbs, New Mexico, which is outside of our primary market area, but impacts our west Texas customers. Recently, the Department of Interior announced that it is reconsidering its denial of the Pueblo of Jemez’s application to put land into trust. The Pueblo of Jemez is seeking trust status in order to conduct gaming on its land in Anthony, New Mexico, which is located approximately 120 miles from our casino and approximately 20 miles north of El Paso, Texas. We also compete with other forms of legal gaming in New Mexico, Texas and Northern Mexico, including horse racing, Class II gaming, pari-mutuel wagering, the New Mexico State Lottery, the Texas State Lottery, as well as non-gaming leisure activities. We intend to expand our existing geographic market and increase the percentage of our overnight and larger spending customers who tend to live greater distances from us. Many of our competitors in this expanded geographical market have substantially greater resources and name recognition than we do or are in a more convenient location, which is closer to a major population center or transportation hub. If we are unable to compete successfully, our business, financial condition and results of operations could be materially adversely affected and we may not be able to meet our debt service obligations.

We are highly dependent on our surrounding market area. As a result, we face greater risks than a geographically diverse company.

     We rely primarily on drive-in customers living within our primary market area consisting of southern New Mexico, western Texas and northern Mexico for the majority of our revenues. We expect to increase our market reach, but if our marketing strategy is not successful, our primary customer base will continue to be a predominately local one. Therefore, we are subject to greater risks than more geographically diversified gaming or resort operations. Among others, the following conditions could have a material adverse effect on our results of operations:

	•		a decline in the economies of our primary market area or a deadline in the number of gaming customers from these areas for any reason;
	•		an increase in competition in our primary market area or the surrounding area;
	•		inaccessibility due to road construction or closures of primary access routes; and
	•		natural and other disasters in the surrounding area including forest fires and floods.

     These factors may cause a disruption in our business and as a result have a material adverse effect on our business, financial condition, result of operations and our ability to meet our debt service obligations.

We do not currently have a Chief Financial Officer and it may be difficult for us to find a Chief Financial Officer with the appropriate level of experience.

     On October 1, 2010, Ben Martinez, our Chief Financial Officer and a member of our Management Board, resigned. In the interim, Scott Eldredge has assumed the role of Chief Financial Officer. It may be difficult to locate candidates to replace this position with the appropriate level of knowledge and experience. We can not assure you that we will be able to locate a qualified replacement candidate at all or on terms acceptable to us. Failure to timely recruit and retain a qualified candidate could result in management, operating and financial reporting difficulties, which could have an adverse effect on our business.

We may face difficulties in recruiting, training and retaining qualified employees and our failure to do so could have a material adverse effect on our business.

     The operation of our resort requires us to continuously recruit and retain a substantial number of qualified professionals, employees, executives and managers with gaming, hospitality, management and financial reporting experience. There can be no assurances that we will be able to recruit, train and retain a sufficient number of qualified employees. A failure to be able to recruit and retain qualified personnel could result in management, operating and financial reporting difficulties or affect the experience and enjoyment of our patrons, either of which could have a material adverse effect on our business, financial condition, results of operations or ability to meet our debt service obligations. Other members of senior management may also change from time to time, which loss could cause disruption or additional expense to replace

Changes in the Tribal Council and our Management Board or their policies could affect the Inn of the Mountain Gods Resort and Casino or other aspects of our business.

     The terms of all Tribal Council members (including the President and Vice President of the Tribe) are two years, with members elected on a staggered basis so that four Tribal Council members are elected each year. Because members of the Tribal Council typically comprise a majority of our Management Board, any changes to the Tribal Council will also alter the composition of our Management Board, which directly oversees the Inn of the Mountain Gods Resort and Casino. If there is a significant change in the composition of the Tribal Council, the new Tribal Council may not have the same agenda or goals as the current government, in particular with respect to our operations. Changes in the Tribal Council and our Management Board or their policies could result in significant changes in our structure or operations, which could adversely affect our business plan or otherwise result in a material adverse effect in our business, financial condition, results of operations or ability to meet our debt service obligations.

The effects of inflation may have a material adverse effect on our operations.

     Changes in competitive and economic conditions or in specific prices affecting the industry and our operations, such as fuel and transportation prices, relative to the general rate of inflation may have a material adverse effect on the hotel and casino industry in general and on our operations.

Energy and fuel price increases, such as the dramatic increases in gasoline prices in recent years, may adversely affect our costs of operations and our revenues.

     We use a significant amount of electricity, natural gas and other forms of energy. Substantial increases in the cost of electricity in the United States would negatively affect our results of operations. In addition, energy and fuel price increases in cities that constitute a significant source of our customers could result in a decline in disposable income of potential customers, and lead our customers and potential customers to decide not to travel, either of which could result in a corresponding decrease in visitation to Inn of the Mountain Gods Resort and Casino, which would negatively impact our revenues. The extent of this impact is subject to the magnitude and duration of the energy and fuel price increases, which could be material.

Our insurance policy failed to cover all of the storm damage due to Hurricane Dolly in 2008 and may fail to cover similar or other damage in the future.

     The severe flooding which occurred due to weather remnants of Hurricane Dolly caused a substantial amount of damage to Ski Apache. We have an insurance policy that provides for up to $5.0 million in flood damage coverage with a $100,000 deductible. The insurance company has covered $5.0 million of our flood damage insurance claim however; we are bearing the costs of repairs and seeking alternative funding sources through FEMA for reimbursement of those costs in excess of $5.0 million. There can be no assurance that our insurance coverage is sufficient to cover damage similar to that caused by Hurricane Dolly or other damage in the future.

The downturn in the economy may continue to affect consumer spending on discretionary items such as travel and leisure, which could have a material adverse effect on our business, financial condition and results of operations.

     Our results of operations may be materially affected by conditions in the global capital markets and the economy generally, both in the U.S. and elsewhere around the world. The stress experienced by global capital markets that began in the second half of calendar year 2008 has continued since that time. Recently, concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the U.S. mortgage market and a declining real estate market in the U.S. have contributed to increased volatility and diminished expectations for the economy. A continued or protracted downturn in the economy could adversely impact consumer spending on discretionary items such as travel and leisure. Factors that could affect consumers’ willingness to spend money on non-essential leisure travel include general business conditions, levels of employment, energy costs, interest rates and tax rates, the availability of consumer credit and consumer confidence. A reduction in consumer spending could significantly reduce our profits. The occurrence of these events could have a material adverse effect on our business, financial condition and results of operations.

A change in the tax treatment of the casino’s revenues could have a material adverse effect on our ability to fulfill our obligations under the New Notes.

     Based on current interpretations of United States tax laws, the casino’s revenues are not taxable for United States federal income tax purposes. There can be no assurance that these interpretations will not be reversed or modified, or that federal tax law will not change. In the past, efforts have been made in Congress to tax the income of tribal business entities. Although no such legislation has been enacted, or is currently pending, similar legislation could be passed in the future. Future legislation in this area could materially and adversely affect our ability to make payments our debt service obligations.

Recent turmoil in the credit and capital markets and in the financial services industry may increase our borrowing costs and may negatively impact our liquidity.

     Recently, the credit markets, capital markets and the financial services industry have experienced a period of unprecedented turmoil and upheaval characterized by the bankruptcy, failure, collapse or sale of various financial institutions and an unprecedented level of intervention from the U.S. federal government. While the ultimate outcome of these events cannot be predicted, they may have a material adverse effect on our liquidity and financial condition if our ability to borrow money to finance our operations were to be impaired. We may also be unable to refinance our indebtedness in the capital markets if we desire or we may be able to do so only at unfavorable rates as a result of capital markets turmoil. In addition, capital markets have recently experienced significant volatility and disruption. We anticipate that the capital markets could be a source of refinancing of our indebtedness in the future. This source of refinancing may not be available if capital markets volatility and disruption continues, which could have a material adverse effect on our liquidity.

We may be subject to material environmental liability as a result of unknown environmental hazards, thereby exposing us to substantial investigation, remediation or removal costs.

     Under various federal, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or chemical releases on or relating to its property and may be held liable to a governmental entity or to third parties for property damage, personal injury and for investigation and cleanup costs incurred by such parties in connection with the contamination. Such laws typically impose cleanup responsibility and liability without regard to whether the owner knew of or caused the presence of contaminants. The costs of investigation, remediation or removal of such substances may be substantial. Although the Tribe has not waived its sovereign immunity with regard to such federal, state and local environmental legislation (and is otherwise not subject to state and local environmental legislation), the existence or discovery of an environmental hazard on any of its lands could result in an assertion of liability under federal environmental laws and have a significant adverse effect on the Tribe’s relations with the state and the local community.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

     We do not currently, and will not, own the land on which our gaming and resort enterprises are located, including the IMG Resort and Casino, the Travel Center and a portion of Ski Apache. The U.S. government holds all of the land in trust for the benefit of the Tribe. The use of tribal land is provided to us rent-free. In addition, we have a special use permit from the United States Department of Agriculture, Forest Service for the operation of the remaining portion of Ski Apache. The special use permit expires on December 31, 2014.

Item 3. Legal Proceedings

Legal Proceedings

     We are involved in litigation incurred in the normal course of business; however, we are not currently a party to any material pending claim or legal action.

Item 4. (Removed and Reserved)

PART II.

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

Equity Securities

     The Resort has not issued or sold any equity securities.

Item 6. Selected Financial Data

SELECTED HISTORICAL FINANCIAL AND OTHER DATA

						Twelve months
		Fiscal year ended				ended				Five months ended								Fiscal year ended
		September 30,				September 30,				September 30,								April 30,
		2010				2009				2009				2008				2009				2008				2007				2006
						(unaudited)								(unaudited)
Statements of Income Data:
Revenues:
Gaming		$	74,722			$	74,555			$	35,125			$	34,920			$	74,383			$	77,537			$	76,473			$	76,476
Hotel			10,047				10,921				5,430				6,138				11,422				12,157				12,199				9,587
Food and beverage			12,978				11,956				5,721				6,348				12,582				14,265				13,213				11,535
Recreation and other			18,390				14,306				5,455				7,962				16,812				20,216				22,821				16,220
Gross revenues			116,137				111,738				51,731				55,368				115,199				124,175				124,706				113,818
Less: promotional allowances			949				891				395				352				882				2,105				2,255				2,766
Net revenues			115,188				110,847				51,336				55,016				114,317				122,070				122,451				111,052
Operating expenses:
Gaming			23,919				24,968				10,820				12,101				26,249				26,647				26,376				27,179
Hotel			3,605				4,005				1,553				2,306				4,758				4,434				4,658				5,181
Food and beverage			13,275				12,349				5,298				6,497				13,547				15,348				14,215				15,729
Recreation and other			11,029				10,124				4,221				5,935				11,881				14,908				13,862				12,379
Marketing			8,513				8,490				3,893				3,240				8,344				10,005				8,816				8,920
General and administrative			15,532				17,185				6,194				6,841				16,885				14,594				13,998				18,418
Management fees			2,005				—				—				—				—				—				—				—
Refinance charges			1,420				—				—				—				—				—				—				—
Depreciation and amortization			11,400				12,110				5,073				5,125				12,162				16,061				18,170				17,779
Insurance reimbursement			(2,237	)			(5,451	)			(45	)			(1,100	)			(5,406	)			—				—				—
Storm costs			221				300				21				117				377				—				—				—
Loss (gain) on disposal of assets			(25	)			(18	)			(15	)			46				294				64				7				—
Total operating expenses			88,657				84,062				37,013				41,108				89,091				102,061				100,102				105,585
Income from operations			26,531				26,785				14,323				13,908				25,226				20,009				22,349				5,467
Interest income (expense), net of amounts capitalized			(31,372	)			(27,316	)			(12,070	)			(10,911	)			(26,115	)			(26,230	)			(26,362	)			(26,398	)
Other non-operating income			114				51				25				44				32				47				48				(337	)
Net income (loss)		$	(4,727	)		$	(480	)		$	2,278			$	3,041			$	(857	)		$	(6,174	)		$	(3,965	)		$	(21,268	)

		Fiscal
		year
		ended				Twelve months
		September				ended				Five months ended								Fiscal year ended
		30,				September 30,				September 30,								April 30,
		2010				2009				2009				2008				2009				2008				2007				2006
						(unaudited)								(unaudited)
Other Financial Data:
EBITDA(1)		$	37,931			$	38,895			$	19,396			$	19,033			$	37,388			$	36,070			$	40,519			$	23,246
Capital expenditures			3,907				830				830				836				9,358				1,298				472				14,769
Cash provided by (used in) operating activities			38,230				19,437				19,793				7,322				8,728				11,297				10,583				(1,528	)
Cash used in investing activities			(4,594	)			(830	)			(1,185	)			(999	)			(4,536	)			(1,298	)			(1,517	)			(20,640	)
Cash provided by (used in) financing activities			(20,086	)			(20,635	)			(20,635	)			(4,386	)			(11,610	)			(11,953	)			(8,906	)			25,218
Ratio of Earnings to Fixed Charges (2)			0.9	x			1.0	x			1.2	x			1.3	x			1.0	x			0.8	x			0.9	x			0.2	x

		Fiscal
		year
		ended				Twelve months
		September				ended				Five months ended								Fiscal year ended
		30,				September 30,				September 30,								April 30,
		2010				2009				2009				2008				2009				2008				2007				2006
						(unaudited)								(unaudited)
Property Data (as of end of period except win per day data) (unaudited):
Net slot win per day		$	138			$	129			$	151			$	135			$	127			$	125			$	125			$	119
Net table game win per day		$	661			$	608				773			$	652			$	576			$	601			$	557			$	513
Number of slot machines			1,301				1,359				1,304				1,458				1,423				1,462				1,501				1,510
Number of table games			31				41				37				42				45				42				46				47
Number of hotel rooms			273				273				273				273				273				273				273				273
Number of restaurant seats			803				803				803				803				803				803				803				803
Gaming square footage			47,000				47,000				47,000				47,000				47,000				47,000				47,000				47,000
Balance Sheet Data:
Cash and cash equivalents		$	19,079			$	5,529			$	5,529			$	16,912			$	7,557			$	14,975			$	16,930			$	16,768
Total assets			204,540				199,626				199,626				217,044				205,097				217,944				235,539				273,360
Total debt and capital lease obligations			200,402				203,321				203,321				207,122				204,922				204,639				208,174				214,780
Total equity (deficit)			(57,268	)			(35,374	)			(35,374	)			(11,103	)			(18,618	)			(9,757	)			4,421				31,365

(1) We define EBITDA as earnings before interest, taxes, depreciation and amortization. We are instrumentalities of a sovereign Indian nation and are not subject to federal or state income tax. Below is a quantitative reconciliation of EBITDA to the most directly comparable GAAP financial performance measure, which is net income:

		Fiscal year ended				Twelve months				Five months ended								Fiscal year ended
		September 30,				ended September 30,				September 30,								April 30,
		2010				2009				2009				2008				2009				2008				2007				2006
						(unaudited)								(unaudited)
Net (loss) income		$	(4,727	)		$	(480	)		$	2,278			$	3,041			$	(857	)		$	(6,174	)		$	(3,965	)		$	(21,268	)
Interest expense, net			31,258				27,265				12,045				10,867				26,083				26,183				26,314				26,735
Depreciation and amortization			11,400				12,110				5,073				5,125				12,162				16,061				18,170				17,779
EBITDA		$	37,931			$	38,895			$	19,396			$	19,033			$	37,388			$	36,070			$	40,519			$	23,246

We caution you that amounts presented in accordance with our definition of EBITDA may not be comparable to similar measures disclosed by other issuers because not all issuers and analysts calculate EBITDA in the same manner. EBITDA is presented in this Form 10-K because management believes it is a useful supplement to income from operations and cash provided by operating activities in understanding cash flows available for debt service, capital expenditures and Tribal distributions. Accordingly, our management utilizes EBITDA along with net income, income from operations and other GAAP measures in evaluating our operations and performance. EBITDA should not be considered as an alternative measure of our net income, income from operations, cash flow or liquidity. EBITDA is not a measurement of financial performance or liquidity in accordance with GAAP. Although we believe EBITDA enhances your understanding of our financial condition and results of operations, this non-GAAP financial measure, when viewed individually, is not necessarily a better indicator of any trend as compared to GAAP financial measures (e.g., income from operations, net revenues, cash provided by operating activities) conventionally computed in accordance with GAAP.

(2) Ratio of earnings to fixed charges. “Earnings” consist of income (loss) from continuing operations including amortization of capitalized interest, before extraordinary items, and fixed charges. “Fixed charges” consist of interest expense, capitalized expenses related to indebtedness, the portion of operating lease expense that represents interest and any preference security dividend requirements of consolidated subsidiaries. The table in Exhibit 12.1 sets forth our calculation of ratio of earnings to fixed charges for the periods indicated.

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

     On September 3, 2009, the Board of IMG Resort and Casino resolved by unanimous consent to change the Company’s fiscal year, formerly ending April 30, to a fiscal year ending September 30. This change in fiscal year makes the Company’s year-end coincide with the Tribe’s fiscal year end. This annual report covers the fiscal year ended September 30, 2010.

     The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company has incurred significant losses and has not made the scheduled semi-annual $12.0 million interest payments on our Senior Notes due 2010 since November 15, 2008. The Senior Notes matured on November 15, 2010. We did not pay the principal due at maturity. This constitutes an event of default under the indenture governing the Senior Notes and the trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes could declare all of such notes immediately due and payable. Pursuant to the indenture, we are obligated to pay interest on overdue installments of interest payable on the Senior Notes at a rate equal to 13% per annum (1% per annum in excess of the then applicable annual interest rate on the Senior Notes). As of September 30, 2010, the Company had negative working capital of approximately $239.5 million and a total deficit of approximately $57.3 million. The event of default, along with the Company’s history of recurring losses, negative working capital and limited access to capital, has raised substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

     On November 24, 2010, we commenced a private offer to exchange our outstanding Senior Notes for (1) new 8.750% Senior Notes due 2020, (2) new Senior PIK Notes due 2020 and (3) a pro rata amount of $18 million in cash. The exchange offer was scheduled to expire at 5:00 p.m., New York City time, on January 7, 2011. The exchange offer has been extended to expire at 5:00 p.m., New York City time, on January 21, 2011, unless extended further or terminated. The purpose of the extension is to allow sufficient time for the receipt of regulatory approvals necessary for the exchange offer.

     Historically, IMG Resort and Casino has not generated sufficient cash flow from operations to satisfy our capital requirements and has relied upon debt financing arrangements to satisfy such requirements. The current cash flows and capital resources may be insufficient to meet both short and long term debt obligations and commitments, and IMG Resort and Casino may be forced to reduce or delay activities and capital expenditures if we are unable to

refinance our debt. In the event that we are unable to refinance or restructure our debt, we will be left without sufficient liquidity and will not be able to meet our debt service requirements and repayment obligations.

     We believe that our ability to fund our operations, make planned capital expenditures, and make scheduled payments depends on our future operating performance and success in seeking to increase operating efficiencies and reduce operating expenses, which are subject to economic, financial, business and other conditions, some of which are beyond our control.

     Additionally, our ability to incur additional indebtedness is limited under the terms of the indenture governing the Senior Notes. If our expected operating performance or success in increasing operating efficiencies and reducing operating expenses does not meet management expectations, we may need to arrange for additional sources of funding in the form of permitted borrowings under our indenture or contributions from the Tribe, which sources of funding cannot be assured.

Summary of Past Year’s Activities

     The challenges for IMGRC were significant this year. However, during the year, there were also a number of positive accomplishments and significant changes, a summary of which are highlighted below:

•

Marketing and Promotional Activity

	•		Enhancing Guest Loyalty Program — The Apache Spirit Club is the guest loyalty program that offers incremental value to guests for gaming and non-gaming spending. The program is a tiered guest loyalty program in which customers earn points for gaming activity. Points accumulated from gaming can be redeemed for all goods and services offered by any of IMGRC’s hospitality enterprises as well as for free slot play, referred to as Spirit Play. The program also offers a 5% — 20% discount in all non-gaming outlets based on status level. Current efforts are focused on compiling customer spending data resort-wide in order to provide offers and incentives that match the guest’s interests and improve revenue per guest. We have recently introduced a casino rate program for our best players to receive hotel room discounts, in an effort to both boost occupancy and increase gaming revenue. In addition, we have formalized the rewards program for our table games players. This year a new website was launched with Spirit Club sign-on and ability to verify current point level, status level and promotional offerings.
	•		Direct Marketing Efforts — Direct marketing efforts continue to be refined using greater segmentation to more closely align reinvestment in the player with their potential to provide us with increased earnings. The scope of offers was expanded to reach a broader mix of customers to stimulate repeat visitation during off-peak periods. The number of levels for casino offers increased from five tiers to seven tiers to provide more balanced customer reinvestment. Each month the direct marketing program evolves to increase recognition, change guest behavior and stimulate additional visitation. New Sign-Up and Reactivation programs also exist to acknowledge new and return players and introduce them to the monthly rewards program as quickly as possible.
	•		Special Events, Promotions and Concert Schedule — These programs are intended to drive visitation and gaming activity during slower periods and to introduce new clientele to the resort. Recent improvements to our seniors program showed positive results in late fiscal year 2010 as did several specialty nights introduced at the buffet. In addition, at Casino Apache Travel Center, a late night menu was recently added to the restaurant, expanding hours of operation to better serve our guests. In effort to drive casino activity after a concert or special event, promotions are offered to members attending an event or performance.
	•		Refinements in Game Mix — Management continues to make refinements in game mix by reducing wide-area progressive games in favor of participation games with lower hold percentages and smaller participation payment to the machine manufacturers.

•

Hotel Occupancy

	•		We recently introduced a casino rate program for our best players to receive hotel room discounts in an effort to boost occupancy and increase the amount of play in the casino.
	•		Leisure Marketing — Increases in occupancy from the leisure market segment have been achieved through direct marketing, as well as through broad-based advertising.
	•		Yield Management — A broad range of rates is utilized with adjustments to the rate on a daily basis. Emphasis has been placed on driving occupancy with modest year-over-year increases in the average rate.
	•		Group Sales — The group sales staff expanded efforts to increase market share as well as improve the capture rate of select groups with greater spending profiles by cross-marketing the enterprise’s other recreational activities.

•

Enhancing Guest Satisfaction

	•		Apache Academy Training — All employees are required to attend different classes of mandatory training covering all major aspects of customer service, leadership, culture, and service.
	•		Anonymous Shoppers Program — An anonymous shopping program continues to gather detailed accounts of an individual customer’s experience in all areas of operations; the data collected is utilized for training and developing operational improvements.
	•		Ongoing Guest Satisfaction Program — A seven-point survey continues to be used to measure satisfaction in all areas of the Resort and on a broad range of issues.

•

Gaming Operations

	•		Casino Remodeling — At the Travel Center, a casino remodeling, including paint and new carpet, was completed recently creating a cleaner, more comfortable gaming environment.
	•		Slot Machines — New slot machine purchases and game conversions were completed to ensure the gaming floors have an up-to-date gaming product.
	•		Table Games Training — Dealer and supervisory personnel in table games were required to undergo training, auditions and academic testing on game rules and protection measures.

Significant Events During Fiscal 2010

•

Bond Payments and Exchange Offer — We currently have outstanding $200.0 million aggregate principal amount of 12% Senior Notes due 2010 (the “Senior Notes”) as well as accrued interest of $51.8 million. During the first quarter of fiscal 2010, IMGRC failed to make its interest payment due May 15, 2010. Interest payments have not been made since November 15, 2008. The Senior Notes matured on November 15, 2010. We have not paid the principal due at maturity. The amount due in principal and interest is $251.8 million. Failure to make these payments constitutes an event of default under the indenture governing the Senior Notes (the “Indenture”) and the trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes could declare all of such notes immediately due and payable. Pursuant to the Indenture, we are obligated to pay interest on overdue installments of interest payable on the Senior Notes at a rate equal to 13% per annum (1% per annum in excess of the then applicable annual interest rate on the Senior Notes). On November 24, 2010, we commenced a private offer to exchange our outstanding Senior Notes for (1) new 8.750% Senior Notes due 2020, (2) new Senior PIK Notes due 2020 and (3) a pro rata amount of $18 million in cash. The exchange offer was scheduled to expire at 5:00 p.m., New York City time, on January 7, 2011. The exchange offer has been extended to expire at 5:00 p.m., New York City time, on January 21, 2011, unless extended further or terminated. The purpose of the extension is to allow sufficient time for the receipt of regulatory approvals necessary for the exchange offer.

	•		Fire Impairment Ski Apache — On November 7, 2009, Ski Apache experienced a fire. The fire was confined to a single metal building used largely for maintenance and repair parts for ski operations related equipment. The building, its contents, other large equipment and vehicles that were damaged were adequately insured to cover the replacement costs. Despite this fire and flood event, Ski Apache opened on time for the season on November 26, 2009.
	•		Abundance of Natural Snowfall for Ski Apache — Ski Apache experienced above average snow for the 2009 — 2010 ski season, increasing both gross revenues and profitably for Ski Apache for the fiscal year. Solid preparations by the ski management team, overall financial management and the continued development of snow-making capabilities of the ski operations were also critical to these improvements. Ski Apache has experienced below average snowfall thus far for the 2010-2011 ski season.
	•		Changes in the Management Team — The Management team has experienced a number of changes over the course of the fiscal year. On July 29, 2010, IMGRC hired Scott Eldredge as the Chief Operating Officer, replacing Elizabeth Foster-Anderson whose employment ended July 23, 2010. In addition, on October 1, 2010, Ben Martinez resigned his position as Chief Financial Officer and IMG Resort and Casino is in the process of evaluating candidates. In the interim, Scott Eldredge has assumed the role of Chief Financial Officer.
	•		Warner Gaming — In February 2009, WG-IMG, LLC, a wholly owned subsidiary of Warner Gaming, LLC, was engaged as a consultant. WG-IMG, LLC assessed and recommended improvements to operations, including a detailed review of the Company’s cost structure to identify areas of potential cost savings and an in-depth review of operations to determine how to enhance revenues and profitability. In January 2010, the Tribe entered into a five-year Management Agreement with WG-IMG, LLC.
	•		AAA Four Diamond Award — The Inn received its 5th consecutive four diamond award during fiscal year 2010.

Critical Accounting Policies

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the recorded amount of assets and liabilities at the date of the financial statements and revenues and expenses during the period. Significant accounting policies employed by us, including the use of estimates and assumptions, are presented in the notes to our consolidated financial statements included elsewhere in this Form 10-K. Our management bases its estimates on its historical experience, together with other relevant factors, in order to form the basis for making judgments that will affect the carrying value of assets and liabilities. On an ongoing basis, management evaluates its estimates and makes changes to carrying values as deemed necessary and appropriate. Actual results could differ from those estimates.

     Fair Value Disclosure. We adopted the new accounting guidance under generally accepted accounting principles relating to fair value measurements and disclosures effective October 1, 2009. The new guidance clarifies the definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements.

     The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions. These two types of inputs create the following fair value hierarchy:

	•		Level 1 — Quoted prices for identical instruments in active markets.
	•		Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
	•		Level 3 — Significant inputs to the valuation model are unobservable.

     Due to their short-term nature, we estimate the fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities by approximating their carrying values. We estimate, based on level 2 data, the fair value of our fixed-rate long-term debt to be approximately $74.0 million on the trade date closest to September 30, 2010, which was September 24, 2010. We estimate, based on level 2 data, the fair value of our fixed-rate long-term debt to be approximately $28.0 million on the trade date closest to September 30, 2009, which was September 15, 2009.

     Revenue Recognition. In accordance with gaming industry practice, we recognize gaming revenues as the net win from gaming activities, which is the difference between gaming wins and losses. Gaming revenues are net of accruals for anticipated payouts of progressive slot jackpots and other fees and table games. These anticipated jackpot payments are reflected as current liabilities on our balance sheets. Net slot win represents all amounts played in the slot machines reduced by the winnings paid out and other expenses. Table games net win represents the difference between table game wins and losses. The table games historical win percentage is reasonably predictable over time, but may vary considerably during shorter periods. Revenues from food, beverage, hotel, recreation, retail and other are recognized at the time the related service or sale is completed. Player reward redemptions for food and beverage, hotel rooms and other items are included in gross revenue at full retail value.

     Promotional Allowances. We periodically reward rooms and other promotions, including Apache Spirit Club points and gift certificates, to our customers. The retail value of these player rebates are recognized by us as a reduction from gross revenue.

     The Casino’s Apache Spirit Club allows customers to earn “points” based on the volume of their gaming activity. These points are redeemable for certain services or merchandise. Points are accrued based upon their historical redemption rate multiplied by the cash value or the cost of providing the applicable rewards services.

     Emerging Issues Task Force (“EITF”) FASB ASC 605-50, Revenue Recognition, Customer payments and Incentives (prior authoritative literature: FASB EITF Issue No. 00-14, Accounting for Certain Sales Incentives)(“FASB ASC 605-50 (FAS Issue No. 00-14)”), requires that discounts which result in a reduction in or refund of the selling price of a product or service in a single exchange transaction be recorded as a reduction of revenues. We adopted FASB ASC 605-50 (FAS Issue No. 00-14) on April 30, 2001. Our accounting policy related to free or discounted food and beverage and other services already complies with FASB ASC 605-50 (FAS Issue No. 00-14), and those free or discounted services are generally deducted from gross revenues as “promotional allowances.” In January 2001, the EITF reached a consensus on certain issues related to Issue No. 00-22, Accounting for “Points” and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Reproduces, or Services To Be Delivered in the Future. Effective January 1, 2001, we, through our wholly-owned subsidiaries, adopted EITF 00-22, which requires that cash or equivalent amounts provided or returned to customers as part of a transaction not be shown as an expense, but instead as an offset to the related revenue.

     Classification of Departmental Costs. Gaming direct costs are comprised of all costs of our gaming operations, including labor costs for casino-based supply costs and other direct operating costs (including costs in operating our players’ clubs) of the casinos. Food and beverage direct costs are comprised of all costs of our food and beverage operations, including labor costs for personnel employed by our restaurants and food and beverage, supply costs for all food and beverages served in the casinos or sold in our restaurants and other food outlets and other expenses including other direct operating expenses related to these activities. General and administrative direct costs are comprised of administrative expenses, including the salaries of corporate officers, accounting, finance, legal and other professional expense and occupancy costs and other indirect costs not included in the direct costs of our operating departments. Legal expenses in the current year have increased significantly due to the ongoing negotiations with the holders of the Senior Notes.

     Deferred Financing Costs. Debt issuance costs incurred in connection with the issuance of the Senior Notes were capitalized and are being amortized to interest expense using the straight-line method over the stated maturity of the debt, which approximates the effective interest method. Unamortized deferred financing costs totaled $2.1 million as of September 30, 2009 and $0.3 million as of September 30, 2010.

     Impairment of Long-Lived Assets. Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. In August 2001, the Financial Accounting Standards Board issued Statement of Accounting Standards FASB ASC 360-10, Property, Plant and Equipment, (prior authoritative literature: SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets) (“FASB ASC 360-10 (SFAS No. 144)”), which established the approach to be used in the determination of impairment.

     Under the provisions of FASB ASC 360-10 (SFAS No. 144), a long-lived asset to be abandoned is disposed of when it ceases to be used. If an entity commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, depreciation estimates shall be revised to reflect the use of the asset over its shortened useful life.

     During the fiscal year ended September 30, 2010, we recorded a loss on disposal of assets of $25,280 and for the five months ended September 30, 2009, we recorded a loss on disposal of assets of $15,000. For the fiscal years ended April 30, 2009 and 2008, we recorded losses on disposal of assets of $293,896 and $63,857, respectively.

Results of Operations

Fiscal Year Ended September 30, 2010 Compared to Twelve months Ended September 30, 2009 (unaudited)

The information in this section compares information for the fiscal year ended September 30, 2010 to information for the twelve months ended September 30, 2009. The information for the twelve months ended September 30, 2009 is unaudited.

     Net Revenues. Net revenues increased $4.4 million, or 4%, to $115.2 million for the fiscal year ended September 30, 2010 from $110.8 million for the twelve months ended September 30, 2009. Revenue increases were driven by a $1.0 million increase in Food and Beverage revenues, as well as a $4.1 million increase in Recreation and Other revenues resulting from an increase in customer volume and spending at our Ski Apache recreation facilities. Ski Apache benefitted from an increase in natural snowfall and our ability to commence operations earlier than the prior

year. For the fiscal year ended September 30, 2010, Gaming net revenues were $74.7 million, an increase of $0.1 million from the prior twelve months. However, Hotel revenue decreased by approximately $0.8 million for the fiscal year ended September 30, 2010, as a result of a decrease in leisure and business travel.

     Gaming. Gaming net revenues increased $0.1 million to $74.7 million for the fiscal year ended September 30, 2010 from $74.6 million for the twelve months ended September 30, 2009. Slot revenues increased to $65.4 million for the fiscal year ended September 30, 2010 from $64.1 million for the twelve months ended September 30, 2009 due to a repositioning of the gaming floor at each property in April 2010, and due to direct marketing efforts. Net slot win per unit, per day was $138 for the fiscal year ended September 30, 2010 compared to $129 for the twelve months ended September 30, 2009. Table games revenue decreased $1.2 million, to $9.3 million for the fiscal year ended September 30, 2010 from $10.5 million for the twelve months ended September 30, 2009. Daily Net Win per Table for the fiscal year ended September 30, 2010 was $661 as compared to $608 for the twelve months ended September 30, 2009, a 9% increase, due to a reduction in gaming tables, related to the repositioning of the gaming floors of both properties in April 2010.

     Hotel. Hotel revenues decreased $0.8 million to $10.1 million for the fiscal year ended September 30, 2010 from $10.9 million for the twelve months ended September 30, 2009, due to a reduction in rate as of result of overall decrease in leisure and business travel and a reduction in discretionary spending by our guests. Occupancy rates averaged 78% for the fiscal year ended September 30, 2010 compared to 72% for the twelve months ended September 30, 2009. Average daily rate was $134 for the fiscal year ended September 30, 2010, as compared to $140 for the twelve months ended September 30, 2009 and revenue per available room was $115 for the fiscal year ended September 30, 2010 as compared to $112 for the twelve months ended September 30, 2009.

     Food and Beverage. Food and beverage revenues increased $1.0 million, or 8%, to $13.0 million for the fiscal year ended September 30, 2010 from $12.0 million for the twelve months ended September 30, 2009 due to an increase in customer volume and spend at our Ski Apache recreation facilities. For the fiscal year ended September 30, 2010, these increases were due to an increase in natural snowfall and our ability to commence operations at Ski Apache earlier compared to the previous year.

     Recreation and Other. Recreation and other revenues increased $4.1 million to $18.4 million for the fiscal year ended September 30, 2010 compared to $14.3 million for the twelve months ended September 30, 2009 due to an increase in customer volume at our Ski Apache recreation facilities for the fiscal year ended September 30, 2010, compared to the same period in 2009.

     Promotional Allowances. Promotional allowances remained flat at $0.9 million for the fiscal year ended September 30, 2010 and the twelve months ended September 30, 2009 due to limited change in our direct marketing efforts.

     Total Operating Expenses. Total operating expenses increased $4.6 million to $88.7 million for the fiscal year ended September 30, 2010 from $84.1 million for the twelve months ended September 30, 2009. As a percentage of revenues, operating expenses remained flat for the fiscal year ended September 30, 2010. The change in total operating expenses resulted from increases and decreases in various divisions of the organization as explained below.

     Gaming. Gaming expenses decreased $1.1 million to $23.9 million for the fiscal year ended September 30, 2010 from $25.0 million for the twelve months ended September 30, 2009 due to a decrease in state compact fees, revenue sharing fees, benefits, salaries and wages and outside services. Gaming expenses as a percentage of gaming revenues decreased 2%, from 32% for the fiscal year ended September 30, 2010 compared to 34% for the twelve months ended September 30, 2009.

     Hotel. Hotel expenses decreased $0.4 million to $3.6 million for the fiscal year ended September 30, 2010 from $4.0 million for the twelve months ended September 30, 2009 due to cost containment by management in the areas of salaries, wages and benefits. Hotel expenses represented 36% of hotel revenue for the fiscal year ended September 2010 as compared to 33% of hotel revenue for the twelve months ended September 30, 2009.

     Food and Beverage. Food and beverage expenses increased $0.9 million, or 7%, to $13.3 million for the fiscal year ended September 30, 2010 from $12.4 million for the twelve months ended September 30, 2009 due to

increases in cost of goods sold related to increased revenue as well as marketing, supplies, repairs and maintenance expenses. Of the increase, $0.2 million was related to Food and Beverage operations at Ski Apache and is a direct result of increased revenues. Food and beverage expenses as a percentage of food and beverage revenues decreased to 102% for the fiscal year ended September 30, 2010 from 103% for the twelve months ended September 30, 2009.

     Recreation and Other. Recreation and other costs increased $0.9 million, or 9%, to $11.0 million for the fiscal year ended September 30, 2010 from $10.1 million for the twelve months ended September 30, 2009 due to increases in benefits, salaries and wages, supplies, repairs and maintenance and cost of goods sold. Of the increase, $0.8 million was attributable to Ski Apache associated with an increase in customer volume and spending at our Ski Apache recreation facilities.

     Marketing and Advertising. Marketing and advertising costs remained flat at $8.5 million for the fiscal year ended September 30, 2010 compared to the twelve months ended 2009. The composition of Marketing costs shifted away from broad-based marketing efforts to more targeted, database-oriented efforts.

     General and Administrative. General and administrative expenses decreased $1.7 million, or 10%, to $15.5 million for the fiscal year ended September 30, 2010 from $17.2 million for the twelve months ended September 30, 2009 due to a decrease of $1.9 million in Tribal Regulatory fees, $1.3 million in payroll and benefits, $0.8 million in insurance liability, $0.3 million in repairs and maintenance as well as $0.1 million in public relations. These decreases were partially offset by an increase in outside services of $0.3 million and in utilities expenses of $0.2 million.

     Management Fees. Since January 20, 2010, following approval by the NIGC of our management agreement with Warner Gaming, these expenses include management fees paid under our management agreement. These expenses were $2.0 million for the fiscal year ended September 30, 2010. Prior to January 20, 2010 fees paid under our management agreement with Warner Gaming were accounted for as consulting fees in General and Administrative Expenses.

     Restructuring Costs. Restructuring costs were $1.4 million for the fiscal year ended September 30, 2010 and $0 for the twelve months ended September 30, 2009. Restructuring costs include legal and other costs related to the restructuring of our debt.

     Depreciation. Depreciation decreased $0.7 million to $11.4 million for the fiscal year ended September 30, 2010 from $12.1 million for the twelve months ended September 30, 2009 due to certain property and equipment assets becoming fully depreciated.

     Insurance Reimbursement. Insurance Reimbursement was $2.2 million for the fiscal year ended September 30, 2010 compared to $5.5 million for the twelve months ended September 30, 2009. In late July 2008, the remnants of Hurricane Dolly brought torrential rain and caused significant flash flood damage at Ski Apache and the Inn of the Mountain Gods Championship Golf Course, damaging buildings, land, and equipment. A majority of assets that were damaged or destroyed were fully or nearly fully depreciated. These events affected Insurance Reimbursement in the periods presented.

     Storm costs. Storm costs decreased $0.1 million to $0.2 million for the fiscal year ended September 30, 2010 from $0.3 million for the twelve months ended September 30, 2009. Storm costs consisted of costs related to damage caused by Hurricane Dolly in 2008.

     Loss on Disposal of Assets. Loss on disposal of assets was $25,280 for the fiscal year ended September 30, 2010 and $18,163 for the twelve months ended September 30, 2009 and related primarily to disposal of assets as well as loss on assets related to the storm damage.

     Income from Operations. Income from operations decreased $0.3 million to $26.5 million for the fiscal year ended September 30, 2010 from $26.8 million for the twelve months ended September 30, 2009, as a result of an increase in the natural snowfall experienced this season at Ski Apache offset by an increase in operating expenses. This decline was influenced by all of the factors described above, but most significantly by the $2.0 million of costs associated with management fees as well as the $1.4 million related to the restructuring of our debt.

     Other Income (Expenses). Other non-operating expenses increased $4.0 million to $31.3 million for the fiscal year ended September 30, 2010 from $27.3 million for the twelve months ended September 30, 2009. Other income (expenses) is comprised of interest income and other income minus interest expense and other expenses.

Five months Ended September 30, 2009 Compared to Five months Ended September 30, 2008 (unaudited)

The information in this section compares information for the five months ended September 30, 2009 to information for the five months ended September 30, 2008. The information for the five months ended September 30, 2008 is unaudited.

     Net Revenues. Net revenues decreased $3.7 million, or 7%, to $51.3 million for the five months ended September 30, 2009 from $55.0 million for the five months ended September 30, 2008 due to a decrease in certain areas of our business caused by a decline in the economy and leisure and business travel discretionary spending of our guests. Gaming net revenues increased $0.1 million from the comparable prior period; food and beverage revenues decreased $0.6 million, or 10%, from the comparable prior period; hotel revenues decreased $0.7 million from a year ago. Recreation and other revenue for the 2009 period decreased $2.6 million, or 33%, from September 30, 2008. Promotional allowances decreased $0.1 million, or 25%, for the five months ended September 30, 2009 compared to the five months ended September 30, 2008.

     Gaming. Net gaming revenues increased $0.2 million to $35.1 million for the five months ended September 30, 2009 from $34.9 million for the five months ended September 30, 2008. Slot revenues increased to $30.2 million for the five months ended September 30, 2009 from $30.1 million for the five months ended September 30, 2008 a decrease of $0.1 million. Net slot win per unit, per day was $151 for the five months ended September 30, 2009 compared to $135 for the five months ended September 30, 2008; the weighted average number of machines declined to 1,304 for the five months ended September 30, 2009 from 1,458 for the five months ended September 30, 2008. Table games revenue increased $0.1 million to $5.0 million for the five months ended September 30, 2009 from $4.9 million for the five months ended September 30, 2008. Daily Net Win per Table for the five months ended September 30, 2009 was $773 as compared to $652 for the same period a year ago, a 19% increase.

     Hotel. Hotel revenue for the five months ended September 30, 2009 decreased $0.7 million to $5.4 million from $6.1 million for the five months ended September 30, 2008. This decline is attributed to an increased discounting of hotel rates or marketing discounts of $0.6 million and a decline in group/leisure sales. Occupancy rates averaged 87%, an increase of 1%, for the five months ended September 30, 2009, the average daily rate decreased to $157, for the five months ended September 30, 2009, as compared to $162 for the same period a year ago. Revenue per available room was $136 for the five months ended September 30, 2009, a 1% decrease.

     Food and Beverage. Food and beverage revenues decreased $0.6 million, or 10%, to $5.7 million for the five months ended September 30, 2009 from $6.3 million for the five months ended September 30, 2008 due to a decrease in covers and decline in group business sales.

     Recreation and Other. Recreation and other revenues decreased $2.6 million, or 33%, to $5.4 million for the five months ended September 30, 2009 compared to $8.0 million for the five months ended September 30, 2008 due to a decrease in fuel sales and merchandise. Due to the state of the economy, the recreational hunt packages were discounted $0.8 million from the prior year.

     Promotional Allowances. Promotional allowances were $0.4 million for the five months ended September 30, 2009 compared to $0.3 million for the five months ended September 30, 2008, a decrease of $0.1 million or 33%.

     Total Operating Expenses. Total operating expenses decreased $4.1 million to $37.0 million for the five months ended September 30, 2009 from $41.1 million for the five months ended September 30, 2008 due to decreases in various divisions throughout the organization, as explained below.

     Gaming. Gaming expenses decreased $1.3 million, or 11%, for the five months ended September 30, 2009 to $10.8 million from $12.1 million for the five months ended September 30, 2008 due to a decrease in head count, wages, benefits and supplies.

     Hotel. Hotel expenses decreased $0.7 million to $1.6 million for the five months ended September 30, 2009 from $2.3 million for the five months ended September 30, 2008, resulting from a decrease in salaries, wages, benefits and supplies expense. Hotel was running at a 74% profit for the five months ended September 30, 2009 up 14% from the comparable 2008 period.

     Food and Beverage. Food and beverage expenses decreased $1.2 million, or 18%, to $5.3 million for the five months ended September 30, 2009 from $6.5 million for the five months ended September 30, 2008 due to a decrease in salaries, wages and benefits due to a decrease in head count. A decrease in cost of goods sold, supplies expense and the cost of an employee meal program also reduced expenses.

     Recreation and Other. Recreation and other costs decreased $1.7 million, or 29%, to $4.2 million for the five months ended September 30, 2009 from $5.9 million for the five months ended September 30, 2008 due to a decrease in cost of goods sold in the areas of gas and diesel, merchandise and cigarettes.

     Marketing. Marketing costs increased $0.7 million to $3.9 million for the five months ended September 30, 2009 from $3.2 million for the five months ended September 30, 2008 due to an increase in direct marketing costs associated with gaming and hotel offers.

     General and Administrative. General and administrative expenses decreased $0.6 million, or 9%, to $6.2 million for the five months ended September 30, 2009 from $6.8 million for the five months ended September 30, 2008 due to a decrease in salaries, wages, benefits and repairs and maintenance, offset by an increase in outside services of legal and consulting fees related to the bond restructuring.

     Depreciation. Depreciation remained flat at $5.1 million for the five months ended September 30, 2009 and 2008 due to fully depreciated equipment.

     Storm Costs. Storm costs were $20,500 for the five months ended September 30, 2009 and $116,500 for the five months ended September 30, 2008 due to remnants of Hurricane Dolly which brought rain and caused significant damage.

     Income from Operations. Income from operations increased $0.4 million, or 3%, to $14.3 million for the five months ended September 30, 2009 from $13.9 million for the five months ended September 30, 2008 due to a decrease in revenue offset by a decrease in operating expenses.

     Other Income (Expenses). Other non-operating expenses were $12.0 million for the five months ended September 30, 2009 and $10.9 million for the five months ended September 30, 2008. Other income (expenses) is comprised primarily of interest income and interest expense along with other expenses.

Fiscal Year Ended April 30, 2009 Compared to the Fiscal Year Ended April 30, 2008

     Net Revenues. Net revenues decreased $7.8 million, or 6%, to $114.3 million for the fiscal year ended April 30, 2009 from $122.1 million for the fiscal year ended April 30, 2008. Gaming revenues decreased $3.1 million, down 4.0% from the comparable period; food and beverage revenues decreased $1.7 million, or 12.0%, over the comparable period; and hotel revenues decreased $0.8 million; and recreation and other decreased $3.4 million. Promotional allowances decreased by $1.2 million from the prior year.

     Gaming. Gaming revenues decreased $3.1 million, or 4.0%, to $74.4 million for the fiscal year ended April 30, 2009 from $77.5 million for the fiscal year ended April 30, 2008. Slot revenues decreased to $64.0 million for the fiscal year ended April 30, 2009 from $66.7 million for the fiscal year ended April 30, 2008. Net slot win per unit, per day was $127 for the fiscal year ended April 30, 2009 compared to $125 for the fiscal year ended April 30, 2008. Table games revenue decreased $0.4 million to $10.4 million for the fiscal year ended April 30, 2009 from $10.8 million for the fiscal year ended April 30, 2008.

     Hotel. Hotel revenues decreased $0.8 million, or 7%, to $11.4 million for the fiscal year ended April 30, 2009 from $12.2 million for the fiscal year ended April 30, 2008. Occupancy rates averaged 72% for the fiscal year ended April 30, 2009 and 74% for the fiscal year ended April 30, 2008, average daily rate was $175 as compared to $169 for the fiscal year ended April 30, 2008 and revenue per available room was $126.

     Food and Beverage. Food and beverage revenues decreased $1.7 million, or 12.0%, to $12.6 million for the fiscal year ended April 30, 2009 from $14.3 million for the fiscal year ended April 30, 2008 due to a decrease in covers.

     Recreation and Other. Recreation and other revenues decreased $3.4 million, or 17.0%, to $16.8 million for the fiscal year ended April 30, 2009 compared to $20.2 million for the fiscal year ended April 30, 2008. The decrease is attributable to a decrease in the sale of fuel as well as a decrease in lift revenue.

     Promotional Allowances. Promotional allowances were $0.9 million for the fiscal year ended April 30, 2009 compared to $2.1 million for the fiscal year ended April 30, 2008, a decrease of $1.2 million due to a refined marketing plan which is a tiered direct marking plan as opposed to a mass marketing plan.

     Total Operating Expenses. Total operating expenses decreased $13.0 million to $89.1 million for the fiscal year ended April 30, 2009 from $102.1 million for the fiscal year ended April 30, 2008. The decrease in total operating expense was due to decreases in food and beverage, recreation and marketing expenses as well as the insurance reimbursement of $5.4 million.

     Gaming. Gaming expenses decreased $0.4 million to $26.2 million for the fiscal year ended April 30, 2009 from $26.6 million for the fiscal year ended April 30, 2008 due to a decrease in revenue sharing fees associated with a decrease in revenue as well as a decrease in wages. Gaming expenses as a percentage of gaming revenues increased 1.0%, from 35.3% for the fiscal year ended April 30, 2009 compared to 34.3% for the fiscal year ended April 30, 2008.

     Hotel. Hotel expenses increased to $4.8 million for the fiscal year ended April 30, 2009 from $4.4 million for the fiscal year ended April 30, 2008 due an increase in salaries and benefits. Hotel expenses represented 37.6% of hotel revenue for the fiscal year ended April 30, 2009 as compared to 32.9% of hotel revenue for the fiscal year ended April 30, 2008.

     Food and Beverage. Food and beverage expenses decreased $1.8 million, or 12%, to $13.5 million for the fiscal year ended April 30, 2009 from $15.3 million for the fiscal year ended April 30, 2008. Food and beverage expenses as a percent of food and beverage revenues remained flat at 102% for the fiscal years ended April 30, 2009 and 2008. Cost of Goods Sold as a percentage of revenue decreased 2% from 2009 to 2008 and wages increased $0.02 million or 6.2% as a percentage of revenue from 2008.

     Recreation and Other. Recreation and other costs decreased $3.0 million, or 20.0% to $11.9 million for the fiscal year ended April 30, 2009 from $14.9 million for the fiscal year ended April 30, 2008 due to decrease in salaries and benefits as well as a decrease in cost of goods sold associated with fuel.

     Marketing and Advertising. Marketing and advertising costs decreased $1.7 million or 17.0% to $8.3 million for the fiscal year ended April 30, 2009 from $10.0 million for the fiscal year ended April 30, 2008 due to a decrease in expenses associated with the cancellation of the air charter program.

     General and Administrative. General and administrative expenses increased $2.3 million, or 16%, to $16.9 million for the fiscal year ended April 30, 2009 from $14.6 million for the fiscal year ended April 30, 2008 due to an increase in benefits, salaries, and other operating expenses.

     Depreciation. Depreciation decreased $3.9 million to $12.2 million for the fiscal year ended April 30, 2009 from $16.1 million for the fiscal year ended April 30, 2008 due to fully depreciated assets.

     Insurance Reimbursement. Insurance reimbursement for the fiscal year ended April 30, 2009 was $5.4 million and is the gain recorded from the reconstruction of storm damaged, leasehold improvements, buildings and equipment that were fully depreciated at the time of the storm. This amount included $5.0 million from insurance and $394,983 from FEMA.

     Storm Costs. Storm costs were $0.4 million for the fiscal year ended April 30, 2009. Storm costs were expenses related to the cost of repairing the damages as a result of severe flooding from heavy rainfall from the remnants of

Hurricane Dolly on July 27, 2008. Total damage was approximately $5.9 million, which included the previously mentioned storm cost, loss on disposal of assets and fixed assets replacements.

     Loss on disposal of assets. During the fiscal year ended April 30, 2009, we recorded a loss on disposal of assets of $293,896 including, $46,118 related to storm damage and $234,350 related to fire damage to a building at Ski Apache.

     Income from Operations. Income from operations increased $5.2 million, or 26%, to $25.2 million for the fiscal year ended April 30, 2009 from $20.0 million for the fiscal year ended April 30, 2008, as a result of a credit in the insurance reimbursement.

     Other Income (Expenses). Other non-operating expenses decreased $0.1 million to $26.1 million for the fiscal year ended April 30, 2009 from $26.2 million for the fiscal year ended April 30, 2008. Other income (expenses) is comprised of interest income and other income minus interest expense and other expenses.

Fiscal Year Ended April 30, 2008 Compared to Fiscal Year Ended April 30, 2007

     Net Revenues. Net revenues decreased $0.4 million to $122.1 million for the fiscal year ended April 30, 2008, from $122.5 million for the fiscal year ended April 30, 2007. Gaming revenues increased $1.0 million or 1.3%, over the comparable period; food and beverage revenues increased $1.1 million, or 7.3%, over the comparable period; and hotel revenues remained flat over the comparable period.

     Gaming. Gaming revenues increased $1.0 million, or 1.3%, to $77.5 million for the fiscal year ended April 30, 2008, from $76.5 million for the fiscal year ended April 30, 2007. Slot revenues increased to $72.0 million for the fiscal year ended April 30, 2008, from $71.6 million for the fiscal year ended April 30, 2007. Net slot win per unit, per day remained flat at $125 for the fiscal years ended April 30, 2008 and 2007. Table games revenue remained flat at $10.8 million for the fiscal years ended April 30, 2008 and 2007.

     Hotel. Hotel revenues remained flat at $12.2 million for the fiscal years ended April 30, 2008 and 2007. Occupancy rates averaged 74% over the fiscal years ended April 30, 2008 and 2007, average daily rate for the fiscal year ended April 30, 2008, was $169 as compared to $175 for the fiscal year ended April 30, 2007, and revenue per available room was $126.

     Food and Beverage. Food and beverage revenues increased $1.1 million, or 8.3%, to $14.3 million for the fiscal year ended April 30, 2008, from $13.2 million for the fiscal year ended April 30, 2007, due to an increase in covers.

     Recreation and Other. Recreation and other revenues decreased $2.6 million, or 11.4%, to $20.2 million for the fiscal year ended April 30, 2008, compared to $22.8 million for the fiscal year ended April 30, 2007. The decrease is attributable to the low snowfall experienced at Ski Apache resort during the ski season of the fiscal year ended April 30, 2008, consequently decreasing revenue as compared to the fiscal year ended April 30, 2007 when we had average snowfall.

     Promotional Allowances. Promotional allowances were $2.1 million for the fiscal year ended April 30, 2008 compared to $2.3 million for the fiscal year ended April 30, 2007, a decrease of $0.2 million due to a refined marketing plan. This plan expends more in direct player rewards and less in broad based promotion more proportionately to their level of play and de-emphasizes broad based promotional activity, which tends to concentrate returned values to a very limited numbers of patrons.

     Total Operating Expenses. Total operating expenses increased $2.0 million to $102.1 million for the fiscal year ended April 30, 2008, from $100.1 million for the fiscal year ended April 30, 2007. As a percentage of revenues, operating expenses increased by 2% for the fiscal year ended April 30, 2008. The increase in total operating expenses was due to increased salaries and wages, air charter services, and cost of goods sold.

     Gaming. Gaming expenses increased $0.2 million to $26.6 million for the fiscal year ended April 30, 2008, from $26.4 million for the fiscal year ended April 30, 2007, due to an increase in revenue sharing fees associated with increased gaming revenue. Gaming expenses as a percentage of gaming revenues decreased 0.2%, from 34.3% for the fiscal year ended April 30, 2008, compared to 34.5% for the fiscal year ended April 30, 2007.

     Hotel. Hotel expenses decreased to $4.4 million for the fiscal year ended April 30, 2008, from $4.7 million for the fiscal year ended April 30, 2007, due to cost containment by management in the areas of labor and supplies expense. Hotel expenses represented 32.6% of hotel revenue for the fiscal year ended April 30, 2008, as compared to 34.8% of hotel revenue for the fiscal year ended April 30, 2007.

     Food and Beverage. Food and beverage expenses increased $1.1 million, or 8%, to $15.3 million for the fiscal year ended April 30, 2008, from $14.2 million for the fiscal year ended April 30, 2007, due to an increase in salaries and wages and cost of goods sold related to increased revenue. Food and beverage expenses as a percentage of food and beverage revenues remained flat at 102% for the fiscal years ended April 30, 2008 and 2007. Cost of goods sold as a percentage of revenue increased 2% from the fiscal year ended April 30, 2007 to the fiscal year ended April 30, 2008 and wages increased $0.3 million, or 1.3%, as a percentage of revenue from 2007 to the fiscal year ended April 30, 2008.

     Recreation and Other. Recreation and other costs increased $1.0 million, or 7.2%, to $14.9 million for the fiscal year ended April 30, 2008, from $13.9 million for the fiscal year ended April 30, 2007, due to increases in salaries and wages, repairs and maintenance and cost of goods sold.

     Marketing and Advertising. Marketing and advertising costs increased $1.2 million, or 13.6%, to $10.0 million for the fiscal year ended April 30, 2008, from $8.8 million for the fiscal year ended April 30, 2007, due to additions to sales staff, air charter advertising and air charter operations.

     General and Administrative. General and administrative expenses increased $0.6 million, or 4.3%, to $14.6 million for the fiscal year ended April 30, 2008, from $14.0 million for the fiscal year ended April 30, 2007, due to an increase in costs associated with Sarbanes-Oxley compliance.

     Depreciation. Depreciation decreased $2.1 million to $16.1 million for the fiscal year ended April 30, 2008, from $18.2 million for the fiscal year ended April 30, 2007, due to fully depreciated assets.

     Income from Operations. Income from Operations decreased $2.3 million, or 10.3%, to $20.0 million for the fiscal year ended April 30, 2008, from $22.3 million for the fiscal year ended April 30, 2007, as a result of a decrease in the natural snowfall experienced during the fiscal year ended April 30, 2008, at Ski Apache and increased costs associated with the Air Charter service.

     Other Income (Expenses). Other non-operating expenses decreased $0.1 million to $26.2 million for the fiscal year ended April 30, 2008, from $26.3 million for the fiscal year ended April 30, 2007. Other income (expenses) is comprised of interest income and other income minus interest expense and other expenses.

Liquidity and Capital Resources

     The information in this section compares information for the fiscal year ended September 30, 2010 to information for the twelve months ended September 30, 2009. The information for the twelve months ended September 30, 2009 is unaudited.

     As of September 30, 2010 and September 30, 2009, we had cash and cash equivalents of $19.1 million and $5.5 million, respectively. Our principal source of liquidity for the fiscal year ended September 30, 2010 was cash provided by operating activities of $38.2 million, as well as an increase in operating income experienced during the first and second quarters of the fiscal year due to cost savings measures and new marketing strategies implemented to slow the growth of declining revenues. Our principal source of liquidity for the twelve months ended September 30, 2009 was cash provided by operating activities of $19.4 million as well as an increase in operating income due to cost savings measures and new marketing strategies implemented to slow the growth of declining revenues

     Cash used in investing activities for the fiscal year ended September 30, 2010 was $4.6 million, primarily due to capital expenditures of $4.6 million, which consists of $1.2 million in building, $1.6 in gaming equipment and $0.9 million in furniture, fixtures and equipment, as well as construction in progress of $0.9 million; offset by $0.7

million in write-offs. Cash used in investing activities for the twelve months ended September 30, 2009 was $0.8 million, which consisted of capital expenditures to purchase gaming equipment as well as non-gaming equipment.

     Cash used in financing activities for the fiscal year ended September 30, 2010 was $20.1 million, which primarily consisted of $13.0 million transferred to the Tribe’s reserve account, $4.2 million in direct distributions to the Tribe and $2.9 million in principal payments on our capital equipment loan. Our understanding is that the Tribe has approximately $21.0 million in a reserve account as of September 30, 2010 to be used in connection with the exchange offer. Cash used in financing activities for the twelve months ended September 30, 2009 was $20.6 million, which primarily consisted of $19.0 million in distributions to the Tribe and $1.6 million in principal payments on our capital equipment loan.

     Our ability to fund our operations, make planned capital expenditures, and make scheduled payments depends on our ability to refinance our long-term debt, as well as our future operating performance and success in seeking to increase operating efficiencies and reduce operating expenses, which are subject to economic, financial, business and other conditions, some of which are beyond our control.

     We currently have outstanding $200.0 million aggregate principal and $51.8 million in interest in connection with our 12% Senior Notes due 2010. We have not made the scheduled $12.0 million interest payments on the Senior Notes since November 15, 2008. The Senior Notes matured on November 15, 2010 and we did not pay the principal due at maturity.

     Additionally, our ability to incur additional indebtedness is limited under the terms of the Indenture governing the Senior Notes. If our operating performance or success in increasing operating efficiencies and reducing operating expenses does not meet management expectations, we may need to arrange for additional sources of funding in the form of borrowings under our Indenture or contributions from the Tribe, which sources of funding cannot be assured.

     On August 14, 2009, Moody’s Investor Service lowered IMG Resort and Casino’s probability of default rating to ‘Ca/LD’ from ‘Ca.’ The ‘Ca/LD’ probability of default rating recognizes a payment default under the $200 million 12% Senior Notes due November 2010. The previous rating action by Moody’s Investor Service was on March 20, 2009, at which time they lowered IMG Resort and Casino’s rating from ‘Caa2’ to ‘Ca’.

     The Company has incurred significant losses and did not generate sufficient cash to make the interest payments on its 12% Senior Notes due 2010 (the “Senior Notes”) since November 15, 2008. The Senior Notes matured on November 15, 2010. The company did not pay the principal due at maturity. This non-payment of interest and principal constitutes an event of default under the Indenture governing the Senior Notes and the trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes could declare all such notes immediately due and payable. The amount due in principal and interest is $251.8 million.

     As of September 30, 2010, the Company had negative working capital of approximately $239.5 million and a total deficit of approximately $57.3 million.

     The event of default, along with the Company’s history of recurring losses, negative working capital and limited access to capital, has raised substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

     On November 24, 2010, the Company commenced a private offer to exchange its outstanding Senior Notes for (1) new 8.750% Senior Notes due 2020, (2) new Senior PIK Notes due 2020 and (3) a pro rata amount of $18 million in cash. The exchange offer was scheduled to expire at 5:00 p.m., New York City time, on January 7, 2011. The exchange offer has been extended to expire at 5:00 p.m., New York City time, on January 21, 2011, unless extended further or terminated. The purpose of the extension is to allow sufficient time for the receipt of regulatory approvals necessary for the exchange offer.

     Historically, IMG Resort and Casino has not generated sufficient cash flow from operations to satisfy its capital requirements and relied upon debt financing arrangements to satisfy such requirements. The current cash flows and capital resources may force IMG Resort and Casino to reduce or delay activities and capital expenditures if IMG Resort and Casino is unable to refinance its debt. In the event that IMG Resort and Casino is unable to refinance or

restructure its debt, IMG Resort and Casino will be left without sufficient liquidity and IMG Resort and Casino will not be able to meet its debt service requirements and repayment obligations.

On August 5, 2010, Standard and Poor’s withdrew its ‘D’ issuer credit and issue-level ratings for IMG Resort and Casino.

Description of Indebtedness

The Senior Notes

     On November 3, 2003, we issued $200.0 million Senior Notes, with fixed interest payable at a rate of 12% per annum. Interest on the Senior Notes was payable semi-annually on May 15 and November 15. The Senior Notes matured on November 15, 2010. As of September 30, 2010, accrued interest payable on the Senior Notes is $51.8 million, including penalty interest as described below.

     We have not made the scheduled semi-annual $12.0 million interest payments on the Senior Notes since November 15, 2008. We did not pay the principal due at maturity. Our failure to make these payments on or before June 15, 2009, December 15, 2009, June 15, 2010 and November 15, 2010, constituted separate events of default under the Indenture governing the Senior Notes and the trustee or holders of at least 25% of the aggregate principal amount of the Senior Notes could declare all of such notes immediately due and payable. Due to the events of default, the Senior Notes have been classified as current in the accompanying consolidated balance sheet.

     Pursuant to the Indenture, we are obligated to pay penalty interest on overdue principal at the rate equal to 1% per annum in excess of the applicable interest rate on the Senior Notes (12%), and to pay interest on overdue installments of interest payable on the Senior Notes at the same rate. As of September 30, 2010 the penalty interest accrued as a result is $6,845,000.

     On November 24, 2010, we commenced a private offer to exchange our outstanding Senior Notes for (1) new 8.750% Senior Notes due 2020, (2) new Senior PIK Notes due 2020 and (3) a pro rata amount of $18 million in cash. The exchange offer was scheduled to expire at 5:00 p.m., New York City time, on January 7, 2011. The exchange offer has been extended to expire at 5:00 p.m., New York City time, on January 21, 2011, unless extended further or terminated. The purpose of the extension is to allow sufficient time for the receipt of regulatory approvals necessary for the exchange offer.

Incurrence of Additional Indebtedness

     In general, we are restricted in connection with the issuance of the Senior Notes and the related Indenture, that we would not incur any indebtedness if and to the extent the indebtedness would appear as a liability upon our balance sheet prepared in accordance with Accounting Principles Generally Accepted in the United States of America; provided however, we may incur indebtedness if certain financial ratios meet certain criteria. Furthermore, we agreed that we would not incur any indebtedness that is contractually subordinated in right of payment to our other indebtedness unless such indebtedness is also contractually subordinated in right of payment to the Senior Notes. Our ability to create liens (other than certain permitted liens) upon any of our property or assets, or any proceeds, income or profits therefrom, or assign or convey any right to receive income therefrom are restricted unless payments due under the Indenture and the Senior Notes are secured on an equal and ratable basis with (or, in the case of subordinated indebtedness, senior thereto, with the same relative priority that the Senior Notes shall have with respect to such subordinated indebtedness) the obligation so secured until such time as such obligations are no longer secured by a lien. Accordingly, our ability to incur additional debt financing is severely limited.

General Indebtedness

     The Tribe, for the benefit of the Inn of the Mountain Gods, a wholly-owned subsidiary of IMG Resort and Casino, executed a promissory note dated September 1, 1982, (the “BIA Note”) in favor of the Department of Interior, Bureau of Indian Affairs in the amount of approximately $3.5 million. The BIA Note accrues interest at the rate of 8.5% per annum payable annually from the date of the BIA Note until paid in full on September 1, 2011. As of September 30, 2010, there was approximately $0.3 million outstanding on the BIA Note.

Equipment Finance Agreement

     On June 15, 2004, we entered into a $15.0 million loan agreement with an equipment finance company. The fixed rate loan is fully amortizable over five years. Proceeds from the interest rate loan were used to fund furniture, fixtures and equipment for the Resort. As of September 30, 2010, approximately $8,912 was the outstanding balance.

     As discussed above, we have not made the scheduled payments on the Senior Notes since November 15, 2008. If the Senior Notes are declared immediately due and payable, it would constitute a default under the terms of our furniture and equipment loan and the lenders there under could declare the outstanding loan to be immediately due and payable and may enforce their rights to the collateral securing the loan.

Off-Balance Sheet Arrangements

     As of September 30, 2010, we had no off-balance sheet arrangements that affect our financial condition, liquidity and results of operation.

Tabular Disclosure of Contractual Obligations

     The following table sets forth, as of September 30, 2010, our scheduled principal, interest and other contractual annual cash obligations due by us for each of the periods indicated below (Dollars in thousands):

		Payments due by Period
						Less												More
						Than				1-3				3-5				Than
Contractual Obligations		Total				1 Year				Years				Years				5 Years
Long-term debt obligations		$	200,401			$	200,009			$	392			$	—			$	—
Interest (a)			51,865				51,845				20				—				—
Warner Gaming Management agreement (b)			4,280				720				2,160				1,400				—
Tribal Taxes (c)			14,400				2,400				7,200				4,800				—
Total		$	270,946			$	254,974			$	9,772			$	6,200			$	—

     A special use permit was obtained from the United States Department of Agriculture Forest Service for Ski Apache’s use of 80 acres of land in Lincoln National Forest. The permit is dated April 23, 1985, and has a term of 30 years with an annual occupancy fee based on revenue and gross fixed assets. There is no set minimum; the fee is based on revenue. The occupancy fees for the fiscal year ended September 30, 2010 and the twelve months ended September 30, 2009 (unaudited) totaled approximately $61,000 and $17,000 respectively. The occupancy fees for the five months ended September 30, 2009 and 2008 (unaudited) totaled approximately $1,000 and $17,000, respectively. Occupancy fees for the fiscal years ended April 30, 2009 and 2008 totaled approximately $22,672 and $55,650 respectively. As this fee is based on revenue of the Company and not a minimum guarantee it was not included in the contractual obligations table above.

Regulation and Taxes

     We are subject to extensive regulation by the Mescalero Apache Tribal Gaming Commission, the National Indian Gaming Commission, the NIGC, and, to a lesser extent, the New Mexico Gaming Control Board. Changes in applicable laws or regulations could have a significant impact on our operations. We are an unincorporated Tribal business enterprise, directly owned by the Tribe, a federally recognized Indian tribe, and are located on reservation land held in trust by the United States of America; therefore, we were not subject to federal or state income taxes for the twelve month period ended September 30, 2009 (unaudited) or the fiscal years ended September 30, 2010 or April 30, 2009, nor is it anticipated that we will be subject to such taxes for the foreseeable future. Various efforts have been made in the U.S. Congress over the past several years to enact legislation that would subject the income of tribal business entities, such as us, to federal income tax. Although no such legislation has been enacted, similar legislation could be passed in the future. A change in our non-taxable status could have a material adverse effect on our cash flows from operations.

New Accounting Pronouncements

     The adjustment to reflect the difference between the fair value and the current carrying amount of the assets and liabilities for which a company elects fair-value measurement is reported as a cumulative-effect adjustment to the opening balance of retained earnings upon adoption. Companies that adopt FASB ASC 825-10 (SFAS 159) early must also adopt all of FASB ASC 825-10’s (SFAS 157) requirements at the early adoption date. The adoption of this standard did not have a material effect on IMG Resort and Casino’s financial statements.

     In April 2008, the Financial Accounting Standards Board (“FASB”) issued Staff Position FASB ASC 350, Intangible- Goodwill and Other, (prior authoritative literature: FASB SFAS 142-3: Determination of the Useful Life of Intangible Assets, issued April 2008) (“FASB ASC 350 (FSP FAS 142-3)”). The FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB ASC 350 (SFAS No. 142), “Goodwill and Other Intangible Assets”. The intent of the FSP is to improve the consistency between the useful life of a recognized intangible asset under FASB ASC 350 (SFAS No. 142) and the period of expected cash flows used to measure the fair value of the asset under other accounting principles generally accepted in the United States of America. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The Company adopted FASB ASC 350 (SFAS No. 142) at the beginning of fiscal year 2010. The adoption did not have a significant effect on the Company’s financial statements.

     The FASB issued FASB ASC 105-10, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (prior authoritative literature: FASB SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, issued June 2009) (“FASB ASC 106-10-65 (SFAS No. 168)”), which replaced SFAS No. 162, and established the sources of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. On the effective date for financial statements issued for interim and annual periods ending after September 15, 2009, the Codification superseded all then-existing non—SEC accounting and reporting standards. FASB ASC 106-10 (SFAS No. 168) is effective for fiscal years and interim periods ending after September 15, 2009. The adoption of FASB ASC 105-10 (SFAS 168) did not have a material impact on our consolidated financial statements.

     In April 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-16, Entertainment-Casinos (Topic 924): Accruals for Casino Jackpot Liabilities, a consensus of the FASB Emerging Issues Task Force. This guidance clarifies that an entity should not accrue jackpot liabilities (or portions thereof) before a jackpot is won if the entity can avoid paying that jackpot. Jackpots should be accrued and charged to revenue when an entity has the obligation to pay the jackpot. The guidance applies to both base and progressive jackpots. The guidance is effective for reporting periods beginning after December 15, 2010. Accordingly, we will adopt the new guidance in the first quarter of 2011. The adoption of this new guidance is not expected to have a material impact on our condensed consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

     Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices.

     As of September 30, 2010, we held no derivative instruments.

Item 8. Financial Statements and Supplementary Data

     The financial statements required pursuant to this item are included in Part IV of this report and begin on page F-1. The supplementary financial information required by this item is included in “Item 6. Selected Financial Data.”

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

     Our Chief Operating Officer and Interim-Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(c) of the Securities Exchange Act of 1934) as of the end of the period covered by this Report, have concluded that as of the date, our disclosure controls and procedures were effective.

     As of September 30, 2010, the Company evaluated the effectiveness and design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are the controls and other procedures that the Company designed to ensure that it records, processes, summarizes, and reports in a timely manner the information that it must disclose in reports that the Company files with or submits to the Securities and Exchange Commission. Scott Eldredge, the principal executive officer and principal financial officer of the Company, reviewed and participated in this evaluation. Based on this evaluation, the Company made the determination that its disclosure controls were effective.

Report of Management on Internal Control Over Financial Reporting

     The management of the Company is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is the process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

     There are inherent limitations in the effectiveness of internal control over financial reporting, including the possibility that misstatements may not be prevented or detected. Accordingly, even effective internal controls over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Furthermore, the effectiveness of internal controls can change as circumstances change.

     Management has evaluated the effectiveness of internal control over financial reporting as of September 30, 2010, using criteria described in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on management’s assessment, management concluded that the Company’s internal control over financial reporting was effective as of September 30, 2010.

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

Changes in Internal Control Over Financial Reporting

     During the Company’s fourth fiscal quarter ended September 30, 2010 and since the date of the evaluation noted above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rules 13a-15(d) that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

     On January 8, 2011, two newly elected Tribal officials will be sworn into office, thereby becoming members of the IMG Resort and Casino’s Management Board. Ira Sago and Duane Duffy will be replacing Hazel Botella-Spottedbird and Oliver Enjady, respectively.

     Ira Sago was elected to serve his first term on the Mescalero Apache Tribal Council on November 4, 2010. He will begin his term on January 14, 2011. Mr. Sago has been employed as a gaming agent by the Mescalero Apache Gaming Commission since January 2005. He attended the University of Colorado at Boulder from 1990 to 1992. From 2001 to 2004 he continued his education in psychology at the same university. Mr. Sago is 40 years old.

     Duane Duffy was elected to serve his first term on the Mescalero Apache Tribal Council on November 4, 2010. He will begin his term on January 14, 2011. Mr. Duffy has been employed by the Mescalero Apache Fire Rescue as a structural firefighter and emergency medical services-first responder since August 2010. In 2006, he was employed by Ski Apache as the supervisor for security/surveillance. Mr. Duffy received a bachelor’s degree in political science from Fort Lewis College in Durango, CO in 2009. He is 26 years old.

     On October 1, 2010, Ben Martinez, our Chief Financial Officer and a member of our Management Board, resigned. In the interim, Scott Eldredge has assumed the role of Chief Financial Officer.

     On November 24, 2010, we commenced a private offer to exchange our outstanding 12% Senior Notes due 2010 for (1) new 8.750% Senior Notes due 2020, (2) new Senior PIK Notes due 2020 and (3) a pro rata amount of $18 million in cash. The exchange offer was scheduled to expire at 5:00 p.m., New York City time, on January 7, 2011. The exchange offer has been extended to expire at 5:00 p.m., New York City time, on January 21, 2011, unless extended further or terminated. The purpose of the extension is to allow sufficient time for the receipt of regulatory approvals necessary for the exchange offer.

PART III.

Item 10. Directors, Executive Officers and Corporate Governance

     The Tribe has established IMG Resort and Casino as an unincorporated enterprise of the Tribe to operate its gaming, hotel, resort and ski businesses. IMG Resort and Casino is governed by a Management Board comprised of between seven to nine members, including: the four members of the Executive Committee of the Tribe (including the President of the Tribe who serves as Chairperson, as well as the Vice President and Secretary of the Tribe); the Chief Operating Officer of IMG Resort and Casino, and at least one, and up to three, independent members. The Management Board designates officers to administer the economic and business affairs of IMG Resort and Casino.

     The following are our current officers and members of the Management Board of IMG Resort and Casino:

Name		Age				Position
Mark R. Chino			56			Management Board Member (Chairperson), President of the Tribe
Sandra Platero			54			Management Board Member, Vice President of the Tribe
Gregory Mendez			51			Management Board Member, Secretary of the Tribe
Pamela Cordova			63			Management Board Member
Randy Bell			45			Management Board Member
Kenny Blazer			52			Management Board Member
Pete Kazhe			66			Management Board Member
Oliver Enjady			58			Management Board Member
Hazel Botella-Spottedbird			53			Management Board Member
Manuel Lujan, Jr.			82			Management Board Member, Audit Committee Chair
Scott Eldredge			41			Chief Operating Officer of IMG Resort and Casino, Management Board Member and Interim-Chief Financial Officer of IMG Resort and Casino

     There are no management board members that are related.

     The Management Board met a total of 13 times during the fiscal year ended September 30, 2010. All members of the Management Board attended more than 90% of the time.

     Mark R. Chino has served as President of the Tribe since January 8, 2010. As President of the Tribe, Mr. Chino also serves as Chairman of the Management Board and Chief Executive Officer of the Company. Mr. Chino’s term will expire in January 2012. He previously served two consecutive two-year terms as President of the Tribe from 2004 to 2008 while at the same time serving as CEO of the Management Board. Prior to his terms as President of the Tribe, he held various law enforcement positions with the Bureau of Indian Affairs, Law Enforcement Services before retiring in 2004. He received his Bachelor of Police Science from New Mexico State University in 1977.

     Sandra Platero has served as Vice President of the Tribe since January 8, 2010. As Vice President of the Tribe, Ms Platero also serves as a member of the Management Board for a two-year term. Previously, she served on the Tribal Council from 2000 to 2004. In addition, she was the Project Manager at the Company from 2002 to 2004. Ms. Platero attended Southwestern Indian Polytechnic Institute and received a certificate in Secretarial/Business in 1992.

     Gregory Mendez has served his two-year term as a member of the Management Board since January 8, 2010. Mr. Mendez is also the Secretary of the Management Board and a member of the Tribal Council. Mr. Mendez served on the Tribal Council from 2000 to 2003 and has been on the Tribal Council since 2006. In a prior term, he served as Treasurer of the Tribe and currently serves as Secretary of the Tribe. Mr. Mendez is employed by the BIA as a Range Land Specialist, a position he has held for 20 years. He received a bachelor’s degree in range science from New Mexico State University in 1995.

     Pamela Cordova has served her two-year term as a member of the Management Board since January 8, 2010. Ms. Cordova is also a member of the Tribal Council. Ms. Cordova worked as a teacher and administrative assistant in the Tularosa School District and the Mescalero Apache Schools from the 1980s until May 2010. She received her Bachelor of Arts in Elementary Education in 1982 and a Master’s Degree in Elementary Education in 1986, each from New Mexico State University.

     Randy Bell has served his two-year term as a member of the Management Board since January 8, 2010. Mr. Bell is also a member of the Tribal Council. Mr. Bell was appointed to the Tribal Council in August 2008 and was elected to serve an additional two-year term starting in 2010. He is the owner and manager of Besh Din De Graphics, a print shop that since 2004 has catered primarily to Mescalero Apache artists. In addition, he is Chair of the Tribal Council Natural Resources Sub-Committee.

     Kenny Blazer has served his two-year term as a member of the Management Board since January 8, 2010. Mr. Blazer is also a member of the Tribal Council. Previously, he served on the Tribal Council from May 2008 through January 2009. He is the owner of Blazer Bus Co., which he has owned for 25 years. He also serves as the secretary of the Board of Directors of Otero County Electric Coop.

     Pete Kazhe has served his two-year term as a member of the Management Board since January 25, 2010. Mr. Kazhe is also a member of the Tribal Council. He worked for the Mescalero Apache Housing Authority (MAHA) until 2007 when he retired. He attended Ft. Lewis College in Durango, Colorado from 1964 to 1965.

     Oliver Enjady has served his two-year term as a member of the Management Board since January 2009. Mr. Enjady is also a member of the Tribal Council. Previously, he served as Vice President of the Tribe for a six-month period beginning in November 1998. In addition, he served as a member of the Tribal Council from 1996 to 1998, 2001 to 2001 and 2005 to 2006. He received his degree in art from the Institute of American Indian Arts in Santa Fe, New Mexico in 1991, and he currently works as a professional artist. Mr. Enjady will be replaced on January 14, 2011.

     Hazel Botella-Spottedbird has served as a member of the Management Board since January 2008. Ms. Botella-Spottedbird is also a member of the Tribal Council. She served as Treasurer of both the Tribal Council and the Management Board in 2009. She has been employed by the Company as the Accounts Receivable Coordinator since June 2005. She received a certificate from the International Business College for computer and accounting courses. Ms. Bottella-Spottedbird will be replaced on January 14, 2011.

     Manuel Lujan, Jr. has served as an independent member of the Management Board since January 2005. Mr. Lujan served as the U.S. Congressman representing the State of New Mexico from January 1969 to January 1989 and as Secretary of the Interior under the Bush Administration from 1989 to 1993. Since 1993 he has served as a lobbyist in Washington, D.C. through his company Manuel Lujan Associates, a consulting firm dealing with matters involving federal agencies. Mr. Lujan also currently serves on the board of directors of San Ildefonso Indian Pueblo Economic Development. He received a bachelor’s degree from the College of Sante Fe in 1950.

     Scott Eldredge has served as Chief Operating Officer of the Company since August 12, 2010. Mr. Eldredge has also assumed the role of Chief Financial Officer on an interim basis. From 2005 to 2010, Mr. Eldredge worked for the Santa Ana Star Casino, first as the Director of Marketing and Transportation and later as the General Manager. As General Manager, he managed a team of 800 employees and oversaw the business strategy for the property. From March 2010 until his appointment with the Company, Mr. Eldredge worked as Corporate Vice President of Marketing for Cherokee Nation Entertainment, where he developed and implemented their marketing strategy. Mr. Eldredge also completed the Casino Management Association certification program and the Maloof Hotels management trainee program. He graduated from New Mexico Highlands University with a Bachelor of Arts degree in business administration in 1991.

Management Board Independence

     The Tribe has established IMG Resort and Casino as an unincorporated enterprise of the Tribe to operate its gaming, hotel, resort and ski businesses. As such, the IMG Resort and Casino is governed by a Management Board comprised of between seven to nine members, including: the four members of the Executive Committee of the Tribe (including the President of the Tribe who serves as Chairperson, as well as the Vice President, Secretary and Treasurer of the Tribe); the Chief Operating Officer of IMG Resort and Casino, and at least one, and up to three, independent members. Currently, the Tribe has designated one individual, Mr. Lujan, Jr. to serve as the independent member of the Management Board.

Code of Ethics

     We have adopted a Code of Business Conduct and Ethics applicable to all of our employees, including our Chief Operating Officer, Chief Financial Officer, and all other senior financial executives, and to our directors when acting in their capacity as directors. Our Code of Business Conduct and Ethics is designed to set the standards of business conduct and ethics and to help directors and employees resolve ethical issues. The purpose of our Code of Business Conduct and Ethics is to ensure to the greatest possible extent that our business is conducted in a consistently legal and ethical manner. Employees may submit concerns or complaints regarding audit, accounting, internal controls or other ethical issues on a confidential basis by means of a toll-free telephone call or an anonymous email. We investigate all concerns and complaints. Copies of our Code of Business Conduct and Ethics are available to investors upon written request. Any such request should be sent by mail to Inn of the Mountain Gods Resort and Casino, 287 Carrizo Canyon Road, Mescalero, New Mexico 88340, Attn: Chief Operating Officer or should be made by telephone by calling (575) 464-7777.

     We intend to disclose on our website amendments to, or waivers from, any provision of our Code of Business Conduct and Ethics that apply to our Chief Operating Officer, Chief Financial Officer, and persons performing similar functions and amendments to, or waivers from, any provision which relates to any element of our Code of Business Conduct and Ethics described in Item 406(b) of Regulation S-K.

Committees of the Board

     Audit Committee. On behalf of the Management Board, the Audit Committee is responsible for providing an independent, objective review of our auditing, accounting and financial reporting process, public reports and disclosures, and system of internal controls regarding financial accounting. Currently there are three members of the Audit Committee and Manuel Lujan, Jr. serves as the Audit Committee financial expert. The Management Board has determined that Mr. Lujan is independent.

     Compensation Committee. All members of our Management Board performed the responsibilities of the compensation committee, and participated in deliberations and made decisions concerning executive officer compensation during the course of regular board meetings or board activities conducted through unanimous consent board resolutions in lieu of meetings. Executive officers did not deliberate and vote on matters relating to their compensation as our executive officer. None of the members of the Management Board during the fiscal year ended September 30, 2010 served on the compensation committee of an entity whose executive officers served on the Management Board of the Company, and no executive officer of the Company during fiscal year 2010 served on the compensation committee or board of any company that employed any member of the Management Board.

     Disclosure Committee. The Disclosure Committee was established in 2004 and met one time during the fiscal year ended September 30, 2010. There are currently five members of the Disclosure Committee. There is no compensation for being on this committee.

Item 11. Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Objectives

     The Company’s success depends on the expertise, talent, experience and long-term commitment of the Company’s employees, especially its executive officers. The Company’s compensation plan is intended to achieve the following objectives:

	•		To attract, retain, motivate and reward key employees to drive the successful implementation of the Company’s current and long-term financial and operating goals;
	•		To establish appropriate incentives for management and employees that are consistent with the Company’s culture and values; and
	•		To provide an annual compensation program that rewards both Company and individual performance with the proper balance between salary, and performance-based incentives.

     Our named executive officers consist of our Chief Operating Officer (“COO”) and our Chief Financial Officer (“CFO”). Compensation of officers is established after a review of data for executives in similar positions in comparable companies, mostly companies in the hospitality and gaming fields. When reviewing individual compensation levels, the Company considers individual and corporate performance, levels of responsibility, and competitive pay practices. These factors vary from individual to individual and other subjective features are also considered such as the individual’s experience.

Roles in Establishing Executive Officers Compensation

     Our executive officers compensation is set by our entire Management Board and not by a compensation committee. To the extent that an executive officer is a member of the Management Board, they recuse themselves from discussion or do not participate in compensation decisions that relate to them. The Management Board relies on input from the COO in connection with the CFO’s position and compensation. The Management Board determines the COO’s position and compensation without the input of any other executive officer. The amount of compensation for each named executive officer reflects their superior management experience and continued high level of performance over a long period of time. Currently, none of our executive officers are entitled to any cash compensation or bonuses above and beyond their base salary.

Elements of Compensation

     Base Annual Compensation. The Company believes that the base salary levels of the Company’s executive officers are reasonably related to the base salary levels of executive officers of comparable companies in the gaming and hospitality fields and the geographical region in which the Company is located. The base salary levels were not objectively determined with a formula but instead reflect levels that the Company concluded were appropriate based

upon our general experience. The Company believes that the current base salary levels of the Company’s executive officers take into account the unique talents and experience of our executive officers. Base salaries are adjusted annually for cost of living adjustments. Base salaries are reviewed at the end of the contract period and increases in base salary takes into account such factors as individual past performance, changes in responsibilities, and changes in pay levels of companies deemed comparable to us.

     Severance Benefits. We believe that companies should provide reasonable severance benefits to its executive officers when leaving the Company due to a change in control or without cause. The amount of each executive’s severance is determined by the terms of each of their respective employment agreements.

     Other Compensation. Our executive officers are entitled to participate on the same basis as all other employees of IMGRC in all general employee benefit plans and programs. However, our executive officers do not receive any other compensation nor are they entitled to any bonus compensation as part of their employment with the Company.

     Retirement Benefits. The executive officers may elect to participate in retirement plan benefits of our 401(k) plan generally available to all of our full time employees. The Company does not make any 401(k) contributions on behalf of the executive officers.

     Pension Benefits. The Company does not have a benefit pension plan.

     Deferred Compensation. The Company has neither a non-qualified defined contribution plan nor any other non-qualified deferred compensation plans.

Compensation Committee Report

     The Management Board has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the Board’s review and discussions with management, recommends that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2010.

Report Submitted by:

THE MANAGEMENT BOARD
Mark R. Chino, Chairman
Sandra Platero
Gregory Mendez
Pamela Cordova
Kenny Blazer
Randy Bell
Pete Kazhe
Oliver Enjady
Hazel Botella-Spottedbird
Manuel Lujan, Jr.
Scott Eldredge

Summary Compensation Table

     The following table sets forth, as to the Chief Operating Officer and Chief Financial Officer during fiscal year 2010 (referred to as the named executive officers); information concerning all compensation paid for services to us in all capacities for the fiscal year ended September 30, 2010 indicated below.

														All Other
														Compensation				Total
Name and Principal Position(1)		Year				Salary ($)				Bonus ($)				($)				($)
Scott Eldredge Chief Operating Officer and Interim-Chief Financial Officer			2010				33,674				—				—				33,674
Elizabeth Foster-Anderson (2) Former — Chief Operating Officer			2010				198,480				—				21,155				219,635
Ben Martinez Former — Chief Financial Officer			2010				204,607				—				—				204,607

DIRECTOR COMPENSATION

																		Change in
																		Pension
																		Value and
																		Non-qualified
														Non-Equity				Deferred
		Fees Earned or Paid												Incentive Plan				Compensation				All Other
		in Cash				Stock Awards				Option Awards				Compensation				Earnings				Compensation
Name		($)				($)				($)				($)				($)				($)
Mark R. Chino			4,200				—				—				—				—				—
Sandra Platero			4,200				—				—				—				—				—
Gregory Mendez			1,200				—				—				—				—				—
Pamela Cordova			1,400				—				—				—				—				—
Randy Bell			3,000				—				—				—				—				—
Kenny Blazer			1,400				—				—				—				—				—
Pete Kazhe			3,000				—				—				—				—				—
Oliver Enjady			2,800				—				—				—				—				—
Hazel Botella-Spottedbird			3,000				—				—				—				—				—
Manuel Lujan, Jr.			2,800				—				—				—				—				—

Compensation of the Management Board and Audit Committee

     Members of the Management Board who are officers of the Resort but are not Tribal members do not receive any additional compensation or fees for attending Management Board or Audit Committee meetings. Tribal members serving on the Management Board and Audit Committee receive $200 per meeting. Independent members serving on the Management Board and Audit Committee receive $500 per meeting and an additional $1,000 per quarter.

Employment Agreements

     The Board for IMG has discontinued the general practice of employment agreements for the Company.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

None.

Item 13. Certain Relationships and Related Transactions, and Director Independence Related Party Transaction Approval Policy

     The Board recognizes that related party transactions can present conflicts of interest and questions as to whether the transactions are in the best interests of the Company. Accordingly, effective as of July 18, 2010, the Management Board adopted a written policy for the review, approval and ratification of transactions with related persons. For the purposes of the policy, a “related party transaction” is a transaction or relationship involving a member of the Management Board, executive officer or their immediate family members that is reportable under the SEC’s rules regarding such transactions. The policy requires for the Audit Committee to review and approve all related party transactions, other than transactions involving amounts less than $100,000 in aggregate. As the policy was not adopted until after the end of the fiscal year, only transactions on a going-forward basis will be reviewed and approved pursuant to the policy.

Distributions to the Tribe with Other Payments

     Distributions in the form of government service payments to the Tribe were $4.2 million during the fiscal year ended September 30, 2010. We make distributions to the Tribe under the terms of an annual Tribal budget resolution passed at the discretion of the Tribal Council. We intend to continue to make distributions to the Tribe subject to the restrictions set forth in the indenture governing our Senior Notes or any instrument replacing the indenture.

Tribal Taxes

     IMG Resort and Casino is subject to Mescalero Apache Tribal taxes which employs an alternative minimum tax system. Other than a portion of the operations at Ski Apache, IMG Resort and Casino’s operations are not subject to New Mexico State Gross Receipts Tax. A Tribal tax charge of 10.75% of room revenue, 6.75% of food and beverage revenue, and 6.5% of other revenue is charged at non-Ski Apache outlets. Under the Tribe’s alternative minimum tax system, IMG Resort and Casino is assessed the greater of a fixed rate of $200,000 or the amount collected from sales taxes on a per month basis. Since November 2009, taxes have been collected and recorded as a liability on IMG Resort and Casino’s balance sheet and are not included in net revenue. Excess tax amounts due under the alternative minimum tax system are expensed in the month they are due. In prior periods the taxes collected were included in net revenue and tax payments were expensed. Reclassifications have been made to the prior years presented to be consistent with the current fiscal year financial presentation. The tax payment is made at the beginning of the month in which the taxes are collected. As of September 30, 2010 and 2009, the Company had alternative minimum taxes payable of $196,877 and $88,122, respectively in connection with the taxes collected and not paid.

     The following chart highlights IMG Resort and Casino’s tribal tax activity for the fiscal year ended September 30, 2010, the five months ended September 30, 2009, and the fiscal years ended April 30, 2009 and 2008.

		For the fiscal year				For the five months				For the fiscal year				For the fiscal
		ended				ended				ended				year ended
		September 30, 2010				September 30, 2009				April 30, 2009				April 30, 2008
Alternative minimum tax paid/payable		$	2,508,755			$	1,088,122			$	2,400,000			$	2,400,000
Total taxes collected			(2,010,170	)			(1,088,122	)			(2,189,730	)			(2,366,617	)
Alternative minimum tax expense		$	498,585			$	—			$	210,270			$	33,383

Shared Services and Cost Allocations

     In 2003, IMG Resort and Casino and the Tribe entered into a service and cost allocation agreement, which provides that the Tribe or its enterprises will continue to provide IMG Resort and Casino and its resort enterprises the following services in accordance with past practice: (i) insurance; (ii) telecommunications; (iii) propane; and (iv) gaming regulation, and that IMG Resort and Casino and its resort enterprises will pay, on behalf of the Tribe, for (a) revenue sharing and regulatory fee obligations required under the 2001 Compact or any new compact, (b) federal regulatory fees required by IGRA, (c) an amount equal to the monthly payments required under the promissory note dated September 1, 1982, in favor of the Department of Interior, Bureau of Indian Affairs (See Note 5) and (d) amounts for certain other miscellaneous liabilities. IMG Resort and Casino reimburses the Tribe for its direct costs as billed by the third party.

Employee Benefits Cost Allocations

     In 2003, IMG Resort and Casino and the Tribe entered into an employee benefits cost allocation agreement, which provides that the Tribe will continue to provide IMG Resort and Casino and its resort enterprises with certain employee benefits in accordance with past practice, including group health benefits, workers’ compensation

insurance, disability insurance, unemployment benefits and pension benefits. IMG reimburses the Tribe for its employees’ direct costs for coverage as billed by the third party.

     The Tribe provides employee benefits to the IMG Resort and Casino, which reimburses the Tribe for all costs and expenses associated with this insurance. IMG Resort and Casino paid the Tribe approximately $1.4 million, $1.2 million and $1.1 million for the five months ended September 30, 2008, 2009 and 2010, respectively. IMG Resort and Casino paid the Tribe approximately $3.5 million, $3.3 million and $2.7 million for the twelve months ended September 30, 2008 and 2009 and the fiscal year ended September 30, 2010, respectively.

Item 14. Principal Accounting Fees and Services

     Before our principal accountant is engaged by us to render audit or non-audit services, where required by the rules and regulations promulgated by the Securities and Exchange Commission, such engagement is approved by the Audit Committee.

     The following table sets forth the aggregate fees for professional service provided to IMG Resort and Casino for fiscal 2009 and 2010 by BDO USA, LLP:

		Fiscal year ended				Fiscal year ended
		September 30,				April 30,				Percentage of Services
		2010				2009				2010				2009
Audit Fees		$	347,000			$	370,000				91	%			87	%
Tax Fees			—				—				0	%			0	%
MICS Audit Fees and other			31,000				56,000				9	%			13	%
Total Fees		$	378,000			$	426,000				100	%			100	%

     “Audit Fees” billed during fiscal 2009 and 2010 were for professional services rendered for the audit of our financial statements quarterly reviews and services rendered in connection with regulatory filings for those fiscal years. “MICS Audit Fees” consists of fees related to agreed upon procedures applied to minimum internal control standards.

     The Audit Committee has adopted a policy for the pre-approval of all audit and non-audit services to be performed for IMG Resort and Casino by its independent auditor. The Audit Committee has considered the role of BDO USA, LLP in providing audit and MICS services to IMG Resort and Casino and has concluded that such services are compatible role as IMG Resort and Casino’s independent auditor.

Item 15. Exhibits, Financial Statement Schedules

(a)		(1)  FINANCIAL STATEMENTS — See Index to Consolidated Financial Statements of this Annual Report on Form 10-K.
		(2)  FINANCIAL STATEMENT SCHEDULES — All financial statement schedules have been omitted because they are not applicable or are not required, or because the information required to be set forth therein is included in the Consolidated Financial Statements or Notes thereto.
		(3)  EXHIBITS — See Exhibit Index of this Annual Report on Form 10-K.

(b)		None.
(c)		See Exhibit Index of this Annual Report on Form 10-K.

SIGNATURES

     Pursuant to the requirements of the Securities Act, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the Reservation of the Mescalero Apache Tribe, State of New Mexico, on January 7, 2011.

		INN OF THE MOUNTAIN GODS RESORT AND CASINO
		By:		/s/ Scott Eldredge   Scott Eldredge
				Its: Chief Operating Officer (Principal Executive Officer) and Interim-Chief Financial Officer (Principal Financial Officer)

POWER OF ATTORNEY

     Each person whose signature appears below constitutes and appoints Scott Eldredge, as his or her true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him or her and his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his or her substitutes, may lawfully do or cause to be done by virtue hereof.

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

Signature		Title		Date
/s/ Mark R. Chino Mark R. Chino		Chief Executive Officer Management Board Member (Chairperson)		January 7, 2011
/s/ Sandra Platero Sandra Platero		Vice Chairman, Management Board Management Board Member		January 7, 2011
/s/ Gregory Mendez Gregory Mendez		Secretary, Board Member Management Board Member		January 7, 2011
/s/ Manuel Lujan, Jr. Manuel Lujan, Jr.		Chairman, Audit Committee Management Board Member		January 7, 2011
/s/ Scott Eldredge Scott Eldredge		Chief Operating Officer Interim-Chief Financial Officer (Principal Financial Officer)		January 7, 2011
/s/ Pamela Cordova		Management Board Member		January 7, 2011
Pamela Cordova
/s/ Randy Bell		Management Board Member		January 7, 2011
Randy Bell
/s/ Kenny Blazer		Management Board Member		January 7, 2011
Kenny Blazer
/s/ Pete Kazhe		Management Board Member		January 7, 2011
Pete Kazhe
/s/ Oliver Enjady		Management Board Member		January 7, 2011
Oliver Enjady
/s/ Hazel Botella-Spottedbird		Management Board Member		January 7, 2011
Hazel Botella-Spottedbird

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
UNINCORPORATED BUSINESS ENTERPRISES OF THE MESCALERO APACHE TRIBE

		Page
Report of Independent Registered Public Accounting Firm			F-1
Audited Financial Statements:
Consolidated Balance Sheets as of September 30, 2010 and September 30, 2009			F-2
Consolidated Statements of Operations for the Fiscal year ended September 30, 2010 the Five months ended September 30, 2009 and the Fiscal years ended April 30, 2009 and 2008			F-3
Consolidated Statements of Changes in Deficit for the Fiscal year ended September 30, 2010, the Five months ended September 30, 2009, and the Fiscal years ended April 30, 2009 and 2008			F-4
Consolidated Statements of Cash Flows for the Fiscal year ended September 30, 2010, the Five months ended September 30, 2009 and the Fiscal years ended April 30, 2009 and 2008			F-5
Notes to Consolidated Financial Statements			F-7

Report of Independent Registered Public Accounting Firm

Management Board
Inn of the Mountain Gods Resort and Casino and subsidiaries
Mescalero, New Mexico

We have audited the accompanying consolidated balance sheets of Inn of the Mountain Gods Resort and Casino and subsidiaries (the “Company”), unincorporated enterprises of the Mescalero Apache Tribe, as of September 30, 2010 and 2009, and the related statements of operations, changes in deficit, and cash flows for the fiscal year ended September 30, 2010, the five months ended September 30, 2009 and the fiscal years ended April 30, 2009 and 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Inn of the Mountain Gods Resort and Casino and subsidiaries as of September 30, 2010 and 2009, and the results of its operations and its cash flows for the fiscal year ended September 30, 2010, the five months ended September 30, 2009 and the fiscal years ended April 30, 2009 and 2008, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses, negative cash flows, has negative working capital, accumulated deficits, and negative equity that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Inn of the Mountain Gods Resort and Casino and subsidiaries are unincorporated enterprises of the Mescalero Apache Tribe and are not separate legal entities. These financial statements reflect the financial position of the Inn of the Mountain Gods Resort and Casino and subsidiaries and the results of their operation and their cash flows and do not purport to represent the financial position and activity of the Mescalero Apache Tribe as a whole.

/s/ BDO USA, LLP
Las Vegas, Nevada
January 7, 2011

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

		As of September 30,
		2010				2009
Current assets:
Cash and cash equivalents		$	19,078,894			$	5,528,820
Accounts receivable, net of allowance for doubtful accounts			615,860				718,049
Inventories			883,574				862,251
Prepaid expenses and other assets			1,327,904				1,321,812
Total current assets			21,906,232				8,430,932
Non-current assets:
Property, plant and equipment			312,376,013				308,443,306
Accumulated depreciation			(130,089,874	)			(119,376,921	)
Property, plant and equipment, net			182,286,139				189,066,385
Other assets			51,000				51,000
Deferred financing cost			296,859				2,078,017
Total assets		$	204,540,230			$	199,626,334
Liabilities and Deficit:
Current liabilities
Accounts payable		$	2,113,414			$	1,510,426
Accrued expenses			5,156,990				5,469,293
Accrued payroll and benefits			1,792,820				1,900,338
Accrued interest			51,845,000				22,386,667
Advance deposits			497,883				413,046
Current portion of long-term debt			200,008,912				202,924,922
Total current liabilities			261,415,019				234,604,692
Non-current liabilities:
Long-term debt, net of current portion			392,801				395,634
Total liabilities			261,807,820				235,000,326
Deficit
Distributions			(22,555,727	)			(5,389,062	)
Accumulated deficit			(34,711,863	)			(29,984,930	)
Total deficit			(57,267,590	)			(35,373,992	)
Total liabilities and deficit		$	204,540,230			$	199,626,334

The accompanying notes are an integral part of these statements.

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

		Fiscal year
		ended				Five months ended
		September 30,				September 30,				Fiscal year ended April 30,
		2010				2009				2009				2008
Revenues:
Gaming		$	74,721,871			$	35,124,768			$	74,383,388			$	77,536,827
Hotel			10,046,611				5,429,623				11,421,683				12,157,187
Food and beverage			12,978,055				5,721,231				12,582,440				14,265,112
Recreation and other			18,390,098				5,455,183				16,812,405				20,216,187
Gross revenue			116,136,635				51,730,805				115,199,916				124,175,313
Less-promotional allowances			948,963				394,501				881,666				2,105,256
Net revenue			115,187,672				51,336,304				114,318,250				122,070,057
Operating Expenses:
Gaming			23,919,379				10,819,613				26,249,451				26,646,532
Hotel expenses			3,605,321				1,553,100				4,757,635				4,434,224
Food and beverage			13,275,308				5,298,491				13,546,888				15,348,515
Recreation and other			11,028,692				4,221,347				11,880,845				14,908,202
Marketing			8,512,629				3,892,640				8,343,783				10,004,622
General and administrative			15,531,274				6,194,328				16,886,659				14,593,965
Management fees			2,005,132				—				—				—
Refinance charges			1,420,212				—				—				—
Depreciation			11,399,788				5,072,973				12,162,079				16,061,087
Insurance reimbursement			(2,237,475	)			(45,000	)			(5,406,380	)			—
Storm costs			221,346				20,558				376,700				—
(Gain) loss on disposal of assets			(25,280	)			(15,000	)			293,896				63,847
Total operating expenses			88,656,326				37,013,050				89,091,556				102,060,994
Operating Income			26,531,346				14,323,254				25,226,694				20,009,063
Other income:
Interest expense			(31,371,890	)			(12,070,420	)			(26,156,329	)			(26,419,780	)
Other income			113,611				25,364				72,731				236,917
Total other expense			(31,258,279	)			(12,045,056	)			(26,083,598	)			(26,182,863	)
Net (loss) income		$	(4,726,933	)		$	2,278,198			$	(856,904	)		$	(6,173,800	)