Inn of the Mountain Gods Resorts & Casino · 10-K · For 4/30/05

Filed On 7/28/05 4:29pm ET   ·   SEC File 333-113140   ·   Accession Number 1011438-5-182

Annual Report   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         71    381K 
 2: EX-10       Material Contract                                      4     20K 
 3: EX-31       Certification per Sarbanes-Oxley Act (Section 302)     2±    10K 
 4: EX-31       Certification per Sarbanes-Oxley Act (Section 302)     2±    10K 
 5: EX-32       Certification per Sarbanes-Oxley Act (Section 906)     1      7K 

10-K   ·   Annual Report
Document Table of Contents

10-K
1st Page of 71
TOC
Top
Previous
Next
Bottom
Just 1st
 
Sponsored Ads...


 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-K

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

FOR THE FISCAL YEAR ENDED APRIL 30, 2005

OR

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

 FOR THE TRANSITION PERIOD FROM ____________ TO ____________

 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)          

(505) 464-7004
(Registrant's Telephone Number, Including Area Code)

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

                                                   Name of Each Exchange
       TITLE OF EACH CLASS                         ON WHICH REGISTERED
       None                                       None

Securities registered under Section                                     
12(G) OF THE ACT:                                       
(Title of Class)                                        
None                                          

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 [X] No [_]                        

Indicate by check mark if disclosure of delinquent filers, pursuant to Item 405 
of Regulation S-K is not contained herein, and will not be contained, to the    
best of the 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. [X]                                                

Indicate by check mark whether the registrant is an accelerated filer (as       
defined in Exchange Act Rule 12b-2).                                            

Yes [__]  No [X]                                                                

10-K
2nd Page of 71
TOC
1st
Previous
Next
Bottom
Just 2nd

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" AND "US" REFER TO IMG RESORT AND CASINO.

FORWARD-LOOKING STATEMENTS                                                      

    THIS FORM 10-K INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
THE FEDERAL SECURITIES LAWS. STATEMENTS REGARDING OUR EXPECTED FINANCIAL        
CONDITION, RESULTS OF OPERATIONS, BUSINESS, STRATEGIES AND FINANCING PLANS UNDER
THE HEADINGS "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL 
CONDITION AND RESULTS OF OPERATIONS," "BUSINESS" AND ELSEWHERE IN THIS FORM 10-K
ARE FORWARD-LOOKING STATEMENTS. IN ADDITION, IN THOSE AND OTHER PORTIONS OF THIS
FORM 10-K, THE WORDS "ANTICIPATE," "EXPECT," "PLAN," "INTEND," "WILL,"          
"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. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL 
RESULTS TO DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS DISCLOSED IN 
THIS FORM 10-K INCLUDE, WITHOUT LIMITATION, RISKS RELATING TO THE FOLLOWING: (A)
OUR LEVELS OF LEVERAGE AND ABILITY TO MEET OUR DEBT SERVICE OBLIGATIONS; (B) OUR
FINANCIAL PERFORMANCE; (C) RESTRICTIVE COVENANTS IN OUR DEBT INSTRUMENTS; (D)   
REALIZING THE BENEFITS OF OUR BUSINESS PLAN AND BUSINESS STRATEGIES; (E) CHANGES
IN GAMING LAWS OR REGULATIONS, INCLUDING POTENTIAL LEGALIZATION OF GAMING IN    
CERTAIN JURISDICTIONS; (F) THE IMPACT OF COMPETITION IN OUR MARKETS; (F) OUR    
ABILITY TO ATTRACT INCREASING NUMBERS OF CUSTOMERS; (G) GENERAL LOCAL, DOMESTIC 
AND GLOBAL ECONOMIC CONDITIONS; AND (H) OTHER FACTORS DISCUSSED UNDER "RISK     
FACTORS" OR ELSEWHERE IN THIS FORM 10-K.                                        

YOU ARE URGED TO CONSIDER THESE FACTORS CAREFULLY IN EVALUATING THE   
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS FORM 10-K. ALL SUBSEQUENT WRITTEN  
AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO US OR PERSONS ACTING ON OUR 
BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY OUR CAUTIONARY STATEMENTS.  
THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS FORM 10-K ARE MADE ONLY AS OF   
THE DATE OF THIS FORM 10-K. WE DO NOT INTEND, AND UNDERTAKE NO OBLIGATION, TO   
UPDATE THESE FORWARD-LOOKING STATEMENTS.                                        

ITEM 1. BUSINESS                                                                

OVERVIEW                                                                        

IMG RESORT AND CASINO                                                           

IMG Resort and Casino, established on April 2, 2003, is a wholly owned
enterprise of the Tribe with the exclusive power to conduct and regulate 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. We are located in the forests of the Sacramento       
Mountains and our operations include: a full- service casino, the Travel Center,
offering 17,000 square feet of gaming space including 503 slot machines and 15  
table games as of April 30, 2005; a new resort hotel and casino on the banks of 
Lake Mescalero; offering 38,000 square feet of gaming space including 1,000 slot
machines and 41 table games as of April 30, 2005; the second largest ski resort 
in New Mexico; a championship golf course; big-game hunting and various other   
outdoor recreational activities. We are located approximately 120 miles north of
El Paso, Texas and the Mexican border, approximately 200 miles south of         
Albuquerque, New Mexico and approximately 10 miles west of the resort town of   
Ruidoso. Ruidoso and its surrounding area offers tourists a variety of          
year-round activities, including skiing, golfing, hunting, boating, fishing,    
camping, swimming, horseback riding and cultural events. The neighboring town of
Ruidoso Downs features the Ruidoso Downs Race Track and Casino, offering quarter
horse and thoroughbred racing throughout the summer months and is home of the   
world's richest quarter horse race, the All-American Futurity. White Sands      
National Monument, which attracts in excess of 500,000 visitors a year, is      
located approximately 60 miles away from our properties.                        

1 

10-K
3rd Page of 71
TOC
1st
Previous
Next
Bottom
Just 3rd

Our casinos and resort hotel are conveniently located off of a heavily
traveled four-lane highway, U.S. Highway 70. According to the New Mexico State  
Highway and Transportation Department, approximately 5.9 million vehicles travel
across U.S. Highway 70 each year. We are the only full-service casino operator  
within our primary market area, encompassing southern New Mexico, including the 
cities of Ruidoso, Alamogordo, Las Cruces and Roswell and western Texas,        
including the cities of El Paso, Lubbock and Odessa, and northern Mexico,       
including Ciudad Juarez.                                                        

THE PROJECT                                                                     

  We have completed a two-phase construction project, which we refer to as
the Project. We successfully completed Phase I of the Project, construction of  
our new Casino Apache Travel Center in May 2003, at a cost of $16.0 million. We 
have completed construction of Phase II of the Project, the Inn of the Mountain 
Gods Resort and Casino, on March 15, 2005. Total construction cost to complete  
Phase II of the Project was $143.9 million. In March 2005, the contractor was   
issued a certificate of substantial completion and the Resort started commercial
operation on March 15, 2005. A final certificate of completion and acceptance   
will be issued following the successful completion of identified incomplete     
items. At April 30, 2005, a total of $8.1 million in retainage remains          
outstanding in restricted cash account with the trustee and will be disbursed   
following the issuance of the final completion certificate.                     

    Management believes the Project has positioned us as the "Southwest's Best
All-Season Resort" by expanding and modernizing our gaming and hotel facilities 
to meet customer demand and address the limitations of our old casino, Casino   
Apache, and our old hotel, the Inn of the Mountain Gods. Casino Apache operated 
at capacity on weekends, holidays and during promotional events even though it  
was originally designed as a two-floor convention space and not a high-traffic  
casino. Casino Apache was also affected by poor ventilation and limited parking 
and gaming space. Although it was opened in 1975 as a luxury resort hotel, by   
2002, the Inn of the Mountain Gods hotel was an aging and dated facility that   
required significant modernization to serve the needs of our customers. These   
capacity and design issues have limited our ability to attract additional gaming
and resort customers from both within and beyond our primary market area.       
Nevertheless, our gaming revenues have continued to grow, experiencing a        
compound annual growth rate of approximately 12.7% from our fiscal year ended   
April 30, 2000 through April 30, 2005.                                          

PHASE I -- TRAVEL CENTER                                                        

     In May 2003, we successfully completed Phase I of the Project, construction
of the Travel Center, on time and on budget. The Travel Center targets locals   
and casual day-trip visitors and complements our gaming operations at Inn of the
Mountain Gods. The Tribe funded the entire construction cost of the Travel      
Center with equity contributions to us from cash on hand. The 14-acre Travel    
Center, which includes a 30,000 square foot main building, is located on U.S.   
Highway 70, and at April 30, 2005 featured:                                     

    o    17,000 square feet of gaming space including 503 slot machines and 15
table games, including blackjack and roulette;              

   o    two video poker bars -- a 12-seat circular bar located in the center
       of the facility, which features video poker at all 12 seats, and an
       11-seat full-service bar, which features video poker at five seats;

o    "Smokey-B's Grill," a 2,300 square foot, 135-seat casual dining  
restaurant;                                                 

    o    a 2,500 square foot convenience store, which carries food, candy, hot
and cold beverages and travel and sundry items;             

o    an 800 square foot tax-free smoke shop, which offers a variety of
brand-name carton cigarettes at discounted prices;          

o    a Conoco-branded fuel station with 12 gasoline and eight diesel  
pumping stations;                                           

o    a 2,000 square foot shower and laundry facility;                 

2 

10-K
4th Page of 71
TOC
1st
Previous
Next
Bottom
Just 4th

o    700 on-site parking spaces, including a separate parking area for
semi-trucks, with over 24 over-sized spaces; and            

o    shuttle service to the Inn of the Mountain Gods.                 

PHASE II -- INN OF THE MOUNTAIN GODS RESORT AND CASINO                          

In March 2005, we successfully completed Phase II of the Project,     
construction of IMG Resort and Casino, on time and on budget. The Resort is     
designed to be a premier gaming resort destination hotel and casino, targeting  
the mature, affluent gaming and entertainment patron, as well as middle market  
clientele. IMG Resort and Casino offers higher table gaming and slot machine    
limits and a broader mix of table games than the Travel Center. IMG Resort and  
Casino, as of April 30, 2005, featured:                                         

o    a casino featuring 38,000 square feet of gaming space, 1,000 slot
  machines (and capacity for 1,500 machines) and 41 table games,
      including craps, blackjack, roulette, three-card poker and "Let it
Ride";                                                      

o    a 273-room hotel, featuring over-sized deluxe guest rooms, with a
       balcony view of Lake Mescalero and either Sierra Blanca Mountain or
     the forest-lines golf course, an indoor swimming pool and fitness
      center including a yoga and aerobics workout area, steam and sauna
facilities for both men and women and a family locker area; 

  o    food and beverage venues including a 158-seat indoor/outdoor casual
     and fine dining restaurant; a 250-seat buffet style restaurant; a
         100-seat spots bar, a 75-seat night club featuring live entertainment
      and dancing and a "quiet" lounge featuring an oversized fireplace;

o    a 37,000 square foot events center, which can accommodate a wide 
          variety of activities, including entertainment and sports events, such
    as concerts, comedy shows and boxing, as well as trade shows and
exhibitions; and                                            

    o    a 1,700 space underground parking structure and 500 spaces of surface
parking.                                                    

3 

10-K
5th Page of 71
TOC
1st
Previous
Next
Bottom
Just 5th

OUR BUSINESS ACTIVITIES                                                         

  IMG Resort and Casino was formed by the Tribe on April 2, 2003 to be the
holding company for all of the Tribe's gaming and resort enterprises. Prior to  
the formation of IMG Resort and Casino, the Tribe operated all of its gaming and
resort activities through four separate tribal enterprises: Casino Apache, which
owned and operated the Tribe's original casino, Casino Apache, since the        
commencement of its operations in 1992; Ski Apache, which owned and operated the
Tribe's ski resort, since the commencement of its operations in 1964; Inn of the
Mountain Gods, which owned and operated the Tribe's resort hotel, the Inn of the
Mountain Gods, since the commencement of its operations in 1975; and the Travel 
Center, which owned and operated the Tribe's second gaming facility, Casino     
Apache Travel Center, since the commencement of its operations in April 2003. On
April 2, 2003, each of the Tribe's gaming and resort enterprises - the Travel   
Center, Casino Apache, Ski Apache and Inn of the Mountain Gods - were           
contributed to IMG Resort and Casino by the Tribe and are wholly-owned          
subsidiaries of IMG Resort and Casino.                                          

4 

10-K
6th Page of 71
TOC
1st
Previous
Next
Bottom
Just 6th

GAMING                                                                          

We currently operate two gaming facilities, the Travel Center and IMG 
Resort and Casino. The Travel Center, opened on May 21, 2003, is located        
directly on U.S. Highway 70 and is highly visible to drivers in both directions.
As of April 30, 2005, the Travel Center featured 17,000 square feet of gaming   
space, 503 slot machines and 15 table games, including blackjack and roulette.  
IMG Resort and Casino opened on March 15, 2005, and is located two miles off of 
U.S. Highway 70, adjacent to the site of our old casino, Casino Apache. As of   
April 30, 2005, IMG Resort and Casino featured 38,000 square feet of gaming     
space, 1,000 slot machines and 41 table games, including craps, blackjack,      
roulette, three-card poker and "Let it Ride;" a 100-seat buffet restaurant; a   
gift shop and approximately 2,200 customer parking spaces.                      

    Our gaming operations have experienced continued growth since fiscal 2000.
Gaming revenues have increased from $35.4 million for the twelve months ended   
April 30, 2000 to $64.3 million for the twelve months ended April 30, 2005, a   
compound annual growth rate of 12.7%. Gaming revenues for the twelve months     
ended April 30, 2004 and 2003 were $60.3 million and $46.9 million,             
respectively. On May 21, 2003, we opened the Travel Center with approximately   
500 slot machines, comprised of approximately 200 slot machines moved from      
Casino Apache and approximately 300 new slot machines. On March 15, 2005, we    
opened the IMG Resort and Casino with 1,000 slots and 41 table games.           

RESORT AMENITIES                                                                

     Since opening the original 118-room hotel as a five-star resort facility in
1975, we have built a strong reputation as a leading destination resort in our  
region. Our cool mountain climate and resort amenities typically attract        
capacity crowds from May through September. Our resort amenities include our    
championship golf course, rated the 35th "Best Golf Resort" in the country in   
2002 by Golf Week(TM), a golf pro shop, big game hunts, shooting ranges,        
horseback riding, boating, fishing and a casual dining restaurant and bar.      

SKIING                                                                          

    We have owned and operated Ski Apache since 1964. Ski Apache has 750-acres
of ski area and is the second largest snow ski area (based upon acres of ski    
area) in the State of New Mexico. Our ski resort is located on U.S. Forest and  
Tribal land on the 12,003-foot Sierra Blanca Mountain, on the southern tip of   
the Rocky Mountains, approximately 20 miles from the site of the Resort.        
Approximately 200,000 skiers, primarily from New Mexico, Texas, Arizona and     
Mexico, visited Ski Apache during each of our last three ski seasons, which     
typically run from Thanksgiving to Easter. At April 30, 2005, Ski Apache        
featured:                                                                       

o    11 lifts providing the largest lift capacity in New Mexico (over 
        16,500 people per hour), which include a four-passenger gondola (the
          only one in New Mexico), two quad chair lifts, five triple chairs, one
double chair lift and two surface lifts;                    

o    a base elevation of 9,600 feet and a vertical drop of 1,900 feet;

o    55 ski trails, of which 20 percent are beginner, 35 percent are  
        intermediate and 45 percent are advanced, as well as Apache Bowl, an
expert open bowl ski area;                                  

     o    a Professional Ski Instructors of America ski and snowboarding school;
and                                                         

o    a sport shop with ski rental, offering top quality ski and       
snowboarding equipment.                                     

    Although Ski Apache typically averages over 15 feet of snowfall each year,
Ski Apache features a multi-million dollar snowmaking system, which covers 1,000
feet of vertical drop, trails for all ability levels and the use of 8 of its 11 
lifts.                                                                          

BUSINESS STRATEGY                                                               

  We are the only full-service casino operator offering both slot machines
and table games within our primary market area, which 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 Juarez. Our primary feeder markets include cities over 
200 miles away. We have identified this market based on information we have     
obtained from our approximately 118,630 member customer loyalty program, the    

5 

10-K
7th Page of 71
TOC
1st
Previous
Next
Bottom
Just 7th

Apache Spirit Club. We believe that our facilities will continue to be          
attractive to these customers because of our location. Within our primary market
area we are the closest gaming facility to offer both slot machines and table   
games and we are the closest resort destination offering all-season amenities,  
including skiing and championship golf.                                         

   We believe that as a result of completing the Project, we will be able to
increase penetration within our existing primary market and expand our market to
include a greater number of customers from New Mexico, Mexico, Texas, Oklahoma, 
Colorado, Arizona, and California. We intend to fully implement a comprehensive 
business and marketing strategy to enhance operations at our facilities. Key    
measures include:                                                               

  o    CROSS MARKET OUR RESORT FACILITIES - Cross market all of our resort
      facilities to increase market penetration and expand our market by
       highlighting our diverse range of attractive all-season activities;

o    INTEGRATE MANAGEMENT - Further expand our management team and    
       consolidate our management structure across our resort enterprises,
         which were formerly operated as separate businesses, to drive greater
operating efficiencies and economies of scale for our resort
enterprises as a whole;                                     

o    BROADEN CUSTOMER BASE - Offer different gaming and slot machine  
     limits, mixes of table games, and non-gaming amenities across our
casino and new resort to broaden our customer base;         

   o    IMPLEMENT PREMIUM PRICING - Capitalize on our new resort facilities,
    including luxury accommodations, to implement premium pricing to
target a more affluent customer base;                       

o    SHOULDER AND OFF-PEAK MARKETING - Create targeted promotions to  
        achieve higher utilization during shoulder and off-peak periods; and

     o    EXPAND CUSTOMER LOYALTY PROGRAM - Continue to expand the Apache Spirit
     Club across all of our resort facilities, to recognize gaming and
          non-gaming spending habits and create individually targeted promotions
         for our customers. We have increased memberships in the Apache Spirit
   Club by approximately 61.0% from March 2003 through April 2005.

The Project is part of our business strategy to develop an integrated 
resort, increase our market reach and realize operating benefits from business  
synergies. We may not be able to fully implement this strategy if we experience 
changes in general or local economic conditions, increased competition, other   
changes in our industry, or our plan to promote our customers' utilization of   
our various resort amenities, including our gaming, hotel, entertainment and    
other amenities does not achieve its intended results.                          

6 

10-K
8th Page of 71
TOC
1st
Previous
Next
Bottom
Just 8th

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 
Juarez. According to the U.S. Census Bureau and Desarrollo Economico de Ciudad  
Juarez/INEGI there are approximately 3.1 million people in our primary market   
area and 1.8 million adults.                                                    

    Currently, we are the only full-service casino operator within our primary
market area. We currently face competition in our primary market area from two  
racinos, Ruidoso Downs, 10 miles away in Ruidoso and Sunland Park Racetrack and 
Casino, 125 miles away 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 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 facility, 700 slot machines and five   
restaurants. Both of these facilities lack table games and lodging facilities.  
In addition, we compete with 11 other New Mexico Indian casinos and one racino  
located in and around Albuquerque and Santa Fe, New Mexico, which is outside of 
our primary market area.                                                        

7 

10-K
9th Page of 71
TOC
1st
Previous
Next
Bottom
Just 9th

   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. We hope that with the completion of the      
Project, we will be able to compete more directly for regional overnight and    
national customers with casinos and resorts located in other parts of the       
country.                                                                        

MESCALERO APACHE TRIBE                                                          

TRIBAL ADMINISTRATION                                                           

  The Tribe is a federally recognized Indian tribe located on a 750 square
mile reservation in south-central New Mexico and has approximately 4,100        
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, both of whom are appointed by   
the President.                                                                  

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.                              

8 

10-K
10th Page of 71
TOC
1st
Previous
Next
Bottom
Just 10th

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, state 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  
state laws applicable to the gaming industry generally and to the distribution  
of gaming equipment. 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. Moreover, this     
particular regulatory environment is more susceptible to changes in public      
policy considerations than others. 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, subordinate to the United States, 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 exercise of tribal sovereignty and is subject to federal law.  
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 Indian 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 unconsented 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 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 some judicial remedies, the tribe's consent to             
jurisdictional provisions 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 would 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 IGRA. IGRA is administered by the NIGC which exercises       
primary federal regulatory responsibility over Indian gaming. The NIGC          

9 

10-K
11th Page of 71
TOC
1st
Previous
Next
Bottom
Just 11th

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, the state in which
the Tribe is located and the Tribe, in accordance with federal law.             

 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, pulltabs, 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 I gaming on Indian lands is within the exclusive jurisdiction of the
Indian tribes and is not subject to IGRA. Class II gaming is permitted on Indian
lands if:                                                                       

  o    the state in which the Indian lands lie permits that gaming for any
purpose by any person, organization or entity;              

     o    the gaming is not otherwise specifically prohibited on Indian lands by
federal law;                                                

o    the gaming is conducted in accordance with a tribal ordinance or 
resolution which has been approved by the NIGC;             

   o    an Indian tribe has sole proprietary interest and responsibility for
the conduct of the gaming;                                  

o    the primary management officials and key employees are tribally  
licensed; and                                               

o    several other requirements are met.                              

    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.                

     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,                                 

10

10-K
12th Page of 71
TOC
1st
Previous
Next
Bottom
Just 12th

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:

o    the ownership, security, personnel background, recordkeeping and 
auditing of a tribe's gaming enterprises;                   

o    the use of the revenues from that gaming; and                    

  o    the protection of the environment and the public health and safety.

POSSIBLE CHANGES IN FEDERAL LAW                                                 

Several bills have been introduced in Congress that would amend IGRA. 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 April 30, 2005, we had 1,627 full-time team members, excluding  
approximately 400 additional full-time team members which will be hired during  
the ski season at Ski Apache, which typically runs from Thanksgiving to Easter. 
We hired approximately 450 additional full-time team members in connection with 
the opening of the Resort. 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 believe
we have good labor relations with our team members.                             

WEBSITE AVAILABILITY OF OUR REPORTS FILED WITH THE SECURITIES AND EXCHANGE      
COMMISSION                                                                      

We maintain a website with the address www.innofthemountaingods.com. We are not 
including the information contained on our website as a part of, or             
incorporating it by reference into, this annual report on Form 10-K. We intend  
to make available free of charge through our website our annual reports on Form 
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and       
amendments to these reports, as soon as reasonably practicable after we         
electronically file that material with, or furnish such material to, the        
Securities and Exchange Commission.                                             

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.                                                                         

11

10-K
13th Page of 71
TOC
1st
Previous
Next
Bottom
Just 13th


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                    

Not applicable.                                                                 

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.              

12

10-K
14th Page of 71
TOC
1st
Previous
Next
Bottom
Just 14th


ITEM 6. SELECTED FINANCIAL DATA                                                 

SELECTED HISTORICAL FINANCIAL AND OTHER DATA

 The selected financial data set forth below for each of the five fiscal
years ended April 30, 2001, 2002, 2003, 2004, and 2005 have been derived from   
our audited financial statements. You should read the following financial data  
in conjunction with the section in this Form 10-K entitled "Management's        
Discussion and Analysis of Financial Condition and Results of Operations" and   
with our financial statements and the related notes included in this Form 10-K  
beginning on page F-1. Our financial statements for each of the fiscal years    
ended April 30, 2001, 2002, 2003 and 2004 were audited by Grant Thornton LLP.   
Our financial statements for the year ended April 30, 2005, were audited by BDO 
Seidman LLP, an independent registered public accounting firm, and are included 
in this Form 10-K.                                                              

                                                        · Enlarge/Download Table

                                                               FISCAL YEAR ENDED                              
                                                                    APRIL 30,                                 
                                      ----------------------------------------------------------------------- 
                                                2001        2002          2003         2004          2005     
                                                                                                              
                                                                 (DOLLARS IN THOUSANDS)                       
STATEMENTS OF INCOME DATA:                                                                                    
Revenues:                                                                                                     
 Gaming.......................                 $ 39,655      $ 41,845     $ 46,942      $ 60,277     $ 64,254 
 Food and beverage............                    5,152         5,287        4,894         5,615        6,369 
 Rooms........................                    4,777         4,608        3,394            --        1,168 
 Recreation and other.........                   11,713        11,229       11,953        16,472       23,013 
                                              ---------      --------     --------     ---------     ---------
Gross revenues................                   61,297        62,969       67,183        82,364       94,804 
 Less: promotional allowances.                      408           783          931         1,437        1,770 
                                              ---------      --------     --------     ---------     ---------
Net revenues..................                 $ 60,889      $ 62,186     $ 66,252      $ 80,927     $ 93,034 
Operating expenses:                           ---------      --------     --------     ---------     ---------
 Gaming.......................                   17,512        17,962       19,458        25,406       25,765 
 Reversal of accrued fees                             -             -            -       (27,136)           - 
 Food and beverage............                    5,310         5,067        4,955         6,587        7,274 
 Rooms........................                    2,517         2,219        1,552           120          651 
 Recreation and other.........                    5,335         5,245        5,757        10,702       15,435 
 General and administrative...                    6,529         5,672        6,500         9,038        9,841 
 Intercompany allocations                                                                                     
  and charges.................                        -         2,726        3,183         4,271        5,544 
 Pre-opening costs and expenses                       -             -        1,390         3,072        8,324 
 Depreciation and amortization                    4,077         3,916        9,213         4,930        7,270 
                                              ---------      --------     --------     ---------     ---------
 Total operating expenses.....                   41,280        42,807       52,008        36,990       80,104 
                                              ---------      --------     --------     ---------     ---------
Income from operations........                   19,609        19,379       14,244        43,937       12,930 
Interest income...............                    1,545           288          190           802          657 
Interest expense, net of amounts                                                                              
 capitalized..................                     (497)         (196)           -        (5,252)     (11,544)

Other non-operating income....                      198            75          171           258           97 
                                              ---------      --------     --------     ---------     ---------
Net income....................                 $ 20,855      $ 19,546     $ 14,605      $ 39,745     $  2,140 
                                              =========      ========     ========     =========     ======== 
OTHER FINANCIAL DATA:                                                                                         
EBITDA(1).....................                 $ 23,884      $ 23,370     $ 23,628      $ 49,125     $ 20,200 
Capital expenditures..........                      928         1,633       30,735       107,003       88,661 
Cash provided by (used in) operating                                                                          
 activities...................                   26,614        57,783       32,021        38,113       (3,135)


13

10-K
15th Page of 71
TOC
1st
Previous
Next
Bottom
Just 15th
                                                        · Enlarge/Download Table

                                                                                AS OF APRIL 30,                           
                                                      --------------------------------------------------------------------
                                                          2001          2002        2003           2004        2005       

                                                                  (DOLLARS IN THOUSANDS, EXCEPT PROPERTY DATA)            
PROPERTY DATA (AS OF END OF PERIOD EXCEPT                                                                                 
WIN PER DAY DATA,                                                                                                         
UNAUDITED):                                                                                                               
                                                                                                                          
Gross slot win per day...........                          $   125       $  134     $   155      $   140     $    147     
Table game win per day...........                          $   550       $  505     $   632      $   580     $    646     
Number of slot machines..........                              827          839         803        1,180        1,503     
Number of table games............                               25           25          25           38           56     
Number of hotel rooms............                              252          252          --           --          273     
Number of restaurant seats.......                              450          450         200          200          803     
Gaming square footage............                           22,600       22,600      22,600       39,600       55,000     

BALANCE SHEET DATA:                                                                                                       
Cash and cash equivalents........                         $ 15,188      $21,810     $ 9,332      $15,795     $ 13,718     
Total assets.....................                           74,438       82,506      96,595      316,210      293,694     
Total debt and capital lease obligations                     2,729        2,104       7,453      201,947      201,528     
Total equity.....................                           37,609        6,098       1,159       59,004       58,143     

---------------                                                                                                           
<FN>                                                                                                                      
(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:                                                                            

</FN>                                                                                                                     

                                                        · Enlarge/Download Table


                                                         FISCAL YEAR ENDED                      
                                                              APRIL 30,                         
                                     ---------------------------------------------------------  
                                      2001          2002         2003        2004     2005      

                                                      (DOLLARS IN THOUSANDS)                    
                                                                                                
Net income...................... $ 20,855       $ 19,546     $ 14,605     $ 39,745     $  2,140 
 Interest expense (income), net.   (1,048)           (92)        (190)       4,450       10,790 
 Depreciation and amortization..    4,077          3,916        9,213        4,930        7,270 
                                 --------       --------     --------     --------     ---------
EBITDA.......................... $ 23,884       $ 23,370     $ 23,628     $ 49,125     $ 20,200 
                                 ========       ========     ========     ========     =========

We caution you that amounts presented in accordance with our definition of      
EBITDA may not be comparable to similar measures disclosed by other issues      
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.                                                                      

14

10-K
16th Page of 71
TOC
1st
Previous
Next
Bottom
Just 16th


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATION.                                                   

OVERVIEW                                                                        

 IMG Resort and Casino is an unincorporated enterprise of the Tribe. The
Tribe formed IMG Resort and Casino to operate its resort enterprises, comprised 
of Casino Apache Travel Center, Ski Apache and Inn of the Mountain Gods, each of
which is an unincorporated Tribal enterprise wholly-owned by IMG Resort and     
Casino. The combined activities of these enterprises comprise the operations of 
IMG Resort and Casino. Our four primary areas of operation are:                 

  GAMING. Our gaming activities are authorized by IGRA, our gaming compact
with the State of New Mexico and a Tribal gaming ordinance. As of April 30,     
2005, we had 55,000-square feet of combined gaming space featuring 1,503 slot   
machines and 56 table games between our facilities at IMG Resort and Casino,    
opened in March 2005, and the Travel Center, opened in May 2003.                

 FOOD AND BEVERAGE. IMG Resort and Casino operates Wendell's, a 158-seat
casual and fine dining restaurant; Gathering of the Nations Buffet, a 250-seat  
buffet style restaurant; a 100-seat sports bar; a 75-seat night club featuring  
live entertainment and dancing, Wendell's Lounge, a "piano" lounge featuring an 
oversized fireplace and the Apache Summit BBQ restaurant, a 85-seat casual      
restaurant in the golf clubhouse. The Travel Center features Smoky `Bs, a       
135-seat casual dining restaurant and two sports type bars. Ski Apache operates 
one main restaurant and five satellite food and beverage outlets.               

  ROOMS. On March 15, 2005, we opened IMG Resort and Casino which includes
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 traveling distance 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).      
In-room amenities include high-speed Internet access, coffee makers, ironing    
boards and irons, mini-bars, toiletries, free and pay-per-view movies and other 
standard and premium channels. All rooms feature a balcony view of Lake         
Mescalero and either Sierra Blanca Mountain or the forest-lined golf course. The
hotel also features an indoor swimming pool and fitness center including a yoga 
and aerobics workout area, steam and sauna facilities for both men and women and
a family locker area.                                                           

RECREATION AND OTHER. Our all-season recreational operations include a
750-acre, 55-trail ski resort, the second largest in New Mexico, an 18-hole     
championship golf course, seasonal big-game hunts, a shooting range, horseback  
riding, boating and fishing. Our ski resort is typically open from Thanksgiving 
until Easter, while our golf course generally operates from March through       
October. Our retail outlets include a gift shop, golf and pro shop, ski shop, a 
2,500-square foot convenience store, an 800-square foot smoke shop, a           
Conoco-branded fuel station with 12 gasoline and eight diesel pumping stations  
and laundry and shower facilities.                                              

CRITICAL ACCOUNTING POLICIES                                                    

The preparation of financial statements in conformity with accounting 
principles generally accepted in the United States requires management to make  
estimates and assumptions that affect the 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. 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. We believe that estimates related to the following areas involve a 
high degree of judgment and/or complexity: the liability associated with        
unredeemed Apache Spirit Club points, the estimated lives of depreciable assets 
and pension costs. Actual results could differ from those estimates.            

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 table games. These     
anticipated jackpot payments                                                    

15

10-K
17th Page of 71
TOC
1st
Previous
Next
Bottom
Just 17th

are reflected as current liabilities on our balance sheets. Net slot win        
represents all amounts played in the slot machines reduced by both (1) the      
winnings paid out and (2) all amounts we deposit into slot machines to ensure   
there are a sufficient number of coins to pay out the winnings. 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, rooms,  
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 reward our customers with "points" based on the
volume of their gaming activity through our customer loyalty program, the Apache
Spirit Club. These points are redeemable for player reward services or          
merchandise. Points are accrued and reflected as current liabilities on our     
consolidated balance sheets. We determine the adequacy of these accruals by     
periodically evaluating the historical experience and projected trends related  
to these accruals. If such information indicates that the accruals are          
overstated or understated, we will adjust the assumptions utilized in the       
methodologies and reduce or provide for additional accruals as appropriate. The 
retail value of these promotional allowances are recognized by the Casino as a  
reduction from gross revenue.                                                   

    DISPOSAL OF LONG-LIVED ASSETS. Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," or   
SFAS 144, provides for the treatment of the disposal of long-lived assets. SFAS 
144 provides that 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.
In January 2003, we demolished a substantial portion of the Inn to allow for the
construction of the Resort. As a result of the demolition, the adoption of SFAS 
144 for the fiscal year ended April 30, 2003 had the effect of increasing       
depreciation in fiscal 2003 by $5.4 million.                                    

CAPITALIZATION OF INTEREST. In accordance with Statement of Financial 
Accounting Standards No. 34, "Capitalization of Interest Cost" ("SFAS 34"),     
interest cost associated with major development and construction projects is    
capitalized as part of the cost of the project. Interest is capitalized on      
amounts expended on the project using the weighted-average cost of our          
outstanding borrowings. Capitalization of interest started with the construction
of the project began in January 2004 and ended with the completion of the       
project in March 2005. Interest capitalized on the Resort project totaled $14.3 
million for the twelve months ended April 30, 2005.                             

PRE-OPENING AND DEVELOPMENT COST. Pre-opening and development cost are
expensed as incurred, consistent with Statement of Position 98-5 "REPORTING ON  
THE COST OF START-UP ACTIVITIES." Pre-opening cost for the IMG Resort and Casino
were $8.3 million for the fiscal year ended April 30, 2005 and consisted        
principally of personnel costs, training costs, marketing cost and payroll costs
for retaining the former employees of the Inn.                                  

DISAGREEMENTS WITH THE STATE OF NEW MEXICO. The Tribe challenged the  
legality of the revenue sharing prescribed by the 1997 Compact, claiming them to
be an illegal tax on Indian gaming under the IGRA. The Tribe invoked its right  
to seek a resolution of the disagreements through the arbitration process       
provided for in the 1997 Compact and no revenue sharing or regulatory fees were 
remitted to the State.                                                          

  On April 20, 2004, the Tribe settled with the State of New Mexico all of
its obligations under the 1997 Compact. Under the settlement agreement, the     
State of New Mexico and the Tribe agreed that the Tribe would pay the State of  
New Mexico $25.0 million and enter into a new compact, which we refer to as the 
2001 Compact. On April 20, 2004, we paid an initial payment of $2.0 million     
pursuant to the terms of the settlement agreement. The settlement agreement     
provided that the $25.0 million payment settles all revenue sharing and         
regulatory fees payable under the 1997 Compact as well as all revenue sharing   
fees payable under the 2001 Compact through March 2005. The 2001 Compact        
provides for a revenue sharing amount equal to 8% of "net win" from gaming      
machines, payable no later than 25 days after the last day of each calendar     
quarter and an annual regulatory fee of $100,000, paid in quarterly installments
of $25,000 on the first day of each calendar quarter. Pursuant to the terms of  
the settlement agreement, the Resort began accruing revenue sharing payments to 
the State of New Mexico at the rate of 8% of "net win" pursuant to the 2001     
Compact in March 2005, with the first revenue sharing payment under the 2001    
Compact due in July 2005. In addition, pursuant to the terms of the settlement  
agreement, the Resort began accruing regulatory fees, at the rate of $100,000   
per year, from the date the approval of the 2001 Compact is published in the    
Federal Register with our first payment for regulatory fees under the 2001      
Compact due on the first day of the first full calendar quarter thereafter. As a
result of the compact settlement, the Resort reversed approximately $27.1       
million                                                                         

16

10-K
18th Page of 71
TOC
1st
Previous
Next
Bottom
Just 18th

of previously recorded revenue sharing expenses. On June 1, 2004, the Tribe and 
the State of New Mexico entered into the 2001 Compact. On July 22, 2004 the     
Department of Interior approved the 2001 Compact. The Resort made the remaining 
$23.0 million payment required under the settlement agreement in August 2004.   
Following the payment of the $25.0 million settlement amount, the additional    
$3.0 million we had reserved to pay for our accrued liability relating to the   
1997 Compact, held in a restricted account, became unrestricted cash. The       
settlement with the State of New Mexico was reflected in operating costs and    
expenses as a settlement of revenue sharing and regulatory fees in the          
consolidated statements of income and regulatory fees paid in advance through   
2005 and recorded as a prepaid expense in the consolidated balance sheets.      

     The terms of the 2001 Compact are substantially similar to the terms of the
1997 Compact and revenue sharing agreement, except for the following material   
differences:                                                                    

   o    revenue sharing fees under the 2001 Compact are 8% of "net win" from
gaming, rather than 16% as provided by the 1997 Compact;    

  o    regulatory fees under the 2001 Compact are $100,000 per year, while
      the 1997 Compact requires quarterly regulatory fees (subject to an
     annual increase of 5% beginning on January 1, 1999) of $6,250 per
       gaming facility, $300 per gaming machine and $750 per gaming table;

     o    the 2001 Compact expires June 30, 2015, while the 1997 Compact expires
       on August 29, 2006, subject to an automatic one year extension; and

   o    insurance coverage required by the 2001 Compact to insure the Tribe,
      IMG and its employees and agents from claims against liability for
        bodily injury and property damages by a visitor is required to be at
       least $50 million, while the 1997 Compact requires $10.0 million of
such coverage.                                              

RESULTS OF OPERATIONS                                                           

FISCAL YEAR ENDED APRIL 30, 2005 COMPARED TO FISCAL YEAR ENDED APRIL 30, 2004   

NET REVENUES. Net revenues increased $12.1 million, or 15.0%, to $93.0
million for the fiscal year ended April 30, 2005 from $80.9 million for the     
fiscal year ended April 30, 2004. The increase was due to increases in gaming   
revenues, food and beverage revenue, recreation and retail revenue, and revenue 
from our new hotel. Player reward redemptions are included in gross revenues but
are deducted as a promotional allowance to arrive at net revenues.              

     GAMING. Gaming revenues increased $4 million, or 6.6%, to $64.3 million for
the fiscal year ended April 30, 2005 from $60.3 million at the fiscal year ended
April 30, 2004. Slot revenues led the increase, growing to $55.2 million for the
fiscal year ended April 30, 2005 from $64.3 million for the fiscal year ended   
April 30, 2004, an increase of $2.5 million, or 4.7%. Gross slot win per unit   
was $147 for the fiscal year 2005 compared to $140 for the fiscal year 2004; in 
this period the weighted average number of units increased by 323, or 27.4%.    
Table games revenue increased $1.5 million, or 19.7%, to $9.1 million for the   
fiscal year ended April 30, 2005 from $7.6 million for the fiscal year ended    
April 30, 2004. The increase was the result of the increase in the table game   
hold to 22.5% for the fiscal year ended April 30, 2005 from 18.7% for the fiscal
year ended April 30, 2000, while drop remained relatively stable increasing $0.2
million to $40.5 million for fiscal year 2005 from $40.2 million for fiscal year
2004.                                                                           

  FOOD AND BEVERAGE. Food and beverage revenues increased $0.8 million, or
14.3%, to $6.4 million for the fiscal year ended April 30, 2005 from $5.6       
million for the fiscal year ended April 30, 2004. The increase was due to the   
opening of IMG Resort and Casino in March 2005 and increased sales at Smokey    
B's, our casual dining restaurant at the Travel Center.                         

17

10-K
19th Page of 71
TOC
1st
Previous
Next
Bottom
Just 19th

Smokey B's, our casual dining restaurant at the Travel Center in May 2003 and   
the opening of the new resort in March 2005.                                    

   ROOMS. Room revenues totaled $1.2 million for the fiscal year ended April
30, 2005 following the opening of the new resort in March 2005.                 

     RECREATION AND OTHER. Recreation and other revenues increased $6.5 million,
or 39.4%, to $23.0 million for the fiscal year ended April 30, 2005 from $16.5  
million for the fiscal year ended April 30, 2004. The increase was due to       
increases in revenues at Ski Apache as a result of additional skiers due to a   
much better then average snowfall and increased retail revenues at the Travel   
Center.                                                                         

   PROMOTIONAL ALLOWANCES. Promotional allowances increased $0.4 million, or
28.6%, to $1.8 million for the fiscal year ended April 30, 2005 from $1.4       
million for the fiscal year ended April 30, 2004. The increase in gaming        
revenues and the opening of IMG Resort and Casino have resulted in an increase  
in promotional allowances.                                                      

     TOTAL OPERATING EXPENSES. Total operating expenses increased $43.1 million,
or 116.5%, to $80.1 million for the fiscal year ended April 30, 2005 from $37.0 
million for the fiscal year ended April 30, 2004. The increase was primarily due
to the reversal of previously recorded revenue sharing and State regulatory fees
as a result of the settlement of the Compact dispute offset by an increase in   
our gaming and pre-opening expenses and depreciation expense associated with the
opening of IMG Resort and Casino in March 2005.                                 

   GAMING. Gaming expenses increased $0.4 million, or 1.6%, to $25.8 million
for the fiscal year ended April 30, 2005 from $25.4 million for the fiscal year 
ended April 30, 2004. The increase was primarily due to the addition of team    
members at IMG Resort and Casino which opened in March 2005.                    

 FOOD AND BEVERAGE. Food and beverage expenses increased $0.7 million or
0.7%, to $7.3 million for the fiscal year ended April 30, 2005 from $6.6 million
for the fiscal year ended April 30, 2004, primarily due to the addition of food 
and beverage team members at IMG Resort and Casino which opened in March 2005.  

ROOMS. Costs and expenses associated with hotel rooms increased $0.6  
million, or 600.0%, to $0.7 for the fiscal year ended April 30, 2005 from $0.1  
million for the fiscal year ended April 30, 2004, due to the opening of IMG     
Resort and Casino in March 2005.                                                

     RECREATION AND OTHER. Recreation and other costs increased $4.7 million, or
43.9%, to $15.4 million for the fiscal year ended April 30, 2005 from $10.7     
million for the fiscal year ended April 30, 2004. The increase was primarily    
attributable to the increased cost of sales and related expenses for the        
convenience store, smoke shop, refueling center and laundry and shower          
facilities and additional expenses at Ski Apache to support the additional skier
visits during the year ended April 30, 2005.                                    

   GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$0.8 million, or 8.9%, to $9.8 million for the fiscal year ended April 30, 2005 
from $9.0 million for the fiscal year ended April 30, 2004. The increase was    
primarily due to an increase in expenses due to the addition of executive staff 
in response to the needs of our new resort complex and increased reporting      
requirements associated with the issuance of the Notes as well as an increase in
marketing, advertising and promotional activities.                              

  PENSION EXPENSES. Pension expenses allocated by the Tribe decreased $0.6
million, or 31.6%, to $1.3 million for the fiscal year ended April 30, 2005 from
$1.9 million for the fiscal year ended April 30, 2004. The decrease was         
primarily due to the decision by the Tribe to curtail the retirement plan on    
November 30, 2004, resulting in our ability to cease making contributions to the
retirement plan as of that date.                                                

 GAMING REGULATORY COMMISSION EXPENSES. Gaming and regulatory commission
expenses allocated by the Tribe increased $1.4 million, or 116.7%, to $2.6      
million for the fiscal year ended April 30, 2005 from $1.2 million for the      
fiscal year ended April 30, 2004. The increase was primarily due to an increase 
in expenses due to the addition of staff in response to the needs of IMG Resort 
and Casino.                                                                     

MEDICAL INSURANCE EXPENSES. Medical and health insurance expenses     
administered by the Tribe increased $0.5 million, or 55.6%, to $1.4 million for 
the fiscal year ended April 30, 2005 from $0.9 million for the fiscal year ended

18

10-K
20th Page of 71
TOC
1st
Previous
Next
Bottom
Just 20th

April 30, 2004. The increase was primarily due to an increase in expenses due to
the addition of staff in response to the needs of IMG Resort and Casino.        

TELECOMMUNICATIONS EXPENSES. Telecommunications expenses charge by the
Mescalero Apache Telecommunications decreased $0.1 million, or 33.3%, to $0.2   
million for the fiscal year ended April 30, 2005 from $0.3 million for the      
fiscal year ended April 30, 2004. The decrease was primarily due to use of      
advanced technology at IMG Resort and Casino.                                   

    PRE-OPENING COSTS AND EXPENSES. Pre-opening expenses were $8.3 million for
the fiscal year ended April 30, 2005 compared to $3.1 million for the fiscal    
year ended April 30, 2004, and consisted principally of personnel costs,        
training costs and payroll costs for retaining the former employees of the Inn. 
Pre-opening costs and expenses are expensed as incurred.                        

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased $2.4
million to $7.3 million for the fiscal year ended April 30, 2005 from $4.9      
million for the fiscal year ended April 30, 2004. The increase was primarily the
result of the opening of IMG Resort and Casino in March 2005.                   

  OPERATING INCOME. Operating income decreased $31.0 million, or 70.6%, to
$12.9 million for the fiscal year ended April 30, 2005 from $43.9 million for   
the fiscal year ended April 30, 2004. The decrease in operating income was      
primarily due to the reversal of previously recorded revenue sharing and State  
regulatory fees as a result of the settlement of the Compact dispute in the     
prior year and increase in pre-opening expenses and depreciation expenses       
associated with the opening of IMG Resort and Casino in March 2005.             

    OTHER INCOME (EXPENSES). Other income (expenses) increased $6.6 million to
$(10.8) million for the fiscal year ended April 30, 2005 from $(4.2) million for
the fiscal year ended April 30, 2004. The increase was primarily due to interest
expense, net of amounts capitalized, in an amount equal to $11.5 million during 
the period. Other income (expenses) is comprised of interest income and other   
income minus interest expense and other expense.                                

FISCAL YEAR ENDED APRIL 30, 2004 COMPARED TO FISCAL YEAR ENDED APRIL 30, 2003   

NET REVENUES. Net revenues increased $14.6 million, or 22.0%, to $80.9
million for the fiscal year ended April 30, 2004 from $66.3 million for the     
fiscal year ended April 30, 2003. The increase was due to an increase in gaming 
revenues offset by a decrease in room revenue and a decrease in food and        
beverage revenue due to the closure of the Inn in January 2003. Player reward   
redemptions are included in gross revenues but are deducted as a promotional    
allowance to arrive at net revenues.                                            

     GAMING. Gaming revenues increased $13.4 million, or 28.6%, to $60.3 million
for the fiscal year ended April 30, 2004 from $46.9 million at the fiscal year  
ended April 30, 2003. Slot revenues led the increase, growing to $52.7 million  
for the fiscal year ended April 30, 2004 from $41.2 million for the fiscal year 
ended April 30, 2003, an increase of $11.5 million, or 27.9%. Gross slot win per
unit was $134 for the fiscal year 2004 compared to $155 for the fiscal year     
2002; in this period the weighted average number of units increased by 552, or  
87.9%. Table games revenue increased $1.8 million, or 31.0%, to $7.6 million for
the fiscal year ended April 30, 2004 from $5.8 million for the fiscal year ended
April 30, 2003. The increase was the result of the increase in the table game   
drop of $11.7 million, or 40.9%, to $40.3 million for the fiscal year ended     
April 30, 2004 from $28.6 million for the fiscal year ended April 30, 2003,     
combined with a reduction in hold percentage to 18.7% for the fiscal year ended 
April 30, 2004 from 20.2% for the fiscal year ended April 30, 2003.             

 FOOD AND BEVERAGE. Food and beverage revenues increased $.7 million, or
14.3%, to $5.6 million for the fiscal year ended April 30, 2004 from $4.9       
million for the fiscal year ended April 30, 2003. While there was a loss of     
revenue due to the closing of the restaurants located at the Inn in January     
2003, this loss was offset by the opening of Smokey B's, our casual dining      
restaurant at the Travel Center in May 2003.                                    

   ROOMS. Room revenues decreased $3.4 million, or 100%, for the fiscal year
ended April 30, 2004 due to the closure of the Inn in January 2003.             

     RECREATION AND OTHER. Recreation and other revenues increased $4.5 million,
or 37.5%, to $16.5 million for the fiscal year ended April 30, 2004 from $12.0  
million for the fiscal year ended April 30, 2003. The increase was due          

19

10-K
21st Page of 71
TOC
1st
Previous
Next
Bottom
Just 21st

to the opening of our Travel Center in May 2003, which resulted in increased    
revenues from the convenience store, smoke shop, and gasoline and diesel sales  
located at the facility.                                                        

   PROMOTIONAL ALLOWANCES. Promotional allowances increased $0.5 million, or
55.6%, to $1.4 million for the fiscal year ended April 30, 2004 from $0.9       
million for the fiscal year ended April 30, 2003. The increase in gaming        
revenues and the opening of the Travel Center have resulted in an increase in   
promotional allowances.                                                         

     TOTAL OPERATING EXPENSES. Total operating expenses decreased $15.0 million,
or 28.8%, to $37.0 million for the fiscal year ended April 30, 2004 from $52.0  
million for the fiscal year ended April 30, 2003. The decrease was primarily due
to the reversal of previously recorded revenue sharing and State regulatory fees
as a result of the settlement of the Compact dispute offset by an increase in   
our gaming and pre-opening expenses associated with the opening of the Travel   
Center in May 2003.                                                             

    GAMING. Gaming expenses increased $5.9 million, or 30.3%, to $25.4 million
for the fiscal year ended April 30, 2004 from $19.5 million for the fiscal year 
ended April 30, 2003. The increase was primarily due to the addition of team    
members at the Travel Center which opened in May 2003.                          

 FOOD AND BEVERAGE. Food and beverage expenses increased $1.6 million or
32.0%, to $6.6 million for the fiscal year ended April 30, 2004 from $5.0       
million for the fiscal year ended April 30, 2003, primarily due to the addition 
of food and beverage team members at the Travel Center coupled with an increase 
in the cost of sales due to increased food covers.                              

ROOMS. Costs and expenses associated with hotel rooms decreased $1.5  
million, or 93.8%, to $0.1 for the fiscal year ended April 30, 2004 from $1.6   
million for the fiscal year ended April 30, 2003, primarily due to a            
reassignment of team members as a result of closure of the Inn in January 2003. 

     RECREATION AND OTHER. Recreation and other costs increased $4.9 million, or
84.5%, to $10.7 million for the fiscal year ended April 30, 2004 from $5.8      
million for the fiscal year ended April 30, 2003. The increase was primarily    
attributable to the addition of new team members at the Travel Center and       
increased cost of sales and related expenses for the convenience store, smoke   
shop, refueling center and laundry and shower facilities.                       

   GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$2.5 million, or 38.5%, to $9.0 million for the fiscal year ended April 30, 2004
from $6.5 million for the fiscal year ended April 30, 2003. The increase was    
primarily due to an increase in expenses due to the addition of executive staff 
in response to the needs of our new resort complex and increased reporting      
requirements associated with the issuance of the Notes as well as an increase in
marketing, advertising and promotional activities. This increase in expenses was
partially offset by a reduction in utilities and other expenses related to the  
closure of the Inn in January 2003.                                             

  PENSION EXPENSES. Pension expenses allocated by the Tribe increased $0.3
million, or 18.8%, to $1.9 million for the fiscal year ended April 30, 2004 from
$1.6 million for the fiscal year ended April 30, 2003. The increase was         
primarily due to an increase in expenses due to the addition of staff in        
response to the needs of the Travel Center.                                     

 GAMING REGULATORY COMMISSION EXPENSES. Gaming and regulatory commission
expenses allocated by the Tribe increased $0.4 million, or 50.0%, to $1.2       
million for the fiscal year ended April 30, 2004 from $0.8 million for the      
fiscal year ended April 30, 2003. The increase was primarily due to an increase 
in expenses due to the addition of staff in response to the needs of the Travel 
Center.                                                                         

MEDICAL INSURANCE EXPENSES. Medical and health insurance expenses     
administered by the Tribe increased $0.3 million, or 50.0%, to $0.9 million for 
the fiscal year ended April 30, 2004 from $0.6 million for the fiscal year ended
April 30, 2003. The increase was primarily due to an increase in expenses due to
the addition of staff in response to the needs of the Travel Center.            

TELECOMMUNICATIONS EXPENSES. Telecommunications expenses charge by the
Mescalero Apache Telecommunications increased $0.1 million, or 50.0%, to $0.3   
million for the fiscal year ended April 30, 2004 from $0.2 million for the      
fiscal year ended April 30, 2003. The increase was primarily due to an increase 
in expenses due to the opening of the Travel Center.                            

20

10-K
22nd Page of 71
TOC
1st
Previous
Next
Bottom
Just 22nd

    PRE-OPENING COSTS AND EXPENSES. Pre-opening expenses were $3.1 million for
the fiscal year ended April 30, 2004 compared to $1.4 million for the fiscal    
year ended April 30, 2003, and consisted principally of personnel costs,        
training costs and payroll costs for retaining the former employees of the Inn. 
Pre-opening costs and expenses are expensed as incurred.                        

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased $4.3
million to $4.9 million for the fiscal year ended April 30, 2004 from $9.2      
million for the fiscal year ended April 30, 2003. The decrease was primarily the
result of the demolition of the Inn in January 2003.                            

   OPERATING INCOME. Operating income increased $29.7 million, or 209.2%, to
$43.9 million for the fiscal year ended April 30, 2004 from $14.2 million for   
the fiscal year ended April 30, 2003. The increase in operating income was      
primarily due to the reversal of previously recorded revenue sharing and State  
regulatory fees as a result of the settlement of the Compact dispute offset by  
an increase in our gaming and pre-opening expenses associated with the opening  
of the Travel Center in May 2003.                                               

    OTHER INCOME (EXPENSES). Other income (expenses) increased $4.6 million to
$(4.2) million for the fiscal year ended April 30, 2004 from $0.4 million for   
the fiscal year ended April 30, 2003. The increase was primarily due to interest
expense, net of amounts capitalized, in an amount equal to $5.3 million during  
the period. Other income (expenses) is comprised of interest income and other   
income minus interest expense and other expense.                                

LIQUIDITY AND CAPITAL RESOURCES                                                 

 As of April 30, 2005 and 2004, we had cash and cash equivalents (net of
amounts in restricted accounts) of $13.7 million and $15.8 million,             
respectively. Our principal sources of liquidity for fiscal year 2005 consisted 
of net cash provided by financing activities of $95.2 million and for fiscal    
2004 consisted of net cash provided in operating activities of $38.1 million.   
Net cash used in operating activities for fiscal 2005 were primarily a payment  
of revenue sharing expenses of $23.0 million as a result of the compact         
settlement. Net cash provided by operating activities for fiscal 2004 increased 
$6.1 million over fiscal 2003. Cash flows from operating activities was $38.1   
million for the fiscal year ended April 30, 2004 compared to $32.0 million for  
the fiscal year ended April 30, 2003. The $6.1 million increase included net    
income of $39.7 million in net income with increases in interest payable of     
$12.0 million offset by a reduction of accrued revenue sharing and regulatory   
fees of $16.8 million and an increase in prepaid revenue sharing fees as a      
result of the Compact settlement.                                               

   Cash used in investing activities for fiscal year 2005 and 2004 was $94.1
million and $100.5 million, respectively, and primarily relates to construction 
costs for the Project. Cash used in investing activities for fiscal year 2003   
was $23.5 and primarily relates to construction costs for the Travel Center.    

Cash provided from financing activities for fiscal year 2005 was $95.2
million and primarily related to the use of restricted cash to pay construction 
payables of $96.9 million along with $10.0 million in contributions by the Tribe
offset by $13.0 million in Tribal distributions. Cash provided from financing   
activities was $68.9 million for the fiscal year ended April 30, 2004 compared  
to $20.9 million used by financing activities for the fiscal year ended April   
30, 2003. The $89.8 million increase in cash provided from financing activities 
is primarily due to the issuance of $200.0 million in senior notes offset by    
$10.9 million in deferred financing costs, $4.7 million in debt payments, and   
$151.6 million of cash held for use in paying construction expenditures for the 
construction of the Project. Cash used from financing activities for fiscal year
2003 was $21.0 million and primarily related to distributions and payments to   
the Tribe offset by equity contributions to fund the Travel Center and other    
costs related to the Project.                                                   

21

10-K
23rd Page of 71
TOC
1st
Previous
Next
Bottom
Just 23rd

We believe that existing cash balances and operating cash flows will  
provide adequate funds for our working capital needs, planned capital           
expenditures, including equipment and furnishings for the Resort and debt       
service requirements for the foreseeable future. However, our ability to fund   
our operations, make planned capital expenditures, make scheduled payments and  
refinance our indebtedness depends on our future operating performance and cash 
flow, which, in turn, are subject to prevailing economic conditions and to      
financial, business and other factors, some of which are beyond our control.    
Additionally, as a result of the offering, our ability to incur additional      
indebtedness is limited under the terms of the indenture governing the 12%      
Senior Notes due 2010, or the Notes.                                            

DESCRIPTION OF INDEBTEDNESS                                                     

THE 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 Notes is payable   
semi-annually on May 15 and November 15. The Notes mature on November 15, 2010. 
At April 30, 2005 accrued interest payable on the Notes was $11.2 million. The  
Notes are secured until completion of the Resort, by first priority security    
interests in the following accounts:                                            

  o    an interest reserve account, which was funded at the time the notes
    were sold with approximately $36.4 million, which, together with
     interest earned thereon, will be used to make the first three (3)
        interest payments on the Notes. As of April 30, 2005, the balance in
the interest reserve account was $11.9 million;             

    o    a construction disbursement account, which was funded at the time the
         Notes were sold with approximately $94.3 million and was used to fund
      completion of the Resort. As of April 30, 2005, the balance in the
construction disbursement account was $1,180;               

     o    a construction reserve account, which was funded at the time the Notes
     were sold approximately $53.6 million and was be used to (i) fund
         contingencies related to the construction of the Resort and (ii) fund
          a resolution of the Tribe's disagreement relating to the 1997 Compact.
         As of April 30, 2005, the balance in the construction reserve account
was $15.6 million; and                                      

     o    a construction retainage account. As of April 30, 2005, the balance in
the construction retainage account was $8.2 million.        

     The Notes rank senior in right of payment to all of our future indebtedness
or other obligations that are, by their terms, expressly subordinated in right  
of payment to the notes. In addition, the notes rank equal in right of payment  
to all of our existing and future senior unsecured indebtedness and other       
obligations that are not, by their terms, expressly subordinated in right of    
payment to the notes. Casino Apache, Inn of the Mountain Gods, Casino Apache    
Travel Center and Ski Apache are guarantors of the notes.                       

GENERAL INDEBTEDNESS                                                            

 The Tribe, for the benefit of the Inn, executed a promissory note dated
September 1, 1982, which we refer to as 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. 
The Inn has been making payments of approximately $27,000 on the BIA Note each  
month. As of April 30, 2005, there was approximately $1.5 million outstanding on
the BIA Note.                                                                   

CREDIT FACILITY                                                                 

    On June 15, 2004, we entered into a $15.0 million credit facility with Key
Equipment Finance, a Division of Key Corporate Capital Inc., one of the nation's
largest financial services firms. The fixed rate loan is fully                  

22

10-K
24th Page of 71
TOC
1st
Previous
Next
Bottom
Just 24th

amortizable over five years and bears an interest rate indexed off the 3-year   
Treasury Interest Rate Swaps. Proceeds from the loan will be used to fund       
furniture, fixtures and equipment for the Project. At April 30, 2005 no funds   
had been drawn against this facility. During May and June 2005, we drew $14.9   
million against this facility to finance purchases of furniture, fixtures and   
equipment for the Project.                                                      

OFF-BALANCE SHEET ARRANGEMENTS                                                  

     As of April 30, 2005, we have no off-balance sheet arrangements that affect
our financial condition, liquidity and results of operation. We have certain    
contractual obligations including long-term debt, operating leases and          
employment contracts.                                                           

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS                                   

The following table sets forth, as of April 30, 2005, our scheduled   
principal, interest and other contractual annual cash obligations due by us for 
each of the periods indicated below (Dollars in thousands):                     

                                                        · Enlarge/Download Table

                                                    PAYMENTS DUE BY PERIOD             
                                         ----------------------------------------------
                                         LESS THAN        1-3        3-5      MORE THAN
   CONTRACTUAL OBLIGATIONS       TOTAL     1 YEAR        YEARS      YEARS      5 YEARS 
   -----------------------     --------  ---------      -------    ------     ---------
                                                                                       
Long-Term Debt Obligations..   $201,660       $278        $592       $646      $200,144
Other Contractual Obligations     1,328        428         200        200           500
Total.......................   $202,988       $706        $792       $846      $200,644


Under the 2001 state compact, the Resort is obligated to pay revenue  
sharing expenses based on 8% of slot revenue and also a state regulatory fee of 
$100,000 per year.                                                              

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 a quarterly occupancy fee based on revenue and gross fixed assets.         
Occupancy fee for the years ended April 30, 2003, 2004 and 2005 totaled         
approximately $121,000, $130,000 and 137,200 respectively.                      

IMPACT OF INFLATION                                                             

     Absent changes in competitive and economic conditions or in specific prices
affecting the industry, we do not expect that inflation will have a significant 
impact on our operations. Changes in specific prices, 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.            

REGULATION AND TAXES                                                            

We are subject to extensive regulation by the Mescalero Apache Tribal 
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 unincorporated Tribal enterprises, 
directly or indirectly 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
fiscal years ended April 30, 2003, 2004 or 2005 , nor is it anticipated 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 affect on our cash flows from operations.                      

23

10-K
25th Page of 71
TOC
1st
Previous
Next
Bottom
Just 25th

NEW ACCOUNTING PRONOUNCEMENTS                                                   

     In November 2004, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards, or SFAS, No. 151, "Inventory Costs," ("SFAS  
151"), an amendment of Accounting Research Bulletin No. 43, Chapter 4. SFAS No. 
151 is the result of a broader effort by the FASB working with the International
Accounting Standards Board to reduce differences between United States and      
international accounting standards. SFAS No. 151 eliminates the "so abnormal"   
criterion in ARB 43 and companies will no longer be permitted to capitalize     
inventory costs on their balance sheets when the production defect rate varies  
significantly from the expected rate. It also makes clear that fixed overhead   
should be allocated based on "normal capacity." SFAS 151 is effective for       
inventory costs incurred during fiscal periods beginning after June 15, 2005.   
The Company does not believe that the adoption of SFAS 151 will have a material 
effect on our results of operations or consolidated financial position.         

   In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets - An Amendment of APB Opinion No. 29, Accounting for Nonmonetary         
Transactions" ("SFAS 153"). SFAS 153 eliminates the exception from fair value   
measurement for nonmonetary exchanges of similar productive assets in paragraph 
21(b) of APB Opinion No. 29, "Accounting for Nonmonetary Transactions," and     
replaces it with an exception for exchanges that do not have commercial         
substance. SFAS 153 specifies that a nonmonetary exchange have commercial       
substance if the future cash flows of the entity are expected to change         
significantly as a result of the exchange. SFAS 153 is effective for fiscal     
periods beginning after June 15, 2005. The Company does not believe that the    
adoption of SFAS 153 will have a material effect on our results of operations or
consolidated financial position.                                                

    In May 2005, the Financial Accounting Standards Board, issued Statement of
Financial Accounting Standards SFAS No. 154, "Accounting Changes and Error      
Corrections"("SFAS 154"). SFAS 154 replaces APB No. 20, "Accounting Changes" and
SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements" and  
establishes retrospective application as the required method for reporting a    
change in accounting principle. SFAS 154 provides guidance for determining      
whether retrospective application of a change in accounting principle is        
impracticable and for reporting a change when retrospective application is      
impracticable. The reporting of a correction of an error by restating previously
issued financial statements is also addressed. SFAS 154 is effective for        
accounting changes and corrections of errors made in fiscal years beginning     
after December 15, 2005. The Company does not believe that the adoption of SFAS 
154 will have a material effect on our results of operations or consolidated    
financial position                                                              

RISK FACTORS

 SEVERAL OF THE MATTERS DISCUSSED IN THIS REPORT CONTAIN FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. FACTORS ASSOCIATED WITH THE    
FORWARD-LOOKING STATEMENTS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THOSE 
PROJECTED OR FORECASTED IN THIS REPORT ARE INCLUDED IN THE STATEMENTS BELOW. 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                             

RISKS RELATING TO OUR BUSINESS

WE HAVE A SUBSTANTIAL AMOUNT OF INDEBTEDNESS, WHICH COULD ADVERSELY AFFECT OUR  
FINANCIAL CONDITION.                                                            

   As of April 30, 2005, we had an aggregate of approximately $201.5 million
of indebtedness outstanding, which includes $200.0 million of debt on the notes 
issued on November 3, 2003. This substantial indebtedness could have important  
consequences to you and significant effects on our business and future          
operations. For example, it could:                                              

     o    make it more difficult for us to satisfy our debt service obligations;

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

24

10-K
26th Page of 71
TOC
1st
Previous
Next
Bottom
Just 26th

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

 o    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, the Project and other general operating requirements;

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

o    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 business   
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:                                                   

o    unlike non-governmental businesses, we are prohibited by law from
generating cash through an offering of equity securities;   

  o    our ability to incur additional debt is limited by the covenants of
the indenture governing the notes; and                      

   o    the indenture governing the notes includes 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.                  

RESTRICTIVE COVENANTS IN THE INDENTURE GOVERNING THE NOTES MAY LIMIT OUR ABILITY
TO EXPAND OUR OPERATIONS AND CAPITALIZE ON OUR BUSINESS OPPORTUNITIES.          

The indenture governing the notes includes 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. 

WE MAY NOT BE ABLE TO REALIZE THE BENEFITS OF OUR BUSINESS STRATEGY.            

The Project is part of our business strategy to develop an integrated 
resort, increase our market reach and realize operating benefits from business  
synergies. We may not be able to fully implement this strategy or may not fully 
realize these anticipated benefits. 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 as anticipated or 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                                                       

25

10-K
27th Page of 71
TOC
1st
Previous
Next
Bottom
Just 27th

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, Congress has regulatory 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. For example, over the past    
several years, legislation has been introduced in Congress designed to address a
myriad of perceived problems with IGRA, including proposed legislation repealing
many of the provisions of IGRA and prohibiting the operation of gaming on Indian
reservations in states where gaming is not otherwise allowed on a commercial    
basis. While none of the substantive proposed amendments to IGRA have proceeded 
out of committee hearings to a vote by either house of the U.S. Congress, 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..                     

    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 which are outside of our   
primary market area. 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. The Project will 
allow us to compete more directly for regional overnight and national customers 
with casinos and resorts located in other parts of the country. 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                                

26

10-K
28th Page of 71
TOC
1st
Previous
Next
Bottom
Just 28th

operations. Among others, the following conditions could have a material adverse
effect on our results of operations:                                            

    o    a decline in the economies of our primary market area or a decline in
   the number of gaming customers from these areas for any reason;

o    an increase in competition in our primary market area or the     
surrounding area;                                           

     o    inaccessibility due to road construction or closures of primary access
routes; and                                                 

   o    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.                

OUR BUSINESS IS SUBJECT TO CONTINGENCIES BEYOND OUR CONTROL, INCLUDING THE      
AFTERMATH OF TERRORIST ACTS AND WARS, WHICH MAY SIGNIFICANTLY AND ADVERSELY     
AFFECT OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND ABILITY TO  
MEET OUR DEBT SERVICE OBLIGATIONS.                                              

   We hope to attract customers from beyond our primary market who will have
to travel by air to our property. The recent war with Iraq, the terrorist       
attacks of September 11, 2001, the United States' ongoing military campaign     
against terrorism, and continued violence, conflicts and instability in other   
areas of the world have created many economic and political uncertainties, some 
of which may affect our ability to attract customers outside our current primary
market as well as our operations and profitability. The potential short-term and
long-term effects that these and similar other situations and events may have   
for our customers, our primary and secondary markets and the U.S. economy in    
general are uncertain. These and similar other future events could have a       
significant impact on the number of customers visiting the Travel Center and the
Resort and, as a result, may have a material adverse effect on our business,    
financial condition, results of operations and ability to meet our debt service 
obligations.                                                                    

WE MAY FACE DIFFICULTIES IN RECRUITING, TRAINING AND RETAINING QUALIFIED        
EMPLOYEES.                                                                      

    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.                                                                    

WE DO NOT HAVE A HISTORY OF OPERATING ON AS LARGE OF A SCALE AS CONTEMPLATED BY 
THE PROJECT.                                                                    

As a result of the Project, our business operations is significantly  
expanded in size and diversity. Our gaming space grew by more than 32,000 square
feet (including the addition of a second casino location) and our gaming        
positions by approximately 700 slot machines and 22 table games. In addition, we
have significantly expanded restaurant, lounge and bar operations, a fuel       
station and a number of additional retail facilities. The expansion of our      
resort operations places a significant demand on our management resources which 
may affect our ability to effectively manage our growth. These increased demands
on our management could distract them from the operation of our business, which 
could have a material adverse effect on our business, financial condition,      
results of operations and ability to meet our debt service obligations.         

A CHANGE IN OUR CURRENT NON-TAXABLE STATUS COULD HAVE A MATERIAL ADVERSE EFFECT 
ON OUR CASH FLOW AND OUR ABILITY TO FULFILL OUR DEBT SERVICE OBLIGATIONS.       

    Based on current interpretations of federal and state tax laws, we are not
a taxable entity for federal and state income tax purposes. If these            
interpretations are reversed or modified, or if the applicable tax law changes  
in this regard, our cash flow and ability fulfill our debt service obligations  
may be adversely affected.                                                      

27

10-K
29th Page of 71
TOC
1st
Previous
Next
Bottom
Just 29th

   Efforts have been made in Congress over the past several years to tax the
income of tribal business enterprises. These have included a House of           
Representatives bill that would have taxed gaming income earned by Indian tribes
as business income subject to corporate tax rates. Although that legislation has
not been enacted, similar legislation could be enacted in the future. Any future
legislation permitting the taxation of the Tribe or our businesses could have a 
material adverse effect on our business, financial condition, results of        
operations or ability to meet our debt service obligations.                     

THE TERMS OF FOUR OF THE EIGHT VOTING MEMBERS OF THE TRIBAL COUNCIL EXPIRE EACH 
YEAR AND THE TERMS OF THE TRIBE'S PRESIDENT AND VICE PRESIDENT EXPIRE EVERY TWO 
YEARS; CHANGES IN THE TRIBAL COUNCIL OR ITS POLICIES COULD AFFECT THE PROJECT OR
OTHER ASPECTS OF OUR BUSINESS.                                                  

 The Tribe is governed by a ten member Tribal Council, consisting of the
President and Vice President of the Tribe and eight voting Tribal Council       
members. The President is a non-voting member of the Tribal Council and the     
Tribe's Vice President only votes in the event of a tie in the voting of the    
eight voting members of the Tribal Council. 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. The terms of four of the voting members of the Tribal Council
expire in January 2006. 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 the Project. In        
addition, the Tribal Council acts by majority vote and with respect to any issue
or policy, a change in views by one or more members could result in a change in 
the policy adopted by the Tribal Council. Changes in the Tribal Council or its  
policies could result in significant changes in our structure or operations or  
in the Project, 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.          

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. The Resort's primary exposure to market risk is interest rate 
risk associated with our short term debt. As of April 30, 2005, we had no       
variable rate debt outstanding.                                                 

 Management has and will continue to limit our exposure to interest rate
risk by maintaining a conservative ratio of fixed rate, long-term debt to total 
debt such that variable rate exposure is kept at an acceptable level and fixing 
certain long-term variable rate debt through the use of interest rate swaps or  
interest rate caps with appropriately matching maturities.                      

As of April 30, 2005, the Resort held no derivative instruments.      

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.                            

28

10-K
30th Page of 71
TOC
1st
Previous
Next
Bottom
Just 30th

Our Consolidated Financial Statements and notes thereto appear on pages F-3     
through F-30.                                                                   

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE                                            

None.                                                                           

ITEM 9A. CONTROLS AND PROCEDURES.                                               

    As of the end of the period covered by this annual report, we conducted an
evaluation, under the supervision and with the participation of IMG Resort and  
Casino's management, including our Chief Executive Officer and Chief Financial  
Officer, of the effectiveness of the design and operation of our disclosure     
controls and procedures pursuant to Rule 13a-15 and 15d-15 of the Securities    
Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation,
our Chief Executive Officer and Chief Financial Officer concluded that our      
disclosure controls and procedures are effective at the reasonable assurance    
level and designed to ensure that information required to be disclosed by us in 
the reports that we file or submit under the Exchange Act is recorded,          
processed, summarized and reported within the time periods specified in the     
Commission's rules and forms. There were no significant changes in our internal 
controls or in other factors that could significantly affect these controls     
subsequent to the date of their evaluation.                                     

Our management, including our Chief Executive Officer and our Chief   
Financial Officer, does not expect that our disclosure controls or our internal 
controls will prevent all error and all fraud. A control system, no matter how  
well designed and operated, can provide only reasonable, not absolute, assurance
that the control system's objectives will be met. Further, the design of a      
control system must reflect the fact that there are resource constraints, and   
the benefits of controls must be considered relative to their costs. Because of 
the inherent limitations in all control systems, no evaluation of controls can  
provide absolute assurance that all control issues and instances of fraud, if   
any, within IMG Resort and Casino have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that 
breakdowns can occur because of simple error or mistake. Controls can also be   
circumvented by the individual acts of some persons, by collusion of two or more
people or by management override of the controls. Because of the inherent       
limitations in a cost-effective control system, misstatements due to error or   
fraud may occur and not be detected.                                            

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES                                

 Our Chief Executive Officer and Chief Financial Officer, along with the
other members of management, evaluate our disclosure controls and procedures as 
of the end of the period covered by our reports filed pursuant to the Exchange  
Act. Our Chief Executive Officer and Chief Financial Officer have concluded that
the disclosure controls and procedures are effective in alerting the Chief      
Executive Officer and Chief Financial Officer on a timely basis to material     
information relating to IMG Resort and Casino and its consolidated subsidiaries 
required to be included in our periodic and other filings with the Commission.  

ITEM 9B. OTHER INFORMATION.                                                     

None.                                                                           

29

10-K
31st Page of 71
TOC
1st
Previous
Next
Bottom
Just 31st

PART III.                                                                       

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.                    

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, 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. 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:                                                       

                                                        · Enlarge/Download Table

                                                                                                   
         NAME               AGE                    POSITION                                        
--------------------------------------------------------------------------------------             
Mark Chino...........       51      Management Board  Member (Chairperson),                        
                                    President of the Tribe                                         
Frederick Chino, Sr.        60      Management Board Member,                                       
                                    Vice President of the Tribe                                    
Alfred LaPaz                57      Management Board Member,                                       
                                    Treasurer of the Tribe                                         
Naomi Sainz                 49      Management Board Member,                                       
                                    Secretary of the Tribe                                         
Manuel Lujan, Jr. ...       77      Management Board Member                                        
R. Miles Ledgerwood         50      Management Board Member                                        
Brian Parrish........       43      Management Board Member,                                       
                                    Chief Operating Officer of IMG Resort and Casino               
Richard Williams.....       60      Chief Financial Officer of IMG Resort and Casino               
Wayne Marks..........       59      Director of Finance of IMG Resort and Casino                   

There are no family relationships between any Management Board Member and/or any executive officer.


    MARK CHINO has served as Chairperson of the Management Board of IMG Resort
and Casino and President of the Tribe since January 2004. Mr. Chino's term on   
the Tribal Council and Executive Committee expires in January 2006. Prior to his
election as President of the Tribe, Mr. Chino was employed by the Bureau of     
Indian Affairs for nearly 30 years, serving as a Police Officer, Lead Police    
Officer (Sergeant) and Supervisory Police Officer (Lieutenant) from 1975 to     
1988, and then as a Criminal Investigator from 1988 to 2004. Mr. Chino received 
a Bachelor of Police Science degree from New Mexico State University in 1977.   

    FREDERICK CHINO, SR. has served as a member of the Management Board of IMG
Resort and Casino since January 2005 and Vice President of the Tribe since      
January 2005. Mr. Chino retired from the Public Health Service in 1993 following
23 years of service and has been active in Tribal activities.                   

   ALFRED LAPAZ has served as a member of the Management Board of IMG Resort
and Casino since June 2004. Mr. LaPaz also serves as Treasurer of the Tribal    
Council and as Chairperson of the Programs Committee. Mr. LaPaz's term on the   
Tribal Council and Executive Committee expires in January 2005. Since 2000, Mr. 
LaPaz has been employed by IMG Resort and Casino as Director of Security. Prior 
to his experience at IMG Resort and Casino, Mr. LaPaz was employed with the     
Federal Law Enforcement and retired as Captain after 30 years service.          

    NAOMI SAINZ was appointed to the Mescalero Apache Tribal Council in August
of 2004. She serves as Secretary to the Tribal Council and as Chairperson of the
Audit Committee of the Management Board. Ms. Sainz has also worked with the     
Mescalero Fire Department since 2003. Prior to working with the Fire Department,
Ms. Sainz worked as a grant writer for the Tribe from 2001-2003.                

MANUEL LUJAN JR. has served as an independent member of the Management
Board of IMG Resort and Casino since January 2004. Mr. Lujan also currently     
serves as the Chairman of the board of directors of Laguna Construction Company,
which is owned by the Pueblo of Laguna in New Mexico. Mr. Lujan served as U.S.  

30

10-K
32nd Page of 71
TOC
1st
Previous
Next
Bottom
Just 32nd

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, Mr. Lujan has served as a lobbyist in Washington, D.C. through
his company Manuel Lujan Associates, a consulting firm dealing with matters     
involving federal agencies.                                                     

   R. MILES LEDGERWOOD has served as a member of the Management Board of IMG
Resort and Casino since March 2004. Mr. Ledgerwood has also served as President 
and CEO of Alamogordo Federal Savings and Loan Association since 1983. Mr.      
Ledgerwood also currently serves as a member of the Board of Directors of       
Alamogordo Financial Corporation, Alamogordo Federal Savings and Loan           
Association and Space Age City Service Corporation.                             

    BRIAN PARRISH has served as a member of the Management Board of IMG Resort
and Casino and as acting Chief Operating Officer since July 2005. Prior to      
serving as acting Chief Operating Officer, Mr. Parrish served as the Director of
Marketing of IMG Resort and Casino since January 2003. Mr. Parrish has over 15  
years of marketing experience, recently at the Venetian Resort Hotel Casino in  
Las Vegas, Nevada, where he was Vice President of Marketing from 2000 to 2002.  
Prior to his experience at the Venetian, Mr. Parrish served as Vice President of
Hotel Operations and Regional Marketing of the Boyd Gaming Corporation from 1999
to 2000 and as Regional Vice President of Marketing from 1997 to 1999. Mr.      
Parrish also served as Director of Casino Marketing for the Flamingo Hilton in  
Las Vegas, Nevada from 1993 to 1995. Mr. Parrish also worked in the U.S. Defense
Intelligence Industry from 1983 to 1988.                                        

  RICHARD WILLIAMS has served as Chief Financial Officer of IMG Resort and
Casino since September 2003. Mr. Williams has over 30 years of financial        
management experience in public and private companies, and has significant      
experience in the casino and development industries, most recently as Chief     
Financial Officer at the East Valley Tourist Development Authority, an          
instrumentality of the Cabazon Band of Mission Indians near Palm Springs,       
California, from July 2002 to September 2003. Mr. Williams also served as Chief 
Financial Officer of the Cabazon Tribe from September 2001 to June 2002. Prior  
to his experiences at the Cabazon Tribe and the Authority, from 1996 to 2001,   
Mr. Williams was Senior Vice President of Finance for Herbalife International,  
Inc. and The Irvine Company from 1985 to 1995. Mr. Williams also served as Vice 
President and Controller at Caesars World, Inc., Wickes Companies, Inc. and     
Trusthouse Forte, Inc., and as an Adjunct Professor of Finance for the Executive
M.B.A. Program of the University of Southern California, or USC, Chairman of the
Board of Advisors for USC's School of Accounting and member of the Real Estate  
Committee of the AICPA. Mr. Williams is a certified public accountant.          

WAYNE MARKS has served as Director of Finance of IMG Resort and Casino
since March 2004. Previously, Mr. Marks served as a Financial Consultant of IMG 
Resort and Casino from December 2003 to March 2004. Mr. Marks has over 35 years 
of financial management and consulting experience in public and private         
companies, and has significant experience in the casino and financial services  
industries, most recently as Director of Finance at the East Valley Tourist     
Development Authority (Fantasy Springs Resort and Casino), an instrumentality of
the Cabazon Band of Mission Indians near Palm Springs, California, from January 
2000 to December 2003. Prior to his experiences at the Authority, Mr. Marks was 
General Manager of Fiesta Slots and Bingo in Lima, Peru from July 1997 to       
December 1999 and served as Chief Financial Officer of sureBET Casino, Inc. the 
parent company of Fiesta Slots and Bingo. Mr. Marks also worked and held senior 
financial positions in the Federal Farm Credit System for 18 years.             

AUDIT COMMITTEE FINANCIAL EXPERT                                                

     On behalf of the 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, R. Miles Ledgerwood serves  
as the audit committee financial expert.                                        

CODE OF ETHICS                                                                  

    We have adopted a Code of Business Conduct and Ethics applicable to all of
our employees, including our Chief Executive Officer, Chief Financial Officer,  
Principal Accounting 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                                                              

31

10-K
33rd Page of 71
TOC
1st
Previous
Next
Bottom
Just 33rd

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 (505) 464-7004.                                                         

  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    
Executive Officer, Chief Financial Officer, Principal Accounting 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.                              

ITEM 11. EXECUTIVE COMPENSATION.                                                

EXECUTIVE COMPENSATION                                                          

SUMMARY COMPENSATION TABLE                                                      

     The following table sets forth, as to the Chief Operating Officer and as to
each of the other four most highly compensated executive officers whose         
compensation exceeded $100,000 during fiscal 2005 (referred to as the named     
executive officers), information concerning all compensation paid for services  
to us in all capacities for each of the three years ended April 30 indicated    
below.                                                                          

                                                        · Enlarge/Download Table


                                   ANNUAL COMPENSATION                              LONG-TERM COMPENSATION                   
                                   -------------------                              ----------------------                   
NAME AND PRINCIPAL                                                               AWARDS                   PAYOUTS            
POSITION(1)                                                                      ------                   -------            
-----------                                                                                                                  
                            YEAR   SALARY       BONUS    OTHER          RESTRICTED      SECURITIES    LTIP       ALL         
                            ----   ------       -----    ----------     ----------      ----------    ----       ---         
                                                         ANNUAL           STOCK         UNDERLYING   PAYOUTS     OTHER       
                                                         ----------     ----------      ----------   -------     -----       
                                                         COMPENSATION   AWARD(S)        OPTIONS/SARS             COMPENSATION
                                                         -------------  ----------      ------------             ------------
                                                                                                                             

Brian Parrish,                                                                                                               
  Chief Operating                                                                                                            
Officer(2)...............  2005    $181,105   $76,524(3) $ 24,000(4)    $    --        $     --       $     --    $     --   
                           2004    $175,072   $    --    $ 24,000(4)    $    --        $     --       $     --    $     --   
                           2003    $ 72,947   $19,500    $ 10,000(4)    $    --        $     --       $     --    $     --   
Michael French,                                                                                                              
  Former Chief Operating                                                                                                     
Officer(5)...............  2005    $267,634   $76,524(3) $ 36,000(6)    $    --        $     --       $     --    $     --   
                           2004    $250,000   $23,238    $ 36,000(6)    $    --        $     --       $     --    $     --   
                           2003    $107,958   $    --    $ 15,000(6)    $    --        $     --       $     --    $     --   
Richard Williams,                                                                                                            
  Chief Financial                                                                                                            
Officer(7)...............  2005    $207,000   $76,524(3) $ 24,000(9)    $    --        $     --       $     --    $     --   
                           2004    $121,667   $50,000(8) $ 16,000(9)    $    --        $     --       $     --    $     --   
                           2003    $     --   $    --    $      --      $    --        $     --       $     --    $     --   
Wayne Marks(10)                                                                                                              
  Director of Finance....  2005    $125,000   $    --    $      --      $    --        $     --       $     --    $     --   
                           2004    $ 10,417   $    --    $      --      $    --        $     --       $     --    $     --   
                           2003    $     --   $    --    $      --      $    --        $     --       $     --    $     --   

<FN>                                                                                                                         
------------------                                                                                                           

(1)  Other than as set forth below, none of our other officers received                                                      
     compensation in excess of $100,000 during the last fiscal year.                                                         

(2)  Effective July 22, 2005, Brian Parrish was appointed Chief Operating                                                    
     Officer and member of the Management Board of IMG Resort and Casino. Mr.                                                
     Parrish was initially hired on December 12, 2002 to serve as Director of                                                
     Marketing of IMG Resort and Casino and receives an annual salary of                                                     
     $175,072 and certain other compensation. IMG Resort and Casino has not                                                  
     entered into a new employment agreement with Mr. Parrish.                                                               

(3)  Consists of a bonus as per employment contract.                                                                         

(4)  Consists of a housing allowance of $2,000 per month, calculated from                                                    
     December 2003 to April 2005.                                                                                            

(5)  Michael French was hired on December 5, 2002 and received an annual salary                                              
     of $267,634 and certain other compensation. Effective July 22, 2005, Mr.                                                
     French resigned as Chief Operating Officer and member of the Management                                                 
     Board of IMG Resort and Casino and terminated his employment agreement with                                             
     IMG Resort and Casino. In connection with his resignation, IMG Resort and                                               
     Casino entered into a resignation agreement with Mr. French, which provides                                             
     for Mr. French to receive a lump sum payment equal to Mr. French's current                                              
     annual salary, housing allowance and automobile allowance for a period of                                               
     twelve months.                                                                                                          

(6)  Consists of a housing allowance of $3,000 per month, calculated from                                                    
     December 2002 to April 2005.                                                                                            

                                       32                                                                                    

10-K
34th Page of 71
TOC
1st
Previous
Next
Bottom
Just 34th

(7)  Richard Williams, our Chief Financial Officer, was hired in September 2003                                              
     and receives an annual salary of $207,000 and certain other compensation.                                               

(8)  Consists of a signing bonus.                                                                                            

(9)  Consists of a housing allowance of $2,000 per month, calculated from                                                    
     September 2003 to April 2005.                                                                                           

(10) Wayne Marks, our Director of Finance, was hired in March 2004 and receives                                              
     an annual salary of $130,000.                                                                                           

</FN>                                                                                                                        


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                                                           

  BRIAN PARRISH. Effective July 22, 2005, Mr. Parrish was appointed acting
Chief Operating Officer of IMG Resort and Casino. Pursuant to an employment     
agreement dated December 2002, Mr. Parrish provides services to the IMG Resort  
and Casino as its Director of Marketing until April 30, 2008. The agreement     
provides that either Mr. Parrish or IMG Resort and Casino may terminate the     
agreement for any reason whatsoever. If either Mr. Parrish or IMG Resort and    
Casino terminates the agreement involuntarily, IMG Resort and Casino is         
obligated to pay Mr. Parrish the then current monthly base salary, benefits and 
allowance continuation for a period of six months or until Mr. Parrish has      
secured employment with another employer. IMG Resort and Casino is not required 
to pay any compensation if Mr. Parrish terminates the agreement voluntarily. Mr.
Parrish receives an annual salary of $181,105, as well as a bonus based on      
one-quarter of one percent (.25%) of the adjusted net profits of IMG Resort and 
Casino's resort operations.                                                     

   RICHARD WILLIAMS. Pursuant to an employment agreement dated September 22,
2003, Mr. Williams provides services to the IMG Resort and Casino as its Chief  
Financial Officer until April 30, 2006. The agreement provides that either Mr.  
Williams or IMG Resort and Casino may terminate the agreement for any reason    
whatsoever. If either Mr. Williams or IMG Resort and Casino terminates the      
agreement involuntarily, IMG Resort and Casino is obligated to pay Mr. Williams 
the then current monthly base salary, benefits and allowance continuation for a 
period of six months or until Mr. Williams has secured employment with another  
employer. IMG Resort and Casino is not                                          

33

10-K
35th Page of 71
TOC
1st
Previous
Next
Bottom
Just 35th

required to pay any compensation if Mr. Williams terminates the agreement       
voluntarily. Mr. Williams receives an annual salary of $207,000, as well as a   
signing bonus, housing allowance and a bonus equal to the greater of $25,000 per
year or one-quarter of one percent (.25%) of the adjusted net profits of IMG    
Resort and Casino's resort operations.                                          

   WAYNE E. MARKS. Pursuant to an employment agreement dated March 2004, Mr.
Marks provides services to the IMG Resort and Casino as its Director of Finance 
and Chief Accounting Officer until March 2007. The agreement provides that      
either Mr. Marks or IMG Resort and Casino may terminate the agreement for any   
reason whatsoever. If either Mr. Marks or the IMG Resort and Casino terminates  
the agreement involuntarily, IMG Resort and Casino is obligated to pay Mr. Marks
the then current monthly base salary, benefits and allowance continuation for a 
period of six months. IMG Resort and Casino is not required to pay any          
compensation if Mr. Marks terminates the agreement voluntarily. Mr. Marks       
receives an annual salary of $130,000.                                          

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.        

None.                                                                           

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.                       

DISTRIBUTIONS TO THE TRIBE WITH OTHER PAYMENTS                                  

    Distributions to the Tribe were $45.7 million, $13.2 and $13.0 million for
the fiscal years ended April 30, 2003, 2004 and 2005, respectively. 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, which generally provide we can make no distributions unless we meet  
certain debt leverage tests, other than the following: (a) $5.0 million in      
aggregate at any one time, (b) $8.0 million a year for government services and  
(c) amounts to fund a resolution of the Tribe's dispute with the State of New   
Mexico regarding the 1997 Compact.                                              

The Tribe provides health insurance to 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 $0.6 million, $0.9 million   
and $1.4 million for the fiscal years ended April 30, 2003, 2004 and 2005,      
respectively.                                                                   

The Tribe provides pension benefits to IMG Resort and Casino. No      
contributions have been made to the Tribe for any period through October 2003.  
Beginning in November 2003, IMG Resort and Casino began making payments equal to
our pro-rata share of the Tribe's periodic pension cost. The pro-rata periodic  
pension cost related to IMG Resort and Casino has been $1.6 million, $1.9       
million and $1.3 million for the fiscal years ended April 30, 2003, 2004 and    
2005, respectively. On November 30, 2004, the Tribe elected to curtail the      
retirement plan, resulting in IMG Resort and Casino's ability to cease making   
contributions to the retirement plan as of that date.                           

TRIBAL TAXES                                                                    

    The Tribal Code provides for the imposition of a gross receipts tax on the
sale of food, beverages, retail sales and services and the rental of rooms on   
the Mescalero Reservation. The rate of the tax is comparable to the cumulative  
state and local sales or use tax imposed on identical transactions taking place 
outside the reservation and within the State of New Mexico. This tax applies to 
sales at our current operations and will apply to sales on future operations.   
IMG Resort and Casino collects and remits the gross receipts tax to the Tribe on
a monthly basis.                                                                

The Tribal Code also provides for the collection of an excise tax on  
gasoline sold at retail on the Mescalero Reservation. The rate of the tax is    
equivalent to the same tax imposed by the State of New Mexico on identical      
transactions taking place outside the reservation and within the State of New   
Mexico. IMG Resort and Casino collects and remits the excise tax to the Tribe on
a monthly basis.                                                                

  The Tribal Code also provides for the imposition of a special assessment
school tax on the resort enterprises to provide a source of funds to service    
debt incurred to construct the Tribe's K-12 School. The rate of the tax, for    
each month, is equal to the difference between $200,000 and all taxes imposed on
or collected by and remitted by the resort enterprises to the Tribe for that    
month. If the total taxes imposed on us by the Tribe for any month is greater   
than $200,000, then the special assessment tax for that month is zero.          

34

10-K
36th Page of 71
TOC
1st
Previous
Next
Bottom
Just 36th

SHARED SERVICES AND COST ALLOCATIONS                                            

In connection with the issuance of the original notes, IMG Resort and 
Casino and the Tribe entered into a service and cost allocation agreement,      
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; (iv)      
payroll processing; and (v) 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 1997 Compact or any   
new compact, (b) federal regulatory fees required by IGRA, (c) an amount equal  
to the monthly payments required under the BIA Note and (d) amounts for certain 
other miscellaneous liabilities.                                                

EMPLOYEE BENEFITS COST ALLOCATIONS                                              

In connection with the issuance of the original notes, 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, worker's compensation      
insurance, disability insurance, unemployment benefits and pension benefits.    

ATM FEES                                                                        

IMG Resort and Casino does not receive revenues from the use by our   
customers of the ATM machines provided at our business locations. Pursuant to   
agreements with third party ATM providers, the Tribe receives a portion of the  
transaction fees paid by ATM users. The Tribe will continue to receive payments 
related to the ATM services provided in our new facilities under similar        
arrangements, and we will receive no revenue from these services.               

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.                                

    The following table sets forth the aggregate fees billed to IMG Resort and
Casino for fiscal 2005 by BDO Seidman, LLP and Grant Thornton LLP and 2004 by   
Grant Thornton LLP:                                                             

                                                                · Download Table


                                                       PERCENTAGE         
                        YEAR ENDED APRIL 30,           OF SERVICES        
                       2004                2005    2004              2005 
                       ----                ----    ----              ---- 
                                                                          
Audit Fees          $307,241            $333,235  93.23%            96.67%
Audit-Related Fees    22,293               6,203   6.77%             1.80%
Tax Fees                 -                   -       -                  - 
All Other Fees           -                 5,281     -               1.53%

Total Fees          $329,534            $344,719    100%              100%

"Audit Fees" billed during fiscal 2004 and 2005 were for professional 
services rendered for the audit of our financial statements. "Audit-Related     
Fees" were for services related to accounting consultation and review of        
documents filed with the Securities and Exchange Commission. "All Other Fees"   
consist of fees for products and services other than the services reported      
above.                                                                          

    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 Seidman,
LLP and Grant Thornton LLP in providing audit and audit-related services to IMG 
Resort and Casino and has concluded that such services are compatible with BDO  
Seidman, LLP and in the prior year Grant Thornton LLP's role as IMG Resort and  
Casino's independent auditor. For the twelve months ended April 30, 2005 BDO    
Seidman, LLP rendered services totaling $257,971 and Grant Thornton LLP rendered
services totaling $86,748.                                                      

35

10-K
37th Page of 71
TOC
1st
Previous
Next
Bottom
Just 37th


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.      

(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 on pages 36-37 of this Annual Report on
Form 10-K.                                                  
(b)   None.                                                                     

(c)   See Exhibit Index on pages 36-37 of this Annual Report on Form 10-K.      

                                                        · Enlarge/Download Table

EXHIBITS INDEX                                                                                            
                                                                                                          
        EXHIBIT NO. DESCRIPTION                                                                           

            3.1*    Mescalero Apache Tribe Resolutions 03-05, 03-28 and 03-29 establishing and governing  
                    the Inn of the Mountain Gods Resort and Casino adopted and approved April 2, 2003,    
                    July 15, 2003 and July 15, 2003, respectively.                                        
            3.2*    Charter of the Management Board of IMG Resort and Casino.                             
            4.1*    Indenture, dated as of November 3, 2003, among the Mescalero Apache Tribe, Inn of the 
                    Mountain Gods Resort and Casino, Casino Apache, Inn of the Mountain Gods, Casino      
                    Apache Travel Center, Ski Apache and U.S. Bank National Association, as Trustee,      
                    relating to the 12% Senior Notes due 2010 of the Inn of the Mountain Gods Resort and  
                    Casino.                                                                               
            4.2*    Form of 12% Senior Note Due 2010 of the Inn of the Mountain Gods Resort and Casino.   
            4.3*    Registration Rights Agreement, dated as of November 3, 2003, among the Mescalero      
                    Apache Tribe, Inn of the Mountain Gods Resort and Casino, Casino Apache, Inn of the   
                    Mountain Gods, Casino Apache Travel Center, Ski Apache and Citigroup Global Markets   
                    Inc, as the Initial Purchaser.                                                        
           10.1*    Second Amended Design/Build Construction Contract, by and among Inn of the Mountain   
                    Gods Resort and Casino, Centex/WorthGroup, LLC, as Design/Builder, and Rider Hunt     
                    Levett & Bailey, as Construction Manager, dated as of September 6, 2003, and Change   
                    Order No. 9 thereto, dated October 24, 2003.                                          
           10.2*    Cash Collateral and Disbursement Agreement, dated as of November 3, 2003, among Inn of
                    the Mountain Gods Resort and Casino, Casino Apache, Inn of the Mountain Gods, Casino  
                    Apache Travel Center, Ski Apache, U.S. Bank National Association, as Disbursement     
                    Agent, Professional Associates Construction Services, Inc., as Independent            
                    Construction Consultant and U.S. Bank National Association, as Trustee.               
           10.3*    Ski Apache Special Use Permit received from the United States Department of           
                    Agriculture, Forest Service dated April 23, 1985.                                     
           10.4*    Employment Agreement dated September 22, 2003, between the Mescalero Apache Tribe and 
                    Richard Williams.                                                                     
           10.5***  Employment Agreement dated December 12, 2002 between the Mescalero Apache Tribe and   
                    Brian Parrish.                                                                        
           10.6     Resignation Agreement dated July 21, 2005, between IMG Resort and Casino and          
                    Michael French (filed herewith).                                                      

                             36                                                                           

10-K
38th Page of 71
TOC
1st
Previous
Next
Bottom
Just 38th

           10.7***  2001 Compact between the Mescalero Apache Tribe and the State of New Mexico, entered  
                    into June 1, 2004.                                                                    
           14.1***  Code of Business Conduct and Ethics of Inn of the Mountain Gods Resort and Casino     
           14.2***  Code of Ethics for Principal Executive Officer and Senior Financial Officer.          
           21.1*    Subsidiaries of the Registrant.                                                       
           24.1     Power of Attorney (Included with Signature Page)                                      

           31.1     Certification of Principal Executive Officer Pursuant to Section 302 of the           
                    Sarbanes-Oxley Act of 2002 (filed herewith).                                          
           31.2     Certification of Principal Financial Officer Pursuant to Section 302 of the           
                    Sarbanes-Oxley Act of 2002 (filed herewith).                                          
           32.1     Certification of Principal Executive Officer and Principal Financial Officer Pursuant 
                    to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).                    


* Incorporated by reference to IMG Resort and Casino's Registration   
Statement on Form S-4 filed with the SEC on February 27, 2004 (SEC File No.     
333-113140).                                                                    

    ** Incorporated by reference to IMG Resort and Casino's Amendment No. 1 to
Registration Statement on Form S-4 filed with the SEC on April 22, 2004 (SEC    
File No. 333-113140).                                                           

   *** Incorporated by reference to IMG Resort and Casino's Annual Report on
Form 10-K filed with the SEC on July 29, 2004.                                  

37

10-K
39th Page of 71
TOC
1st
Previous
Next
Bottom
Just 39th

SIGNATURES

     Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement 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 July 28, 2005.                            

                        INN OF THE MOUNTAIN GODS RESORT AND CASINO

                  By  /s/ Brian D. Parrish
                                    ------------------------------------
                    Brian D. Parrish
                          Its: Chief Operating Officer and
                           Management Board Member

  Each person whose signature appears below constitutes and appoints Brian
Parrish and Richard Williams, and each of them, as his true and lawful          
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his 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 attorneys-in-fact and    
agents, and each of them, 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 might or could do in      
person, hereby ratifying and confirming all that said attorneys-in-fact and     
agents, or either of them, or their 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.                    

                                                                · Download Table


                                                                                  
       SIGNATURE                             TITLE                            DATE

  /s/ Mark Chino                                                                  
---------------------------  Management Board Member (Chairperson)   July 28, 2005
      Mark Chino                                                                  

  /s/ Frederick Chino, Sr.                                                        
---------------------------         Management Board Member          July 28, 2005
      Frederick Chino, Sr.                                                        

  /s/ Alfred LaPaz                                                                
--------------------------          Management Board Member          July 28, 2005
      Alfred LaPaz                                                                

 /s/  Naomi Sainz                                                                 
--------------------------          Management Board Member          July 28, 2005
      Naomi Sainz                                                                 

 /s/ Manuel Lujan, Jr.                                                            
--------------------------          Management Board Member          July 28, 2005
     Manuel Lujan, Jr.                                                            

10-K
40th Page of 71
TOC
1st
Previous
Next
Bottom
Just 40th

 /s/ Brian D. Parrish        Chief Operating Officer and Management  July 28, 2005
--------------------------               Board Member                             
     Brian D. Parrish              (Chief Executive Officer)                      

 /s/ Richard Williams                                                             
--------------------------          Chief Financial Officer          July 28, 2005
     Richard Williams                                                             

 /s/  Wayne Marks                                                                 
--------------------------            Director of Finance            JULY 28, 2005
      Wayne Marks                 (Chief Accounting Officer)                      


10-K
41st Page of 71
TOC
1st
Previous
Next
Bottom
Just 41st

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

 INDEX TO FINANCIAL STATEMENTS

                                                                        PAGE
                                                                        ----
Report of Independent Registered Public Accounting Firms..........     F-2
Audited Financial Statements                                              
  Consolidated Balance Sheets as of April 30, 2004 and 2005.......     F-4
Consolidated Statements of Income for the Years ended                 
     April 30, 2003, 2004 and 2005................................     F-5
Consolidated Statements of Changes in Equity for the Years            
     ended April 30, 2003, 2004 and 2005..........................     F-6
Consolidated Statements of Cash Flows for the Years ended             
     April 30, 2003, 2004 and 2005................................     F-7
  Notes to Consolidated Financial Statements......................     F-9

 F-1

10-K
42nd Page of 71
TOC
1st
Previous
Next
Bottom
Just 42nd

 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 sheet of Inn of the       
Mountain Gods Resort and Casino and subsidiaries (the "Company"), an            
unincorporated enterprise of the Mescalero Apache Tribe, as of April 30, 2005,  
and the related statements of income, changes in equity, and cash flows for the 
year ended April 30, 2005. 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 audit.                                        

We conducted our audit in accordance with auditing 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 audit 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. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audit provides 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 April 30, 2005 and the results of 
its operations and its cash flows for the year ended April 30, 2005, in         
conformity with accounting principles generally accepted in the United States of
America.                                                                        

/s/ BDO Seidman, LLP                                                            

Los Angeles, California                                                         

July 1, 2005                                                                    

 F-2

10-K
43rd Page of 71
TOC
1st
Previous
Next
Bottom
Just 43rd

 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 the Inn of the  
Mountain Gods Resort and Casino and subsidiaries, an unincorporated enterprise  
of the Mescalero Apache Tribe, as of April 30, 2004 and the related consolidated
statements of income, changes in equity, and cash flows for each of the two     
years in the period ended April 30, 2004. These financial statements are the    
responsibility of the Inn of the Mountain Gods Resort and Casino and            
subsidiaries 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 control over 
financial reporting as a basis for designing audit procedures that are          
appropriate in the circumstances, but not for the purpose of expressing an      
opinion on the effectiveness of the Company's internal control over financial   
reporting. Accordingly, we express no such opinion. An audit also includes      
examining, on a test basis, evidence supporting the amounts and disclosures in  
the financial statements, assessing the accounting principles used and          
significant estimates made by management, 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 the Inn of the      
Mountain Gods Resort and Casino and subsidiaries, as of April 30, 2004 and the  
results of their operations and their cash flows for the each of the two years  
in the period ended April 30, 2004, in conformity with accounting principles    
generally accepted in the United States of America.                             

/s/ Grant Thornton LLP                                                          

Albuquerque, New Mexico                                                         
June 25, 2004                                                                   

 F-3

10-K
44th Page of 71
TOC
1st
Previous
Next
Bottom
Just 44th
                                                        · Enlarge/Download Table


                        INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES                             
                                         CONSOLIDATED BALANCE SHEETS                                            
                                                AS OF APRIL 30,                                                 
                                                                                   2004                 2005    
                                                                          -----------------  -------------------
                               ASSETS                                                                           
                                                                                                                
CURRENT ASSETS:                                                                                                 
   Cash and cash equivalents                                               $    15,794,943        $  13,718,521 
   Restricted cash and cash equivalents                                        133,297,243           35,870,686 
   Accounts receivable, net Inventories                                             32,566              577,476 
   Prepaid expenses                                                                968,585            1,429,506 
   Prepaid revenue sharing fees                                                    462,054              860,189 
                                                                                 4,218,673                    - 
                                                                          -----------------  -------------------
     Total current assets                                                      154,774,064           52,456,378 

NON CURRENT ASSETS:                                                                                             
   Property, plant and equipment, net                                          150,329,503          231,721,074 
   Long term deferred financing cost, net                                       11,029,493            9,321,141 

   Other long-term assets                                                           76,912              195,213 
                                                                          -----------------  -------------------
     Total assets                                                           $  316,209,972        $ 293,693,806 
                                                                          =================  ===================
                       LIABILITIES AND EQUITY                                                                   
CURRENT LIABILITIES:                                                                                            

   Accounts payable and other short-term liabilities                        $      612,873        $   2,673,507 
   Construction accounts payable                                                13,609,367            8,145,734 
   Accrued expenses                                                              5,322,061           11,005,212 
   Accrued revenue sharing and regulatory fees                                  23,000,000                    - 
   Accrued interest                                                             12,048,378           11,200,450 
   Deposits and advance payments                                                   667,100              997,365 
   Current portion of long-term debt                                               252,053              254,007 
                                                                          -----------------  -------------------
     Total current liabilities                                                  55,511,832           34,276,275 
NON CURRENT LIABILITIES:                                                                                        
   Long-term debt, net of current portion                                      201,694,541          201,274,181 
                                                                          -----------------  -------------------
     Total liabilities                                                         257,206,373          235,550,456 
                                                                          -----------------  -------------------

COMMITMENTS AND CONTINGENCIES (Note 10)                                                                         

EQUITY:                                                                                                         
  Contributed capital                                                                                           
                                                                                56,113,676           58,143,350 
  Retained earnings (deficit)                                                    2,889,923                    - 
                                                                          -----------------  -------------------
      Total equity                                                              59,003,599           58,143,350 
                                                                          -----------------  -------------------
     Total liabilities and equity                                            $ 316,209,972        $ 293,693,806 
                                                                          =================  ===================

The accompanying notes are an integral part of these statements.

 F-4

10-K
45th Page of 71
TOC
1st
Previous
Next
Bottom
Just 45th
                                                        · Enlarge/Download Table


           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES                                       

                        CONSOLIDATED STATEMENTS OF INCOME                                                    

                              YEARS ENDED APRIL 30,                                                          

                                                                  2003                  2004         2005    
                                                                  ----                  ----         ----    
                                                                                                             
Revenues:                                                                                                    
   Gaming                                                   $ 46,942,180         $ 60,277,052   $ 64,254,312 
   Food and beverage                                           4,893,997            5,614,672      6,368,994 
   Rooms                                                       3,394,434                    -      1,168,484 

   Recreation and other                                       11,952,860           16,471,890     23,012,602 
                                                              ----------          -----------     ---------- 
     Gross revenue                                            67,183,471           82,363,614     94,804,392 
     Less - promotional allowances                               931,160            1,437,129      1,770,462 
                                                              ----------          -----------     ---------- 
       Net revenue                                            66,252,311           80,926,485     93,033,930 
                                                              ----------          -----------     ---------- 

Operating costs and expenses:                                                                                
   Gaming                                                     19,457,655           25,405,661     25,765,169 
   Reversal of accrued fees                                            -          (27,136,255)              -
   Food and beverage                                           4,955,537                           7,273,668 
                                                                                    6,587,472                
   Rooms                                                       1,552,133                             651,118 
                                                                                      119,722                
   Recreation and other                                        5,757,452           10,701,499     15,434,816 
   General and administrative                                  6,500,909            9,037,815      9,840,983 
   Pension (allocated by related party)                        1,631,828            1,886,333      1,289,615 
   Gaming regulatory commission                                                                              
    fees (charged by related party)                              750,821            1,193,011      2,615,775 
   Insurance (allocated by related party)                        647,000              902,621      1,408,164 
   Telecommunication (charged by related party)                  152,200              289,182        231,592 
   Pre-opening costs and expenses                              1,389,967            3,071,982      8,323,930 
   Depreciation and amortization                               9,213,224            4,930,236      7,269,578 
                                                              ----------          -----------     ---------- 
      Total operating expenses                                52,008,726           36,989,279     80,104,408 
                                                              ----------          -----------     ---------- 

Income from operations                                        14,243,585           43,937,206     12,929,522 

Other income (expenses):                                                                                     
   Interest income                                               190,120              801,266        657,110 
   Interest expense, net of amounts capitalized                        -           (5,251,687)   (11,543,860)
   Other income                                                  170,984              258,098         97,020 
     Total other income (expenses)                               361,104           (4,192,323)   (10,789,730)

     Net income                                             $ 14,604,689         $ 39,744,883    $ 2,139,792 
                                                            ============         ============    =========== 

                         The accompanying notes are an integral part of these statements                     


 F-5

10-K
46th Page of 71
TOC
1st
Previous
Next
Bottom
Just 46th
                                                        · Enlarge/Download Table

           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES                                            

                  CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY                                                    

                              YEARS ENDED APRIL 30,                                                               

                                                                                      Retained                    
                                                                  Contributed         Earnings          Total     
                                                                    Capital           (Deficit)         Equity    
                                                               ---------------  ----------------  ----------------

                                                                                                                  
Balances, April 30, 2002                                         $  3,826,099     $  2,272,257        $ 6,098,356 
Contributed capital from Mescalero Apache Tribe:                                                                  
  Construction of the Resort                                       14,389,215             -            14,389,215 

  Forgiveness of due from Inn                                       9,443,716             -             9,443,716 
  Forgiveness of allocated pension cost                             1,631,828             -             1,631,828 
Distributions to Mescalero Apache Tribe:                                                                          
  State revenue sharing fee accrual transfer                       (4,446,781)            -            (4,446,781)
  Forgiveness of due to Casino                                              -      (13,405,098)       (13,405,098)
  Forgiveness of due to Ski                                                 -       (1,193,833)        (1,193,833)
  Operating transfers                                                       -      (25,962,771)       (25,962,771)
Net Income                                                                  -       14,604,689         14,604,689 
                                                               ---------------  ----------------  ----------------
Balances, April 30, 2003                                           24,844,077      (23,684,756)         1,159,321 

Contributed capital from Mescalero Apache Tribe:                                                                  
  Construction of the Resort                                       29,960,298             -            29,960,298 
  Forgiveness of allocated pension cost                             1,309,301             -             1,309,301 
Distributions to Mescalero Apache Tribe:                                                                          
  Operating transfers                                                       -      (13,170,204)       (13,170,204)
Net income                                                                  -       39,744,883         39,744,883 
                                                               ---------------  ----------------   ---------------
Balances, April 30, 2004                                           56,113,676        2,889,923         59,003,599 
Contributed capital from Mescalero Apache Tribe:                                                                  
  Construction of Resort                                            9,999,959             -             9,999,959 
Distributions to Mescalero Apache Tribe:                                                                          
  Capital Distribution/Operating Transfers                         (7,970,285)     ( 5,029,715)       (13,000,000)
Net Income                                                                  -        2,139,792          2,139,792 
                                                               ---------------  ----------------   ---------------
Balances, April 30, 2005                                         $ 58,143,350     $       -           $58,143,350 
                                                               ===============  ================   ===============


These accompanying notes are an integral part of these statements.

 F-6

10-K
47th Page of 71
TOC
1st
Previous
Next
Bottom
Just 47th
                                                        · Enlarge/Download Table


           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES                                              

                      CONSOLIDATED STATEMENTS OF CASH FLOWS                                                         

                              YEARS ENDED APRIL 30,                                                                 

                                                                   2003              2004              2005         
Cash flows from operating activities:                         -------------   -----------------   ----------------- 
                                                                                                                    
     Net income                                               $ 14,604,689     $   39,744,883      $  2,139,792     
     Adjustments to reconcile net income to net                                                                     
    cash provided by (used in) operating activities:                                                                
        Depreciation and amortization                            9,213,224         4,930,236          7,269,578     
        Gain on sale of property, plant and equipment              (13,741)                -                  -     
        Changes in assets and liabilities:                                                                          
           Restricted cash and cash equivalents                   (114,304)          (58,265)           533,514     
           Accounts receivable, net of allowance                   (58,908)          143,096           (544,910)    
           Inventories                                            (267,736)         (113,056)          (460,921)    
           Prepaid revenue sharing fees                                  -        (4,218,673)         4,218,673     
           Prepaid expenses                                        (77,586)         (173,056)          (398,135)    
           Other long-term assets                                   (1,000)          (60,911)          (118,301)    
           Accounts payable                                        583,895          (797,598)         2,060,634     
           Accrued expenses                                        454,795         3,571,823          5,255,709     
           Accrued revenue sharing and regulatory fees           7,717,219       (16,821,082)       (22,572,558)    
           Accrued interest payable                                      -        12,048,378           (847,928)    
           Deposits and advance payments                           (20,034)          (82,408)           330,265     
                                                               -------------   -----------------   -----------------
           Net cash provided by (used in) in operating                                                              
           activities                                           32,020,513        38,113,367         (3,134,588)    
                                                               -------------   -----------------   -----------------
Cash flows from investing activities:                                                                               
     Purchase of property, plant and equipment                 (30,734,563)     (107,003,099)       (88,661,149)    
     Construction accounts payable                               7,155,922         6,453,445         (5,463,633)    
     Proceeds from sale of property, plant and equipment            35,198                 -                  -     
                                                              -------------   -----------------   ----------------- 
        Net cash used in investing activities                  (23,543,443)     (100,549,654)       (94,124,782)    
                                                              -------------   -----------------   ----------------- 
Cash flows from financing activities:                                                                               
     Deferred financing costs                                    (100,000)       (10,929,493)         1,708,352     
     Cash held for construction payments                                -       (132,763,729)        96,893,043     
     Cash proceeds from the issuance of notes                           -        200,000,000                  -     
     Advances from Mescalero Apache Tribe, net                 (6,660,807)                 -                  -     
     Borrowings on revolving line-of-credit                     5,000,000                  -                  -     
     Principal borrowings (payments) on long-term debt,                                                             
     net                                                          349,764         (5,506,865)          (418,406)    
     Distributions to Mescalero Apache Tribe                  (45,008,483)       (13,170,204)       (13,000,000)    

     Contributions from Mescalero Apache Tribe                 25,464,759         31,269,599          9,999,959     
                                                              -------------   -----------------   ----------------- 

                                       F-7                                                                          

10-K
48th Page of 71
TOC
1st
Previous
Next
Bottom
Just 48th

Net cash (used in) provided by financing activities           (20,954,767)        68,899,308          95,182,948    
                                                              -------------   -----------------   ----------------- 
Net increase (decrease) in cash and cash equivalents          (12,477,697)         6,463,021          (2,076,422)   
Cash and cash equivalents, beginning of year                   21,809,619          9,331,922          15,794,943    
                                                              -------------   -----------------   ----------------- 
Cash and cash equivalents, end of year                       $  9,331,922         15,794,943          13,718,521    
Supplemental cash flow information:                           =============   =================   ================= 
     Cash paid for interest                                  $    173,407             60,115          24,250,669    
                                                              =============   =================   ================= 
Non-cash investing and financing activities:                                                                        
     Distributions to Mescalero Apache Tribe                 $  1,193,833       $ 38,981,173         $         -    
                                                              =============   =================   ================= 
     Property, plant and equipment acquired through                                                                 
     increase of payable, net                                $  7,155,922       $  6,453,445         $         -    
     Contributions from Mescalero Apache Tribe               $  7,820,274       $  1,309,301         $         -    
                                                              =============   =================   ================= 

 The accompanying notes are an integral part of these statements

 F-8

10-K
49th Page of 71
TOC
1st
Previous
Next
Bottom
Just 49th

 INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 APRIL 30, 2003, 2004 AND 2005

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   

REPORTING ENTITY AND OPERATIONS                                       

The Inn of the Mountain Gods Resort and Casino (the "IMG Resort and   
   Casino"), an unincorporated enterprise of the Mescalero Apache Tribe (the
     "Tribe"), was established on April 30, 2003 for the purpose of managing all
resort enterprises of the Tribe including activities of IMG Resort and
Casino and its wholly owned subsidiaries: Casino Apache, Casino Apache
  Travel Center, Inn of the Mountain Gods and Ski Apache (collectively the
    "Resorts"). Effective April 30, 2003, the Tribe contributed the Resorts to
 the IMG Resort and Casino. Prior to such contribution to IMG Resort and
     Casino, the Resorts operated as separate, unincorporated enterprises of the
    Tribe. Due to common control of the Resorts and IMG Resort and Casino, the
     contribution was accounted for as a reorganization of entities under common
    control. The Tribe is the sole owner of the IMG Resort and Casino. The IMG
    Resort and Casino is a separate legal entity from the Tribe and is managed
by a separate management board.                                       

    Inn of the Mountain Gods (the "Casino") offers Class III gaming as defined
   by the Indian Gaming Regulatory Act, on the tribal land in Mescalero, New
     Mexico. The Casino Apache Travel Center (the "Travel Center"), which opened
  for business on May 22, 2003, also offers Class III gaming as defined by
   the Indian Gaming Regulatory Act, on tribal land in Mescalero. The Inn of
   the Mountain Gods (the "Inn") operated a 253-room resort hotel located on
    the Tribe's reservation in Mescalero. The resort hotel has been demolished
    as of April 30, 2003 and the construction of a new resort hotel and casino
    (the "Resort Project") on the same site was opened for commercial business
on March 15, 2005. Ski Apache operates a ski resort within the Tribe's
reservation in Mescalero and on the U.S. Forest Service land. The IMG 
Resort and Casino's activities primarily support the development and  
management efforts related to the new resorts.                        

PRINCIPLES OF CONSOLIDATION                                           

    The accompanying consolidated financial statements include the accounts of
the IMG Resort and Casino and its wholly-owned subsidiaries. All      
  significant intercompany accounts have been eliminated in consolidation.
These consolidated financial statements present only the consolidated 
    financial position, results of operations and cash flows of the IMG Resort
and Casino and subsidiaries and are not intended to present fairly the
    financial position of the Tribe and the results of its operations and cash
flows.                                                                

USE OF ESTIMATES                                                      

 The preparation of consolidated 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 
 reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the reporting
period. Significant estimates included in the accompanying financial  
  statements relate to the liability associated with the unredeemed Apache
Spirit Club points and the estimated lives of depreciable assets and  
pension cost. Actual results could differ from those estimates.       

 F-9

10-K
50th Page of 71
TOC
1st
Previous
Next
Bottom
Just 50th

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   
(CONTINUED)                                                     

CASH AND CASH EQUIVALENTS                                             

  Cash includes cash on hand for change drawers and in the vault for daily
     casino activities and cash on deposit with financial institutions in demand
accounts, savings accounts and short-term certificates of deposit. For
purposes of the statement of cash flows all cash accounts that are not
    subject to withdrawal restrictions or penalties and all highly liquid debt
     instruments purchased with an original maturity of three months or less are
considered to be cash equivalents.                                    

RESTRICTED CASH AND CASH EQUIVALENTS                                  

Restricted cash and cash equivalents includes cash on deposit with    
    financial institutions in demand accounts, savings accounts and short-term
  certificates of deposit that are subject to withdrawal restrictions (see
Note 3).                                                              

ACCOUNTS RECEIVABLE                                                   

Accounts receivable consists primarily of hotel and other non-gaming  
    receivables. The IMG Resort and Casino maintains an allowance for doubtful
    accounts which is based on management's estimate of the amount expected to
be uncollectible considering historical experience and the information
management obtains regarding the creditworthiness of the non-gaming   
customer. The collectibility of these receivables could be affected by
future business or economic trends.                                   

INVENTORIES                                                           

     Inventories consist of food and beverage items, fuel, retail merchandise in
    the golf and pro shop, ski shop, gift shops and other miscellaneous items,
parts and supplies. All inventories are stated at the lower of cost or
market. Casino and Ski Apache inventories are determined using the    
    first-in, first-out method. The Inn's inventories are determined using the
average cost method.                                                  

DEFERRED FINANCING COSTS                                              

     Debt issuance costs incurred in connection with the issuance of the Project
financing are capitalized and 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 $11,029,493 as of April 30, 2004 and $9,321,141 as of April
30, 2005. The amortization related to this deferred financing cost was
$791,812 and $1,708,352 for the years ended April 30, 2004 and 2005,  
respectively.                                                         

PROPERTY, PLANT AND EQUIPMENT                                         

Property, plant and equipment are presented at historical cost, less  
accumulated depreciation and amortization. Expenditures for additions,
improvements and replacements, including interest incurred during     
construction of new facilities, are capitalized while maintenance and 
     repairs, which do not improve or extend the service lives of the respective
     assets, are expensed as incurred. Interest incurred during the construction
 period is capitalized at the borrowing rate for the related loan and is
    amortized over the life of the related asset. Equipment sold, or otherwise
    disposed of, is removed from the accounts with gains or losses on disposal
recorded in the statements of income.                                 

    Depreciation and amortization is provided over the estimated service lives
of the respective assets, using the straight-line method based on the 
following useful lives:                                               

  F-10

10-K
51st Page of 71
TOC
1st
Previous
Next
Bottom
Just 51st
                                                        · Enlarge/Download Table


                                                                                            

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES               
        (CONTINUED)                                                                         

                  Non-gaming equipment, furniture and other                    3 - 15  years
                  Gaming equipment                                             5 - 7   years
                  Leasehold and land improvements, lake and golf course        5 - 30  years
                  Buildings, lifts and snowmaking equipment                    10 - 50 years


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 No. 144, ACCOUNTING FOR THE
     IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS ("SFAS 144"), which established
the approach to be used in the determination of impairment.           

During the year ended April 30, 2003, the Inn demolished a substantial
portion of the existing hotel building and began construction of a new
resort hotel and casino facility. Under the provisions of SFAS 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. As
   a result of the demolition of the hotel, the adoption of SFAS 144 for the
year ended April 30, 2003 resulted in an impairment of the demolished 
portion of the Inn's hotel related property, plant and equipment of   
     approximately $5,391,000, which was recorded as depreciation expense in the
     accompanying consolidated statements of income during fiscal 2003 (see Note
5).                                                                   

FAIR VALUE OF FINANCIAL INSTRUMENTS                                   

     The carrying amount of cash and cash equivalents, restricted cash, accounts
receivable, accounts payable and accrued expenses, bank financing     
  facilities and capital lease obligations approximate fair value. The IMG
Resort and Casino's senior notes was $216.0 million at April 30, 2005,
based on quoted market prices.                                        

CONTRIBUTED CAPITAL                                                   

     Contributed capital represents contributions from the Tribe and consists of
(i) cash to fund certain construction and development of the Resort   
Project, (ii) forgiveness of debt from the Inn to the Tribe and (iii) 
allocated pension costs related to the Mescalero Apache Tribe Defined 
Benefit Plan (see Note 8).                                            

REVENUES                                                              

   In accordance with gaming industry practice, the Casino recognizes casino
revenue 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 table games. Such
  anticipated jackpot payments are reflected as current liabilities in the
accompanying consolidated balance sheets.                             

     Revenues from food and beverage, rooms, recreation and other are recognized
    at the time the related service or sale is completed. Revenues include the
  retail value of food and beverages and other items which are provided to
customers on a reward basis.                                          

  F-11

10-K
52nd Page of 71
TOC
1st
Previous
Next
Bottom
Just 52nd

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   
(CONTINUED)                                                     

PROMOTIONAL ALLOWANCES                                                

The Casino periodically rewards rooms and other promotions, including 
  Apache Spirit Club points and gift certificates, to their customers. The
   retail value of these promotional allowances are recognized by the Casino
as a reduction from gross revenue. The total promotional allowances   
recognized by the Casino were approximately $931,000, $1,437,000 and  
     $1,770,000 for the years ended April 30, 2003, 2004 and 2005, respectively.

    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 complimentary services or merchandise. Points are accrued based
   upon their historical redemption rate multiplied by the cash value or the
   cost of providing the applicable complimentary services. The players club
    points liability is included in accrued expenses and totaled approximately
$380,000 and $931,000 at April 30, 2004 and 2005, respectively.       

     Emerging Issues Task Force ("EITF") Issue No. 00-14, ACCOUNTING FOR CERTAIN
    SALES INCENTIVES 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. The Resorts adopted
 EITF 00-14 on April 30, 2001. The Casino's accounting policy related to
  free or discounted food and beverage and other services already complies
with EITF 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 PREPRODUCTS, OR   
 SERVICES TO BE DELIVERED IN THE FUTURE. On October 1, 2001, the Resorts
     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. The Resorts offer
cash equivalent rewards in certain circumstances and has reflected    
    approximately $837,000, $1,288,000 and $641,000 for the fiscal years ended
   April 30, 2003, 2004 and 2005, respectively, in the promotional allowance
as an offset to gaming revenues for these incentives.                 

The estimated cost of providing such complimentary allowances, as they
relate to the Casino, was included in casino expenses as follows:     

                                                                · Download Table

                                 Year Ended April 30,              
                        2003             2004               2005   
                   ------------     ------------       ------------
                                                                   
Rooms              $  175,133       $        -        $     46,607 
Food and beverage     231,131           40,475             200,099 
Other                  17,617           22,169              31,439 
                   ------------     ------------       ------------
                   $  423,881       $   62,644        $    278,145 

COMPENSATED ABSENCES                                                  

Compensated absences are included in accrued expenses. The personnel  
policies allow the workforce to accrue annual leave as follows:       

o    One week of annual leave after one year of employment.           
o    Two weeks of annual leave after two years of employment.         

  F-12

10-K
53rd Page of 71
TOC
1st
Previous
Next
Bottom
Just 53rd

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   
(CONTINUED)                                                     

o    Three weeks of annual leave after three years of employment.     
o    Four weeks of annual leave after fifteen years of employment.    

    Except for personnel at Ski Apache, annual leave may be accumulated by all
personnel up to a maximum of 120 hours or 160 hours for fifteen-year  
     employees. Any annual leave accrued above these limits is forfeited. Due to
    the seasonality of the Ski Apache's business, Ski Apache's policy requires
all accrued annual leave to be taken by the end of the Tribe's fiscal 
year-end, or it is forfeited. Personnel may be compensated for accrued
annual leave only upon termination.                                   

Sick leave is accrued at 2.1 hours per pay period after 90 days of    
     employment and 3.1 hours after three years of employment. Personnel are not
compensated for accrued sick leave on termination. Accordingly, the   
  compensated absence accrual does not include a provision for sick leave.

PRE-OPENING COSTS AND EXPENSES                                        

  Pre-opening costs and expenses consist principally of direct incremental
personnel costs, training costs and payroll costs for retaining the   
employees of the Inn during the fiscal year 2005 and 2004 construction
period. In accordance with the American Institute of Certified Public 
     Accountants' Statement of Position 98-5, REPORTING ON THE COSTS OF START-UP
ACTIVITIES, pre-opening costs and expenses are expensed as incurred.  

ADVERTISING COSTS                                                     

    The IMG Resort and Casino's advertising costs are expensed as incurred and
 are included as general and administrative expenses in the accompanying
  consolidated statements of income. Advertising costs for the years ended
   April 30, 2003, 2004 and 2005 were approximately $696,000, $1,426,000 and
$3,171,000 respectively.                                              

TRIBAL TAXES                                                          

    The Resorts are subject to tribal taxes as long as the enterprises are not
subject to New Mexico Gross Receipts Tax. Ski Apache is subject to New
   Mexico 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 accrued
monthly and is payable to the Tribe. The Tribe uses these funds to    
reimburse the Inn for advertising costs. The Resorts have recorded    
approximately $200,000 and $200,000 for tax payable to the Tribe as of
    April 30, 2004 and 2005. The amounts are recorded as an accrued expense in
the accompanying consolidated balance sheets. The Tribe re-classified 
     approximately $2,553,000 of tax payable from the Inn to equity contribution
to the Inn as of April 30, 2003 to reflect the forgiveness of the tax 
payable.                                                              

INCOME TAXES                                                          

     As an unincorporated enterprise of the Tribe, the IMG Resort and Casino and
the Resorts are exempt from federal and state income taxes.           

NEW ACCOUNTING PRONOUNCEMENTS                                         

     In November 2004, the Financial Accounting Standards Board issued Statement
 of Financial Accounting Standards, or SFAS, No. 151, "Inventory Costs,"
    ("SFAS 151"), an amendment of Accounting Research Bulletin No. 43, Chapter
    4. SFAS No. 151 is the result of a broader effort by the FASB working with
    the International Accounting Standards Board to reduce differences between
United States and international                                       

  F-13

10-K
54th Page of 71
TOC
1st
Previous
Next
Bottom
Just 54th

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   
(CONTINUED)                                                     

   accounting standards. SFAS No. 151 eliminates the "so abnormal" criterion
     in ARB 43 and companies will no longer be permitted to capitalize inventory
costs on their balance sheets when the production defect rate varies  
significantly from the expected rate. It also makes clear that fixed  
overhead should be allocated based on "normal capacity." SFAS 151 is  
effective for inventory costs incurred during fiscal periods beginning
     after June 15, 2005. The Company does not believe that the adoption of SFAS
151 will have a material effect on our results of operations or       
consolidated financial position.                                      

   In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
 Assets - An Amendment of APB Opinion No. 29, Accounting for Nonmonetary
 Transactions" ("SFAS 153"). SFAS 153 eliminates the exception from fair
     value measurement for nonmonetary exchanges of similar productive assets in
paragraph 21(b) of APB Opinion No. 29, "Accounting for Nonmonetary    
    Transactions," and replaces it with an exception for exchanges that do not
   have commercial substance. SFAS 153 specifies that a nonmonetary exchange
have commercial substance if the future cash flows of the entity are  
   expected to change significantly as a result of the exchange. SFAS 153 is
 effective for fiscal periods beginning after June 15, 2005. The Company
    does not believe that the adoption of SFAS 153 will have a material effect
on our results of operations or consolidated financial position.      

    In May 2005, the Financial Accounting Standards Board, issued Statement of
    Financial Accounting Standards SFAS No. 154, "Accounting Changes and Error
Corrections"("SFAS 154"). SFAS 154 replaces APB No. 20, "Accounting   
     Changes" and SFAS No. 3, "Reporting Accounting Changes in Interim Financial
Statements" and establishes retrospective application as the required 
  method for reporting a change in accounting principle. SFAS 154 provides
   guidance for determining whether retrospective application of a change in
accounting principle is impracticable and for reporting a change when 
   retrospective application is impracticable. The reporting of a correction
 of an error by restating previously issued financial statements is also
    addressed. SFAS 154 is effective for accounting changes and corrections of
    errors made in fiscal years beginning after December 15, 2005. The Company
    does not believe that the adoption of SFAS 154 will have a material effect
on our results of operations or consolidated financial position       

NOTE 2 - ALLOWANCE FOR DOUBTFUL ACCOUNTS                                        

The Resorts maintain an allowance for doubtful accounts for estimated 
     losses resulting from the inability of customers to make required payments,
  which results in bad debt expense. The Resorts determine the adequacy of
  this allowance by periodically evaluating individual non-gaming customer
 receivables and considering the Resorts' non-gaming customers financial
     condition, credit history and current economic conditions. If the financial
condition of non-gaming customers were to deteriorate, resulting in an
    impairment of their ability to make payments, the Resorts may increase the
allowance.                                                            

   The allowance for doubtful accounts and bad debt expense is as follows at
April 30:                                                             

                                                    2004            2005
                                                   ------------      -----------
    Allowance, beginning of year                  $    3,448        $    3,448
    Bad debt expense                                       -                 -
    Write-offs                                             -                 -
     Allowance, end of year                        ------------      -----------
                                                  $    3,448        $    3,448
                                                   ============      ===========

  F-14

10-K
55th Page of 71
TOC
1st
Previous
Next
Bottom
Just 55th

NOTE 3 - RESTRICTED CASH AND CASH EQUIVALENTS                                   

Restricted cash consists of the following at April 30:                

                                              2004              2005
                                             --------------   ----------------
  Interest reserve                         $  36,630,866    $   11,919,101
  Construction reserve                        53,763,014        15,628,691
  Construction retainage                       7,481,741         8,238,351
  Construction funding                        34,888,108            84,543
  Gamblers Fund                                  533,514                 -
                                              --------------   -----------------
    Total restricted cash                  $ 133,297,243    $   35,870,686
                                              ==============   =================

NOTE 4 - INVENTORIES                                                            

Inventories consist of the following at April 30:                     

                                            2004              2005
                                             --------------   ----------------

 Food and beverage                        $     219,628    $     370,924
 Golf and pro shop                              132,936          547,802
 Gift shops, fuel and other                     616,021          510,780
                                             --------------   ----------------
   Total inventories                      $     968,585    $   1,429,506
                                              ==============   =================

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET                                     

Property, plant and equipment is summarized as follows at April 30:   

                                             2004             2005
                                              ---------------   ----------------

  Land                                      $    538,894     $     538,894
  Buildings, lifts and snowmaking equipment   39,287,564       221,150,464
  Non-gaming equipment, furniture and other   25,498,837        42,975,371
  Gaming equipment                            11,370,236        14,490,064
Leasehold and land improvements, lake and                             
   golf course                                6,480,058        6,163,235
                                              ---------------   ----------------
    Subtotal                                  83,175,589       285,318,028

Less accumulated depreciation and                                     
   amortization                               46,281,098        53,641,404
Property, plant and equipment, net              36,894,491       231,676,624  

  Construction in progress                   113,435,012            44,450
                                              ---------------   ----------------
                                           $ 150,329,503     $ 231,721,074

The IMG Resort and Casino capitalized $7,892,314 and $14,348,017 of   
   interest cost related to construction of the Travel Center and the Resort
Project during fiscal years 2004 and 2005, respectively.              

  F-15

10-K
56th Page of 71
TOC
1st
Previous
Next
Bottom
Just 56th

NOTE 6 - LONG-TERM DEBT                                                         

     On November 3, 2003, IMG Resort and Casino issued $200.0 million of its 12%
    Senior Notes (the "Notes"). IMG Resort and Casino is using the proceeds of
these Notes to pay, in part, construction cost                        

    of the Resort Project, to repay a $19.0 million revolving credit agreement
     with Citicorp North America, Inc. and to pay the costs of the offering. The
   Notes bear interest at 12% per year, payable on May 15 and November 15 of
     each year, beginning on May 15, 2004. The Notes will mature on November 15,
   2010. The Notes may be redeemed at any time on or after November 15, 2007
   at fixed redemption prices plus accrued and unpaid interest, if any. If a
change in control occurs, holders of the notes will have the right to 
require the repurchase of their Notes at a price equal at 101% of the 
 principal amount thereof, plus accrued and unpaid interest, if any. The
Notes are guaranteed by the Resorts.                                  

Until the issuance of a final certificate of completion of the Resort 
    Project, the Notes and guarantees are secured by a first priority security
     interest in certain collateral accounts and bank accounts of IMG Resort and
     the guarantors, which had an aggregate balance of approximately $35 million
     at April 30, 2005. The Notes will, after issuance of a final certificate of
   completion of the Resort Project, be the general unsecured obligations of
  IMG Resort and Casino and will rank equal in rights of payment to all of
     its existing future and senior unsecured obligations and senior in right of
payment to any obligations that are by their terms subordinated to the
  Notes and are effectively subordinated to its secured obligations to the
extent of the assets securing those obligations.                      

The indenture governing the Notes contains covenants that limit, among
other things, IMG Resort and Casino and the guarantors' ability to pay
dividends and make distributions to the Tribe; make investments; incur
  additional debt or types of debt; create liens; sell equity interests in
    subsidiaries; enter into transactions with affiliates; enter into sale and
leaseback transactions; engage in other businesses; transfer or sell  
assets; and merge or consolidate with or into other entities. For the 
     fiscal years 2004 and 2005 the IMG Resort and Casino was in compliance with
all covenants required in the Notes.                                  

  F-16

10-K
57th Page of 71
TOC
1st
Previous
Next
Bottom
Just 57th

Long-term debt is summarized as of April 30 as follows:               

                                                        · Enlarge/Download Table

                                                                                 2004              2005      
                                                                           ----------------  --------------  
                                                                                                             
Senior Notes, bearing interest at a fixed rate                                                               
of  12%, maturing in 2010                                                     $200,000,000   $200,000,000    

Bureau of Indian  Affairs,  unsecured  notes  payable  with  payments  of                                    
$27,100 per month, including interest at 8.5%, maturing in 2011.              $  1,744,651   $  1,528,188    

Various notes  payable with  payments  ranging from $3,603 to $21,900 per                                    
month,  plus accrued interest ranging from 4.25% to 10%, maturing between                                    
2001 and 2004.                                                                     201,943              -    
                                                                            ----------------  -------------- 
                                                                               201,946,594    201,528,188    

Less current portion                                                               252,053        254,007    
                                                                             ----------------  --------------
Long-term portion                                                            $ 201,694,541   $201,274,181    
                                                                             =============== ================

The maturities of long-term debt as of April 30, 2005 are as follows: 

                                                                · Download Table

Year Ending April 30:                  
                                       
         2006          $      254,007  
         2007                 266,058  
         2008                 278,684  
         2009                 291,908  
         2010                 305,762  
         Thereafter       200,131,769  
                        ---------------
                       $  201,528,188  
                        ===============


 Total interest costs were $167,968, 13,144,001, and $25,891,877 for the
     years ended April 30, 2003, 2004 and 2005, respectively, of which $167,968,
   $7,892,314 and $14,348,017 was capitalized as of April 30, 2003, 2004 and
2005, respectively.                                                   

  On June 15, 2004, the IMG Resort and Casino entered into a $15.0 million
 credit facility with Key Equipment Finance, a Division of Key Corporate
 Capital Inc., one of the nation's largest financial services firms. The
    fixed rate loan is fully amortizable over five years and bears an interest
  rate indexed off the 3-year Treasury Interest Rate Swaps. During May and
    June 2005, the IMG Resort and Casino drew approximately $14.9 million from
the loan and used the funds to fund furniture, fixtures and equipment 
purchased for the Project.                                            

  F-17

10-K
58th Page of 71
TOC
1st
Previous
Next
Bottom
Just 58th

NOTE 7 - GAMING REVENUES SHARING AND REGULATORY FEES                            

   The Tribe regulates the IMG Resort and Casino's gaming activities through
   the Mescalero Apache Tribe Gaming Regulatory Commission, an agency of the
 Tribe (the "Commission"). The Commission reports directly to the Tribal
 Council. A regulatory fee is paid to the Tribe as reimbursement for the
  cost of regulating the gaming activities. The Casino also pays a federal
    regulatory fee. All tribal and federal regulatory fees have been paid when
due.                                                                  

 On August 29, 1997, the Tribe and the State of New Mexico (the "State")
     entered into a Tribal-State Compact (the "Compact") to govern gaming on the
   Mescalero Apache Reservation. The terms of the Compact subject the Casino
     to various regulatory fees and revenues sharing payable to the State. Among
the provisions of the Compact are requirements for quarterly revenues 
 sharing payments consisting of 16% of the net win from video gaming and
    quarterly regulatory fees assessed on the number of gaming facilities, the
number of gaming machines and the number of gaming tables and other   
   devices. The Tribe has challenged the legality of these fee arrangements,
     claiming them to be an illegal tax on Indian gaming under the Indian Gaming
Regulatory Act.                                                       

 On April 20, 2004, the Tribe and the State of New Mexico entered into a
 settlement agreement which resolved all of their disputes regarding the
   1997 Compact. Under the settlement agreement, the State of New Mexico and
    the Tribe agreed that they would enter into a new gaming compact, the 2001
     Compact, and that the Tribe would pay the State of New Mexico $25.0 million
     in full settlement of all revenue sharing and regulatory fees payable under
     the 1997 Compact as well as all revenue sharing fees payable under the 2001
  Compact through March 2005. On April 20, 2004, the IMG Resort and Casino
paid an initial payment of $2.0 million pursuant to the terms of the  
settlement agreement.                                                 

    The 2001 Compact provides for a revenue sharing amount equal to 8% of "net
     win" from gaming machines, payable no later than 25 days after the last day
    of each calendar quarter and an annual regulatory fee of $100,000, paid in
quarterly installments of $25,000 on the first day of each calendar   
    quarter. Pursuant to the terms of the settlement agreement, the IMG Resort
 and Casino began incurring revenue sharing payments to the State of New
     Mexico at the rate of 8% of "net win" pursuant to the 2001 Compact in March
    2005, with the first revenue sharing payment under the 2001 Compact due in
    July 2005. In addition, pursuant to the terms of the settlement agreement,
   the IMG Resort and Casino began incurring regulatory fees, at the rate of
$100,000 per year, from the date the approval of the 2001 Compact is  
 published in the Federal Register with the first payment for regulatory
     fees under the 2001 Compact due on the first day of the first full calendar
    quarter thereafter. On June 1, 2004, the Tribe and the State of New Mexico
     entered into the 2001 Compact. On July 22, 2004, the Department of Interior
 approved the 2001 Compact. The IMG Resort and Casino made the remaining
 $23.0 million payment required under the settlement agreement in August
2004. As a result of the settlement with the State, expense and the   
    liability for accrued revenue sharing and regulatory fees has been reduced
by $27,136,255 for the year ended and as of April 30, 2004.           

NOTE 8 -  PENSION PLAN                                                          

IMG Resort and Casino and the Resorts employees participated in the   
     Mescalero Apache Tribe Defined Benefit Plan (the "Plan"), a defined benefit
    pension plan that also covers substantially all full-time employees of the
Tribe. Although the IMG Resort and Casino employees participate in the
 Plan, they are not employees of the Tribe and were not employees of the
     Tribe for all periods during which they participated in the Plan. The Tribe
     is the Plan sponsor and handles all administration and funding of the Plan.
Changes to the Plan provisions and contribution requirements must be  
  approved by the Tribal Council. The Plan provides retirement, disability
and death benefits to plan members and beneficiaries.                 

  F-18

10-K
59th Page of 71
TOC
1st
Previous
Next
Bottom
Just 59th

NOTE 8 -  PENSION PLAN (CONTINUED)                                              

     The Tribe upon advice from legal counsel, has determined that the Plan is a
    "governmental plan" as described in Section 414(d) of the Internal Revenue
 Code ("IRC"). As such, the Plan is exempt from many of the requirements
     placed on qualified plans, including (but not limited to) the reporting and
disclosure requirements of ERISA, coverage under the Pension Benefit  
    Guaranty Corporation ("PBGC") and minimum and maximum funding requirements
of IRC Sections 412 404.                                              

  Under the terms of an agreement with the Tribe executed in 2003, the IMG
   Resort and Casino paid a fixed amount of 9.75% of salaries and wages as a
fixed contribution to the retirement Plan. The total pension expenses 
     recorded under this agreement were $1,289,615 and $1,886,333 for the fiscal
years ended April 30, 2005 and 2004.                                  

     The Tribe curtailed the Plan as of November 30, 2004, and will pay benefits
     in the future only on the services that had been rendered by that date. The
IMG Resort and Casino has made contributions to the Plan for employee 
   services through November 30, 2004, and the IMG Resort and Casino will be
    required to make no further payments to the Plan in the future. No gain or
    loss was recorded because there was no pension assets or liability related
to the Plan recorded on the financial statements of the IMG Resort and
   Casino and no future payments will be made or credits received by the IMG
   Resort and Casino. The IMG Resort and Casino has not instituted any other
  pension arrangement with its employees and the Tribe has not established
and alternative pension plan.                                         

NOTE 9 - RISK MANAGEMENT                                                        

   The IMG Resort and Casino manages the exposure to the risk of most losses
through various commercial insurance policies. There have been no     
reductions in insurance coverage. Settlement amounts have not exceeded
insurance coverage for 2003, 2004 and 2005, respectively.             

   The Tribe is self-insured for employee health and accident insurance. The
IMG Resort and Casino's employees are covered by this plan and remit  
     amounts to the Tribe for their share of the self-insurance costs. The total
   amounts reimbursed to the Tribe were approximately $647,000, $902,000 and
$1,408,000 for 2003, 2004 and 2005, respectively.                     

The Tribe maintains worker's compensation insurance coverage under a  
   retrospective rated policy whereby premiums are accrued based on the loss
 experience of the Tribe and its various enterprises. The IMG Resort and
     Casino's and the Resorts' employees are covered under this plan. Under this
     policy, premiums may be adjusted at the end of the coverage period based on
   loss experience for the coverage period. Management of the Tribe, the IMG
    Resort and Casino and the Resorts have not provided an estimate for losses
   that may result in premium adjustments at the end of the coverage period.

NOTE 10 - COMMITMENTS AND CONTINGENCIES                                         

LEGAL MATTERS                                                         

 The IMG Resort and Casino and the Resorts are involved in various legal
  actions incident to their operations that, in the opinion of management,
   will not materially affect the IMG Resort and Casino's financial position
or the results of its operations.                                     

  F-19

10-K
60th Page of 71
TOC
1st
Previous
Next
Bottom
Just 60th

NOTE 10 - COMMITMENTS AND CONTINGENCIES (CONTINUED)                             

OCCUPANCY FEE                                                         

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 a quarterly occupancy fee based on revenue and gross fixed
 assets. Occupancy fee for the years ended April 30, 2003, 2004 and 2005
totaled approximately $121,000, $130,000 and $137,200 respective1y.   

CONSTRUCTION AGREEMENT                                                

   In February 2002, the Tribe entered into a construction agreement for the
  development of the Travel Center and the new resort on behalf of the IMG
   Resort and Casino. Construction cost under the contract was approximately
$149,720,000. In March 2005, the contractor issued a certificate of   
 substantial completion and the IMG Resort and Casino started commercial
operation on March 15, 2005. A final certificate of completion and    
     acceptance will be issued following the successful completion of identified
  incomplete items. At April 30, 2005 a total of $8.1 million in retainage
    remains outstanding in a reserve cash account with the trustee and will be
disbursed following the issuance of the final completion certificate. 

NOTE 11 - RELATED-PARTY TRANSACTIONS                                            

  The Tribe operates other entities and enterprises in various industries,
including telecommunication, timber and forest products, gas and      
   convenience store; in addition, the Tribe has a housing authority, school
and nursing facility. Financial results of the Tribe and its other    
   enterprises and entities are not included in these consolidated financial
statements.                                                           

     The IMG Resort and Casino uses Mescalero Apache Telecommunications for some
 its telecommunications related services. The IMG Resort and Casino paid
  Mescalero Apache Telecommunications approximately $152,200, $289,000 and
   $231,000 for the years ended April 30, 2003, 2004 and 2005, respectively,
for such services.                                                    

   In addition to the amounts due to the Casino from the Tribe in connection
with revenues sharing and regulatory fees (see Note 7), there were no 
   amounts due to the Tribe from the Resorts at April 30, 2004 and 2005. The
Tribe reclassified $6,890,716 due from the Resorts as an equity       
   contribution and $1,193,833 due to Ski Apache from the Tribe as an equity
  distribution as of April 30, 2003, in connection with the reorganization
(see Note 1).                                                         

NOTE 12 - OPERATING SEGMENTS                                                    

     The IMG Resort and Casino has five operating segments. Gaming, Hotel, Ski ,
Resort Management and Travel Center. The Gaming segment information   
includes the activities of the Casino. The Hotel segment information  
  includes the activities of the Inn, hunting, golf, fishing and horseback
riding. The Ski Apache segment includes the activities of Ski Apache. 
     Resort/Holding Company Operations includes the activities of the IMG Resort
  and Casino and the pre-opening activities of the Casino and the Inn. The
     Travel Center which opened in May 2003 includes the pre-opening activities.
    These operating segments represent distinct business activities, which are
managed separately.                                                   

  F-20

10-K
61st Page of 71
TOC
1st
Previous
Next
Bottom
Just 61st
                                                        · Enlarge/Download Table


                                                             Resort/         Travel                                 
                   Gaming        Hotel          Ski        Holding Co.       Center                                 
2003             Operations    Operations    Operations     Operations     Operations    Eliminations     Total     
----            ------------  -------------  -----------  -------------   -----------   --------------  ------------
                                                                                                                    
Net revenue     $47,636,772  $ 13,261,039   $ 10,604,500  $          -     $       -     $ (5,250,000)   66,252,311 

Income (loss)                                                                                                       
from             13,056,515   (1,682,758)      2,932,412             -       (62,584)               -    14,243,585 
Operations                                                                                                          

Segment assets    4,829,867   10,882,615      14,032,654    29,814,295             -          (59,430)   59,500,001 

                                                             Resort/         Travel                                 
                   Gaming        Hotel          Ski         Holding Co.      Center                                 
2004             Operations    Operations    Operations     Operations     Operations    Eliminations       Total   
                ----------------------------------------------------------------------------------------------------
Net revenue     $33,136,364  $ 2,146,082    $  8,138,252   $  (750,941)   $38,256,728   $           -   $80,926,485 
Income (loss)                                                                                                       
from operations  36,176,134   (1,254,844)      1,371,554   (12,327,251)    19,971,613               -    43,937,206 
operations                                                                                                          

Segment assets   16,903,688    8,985,424      13,506,463   299,476,501     30,830,402     (53,492,506)  316,209,972 

                                   Hotel                     Resort/         Travel                                 
                   Gaming       Operations        Ski      Holding Co.       Center                                 
2005             Operations                   Operations    Operations     Operations    Eliminations     Total     
                ----------------------------------------------------------------------------------------------------
Net revenue     $33,874,092     $        -    $10,025,955 $    (10,212)    $49,144,095  $          -    $93,033,930 
Income (loss)                                                                                                       
from                                                                                                                
operations       (2,228,808)        (9,461)     2,205,763   (8,581,642)     21,543,670             -     12,929,522 

Segment assets  213,944,354     10,619,714     15,730,818  296,124,000      38,927,284  (281,652,369)   293,693,806 


  F-21

10-K
62nd Page of 71
TOC
1st
Previous
Next
Bottom
Just 62nd

NOTE 13 - CONSOLIDATING INFORMATION                                             

 In connection with IMG Resort and Casino's issuance in November 2003 of
 $200,000,000 of 12% senior notes, IMG Resort and Casino and the Resorts
(the "wholly-owned Guarantors") have, jointly and severally, fully and
unconditionally guaranteed the 12% senior notes. These guarantees are 
secured only until the completion of the Resort Project and thereafter
   unsecured and subordinated in right of payment to all existing and future
indebtedness outstanding and any other indebtedness permitted to be   
incurred by IMG Resort and Casino under the terms of the indenture    
 agreement for the 12% senior subordinated notes. A final certificate of
completion and acceptance has not been issued pending the successful  
completion of identified incomplete items                             

Pursuant to Rule 3-10 of Regulation S-X, the following consolidating  
     information is for IMG Resort and Casino and the wholly owned Guarantors of
 the 12% senior notes. This consolidating financial information has been
     prepared from the books and records maintained by IMG Resort and Casino and
  the wholly-owned Guarantors. The consolidating financial information may
not necessarily be indicative of results of operations or financial   
    position had the wholly owned Guarantors operated as independent entities.
  The separate financial statements of the wholly-owned Guarantors are not
   presented because management has determined they would not be material to
investors. The Resorts are wholly owned subsidiaries of IMG Resort and
Casino.                                                               

  F-22

10-K
63rd Page of 71
TOC
1st
Previous
Next
Bottom
Just 63rd
                                                        · Enlarge/Download Table


NOTE 13 - CONSOLIDATING INFORMATION (CONTINUED)                                                                                  

                                                   CONSOLIDATING BALANCE SHEETS                                                  
                                                       AS OF APRIL 30, 2005                                                      
                                                                                                                                 
                                                                                 Guarantor                                       
                                                                 IMGRC           Subsidiaries     Eliminations      Consolidated 
                                                             --------------    ---------------  ----------------  ---------------
ASSETS                                                                                                                           
CURRENT ASSETS:                                                                                                                  
   Cash and cash equivalents                                 $     524,959         13,193,562   $          -       $  13,718,521 
   Restricted cash and cash equivalents                         35,870,686                  -              -          35,870,686 
   Accounts receivable, net                                        380,867            196,609              -             577,476 
   Inventories                                                           -          1,429,506              -           1,429,506 
   Prepaid expenses                                                765,487             94,702              -             860,189 
                                                             --------------    ---------------  ----------------  ---------------
     Total current assets                                       37,541,999         14,914,379              -          52,456,378 

  NON CURRENT ASSETS:                                                                                                            
    Advanced to affiliates                                     205,038,001         32,516,495     (237,554,496)                 -
     Property, plant and equipment, net                                  -        231,721,074              -         231,721,074 
     Other Assets                                                  124,991             70,222              -             195,213 
      Deferred Financing Costs                                   9,321,141                  -              -           9,321,141 
      Investments in affiliates                                 44,097,873                  -      (44,097,873)                - 
                                                             --------------    ---------------  ----------------  ---------------
     Total non current assets                                  258,582,006        264,307,791     (281,652,369)      241,237,428 
                                                             --------------    ---------------  ----------------  ---------------
TOTAL ASSETS                                                  $296,124,005       $279,222,170    $(281,652,369)     $293,693,806 
                                                             ==============    ===============  ================  ===============
LIABILITIES AND EQUITY                                                                                                           

CURRENT LIABILITIES:                                                                                                             
   Accounts payable and other short-term liabilities         $   2,673,507      $           -   $          -        $  2,673,507 
   Construction Payables                                         8,145,734                  -              -           8,145,734 
   Accrued payables                                              6,916,507          4,088,705              -          11,005,212 
   Accrued interest                                             11,200,000                450              -          11,200,450 
   Deposits and advance payments                                         -            997,365              -             997,365 
   Current portion of long-term debt                                     -            254,007              -             254,007 
                                                             --------------    ---------------  ----------------  ---------------
     Current liabilities                                        28,935,748          5,340,527              -          34,276,275 

LONG TERM DEBT AND NOTES                                                                                                         
  Advances from affiliates                                       9,043,808        228,510,688     (237,554,496)                - 
  Long-term debt, net of current portion                       200,001,099          1,273,082                 -      201,274,181 
                                                             --------------    ---------------  ----------------  ---------------
  Long Term Liabilities                                        209,044,907        229,783,770     (237,554,496)      201,274,181 

     Total Liabilities                                         237,980,655        235,124,297     (237,554,496)      235,124,297 

EQUITY:                                                                                                                          
  Contributed capital                                           58,143,350         20,166,161      (20,166,161)       58,143,350 
  Retained Earnings                                             (2,139,792)         2,790,556       (2,790,556)       (2,139,792)
  Current year net income                                        2,139,792         21,141,156      (21,141,156)        2,139,792 
                                                             --------------    ---------------  ----------------  ---------------
     TOTAL EQUITY                                                        -         44,097,873      (44,097,873)       58,143,350 
                                                             --------------    ---------------  ----------------  ---------------
  TOTAL LIABILITIES AND EQUITY                               $ 296,124,005      $ 279,222,170   $ (281,652,369)     $293,693,806 
                                                             ==============    ===============  ================  ===============


  F-23

10-K
64th Page of 71
TOC
1st
Previous
Next
Bottom
Just 64th
                                                        · Enlarge/Download Table

                       CONSOLIDATING STATEMENTS OF INCOME                                                                   

                            YEAR ENDED APRIL 30, 2005                                                                       

                                                                              Guarantor                                     
        (Dollars)                                             IMGRC         Subsidiaries     Eliminations     Consolidated  
                                                        ------------------  --------------  ---------------  ---------------
                                                                                                                            
Revenues:                                                                                                                   
   Gaming                                                   $           -   $  64,254,312     $          -    $  64,254,312 
   Food and beverage                                                1,608       6,367,386                -        6,368,994 
   Rooms                                                                -       1,168,484                -        1,168,484 
   Recreation and other                                                 -      23,012,602                -       23,012,602 
                                                        ------------------  --------------  ---------------  ---------------
     Gross revenues                                                 1,608      94,802,784                -       94,804,392 
      Less - promotional allowances                                11,820       1,758,642                -        1,770,462 
                                                        ------------------  --------------  ---------------  ---------------
        Net revenue                                               (10,212)     93,044,142                -       93,033,930 
                                                        ------------------  --------------  ---------------  ---------------
Operating costs and expenses:                                                                                               
   Gaming                                                         257,934      25,507,235                -       25,765,169 
   Food and beverage                                              202,922       7,070,746                -        7,273,668 
   Hotel Expenses                                                       -         651,118                -          651,118 
   Recreation and other                                               760      15,434,056                -       15,434,816 
   General and administrative                                                   7,649,370                -        9,840,983 
                                                                2,191,613                                                   
   Pension (allocated by related party)                           275,675       1,013,940                -        1,289,615 
   Gaming regulatory commission                                                                                             
    fees (charged by related party)                                24,952       2,590,823                -        2,615,775 
   Insurance (allocated by related party)                         178,660       1,229,504                         1,408,164 
   Telecommunication (charged by related party)                   173,056          58,536                -          231,592 
   Pre-opening costs and expenses                                               3,095,662                -        8,323,930 
                                                                5,228,268                                                   
   Depreciation and amortization                                                7,231,988                -        7,269,578 
                                                                   37,590                                                   
                                                        ------------------  --------------  ---------------  ---------------
     Total operating expenses                                   8,571,430      71,532,978                -       80,104,408 
                                                        ------------------  --------------  ---------------  ---------------

Income from operations                                                         21,511,164                -       12,929,522 
                                                               (8,581,642)                                                  
                                                        ------------------  --------------  ---------------  ---------------

Other income:                                                                                                               
   Interest income                                                640,139          16,971                -          657,110 
   Interest expense                                           (11,154,441)       (389,419)               -      (11,543,860)
   Other income                                                    94,580           2,440                -           97,020 

    Income from affiliates                                     21,141,156               -      (21,141,156)               - 
                                                        ------------------  --------------  ---------------  ---------------
     Non Operating Income (Expenses)                           10,721,434        (370,008)     (21,141,156)     (10,789,730)
                                                        ------------------  --------------  ---------------  ---------------

     Net Income                                            $    2,139,792   $  21,141,156   $  (21,141,156)   $   2,139,792 
                                                        ==================  ==============  ===============  ===============


  F-24

10-K
65th Page of 71
TOC
1st
Previous
Next
Bottom
Just 65th
                                                        · Enlarge/Download Table

                     CONSOLIDATING STATEMENTS OF CASH FLOWS                                                                        
                            YEAR ENDED APRIL 30, 2005                                                                              

                                                                              Guarantor                                            
                                                            IMGRC             Subsidiaries        Eliminations      Consolidated   
                                                        -------------------   -----------------  ---------------    -------------  
                                                                                                                                   
Cash flows from operating activities:                                                                                              
   Net income                                            $   2,139,792       $  21,141,156        $(21,141,156)       $2,139,792   
   Adjustments to reconcile net income to net                                                                                      
      cash provided by operating activities:                                                                                       
      Depreciation and amortization                                  -           7,269,578                   -         7,269,578   
      Gain on sale of property, plant and equipment                                                                                
   Changes in assets and liabilities:                                                                                              
      Restricted cash and cash equivalents                           -             533,514                   -           533,514   
      Accounts receivable, net of allowance                   (380,867)           (164,043)                  -          (544,910)  
      Inventories                                                4,869            (465,790)                  -          (460,921)  
      Prepaid revenue sharing fees                                               4,218,673                   -         4,218,673   
      Prepaid expenses                                        (709,682)            311,547                   -          (398,135)  
      Other long term assets                                  (124,991)              6,690                   -          (118,301)  
      Accounts payable                                       2,673,507            (612,873)                  -         2,060,634   
      Accrued expenses                                       5,939,201            (683,492)                  -         5,255,709   
      Accrued revenue sharing and regulatory fees                    -         (22,572,558)                  -       (22,572,558)  
      Accrued interest payable                                (800,000)            (47,928)                  -          (847,928)  
      Deposits and advance payments                                  -             330,265                   -           330,265   
                                                          -----------------   -----------------    ---------------    -------------
       Net cash provided by operating activities             8,741,829           9,264,739         (21,141,156)       (3,134,588)  
                                                          -----------------   -----------------    ---------------    -------------
Cash flows from investing activities:                                                                                              
   Investment in subsidiaries                              (21,141,156)                             21,141,156                 -   
     Construction in progress accounts payable              (5,463,633)                                               (5,463,633)  
   Purchase of property, plant and equipment               113,112,297        (201,773,446)                  -                     
                                                          -----------------   -----------------    ---------------    -------------
       Net cash used by investing activities                86,507,508        (201,773,446)         21,141,156       (94,124,782)  
                                                          -----------------   -----------------    ---------------    -------------
Cash flows from financing activities:                                                                                              
   Deferred financing costs                                  1,708,352                   -                   -         1,708,352   
   Cash held for construction payments                      96,893,043                   -                   -        96,893,043   
    Advances to (from) affiliates                         (197,010,831)        197,010,831                   -                     
    Principal borrowings (payments) on long-term debt, net       1,099            (419,505)                  -          (418,406)  
    Distributions to Mescalero Apache Tribe                          -          (6,684,000)                  -       (13,000,000)  
    Contributions from Mescalero Apache Tribe                9,999,959                   -                   -         9,999,959   
                                                          -----------------   -----------------    ---------------    -------------
        Net cash used by (provided by) financing                                                                                   
          activities                                       (94,724,378)        189,907,326                   -        95,182,948   
                                                          -----------------   -----------------    ---------------    -------------

Net increase (decrease) in cash and cash equivalents           524,959          (2,601,381)                  -        (2,076,422)  

Cash and cash equivalents, beginning of year                         -          15,794,943                   -        15,794,943   
                                                          -----------------   -----------------    ---------------    -------------
Cash and cash equivalents, end of year                         524,959        $ 13,193,562          $        -       $13,718,521   
                                                          =================   =================    ===============    =============
Non-cash investing and financing activities:                                                                                       
     Distributions to Mescalero Apache Tribe               $         -        $          -          $        -       $         -   
                                                          =================   =================    ===============    =============


  F-25

10-K
66th Page of 71
TOC
1st
Previous
Next
Bottom
Just 66th

CONSOLIDATING BALANCE SHEETS

AS OF APRIL 30, 2004

                                                        · Enlarge/Download Table

                                                                                                                           
                                                                         Guarantor                                         
                                                         IMGRC         Subsidiaries      Eliminations       Consolidated   
                                                   -----------------   --------------    -------------    -----------------
Cash and cash equivalents                          $          -       $   15,794,943      $         -      $   15,794,943  
Restricted cash and cash equivalents                132,763,729              533,514                -         133,297,243  
Accounts receivable, net                                      -               32,566                -              32,566  
Inventories                                               4,869              963,716                -             968,585  
Prepaid Revenue Sharing                                       -            4,218,673                -           4,218,673  
Prepaid other                                            55,805              406,249                -             462,054  
Deferred financing cost, net                          1,625,244                    -                -           1,625,244  
                                                   -----------------   --------------    -------------    -----------------
Total current assets                                134,449,647           21,949,661                -         156,399,308  

Advances to Affiliates                               12,869,591           10,982,199      (23,851,790)                  -  
Property, plant and equipment, net                  113,112,297           37,217,206                -         150,329,503  
Long-term deferred financing expenses                 9,404,249                    -                -           9,404,249  
Other long term assets                                        -               76,912                -              76,912  
Investment in subsidiaries                           29,640,717                    -      (29,640,717)                  -  
                                                   ------------------ ---------------- ----------------- ----------------- 
 Total Assets                                      $299,476,501                    -     $(53,492,507)      $ 316,209,972  
                                                   ================== ================ ================= ==================

Accounts Payable and other short term liabilities  $          -              612,873     $          -       $     612,873  
Construction in progress accounts payable            13,609,367                    -                -          13,609,367  
Accrued expenses                                        977,306            4,342,424            2,331           5,322,061  
Accrued revenue sharing and regulatory fees                   -           23,000,000                -          23,000,000  
Accrued interest                                     12,000,000               48,378                -          12,048,378  
Deposits and advance payments                                 -              667,100                -             667,100  
Current portion of long-term debt                             -              252,053                -             252,053  
                                                   -----------------   --------------    -------------    -----------------
            Total current liabilities                26,586,673           28,922,828            2,331          55,511,832  

Advances from affiliates                             13,886,229            9,967,892      (23,854,121)                  -  
Long-term debt, net of current portion              200,000,000            1,694,541                -         201,694,541  
                                                   -----------------   --------------    -------------    -----------------
Total liabilities                                   240,472,902           40,585,261      (23,851,790)        257,206,371  

Contributed Capital                                  56,113,676           20,166,161      (20,166,161)         56,113,676  
  Current Year Net income (Loss)                     39,744,883           56,404,793      (56,404,793)         39,744,883  
 Retained equity                                    (36,854,960)         (46,930,237)      46,930,237         (36,854,960) 
                                                   -----------------   --------------    -------------    -----------------
                                                     59,003,599           29,640,717      (29,640,717)         59,003,599  
                                                   -----------------   --------------    -------------    -----------------
Total liabilities and equity                       $299,476,501        $  70,225,978     $(53,492,507)       $316,209,972  
                                                   ================== ================ ================= ==================

  F-26

10-K
67th Page of 71
TOC
1st
Previous
Next
Bottom
Just 67th
                                                        · Enlarge/Download Table


                       CONSOLIDATING STATEMENTS OF INCOME                                                        

                            YEAR ENDED APRIL 30, 2004                                                            

                                                                                                                 
                                                       IMG                                                       
                                                     Resort       Guarantor                                      
Revenues:                                           and Casino   Subsidiaries    Eliminations     Consolidated   
                                                   ------------  -------------  --------------  ---------------- 
   Gaming                                          $         -   $ 60,277,052    $         -      $   60,277,052 
   Food and Beverage                                     5,691      5,608,982              -           5,614,672 
   Rooms                                                     -              -              -                   - 
   Recreation and other                                     70     16,471,820              -          16,471,820 
                                                   ------------  -------------  --------------  ---------------- 
     Gross Revenue                                       5,761     82,357,854              -          82,363,614 

Less -Promotional Allowances                           756,701        680,428              -           1,437,129 
                                                   ------------  -------------  --------------  ---------------- 
     Net Revenue                                      (750,940)    81,677,426              -          80,926,485 

Operating Expenses                                                                                               
   Gaming                                            2,157,633     23,248,028              -          25,405,661 
   Reversal of accrued fees                                  -    (27,136,255)             -         (27,136,255)
   Food and beverage                                   704,864      5,882,608              -           6,587,472 
   Rooms                                                     -        119,722              -             119,722 
   Recreation and other                                471,800     10,229,699              -          10,701,499 
   General and administrative                        5,866,274      3,171,541              -           9,037,815 
   Insurance (allocated by related party)              157,333        745,288              -             902,621 
   Pension (allocated by related party)                410,231      1,476,102              -           1,886,333 
   Gaming regulatory commission                                                                                  
    fees (charged by related party)                    505,032        687,979              -           1,193,011 
   Telecommunication (charged by related party)         40,006        249,176              -             289,182 
   Pre-opening                                       1,263,138      1,808,844              -           3,071,982 
   Depreciation                                              -      4,930,236              -           4,930,236 
                                                   ------------  -------------  --------------  ---------------- 
     Total Operating Expenses                       11,576,311     25,412,968              -          36,989,279 
                                                   ------------  -------------  --------------  ---------------- 
Operating Income                                   (12,327,251)    56,264,458              -          43,937,206 

Other Income (Expense)                                                                                           
   Interest Income                                     767,698         33,567              -             801,266 
   Interest Expense                                 (5,100,317)      (151,370)             -          (5,251,687)
   Income from subsidiaries                         56,404,753              -    (56,404,753)                  - 
   Other Income                                              -        258,098              -             258,098 
                                                   ------------  -------------  --------------  ---------------- 
     Total Other Income (Expense)                   52,072,134        140,295    (56,404,753)         (4,192,323)
                                                   ------------  -------------  --------------  ---------------- 
     Net Income                                     39,744,883   $ 56,404,753    (56,404,753)         39,744,883 
                                                   ============  =============  ==============  ================ 


  F-27

10-K
68th Page of 71
TOC
1st
Previous
Next
Bottom
Just 68th
                                                        · Enlarge/Download Table

                     CONSOLIDATING STATEMENTS OF CASH FLOWS                                                                   
                            YEAR ENDED APRIL 30, 2004                                                                         

                                                                                Guarantor                                     
                                                                  IMGRC        Subsidiaries     Eliminations     Consolidated 
                                                             ---------------  --------------  ---------------  ---------------
                                                                                                                              
Cash flows from operating activities:                                                                                         
   Net income                                                 $39,744,883     $ 56,404,753     $ (56,404,753)    $ 39,744,833 
   Adjustments to reconcile net income to net                                                                                 
      cash provided by operating activities:                                                                                  
      Depreciation and amortization                                     -        4,930,236                 -        4,930,236 
      Gain on sale of property, plant and equipment                                                                           
   Changes in assets and liabilities:                                                                                         
      Restricted cash and cash equivalents                              -          (58,265)                -          (58,265)
      Accounts receivable, net of allowance                        75,635           67,461                 -          143,096 
      Inventories                                                  (4,869)        (108,187)                -         (113,056)
      Prepaid revenue sharing fees                                  4,448       (4,223,121)                -       (4,218,673)
      Prepaid expenses                                                  -         (173,056)                -         (173,056)
      Other long term assets                                            -          (60,911)                -          (60,911)
      Accounts payable                                                  -         (797,598)                -         (797,598)
      Accrued expenses                                                  -        3,571,823                 -        3,571,823 
      Accrued revenue sharing and regulatory fees                       -      (16,821,082)                -      (16,821,082)
      Accrued interest payable                                 12,000,000           48,378                 -       12,048,378 
      Deposits and advance payments                                     -          (82,408)                -          (82,408)
                                                             ---------------  --------------  ---------------  ---------------
          Net cash provided by operating activities            51,820,097       42,698,023       (56,404,753)      38,113,367 
                                                             ---------------  --------------  ---------------  ---------------

Cash flows from investing activities:                                                                                         
   Investment in subsidiaries                                 (56,404,753)               -        56,404,753                - 
   Construction in progress accounts payable                    6,453,445                -                 -        6,453,445 
   Purchase of property, plant and equipment                 (107,003,099)         752,297                 -     (107,003,099)
                                                             ---------------  --------------  ---------------  ---------------
       Net cash used by investing activities                 (157,706,704)         752,297        56,404,753     (100,549.654)
                                                             ---------------  --------------  ---------------  ---------------
Cash flows from financing activities:                                                                                         
   Deferred financing costs                                   (10,929,493)               -                 -      (10,929,493)
   Cash held for construction payments                       (132,763,729)               -                 -     (132,763,729)
   Cash proceeds from the issuance of notes                   200,000,000                -                 -      200,000,000 
   Principal borrowings (payments) on long-term debt, net               -       (5,506,865)                -       (5,506,865)
   Distributions to Mescalero Apache Tribe                              -      (13,170,204)                -      (13,170,204)
   Contributions from Mescalero Apache Tribe                   49,568,542      (18,298,943)                -       31,269,599 
                                                             ---------------  --------------  ---------------  ---------------
        Net cash used by (provided by) financing                                                                              
        activities                                            105,875,320      (36,976,012)                -       68,899,308 
                                                             ---------------  --------------  ---------------  ---------------
Net increase (decrease) in cash and cash equivalents              (11,287)       6,474,308                 -        6,463,021 

Cash and cash equivalents, beginning of year                       11,287        9,320,635                 -        9,331,922 
                                                             ---------------  --------------  ---------------  ---------------
Cash and cash equivalents, end of year                      $           -     $ 15,794,943     $           -   $   15,794,943 
                                                             ===============  ==============  ===============  ===============
Supplemental cash flow information:                                                                                           
     Cash paid for interest                                 $      60,115     $          -     $           -   $       60,115 
                                                             ===============  ==============  ===============  ===============

Non-cash investing and financing activities:                                                                                  
     Distributions to Mescalero Apache Tribe                $           -     $ 38,981,173     $           -   $   38,981,173 
                                                             ===============  ==============  ===============  ===============
     Property, plant and equipment acquired through                                                                           
      increase of payables, net                             $           -     $  6,453,445     $           -   $    6,453,445 
                                                             ===============  ==============  ===============  ===============
     Contribution from Mescalero Apache Tribe               $     328,618     $    980,683     $           -   $    1,309,301 
                                                             ===============  ==============  ===============  ===============


  F-28

10-K
69th Page of 71
TOC
1st
Previous
Next
Bottom
Just 69th

CONSOLIDATING BALANCE SHEETS

AS OF APRIL 30, 2003

                                                        · Enlarge/Download Table

                                                                        Guarantor                                       
                                                          IMGRC         Subsidiaries     Eliminations      Consolidated 
                                                      --------------  ---------------  ----------------  ---------------
                         ASSETS                                                                                         
CURRENT ASSETS:                                                                                                         
                                                                                                                        
   Cash and cash equivalents                           $     29,221     $  9,302,701    $          -      $   9,331,922 
   Restricted cash and cash equivalents                           -          475,249               -            475,249 
   Accounts receivable, net                                       -          175,662               -            175,662 
   Inventories                                              208,466          647,063               -            855,529 
   Prepaid expenses                                          15,785          273,214               -            288,999 
   Deferred financing costs                                 100,000                -               -            100,000 
                                                      --------------  ---------------  ----------------  ---------------
     Total current assets                                   353,472       10,873,889               -          11,227,361

NON CURRENT ASSETS:                                                                                                     
   Liquor license                                                 -           16,000               -              16,000
   Property, plant and equipment, net                    29,460,823       18,795,817               -          48,256,640
   Investment in affiliates                             (15,782,894)               -      15,782,894                  - 
                                                      --------------  ---------------  ----------------  ---------------

     Total assets                                      $ 14,031,401     $ 29,685,706    $ 15,782,894      $  59,500,001 
                                                      ==============  ===============  ================  ===============

LIABILITIES AND EQUITY                                                                                                  

CURRENT LIABILITIES:                                                                                                    
   Accounts payable and other short term liabilities   $          -     $  1,410,471    $          -      $   1,410,471 
   Construction in Progress Accounts Payable              7,155,922                -               -          7,155,922 
   Accrued expenses                                         136,062        1,614,176               -          1,750,238 
   Accrued revenue sharing and regulatory fees                    -       39,821,082               -         39,821,082 
   Deposits and advance payments                                  -          749,508               -            749,508 
   Current portion of long-term debt                      5,580,096          185,331               -          5,765,427 
                                                      --------------  ---------------  ----------------  ---------------
     Total current liabilities                           12,872,080       43,780,568               -         56,652,648 

NON CURRENT LIABILITIES:                                                                                                
Long-term debt, net of current portion                            -        1,688,032               -          1,688,032 
                                                      --------------  ---------------  ----------------  ---------------
Total long-term debt                                              -        1,688,032               -          1,688,032 

     Total liabilities                                   12,872,080       45,468,600               -         58,340,680 

EQUITY:                                                                                                                 
  Contributed capital                                    24,844,077        7,901,862      (7,901,862)        24,844,077 
  Retained deficit                                      (23,684,756)     (23,684,756)     23,684,756        (23,684,756)
                                                      --------------  ---------------  ----------------  ---------------
     Total equity                                         1,159,321      (15,782,894)     15,782,894          1,159,321 
                                                      --------------  ---------------  ----------------  ---------------
     Total liabilities and equity                      $ 14,031,401     $ 29,685,706   $  15,782,894      $  59,500,001 
                                                      ==============  ===============  ================  ===============


  F-29

10-K
70th Page of 71
TOC
1st
Previous
Next
Bottom
Just 70th
                                                        · Enlarge/Download Table


                       CONSOLIDATING STATEMENTS OF INCOME                                                                

                            YEAR ENDED APRIL 30, 2003                                                                    

                                                                           Guarantor                                     
                                                            IMGRC          Subsidiaries     Eliminations     Consolidated
                                                        --------------  ----------------  --------------  ---------------
                                                                                                                         
Revenues:                                                                                                                
   Gaming                                                 $         -     $  46,942,180     $         -     $ 46,942,180 
   Food and beverage                                                -         4,893,997               -        4,893,997 
   Rooms                                                            -         3,394,434               -        3,394,434 
   Recreation and other                                             -        11,952,860               -       11,952,860 
                                                        --------------  ----------------  --------------  ---------------
     Gross revenues                                                 -        67,183,471               -       67,183,471 
     Less - promotional allowances                                  -           931,160               -          931,160 
                                                        --------------  ----------------  --------------  ---------------
        Net revenue                                                 -        66,252,311               -       66,252,311 
                                                        --------------  ----------------  --------------  ---------------
Operating costs and expenses:                                                                                            
   Gaming                                                           -        19,457,655               -       19,457,655 
   Food and beverage                                                -         4,955,537               -        4,955,537 
   Rooms                                                            -         1,552,133               -        1,552,133 
   Recreation and other                                             -         5,757,452               -        5,757,452 
   General and administrative                                       -         6,500,909               -        6,500,909 
   Pension (allocated by related party)                             -         1,631,828               -        1,631,828 
   Gaming regulatory commission                                                                                          
    fees (charged by related party)                                 -           750,821               -          750,821 
   Insurance (allocated by related party)                           -           647,000               -          647,000 
   Telecommunication (charged by related party)                     -           152,200               -          152,200 
   Pre-opening costs and expenses                                   -         1,389,967               -        1,389,967 
   Depreciation and amortization                                    -         9,213,224               -        9,213,224 
                                                        --------------  ----------------  --------------  ---------------
     Total operating expenses                                       -        52,008,726               -       52,008,726 
                                                        --------------  ----------------  --------------  ---------------

Income from operations                                              -        14,243,585               -       14,243,585 
                                                        --------------  ----------------  --------------  ---------------
Other income:                                                                                                            
   Interest income                                                  -           190,120               -          190,120 
   Other income                                                     -           170,984               -          170,984 
                                                        --------------  ----------------  --------------  ---------------
     Total other income                                             -           361,104               -          361,104 
                                                        --------------  ----------------  --------------  ---------------
     Net Income                                           $         -     $  14,604,689     $         -     $ 14,604,689 
                                                        ==============  ================  ==============  ===============


  F-30

10-K
Last Page of 71
TOC
1st
Previous
Next
Bottom
Just 71st
                                                        · Enlarge/Download Table

                     CONSOLIDATING STATEMENTS OF CASH FLOWS                                                                   
                            YEAR ENDED APRIL 30, 2003                                                                         

                                                                                Guarantor                                     
                                                                 IMGRC        Subsidiaries     Eliminations      Consolidated 
                                                             ---------------  --------------  ---------------   --------------
                                                                                                                              
Cash flows from operating activities:                                                                                         
   Net income                                                $           -      $14,604,689    $          -      $ 14,604,689 
   Adjustments to reconcile net income to net                                                                                 
      cash provided by operating activities:                                                                                  
      Depreciation and amortization                                      -        9,213,224               -         9,213,224 
      Gain on sale of property, plant and equipment                      -          (13,741)              -           (13,741)
   Changes in assets and liabilities:                                                                                         
       Restricted cash and cash equivalents                              -         (114,304)              -          (114,304)
       Accounts receivable, net of allowance                             -          (58,908)              -           (58,908)
       Inventories                                                (208,466)         (59,270)              -          (267,736)
       Prepaid expenses                                            (15,785)         (61,801)              -           (77,586)
       Liquor license                                                    -           (1,000)              -            (1,000)
       Accounts payable                                                  -          583,895               -           583,895 
       Accrued expenses                                            136,062          318,733               -           454,795 
       Accrued revenue sharing and regulatory fees                       -        7,717,219               -         7,717,219 
       Deposits and advance payments                                     -          (20,034)              -           (20,034)
                                                             ---------------  --------------   ---------------   -------------
          Net cash provided by operating activities                (88,189)      32,108,702               -        32,020,513 
                                                             ---------------  --------------   ---------------   -------------
Cash flows from investing activities:                                                                                         
   Investment in subsidiaries                                   15,782,894                -     (15,782,894)                - 
   Purchase of property, plant and equipment                   (29,460,823)      (1,273,740)              -       (30,734,563)
   Construction in progress accounts payable                     7,155,922                -               -         7,155,922 
   Proceeds from sale of property, plant and equipment                   -           35,198               -            35,198 
                                                             ---------------  --------------   ---------------   -------------
         Net cash used by investing activities                  (6,522,007)      (1,238,542)    (15,782,894)      (23,543,443)
                                                             ---------------  --------------   ---------------   -------------

Cash flows from financing activities:                                                                                         
   Deferred financing costs                                       (100,000)               -               -          (100,000)
   Advances from Mescalero Apache Tribe                                  -      (11,107,588)              -       (11,107,588)
   Borrowings on revolving line of credit                        5,000,000                -               -         5,000,000 
   Principal borrowings (payments) on long-term debt, net          580,096         (230,332)              -           349,764 
   Distributions to Mescalero Apache Tribe                               -      (40,561,702)              -       (40,561,702)
   Contributions from Mescalero Apache Tribe                     1,159,321        8,522,544      15,782,894        25,464,759 
                                                             ---------------  --------------   ---------------   -------------
        Net cash used by financing activities                    6,639,417      (43,377,078)     15,782,894       (20,954,767)
                                                             ---------------  --------------   ---------------   -------------

Net (decrease) increase in cash and cash equivalents                29,221      (12,506,918)              -       (12,477,697)

Cash and cash equivalents, beginning of year                             -       21,809,619               -        21,809,619 
                                                             ---------------  --------------   ---------------   -------------

Cash and cash equivalents, end of year                         $    29,221    $   9,302,701     $         -      $  9,331,922 
                                                             ===============  ==============   ===============   =============
Supplemental cash flow information:                                                                                           
     Cash paid for interest                                    $     5,439    $     167,968     $         -      $    173,407 
                                                             ===============  ==============   ===============   =============

Non-cash financing activities:                                                                                                
     Distributions to Mescalero Apache Tribe                   $         -    $   1,193,833     $         -      $  1,193,833 
                                                             ===============  ==============   ===============   =============
     Contribution from Mescalero Apache Tribe                  $         -    $   7,820,274     $         -      $  7,820,274 
                                                             ===============  ==============   ===============   =============

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		8/29/97		58
		1/1/99		18
		8/20/99		10
		4/30/00		3		18
		4/30/01		14		52
		9/11/01		28
		10/1/01		52
		4/30/02		14		46
		12/5/02		33
		12/12/02		33		37
		4/2/03		2		37
		4/30/03		6		71
		5/21/03		6
		5/22/03		49
		7/15/03		37
		9/6/03		37
		9/22/03		34		37
		10/24/03		37
		11/3/03		23		56
		2/27/04		38					S-4
		4/20/04		17		58
		4/22/04		38					S-4/A
		4/30/04		6		68			10-K, 10-K/A
		5/15/04		56
		6/1/04		18		58
		6/15/04		23		57			8-K
		6/25/04		43					8-K
		7/22/04		18		58
		7/29/04		38					10-K/A, 10-K
		11/30/04		19		59
		3/15/05		3		60			8-K
For The Period Ended		4/30/05		1		65
		6/15/05		25		54
		7/1/05		42
		7/21/05		37
		7/22/05		33		34
Filed On / Filed As Of		7/28/05		39		40
		12/15/05		25		54			10-Q, 8-K
		4/30/06		34
		8/29/06		18
		11/15/07		56
		4/30/08		34
		11/15/10		23		56
		9/1/11		23
		12/31/14		12
		6/30/15		18
Top									List All Filings