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

                                    FORM 10-Q

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

                 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 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                        85-0098966
        (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                 (Zip Code)
                 offices)

                                 (505) 464-7004
              (Registrant's telephone number, including area code)


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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes [_]  No [X]



<PAGE>


PART I  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                    As of              As of
                                                                 January 31,         April 30,
                                                                     2005               2004
                                                                --------------     -------------
                           ASSETS                                 (unaudited)
CURRENT ASSETS:
<S>                                                                <C>               <C>
  Cash and cash equivalents                                       $ 15,274,379      $ 15,794,943
  Restricted cash and cash equivalents                              47,586,418       133,297,243
  Accounts receivable, net                                             155,488            32,566
  Inventories                                                        1,266,088           968,585
  Prepaid expenses                                                     807,352           462,054
  Prepaid revenue sharing fees                                       1,100,173         4,218,673
  Deferred financing cost, net                                       1,625,244         1,625,244
                                                                --------------     -------------
     Total current assets                                           67,815,142       156,399,308

NON CURRENT ASSETS:
   Property, plant and equipment, net                              216,802,958       150,329,503
   Long term deferred financing cost, net                            8,102,208         9,404,249
   Other long-term assets                                            3,478,924            76,912
                                                                --------------     -------------
     Total assets                                                 $296,199,232      $316,209,972
                                                                  ============      ============

                   LIABILITIES AND EQUITY
CURRENT LIABILITIES:
  Accounts payable and other short-term liabilities                  3,181,192      $    612,873
  Construction in progress accounts payable                         12,715,609        13,609,367
  Accrued expenses                                                   9,593,770         5,322,061
  Accrued revenue sharing and regulatory fees                                -        23,000,000
  Accrued interest                                                   5,200,000        12,048,378
  Deposits and advance payments                                              -           667,100
  Current portion of long-term debt                                    192,502           252,053
                                                                --------------     -------------
     Total current liabilities                                      30,883,073        55,511,832

NON CURRENT LIABILITIES:
   Long-term debt, net of current portion                          201,400,090       201,694,541
                                                                --------------     -------------

     Total liabilities                                             232,283,163       257,206,373
                                                                --------------     -------------
COMMITMENTS AND CONTINGENCIES (Note 10)

EQUITY:
  Contributed capital                                               57,352,921        56,113,676
  Retained earnings                                                  6,563,148         2,889,923
                                                                --------------     -------------
      Total equity                                                  63,916,069        59,003,599
                                                                --------------     -------------

     Total liabilities and equity                                 $296,199,232      $316,209,972
                                                                  ============      ============


        The accompanying notes are an integral part of these statements.

</TABLE>

                                       1


<PAGE>

<TABLE>
<CAPTION>

           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
                                   (unaudited)

                                                  For the Three Months     For the Nine Months
                                                         Ended                    Ended
                                                      January 31,              January 31,
                                                   2005         2004         2005        2004
                                                ------------ -----------  ----------  ------------
Revenues:
<S>                                             <C>          <C>         <C>         <C>
  Gaming                                        $13,060,621  $13,588,869 $48,004,383 $45,363,920
  Food and beverage                               1,424,581    1,446,736   4,199,124   4,055,599
  Recreation and other                            7,373,459    5,817,425  15,179,218  10,280,647
                                                ------------ -----------  ----------  ------------
     Gross revenue                               21,858,661   20,853,030  67,382,725  59,700,166
     Less - promotional allowances                  186,833      472,707     335,068     900,879
                                                ------------ -----------  ----------  ------------
       Net revenue                               21,671,828   20,380,323  67,047,657  58,799,287

Operating costs and expenses:
  Gaming                                          5,740,266    6,959,042  16,075,804  20,050,318
  Hotel                                                   -            -           -     104,564
  Food and beverage                               1,548,027    1,509,715   5,084,449   4,958,118
  Recreation and other                            4,427,120    3,102,282  11,190,021   7,206,366
  General and administrative                      2,833,959    1,221,602   7,494,547   5,790,913
  Insurance (allocated by related party)            513,094      569,967     918,057     682,647
  Pension (allocated by related party)              776,111      449,966   1,788,796   1,406,934
  Telecommunication (charged by related party)       53,944       99,045     180,101     242,633
  Fees (charged by related party)                   719,117      593,300   1,621,918   1,010,365
  Pre-opening costs and expenses                  2,541,453      597,241   4,315,665   2,458,597
  Depreciation and amortization                   2,021,766    1,383,599   5,042,042   3,791,884
                                                ------------ -----------  ----------  ------------
     Total operating expenses                    21,174,857   16,485,759  53,711,400  47,703,339

Income from operations                              496,971    3,894,564  13,336,257  11,095,948

Other income (expenses):
  Interest income                                   160,746      306,760     513,363     328,812
  Interest expense, net of amounts capitalized   (1,969,830)  (1,297,188) (7,385,686) (1,297,188)
  Other income (expenses)                            (1,855)      56,665      99,214     193,931
                                                ------------ -----------  ----------  ------------
     Total other income (expenses)               (1,810,939)    (933,763) (6,773,109)   (774,445)
                                                ------------ -----------  ----------  ------------

     Net income                                 $(1,313,968)  $2,960,801  $6,563,148 $10,321,503
                                                ============  ==========  ========== ============
</TABLE>

        The accompanying notes are an integral part of these statements.





                                       2
<PAGE>


<TABLE>
<CAPTION>

           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                                  For the Nine Months Ended
                                                                          January 31,
                                                                      2005               2004
                                                                 --------------     --------------
Cash flows from operating activities:
<S>                                                              <C>                <C>
    Net income                                                   $ 6,563,148        $ 10,321,503
    Adjustments to reconcile net income to net
      cash (used in) provided by operating activities:
      Depreciation and amortization                                5,042,042           3,791,884
      Changes in assets and liabilities:
         Restricted cash and cash equivalents                              -             (29,581)
         Accounts receivable, net of allowance                      (122,921)           (243,569)
         Inventories                                                (297,504)           (202,294)
         Prepaid revenue sharing fees                              3,119,029                   -
         Prepaid expenses                                           (345,826)           (359,058)
         Interest receivable                                         (48,563)                  -
         Other long-term assets                                   (3,353,450)                  -
         Accounts payable                                          2,568,320           3,349,046
         Construction in progress accounts payable                  (893,758)          7,306,767
         Accrued expenses                                          4,047,607           1,746,056
         Accrued revenue sharing and regulatory fees             (23,000,000)          7,671,487
         Accrued interest                                         (6,848,378)          6,000,000
         Deposits and advance payments                              (442,995)           (749,508)
                                                              ---------------    ----------------
         Net cash (used in) provided by operating activities     (14,013,249)         38,602,733

Cash flows from investing activities:
    Purchase of property, plant and equipment                    (71,515,498)        (85,214,947)
                                                              ---------------    ----------------
      Net cash used in investing activities                      (71,515,498)        (85,214,947)

Cash flows from financing activities:
    Deferred financing costs                                       1,302,041         (10,508,784)
    Cash held for construction payments                           62,710,825        (151,595,160)
    Payment of compact settlement                                 23,000,000                   -
    Borrowings on revolving line-of-credit                                 -         200,000,000
    Principal borrowings (payments) on long-term debt, net          (354,003)         (4,719,149)
    Distributions to Mescalero Apache Tribe                      (11,650,680)        (12,749,032)
    Contributions from Mescalero Apache Tribe                     10,000,000          31,269,599
                                                              ---------------    ----------------
Net cash provided by financing activities                         85,008,183          51,697,474
                                                              ---------------    ----------------

Net (decrease) increase in cash and cash equivalents                (520,564)          5,085,260

Cash and cash equivalents, beginning of period                    15,794,943           9,331,922
                                                              ---------------    ----------------
Cash and cash equivalents, end of period                        $ 15,274,379          14,417,182
                                                              ===============    ================
</TABLE>


        The accompanying notes are an integral part of these statements.


                                       3
<PAGE>


           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

              FOR THE THREE MONTHS ENDED JANUARY 31, 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.

     Casino Apache (the "Casino") offered Class III gaming as defined by the
     Indian Gaming Regulatory Act ("IGRA"), on tribal land in Mescalero, New
     Mexico and was subsequently closed on February 21, 2005. 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 is in process and is scheduled for completion in
     the fourth quarter of fiscal year 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 resort.

     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 and the capitalization of construction bond interest costs.
     Actual results could differ from those estimates.



                                       4
<PAGE>

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 Resort 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, livestock and stables,
     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 $9,727,452 as of January
     31, 2005.

     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:

          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 - 50years


                                       5
<PAGE>


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

     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. Under the provisions of Statement of Accounting
     Standards No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED
     ASSETS ("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.

     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 fair value at April 30, 2004 was
     approximately $216.0 million and $232.0 million at January 31, 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.

     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 $186,833 and $472,707 for the
     three months ended January 31, 2005 and 2004 and $335,068 and $900,879 for
     the nine months ended January 31, 2005 and 2004, respectively.

     The Casino Apache Spirit Club program 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 related
     liability is included in accrued expenses and totaled approximately
     $479,488 as of January 31, 2005 and $380,000 as of April 30, 2004.


                                       6
<PAGE>



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

     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 $186,833 and $472,707 for the three months ended January 31,
     2005 and 2004 and $335,068 and $900,879 for the nine months ended January
     31, 2005 and 2004, 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 Resorts, was included in gaming expenses as follows:

                                                  Quarter Ended January 31,
                                                        2005           2004
                                                 -------------    ------------

     Food and beverage                                 66,407         27,075
     Other                                                  -         19,307
                                                 -------------    ------------
                                                     $ 66,407       $ 46,382
                                                 =============    ============

     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.
     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 construction period of the Resort. 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.



                                       7
<PAGE>


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

     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 three months
     ended January 31, 2004 and 2005 were approximately $370,000 and $462,000
     respectively. For the nine months ended January 31, 2004 and 2005
     advertising costs were $1,048,000 and $1,526,000 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 for taxes payable to the Tribe as of April 30, 2004
     and January 31, 2005, respectively. The amounts are recorded as an accrued
     expense in the accompanying consolidated balance sheets.

     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.

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 was $3,448 as of
     January 31, 2005.

NOTE 3 - RESTRICTED CASH AND CASH EQUIVALENTS

     Restricted cash consists of various funds held for the construction
     project. The balance was $133,297,243 as of April 30, 2004 and $47,586,417
     as of January 31, 2005.



                                       8
<PAGE>

<TABLE>
<CAPTION>

NOTE 4 - INVENTORIES

    Inventories consist of the following at:
                                                                       April 30,    January 31,
                                                                          2004         2005
                                                                      -----------  -----------
<S>                                                                   <C>          <C>
    Food and beverage                                                 $   219,628  $  228,470
    Golf and pro shop                                                     132,936     505,915
    Gift shops, fuel and other                                            616,021     531,703
                                                                      -----------  -----------
      Total inventories                                               $   968,585  $1,266,088
                                                                      ===========  ===========


NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET

    Property, plant and equipment is summarized as follows at:

                                                                        April 30,   January  31,
                                                                           2004        2005
                                                                      -----------  -----------
    Land                                                             $    538,894  $   538,894
    Buildings, lifts and snowmaking equipment                          39,287,564   39,287,564
    Non-gaming equipment, furniture and other                          25,498,837   27,813,193
    Gaming equipment                                                   11,370,236   12,563,442
    Leasehold and land improvements, lake and golf course               6,480,058    6,163,234
                                                                      -----------  -----------
    Subtotal                                                           83,175,589   86,366,327

    Less accumulated depreciation and amortization                    (46,281,098) (51,413,657)
                                                                      ------------ -----------

    Property, plant and equipment, net                                 36,894,491   34,952,670
    Construction in progress                                          113,435,012  181,850,288
                                                                      -----------  ------------

                                                                     $150,329,503 $216,802,958

</TABLE>

     The IMG Resort and Casino capitalized interest cost of $7,892,314,
     $4,509,966 and $11,915,057 related to construction of the Travel Center and
     Resort Project during the fiscal year ended April 30, 2004 and the three
     and nine month periods ended January 31, 2005, respectively.

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 used proceeds of these
     notes to pay a $19.0 million revolving credit agreement with Citicorp North
     America, Inc. and to pay the costs of the offering, and is using the
     remaining proceeds to pay, in part, construction costs of the Resort
     Project. 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 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 $47.6 million at January 31, 2005. The
     Notes will, after completion



                                       9
<PAGE>

     NOTE 6 - LONG-TERM DEBT (CONTINUED)

     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.

     On June 15, 2004, 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 credit facility is fully 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. As of January 31, 2005, there were no funds drawn under this
     facility.

     Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
                                                                        April 30,   January 31,
                                                                          2004         2005
                                                                     ------------  ------------

<S>                                                                  <C>            <C>
    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  $  1,592,592

    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   201,592,592

    Less current portion                                                 (252,053)     (192,502)
                                                                     ------------  ------------

    Long-term portion                                               $ 201,694,541 $ 201,400,090
                                                                    ============= =============

</TABLE>

     The maturities of long-term debt as of January 31, 2005 are as follows:


     2005                                                          $    192,502
     2006                                                               205,162
     2007                                                               221,125
     2008                                                               242,838
     2009                                                               264,571
     Thereafter                                                     200,466,394
                                                                    -----------
                                                                   $201,592,592
                                                                   =============

                                       10
<PAGE>


NOTE 6 - LONG-TERM DEBT (CONTINUED)

     Total interest incurred for the three months ended January 31, 2005 and
     2004 respectively was $6,057,972 and $6,397,174, respectively, of which
     $4,509,966 and $5,099,986 was capitalized. Total interest incurred for the
     nine month periods ending January 31, 2005 and 2004 respectively was
     $18,066,297 and $9,189,500 of which $11,915,057 and $7,892,314 was
     capitalized.

NOTE 7 - GAMING REVENUE SHARING AND REGULATORY FEES

     The Tribe regulates the Tribe'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 subjected 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 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 Resorts 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 will begin 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 will begin incurring regulatory fees,
     at the rate of $100,000 per year, from July 22, 2004, the date the approval
     of the 2001 Compact was published in the Federal Register. The IMG Resort
     and Casino's first payment for regulatory fees under the 2001 Compact was
     paid on September 1, 2004, the first day of the first full calendar quarter
     after publication of approval of the 2001 Compact in the Federal Register.
     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. On August 10, 2004, the IMG Resort and Casino made the
     remaining $23.0 million payment required under the settlement agreement. As
     a result of the settlement with the State, expense and the liability for
     accrued revenue sharing and regulatory fees has been reduced by $1.5
     million for the quarter ended January 31, 2005.

NOTE 8 - DEFINED BENEFIT PENSION PLAN

     The Resorts participate in the Mescalero Apache Tribe Defined Benefit Plan
     (the "Plan"), a single-employer defined benefit pension plan that covers
     substantially all full-time employees of the Tribe. Individuals who provide
     services to the IMG Resort and Casino and the Resorts are employees of the
     Tribe and participate in the Plan. The Tribe is the Plan sponsor and
     handles all



                                       11
<PAGE>


     administration and funding of the Plan. The Tribe reserves the right to
     amend any or all provisions of the Plan. Changes to 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.

     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 the minimum and maximum funding
     requirements of IRC Sections 412 and 404.

     No separately prepared financial statements of the Plan are available.

     Under the terms of an agreement with the Tribe executed in 2003, the Resort
     pays a fixed amount of 9.75% of salaries and wages as a fixed contribution
     to the retirement plan. The total pension expenses under this agreement
     were $776,111 and $449,966 for the three months ended January 31, 2005 and
     2004, respectively and $1,788,796 and $1,406,934 for the nine months ended
     January 31, 2005 and 2004, respectively.

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 the three months ended January 31, 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 the Plan and remit amounts
     to the Tribe for their share of the self-insurance costs. The total amounts
     reimbursed to the Tribe were approximately $513,094 and $569,967 for the
     three months ended January 31, 2005 and 2004, respectively and $918,057 and
     $682,647 for the nine months ended January 31, 2005 and 2004, 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 the 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.

     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.



                                       12
<PAGE>


     CONSTRUCTION AGREEMENT

     In September 2003, the IMG Resort and Casino entered into a construction
     agreement for the development of the Travel Center and the new Resort
     Project. Estimated construction cost is approximately $135.0 million, and
     as of January 31, 2005, the IMG Resort and Casino had outstanding
     construction commitments of approximately $5.8 million.

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 $53,944 and $99,045 for
     the three months ended January 31, 2005 and 2004 and $180,101 and $242,633
     for the nine months ended January 31, 2005 and 2004, respectively, for such
     services.

    There were no amounts due to the Tribe from the Resorts at January 31, 2005
and 2004.

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.

<TABLE>
<CAPTION>


THREE MONTHS                                                            Resort/        Travel
ENDED                Gaming         Hotel/Golf/Other    Ski           Holding Co.      Center
JANUARY 31, 2004   Operations          Operations    Operations       Operations      Operations     Eliminations        Total
----------------   ------------     ---------------  -------------   ------------    ------------   --------------   -------------
<S>                 <C>                   <C>         <C>            <C>              <C>            <C>             <C>
Net revenue         $7,062,797            $42,067     $ 3,855,084    $       -        $9,420,375     $         -     $20,380,323
Income from
operations           1,952,972           (474,423)      1,374,966     (2,968,231)      4,009,280               -       3,894,564

Segment assets      18,054,833         10,746,540      11,503,089    268,048,581      29,874,825      (29,281,099)   308,946,769


                                       13
<PAGE>



THREE MONTHS                                                            Resort/        Travel
ENDED                Gaming         Hotel/Golf/Other    Ski           Holding Co.      Center
JANUARY 31, 2005   Operations          Operations    Operations       Operations      Operations     Eliminations        Total
----------------   ------------     ---------------  -------------   ------------    ------------   --------------   -------------
Net revenue        $5,805,239         $         -    $ 5,526,290      $    (2,976)    10,343,275      $         -    $ 21,671,828
Income (loss)
from operations    (3,037,714)             (9,460)     2,122,048       (1,985,190)     3,407,287                -         496,971

Segment assets     11,564,298          10,094,682     13,522,296      294,985,663     38,142,034      (72,109,739)    296,199,234



NINE MONTHS                                                            Resort/        Travel
ENDED                Gaming              Hotel          Ski           Holding Co.      Center
JANUARY 31, 2004   Operations          Operations    Operations       Operations      Operations     Eliminations        Total
----------------   ------------     ---------------  -------------   ------------    ------------   --------------   -------------
Net revenue        $25,933,005        $ 2,054,267    $ 3,856,212      $   (36,431)    $26,992,234                -   $ 58,799,287

Income from
operations           8,243,116           (731,995)      (370,279)      (7,922,902)     11,878,008                -     11,095,948

Segment assets      18,054,833         10,746,540     11,503,089      268,048,581      29,874,825      (29,281,099)   308,946,769



NINE MONTHS                                                            Resort/         Travel
ENDED                Gaming               Hotel         Ski           Holding Co.      Center
JANUARY 31, 2005   Operations          Operations    Operations       Operations      Operations     Eliminations        Total
----------------   ------------     ---------------  -------------   ------------    ------------   --------------   -------------
Net revenue        $23,378,599          $        -   $ 5,526,674      $    (5,053)     $38,147,437    $        -     $ 67,047,657

Income from
operations           1,298,533              (9,460)      (53,209)      (5,906,127)      18,006,520             -       13,336,257

Segment assets      11,564,298          10,094,682    13,522,296      294,985,663       38,142,034    (72,109,739)    296,199,234


</TABLE>

NOTE 13 - CONSOLIDATING INFORMATION

In connection with the IMG Resort and Casino's issuance in November 2003 of
$200,000,000 of 12% senior notes, the 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.

Pursuant to Rule 3-10 of Regulation S-X, the following consolidating information
is for the 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 the 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 the IMG Resort and Casino. The IMG
Resort and Casino was established on April 2, 2003 for the purpose of managing
the Resorts. The following consolidating information is presented as of and for
the three and nine months ended January 31, 2004 and 2005.



                                       14
<PAGE>


<TABLE>
<CAPTION>

                          CONSOLIDATING BALANCE SHEETS
                             AS OF JANUARY 31, 2005
                                   (UNAUDITED)

NOTE 13 - CONSOLIDATING INFORMATION (CONTINUED)

                                                       GUARANTOR
                                          IMGRC       SUBSIDIARIES    ELIMINATIONS  CONSOLIDATED
                                        -----------   ------------    ------------  -------------
<S>                                   <C>            <C>             <C>           <C>
    Cash and cash equivalents         $    459,499   $ 14,814,880    $         -   $  15,274,379
    Restricted cash and cash
     equivalents                        47,586,418              -              -      47,586,418
    Accounts receivable, net                     -        155,488              -         155,488
    Inventories                              4,622      1,261,466              -       1,266,088
    Prepaids other                         326,860        480,492              -         807,352
    Prepaid revenue sharing fee                  -      1,100,173              -       1,100,173
    Deferred financing cost, net         1,625,244              -              -       1,625,244
                                        -----------   ------------    -----------   -------------
Total current assets                    50,002,643     17,812,499              -      67,815,142

Advances to affiliates                   9,314,610     20,652,303    (29,966,913)              -
Property plant and equipment, net      182,087,754     34,715,204              -     216,802,958

Long-term deferred financing
    expenses, net                        8,102,208              -              -       8,102,208
Other long-term assets                   3,335,623        143,301              -       3,478,924
Investment in subsidiaries              42,142,826              -    (42,142,826)              -
                                       ------------   ------------    -----------   -------------
    Total Assets                      $294,985,664    $73,323,307   $(72,109,739)   $296,199,232
                                       ============  =============   ============   =============

    Accounts payable and other short
     term liabilities                   $3,181,192              -   $          -       3,181,192
    Construction in progress accounts
     payable                            12,715,609              -              -      12,715,609
    Accrued expenses                     7,420,177      2,173,593              -       9,593,770
    Accrued interest                     5,200,000              -              -       5,200,000
    Current portion long-term debt               -        192,502              -         192,502
                                       ------------  -------------   ------------   -------------
Total current liabilities               28,516,977      2,366,095              -      30,883,073

    Advances from affiliates             2,552,617     27,414,296    (29,966,913)              -
    Long-term debt, net of current
     portion                           200,000,000      1,400,090              -     201,400,090
                                       ------------  -------------   ------------   -------------

Total Liabilities                      231,069,594     31,180,481    (29,966,913)    232,283,163

    Contributed Capital                 62,249,678     15,336,645    (15,336,645)     62,249,678
    Current year net income (loss)       6,563,148     19,190,349    (19,190,349)      6,563,148
    Beginning Retained earnings
    (deficit)                           (4,896,757)     7,615,832     (7,615,832)     (4,896,757)
                                       ------------  -------------   ------------   -------------
Total Equity                            63,916,069     42,142,826    (42,142,826)     63,916,069

    Total Liabilities and Equity      $294,985,663    $73,323,307   $(72,109,739)   $296,199,232
                                       ============  =============   ============   =============

</TABLE>


                                       15
<PAGE>


<TABLE>
<CAPTION>

                       CONSOLIDATING STATEMENTS OF INCOME
                         QUARTER ENDED JANUARY 31, 2005
                                   (UNAUDITED)

NOTE 13 - CONSOLIDATING INFORMATION (CONTINUED)

                                                           GUARANTOR
                                             IMGRC        SUBSIDIARIES    ELIMINATIONS CONSOLIDATED
<S>                                        <C>         <C>               <C>                <C>
Gaming Revenue                             $        -     $13,060,621     $       -  $13,060,621
Food & Beverage Revenue                                     1,424,581                  1,424,581
Recreation & Other Revenue                          -       7,373,459             -    7,373,459
                                          ------------    ------------    ----------   ----------
    Gross Revenue                                   -      21,858,661             -   21,858,661

Promotional Allowances                          2,976         183,857                    186,833
                                          ------------    ------------    ----------   ----------
    Net Revenue (loss)                         (2,976)     21,674,804             -   21,671,828

Gaming Expenses                                67,874       5,672,392                  5,740,266
Food and Beverage Expenses                     44,311       1,503,716                  1,548,027
Retail Recreation & Other                           -       4,427,120                  4,427,120
General Administrative Expenses               450,528       2,383,431                  2,833,959
Health Insurance - Medical                     63,136         449,958                    513,094
Pension                                       112,208         663,903                    776,111
MATI Telephone Expense                         53,944               -                     53,944
Tribal Regulatory Fees                              -         719,117                    719,117
Pre Opening Expense                         1,209,697       1,331,756                  2,541,453
Depreciation Expense                          (19,487)      2,041,253             -    2,021,766
                                          ------------    ------------    ----------   ----------
Total Operating Expense                     1,982,211      19,192,646             -   21,174,857

Operating Income (loss)                    (1,985,187)      2,482,158             -      496,971

Interest Income                               159,909             837                    160,746
Interest Expense                           (1,911,858)        (57,972)                (1,969,830)
Other Income (Expense)                         (1,461)           (394)                    (1,855)
Income from affiliates                      2,424,629               -    (2,424,629)           -
                                          ------------    ------------    ----------   ----------
Non Operating Income (loss)                   671,219         (57,529)   (2,424,629)  (1,810,939)

                                          ------------    ------------    ----------   ----------
Net Income (loss)                         $(1,313,968)    $ 2,424,629   $(2,424,629) $(1,313,968)
                                          ============    ============    ==========  ===========


</TABLE>


                                       16
<PAGE>


<TABLE>
<CAPTION>

                       CONSOLIDATING STATEMENTS OF INCOME
                         QUARTER ENDED JANUARY, 31, 2004
                                   (UNAUDITED)

NOTE 13 - CONSOLIDATING INFORMATION (CONTINUED)

                                                           GUARANTOR
                                             IMGRC        SUBSIDIARIES    ELIMINATIONS CONSOLIDATED
                                          -------------   ------------    ------------ -------------
<S>                                       <C>              <C>           <C>           <C>
Gaming Revenue                            $        -      $13,588,869     $         -  $13,588,869
Food & Beverage Revenue                                     1,446,736                    1,446,736
Recreation & Other Revenue                                  5,817,425                    5,817,425
                                          -------------   ------------    ------------ -------------
  Gross Revenue                                    -       20,853,030               -   20,853,030

 Promotional Allowances                           61          472,646                      472,707
                                          -------------   ------------    ------------ -------------
   Net Revenue (loss)                            (61)      20,380,384               -   20,380,323

Gaming Expenses                            1,274,858        5,684,184                    6,959,042
Food and Beverage Expenses                   108,510        1,401,205                    1,509,715
Retail Recreation & Other                          -        3,102,282                    3,102,282
General Administrative Expenses              687,896          533,706                    1,221,602
Health Insurance - Medical                    44,879          525,088                      569,967
Pension                                      125,071          324,895                      449,966
MATI Telephone Expense                        40,006           59,039                       99,045
Tribal Regulatory Fees                       457,182          136,118                      593,300
Pre Opening Expense                          229,177          368,064                      597,241
Depreciation Expense                               -        1,383,599                    1,383,599
                                          -------------   ------------    ------------ -------------
Total Operating Expense                    2,967,579       13,518,180               -   16,485,759

Operating Income (loss)                   (2,967,640)       6,862,204               -    3,894,564

Interest Income                              302,289            4,471                      306,760
Interest Expense                          (1,297,188)               -                   (1,297,188)
Other Income (Expenses)                            -           56,665                       56,665
Income from affiliates                     6,923,340                -     (6,923,340)            -
                                          -------------   ------------    ------------ -------------
Non Operating Income (loss)                5,928,441           61,136     (6,923,340)     (933,763)

                                          -------------   ------------    ------------ -------------
Net Income (loss)                         $2,960,801       $6,923,340    $(6,923,340)  $ 2,960,801
                                          =============   ============    ============ =============

</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>

                       CONSOLIDATING STATEMENTS OF INCOME
                       NINE MONTHS ENDED JANUARY 31, 2005
                                   (UNAUDITED)

NOTE 13 - CONSOLIDATING INFORMATION (CONTINUED)

                                                    GUARANTOR
                                    IMGRC           SUBSIDIARIES     ELIMINATIONS      CONSOLIDATED
                              ---------------    ----------------    -------------    --------------
<S>                              <C>               <C>                <C>             <C>
Gaming Revenue                   $         -       $  48,004,383      $         -     $  48,004,383
Food & Beverage Revenue                1,608           4,197,516                          4,199,124
Recreation & Other Revenue                            15,179,218                         15,179,218
                              ---------------    ----------------    -------------    --------------
  Gross Revenue                        1,608          67,381,117                -        67,382,725

 Promotional Allowances                6,661             328,407                            335,068
                              ---------------    ----------------    -------------    --------------
   Net Revenue (loss)                 (5,053)         67,052,710                -        67,047,657

Gaming Expenses                      201,441          15,874,363                         16,075,804
Food and Beverage Expenses           167,202           4,917,247                          5,084,449
Retail Recreation & Other                760          11,189,261                         11,190,021
General Administrative
Expenses                           2,066,850           5,427,697                          7,494,547
Health Insurance - Medical           117,569             800,488                            918,057
Pension                              345,559           1,443,237                          1,788,796
MATI Telephone Expense               121,565              58,536                            180,101
Tribal Regulatory Fees                24,952           1,596,966                          1,621,918
Pre Opening Expense                2,817,586           1,498,079                          4,315,665
Depreciation Expense                  37,591           5,004,451                          5,042,042
                              ---------------    ----------------    -------------    --------------
Total Operating Expense            5,901,075          47,810,325                -        53,711,400

Operating Income (loss)           (5,906,128)         19,242,385                -        13,336,257

Interest Income                      501,618              11,745                            513,363
Interest Expense                  (7,319,451)            (66,235)                        (7,385,686)
Other Income (Expenses)               96,760               2,454                             99,214

Income from affiliates            19,190,349                   -     (19,190,349)                 -
                              ---------------    ----------------    -------------    --------------
Non Operating Income (loss)       12,469,276             (52,036)    (19,190,349)        (6,776,109)
(Expenses)
                              ---------------    ----------------    -------------    --------------
Net Income (loss)                 $6,563,148        $ 19,190,349    $(19,190,349)       $ 6,563,148
                              ===============    ================    =============    ==============
</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>

                       CONSOLIDATING STATEMENTS OF INCOME
                       NINE MONTHS ENDED JANUARY 31, 2004
                                   (UNAUDITED)

NOTE 13 - CONSOLIDATING INFORMATION (CONTINUED)

                                                          GUARANTOR
                                             IMGRC      SUBSIDIARIES    ELIMINATIONS   CONSOLIDATED
                                          ------------   ------------   ------------  ------------
<S>                                       <C>            <C>            <C>           <C>
Gaming Revenue                            $        -     $45,363,920    $        -    $45,363,920
Food & Beverage Revenue                           70       4,055,529                    4,055,599
Recreation & Other Revenue                         -      10,280,647                   10,280,647
                                          ------------   ------------   ------------  ------------
Gross Revenue                                     70      59,700,096             -     59,700,166

Promotional Allowances                        36,501         864,378                      900,879
                                          ------------   ------------   ------------  ------------
Net Revenue (loss)                           (36,431)     58,835,718             -     58,799,287

Gaming Expenses                            1,274,858      18,775,460                   20,050,318
Hotel Expenses                                     -         104,564                      104,564
Food and Beverage Expenses                   584,144       4,373,974                    4,958,118
Retail Recreation & Other                    471,800       6,734,566                    7,206,366
General Administrative Expenses            3,573,833       2,217,080                    5,790,913
Health Insurance - Medical                   117,103         565,544                      682,647
Pension                                      328,618       1,078,316                    1,406,934
MATI Telephone Expense                        40,006         202,627                      242,633
Tribal Regulatory Fees                       480,986         529,379                    1,010,365
Pre Opening Expense                        1,015,123       1,443,474                    2,458.597
Depreciation Expense                               -       3,791,884                    3,791,884
                                          ------------   ------------   ------------  ------------
Total Operating Expense                    7,886,471      39,816,868             -     47,703,339

Operating Income (loss)                   (7,992,902)     19,018,850             -     11,095,948

Interest Income                              302,289          26,523                      328,812
Interest Expense                          (1,297,188)                                  (1,297,188)
Other Income (Expenses)                                      193,931                      193,931
Income from affiliates                    19,239,304                   (19,239,304)
                                          ------------   ------------   ------------  ------------
Non Operating Income (loss)               18,244,405         220,454   (19,239,304)      (774,445)

                                          ------------   ------------   ------------  ------------
Net Income (loss)                        $10,321,503     $19,239,304  $(19,239,304)   $10,321,503
                                          ============   ============   ============  ============

</TABLE>

                                       19
<PAGE>


                     CONSOLIDATING STATEMENTS OF CASH FLOWS
                       NINE MONTHS ENDED JANUARY 31, 2005
                                   (UNAUDITED)
<TABLE>
<CAPTION>


NOTE 13 - CONSOLIDATING INFORMATION (CONTINUED)

                                                          GUARANTOR
                                            IMGRC        SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                          ------------   ------------   ------------  -------------
<S>                                      <C>              <C>             <C>          <C>
Cash flows from operating activities:
  Net income                             $6,563,148       $19,190,349    $(19,190,349) $6,563,148
  Adjustments to reconcile net income
   to net cash provided by (used in)
   operating activities:
   Depreciation and amortization             37,591         5,004,451               -   5,042,042

   Changes in assets and liabilities:
      Accounts receivable, net of allowance       -          (122,921)              -    (122,921)
      Inventories                              (247)         (297,257)              -    (297,504)
      Prepaid revenue sharing                     -         3,119,029               -   3,119,029
      Prepaid expenses                     (271,055)         ( 74,771)              -    (345,826)
      Interest receivable                         -           (48,563)              -     (48,563)
      Other Long term assets             (3,335,623)          (17,827)              -  (3,353,450)
      Accounts payable                    3,181,192          (612,872)              -   2,568,320
      Construction in progress
       accounts payable                    (893,758)                -               -    (893,758)
      Accrued expenses                    5,516,698        (1,469,091)              -   4,047,607
      Accrued revenue sharing and
       regulatory fees                            -       (23,000,000)              - (23,000,000)
      Accrued interest payable           (6,800,000)          (48,378)              -  (6,848,378)
      Deposits and advance payments             -            (442,995)              -    (442,995)
                                        -------------   --------------  ------------  -------------
         Net cash provided by (used
          in) operating activities        3,997,946         1,179,154   (19,190,349)  (14,013,249)
                                        -------------   --------------  ------------  -------------

Cash flows from investing activities:
  Purchase of property, plant and
   equipment                            (68,975,456)       (2,540,042)                (71,515,498)
  Investment in subsidiaries            (19,190,349)                -    19,190,349              -
                                        -------------   --------------  ------------  -------------
       Net cash used by investing
        activities                      (88,165,805)       (2,540,042)   19,190,349   (71,515,498)
                                        -------------   --------------  ------------  -------------

Cash flows from financing activities:

  Deferred financing costs                 1,302,041                 -            -     1,302,041
  Cash held for construction payments     62,177,310           533,515            -    62,710,825
  Payment of compact settlement           23,000,000                 -            -    23,000,000
  Advances to (from) affiliates           (6,761,993)        6,761,993            -             -
  Principal borrowings (payments) on
   long-term debt, net                             -          (354,003)           -      (354,003)
  Distributions to Mescalero Apache
   Tribe                                  (5,090,000)       (6,560,680)           -   (11,650,680)
  Contributions from Mescalero Apache
Tribe                                     10,000,000                 -            -    10,000,000
                                        -------------   --------------  ------------  -------------
       Net cash provided by financing
        activities                        84,627,358           380,825            -    85,008,183
                                        -------------   --------------  ------------  -------------

Net (decrease) increase in cash and
 cash equivalents                            459,499          (980,063)           -      (520,564)

Cash and cash equivalents, beginning
 of period                                         -        15,794,943            -    15,794,943
                                        -------------   --------------  ------------  -------------
Cash and cash equivalents, end of
 period                                     $459,499       $14,814,880            -   $15,274,379
                                        =============   ==============  ============  =============


</TABLE>


                                       20
<PAGE>


                     CONSOLIDATING STATEMENTS OF CASH FLOWS
                       NINE MONTHS ENDED JANUARY 31, 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>

NOTE 13 - CONSOLIDATING INFORMATION (CONTINUED)

                                                          GUARANTOR
                                            IMGRC        SUBSIDIARIES   ELIMINATIONS   CONSOLIDATED
                                          ------------   ------------   ------------  -------------
<S>                                      <C>              <C>             <C>          <C>
Cash flows from operating activities:
  Net income                             $(8,842,125)     19,163,628              -      10,321,503
  Adjustments to reconcile net
   income to net cash provided by
   operating activities:
   Depreciation and amortization                   -       3,791,884              -       3,791,884

   Changes in assets and liabilities:
    Restricted cash and cash equivalents           -         (29,581)             -         (29,581)
    Accounts receivable, net of
     allowance                               (96,571)       (146,998)             -        (243,569)
    Inventories                               (4,161)       (198,133)             -        (202,294)
    Prepaid Expenses                         (19,890)       (339,168)             -        (359,058)
    Accounts payable                                       3,349,046                      3,349,046
    Construction in progress
     accounts payable                      7,306,767               -                      7,306,767
    Accrued expenses                               -       1,746,056                      1,746,056
    Accrued revenue sharing and
     regulatory fees                         424,504       7,246,983              -       7,671,487
    Accrued interest payable               6,000,000                                      6,000,000
    Deposits and advance payments                  -        (749,508)             -        (749,508)
                                         ------------    ------------    ------------   -------------
        Net cash provided by               4,768,524      33,834,209              -      38,602,733
         operating activities            ------------    ------------    ------------   -------------

Cash flows from investing activities:
  Purchase of property, plant and
   equipment                             (91,802,697)      6,587,750                    (85,214,947)
                                         ------------    ------------    ------------   -------------
        Net cash provided by (used in)
         investing activities            (91,802,697)      6,587,750              -     (85,214,947)
                                         ------------    ------------    ------------   -------------

Cash flows from financing activities:
  Deferred financing costs               (10,508,784)              -              -     (10,508,784)
  Construction in progress accounts
   payable                              (151,595,160)              -                   (151,595,160)
  Borrowings on 12% Senior Notes         200,000,000               -              -     200,000,000
  Principal payments on revolving
   line of credit                                  -      (4,719,149)                    (4,719,149)
  Distributions to Mescalero Apache
   Tribe                                           -     (12,749,032)                   (12,749,032)
  Contributions from Mescalero Apace
   Tribe                                  49,568,542     (18,298,943              -      31,269,599
                                         ------------    ------------    ------------   -------------
        Net cash provided by (used
         in) financing activities         87,464,598     (35,767,124)             -      51,697,474
                                         ------------    ------------    ------------   -------------

Net increase in cash and cash
 equivalents                                 430,425       4,654,835              -       5,085,260

Cash and cash equivalents,
beginning of period                           11,287       9,320,635              -       9,331,922
                                         ------------    ------------    ------------   -------------

Cash and cash equivalents, end of
period                                       441,712      13,975,470              -      14,417,182
                                         ============    ============    ============   =============


</TABLE>

                                       21
<PAGE>



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

REFERENCES IN THIS QUARTERLY REPORT ON FORM 10-Q (THIS "FORM 10-Q" 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," AND "US" REFER TO IMG RESORT AND CASINO.

FORWARD-LOOKING STATEMENTS

     THIS FORM 10-Q 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 HEADING "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" AND ELSEWHERE IN THIS FORM 10-Q ARE FORWARD-LOOKING
STATEMENTS. IN ADDITION, IN THOSE AND OTHER PORTIONS OF THIS FORM 10-Q, 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-Q
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) CONTINGENCIES ASSOCIATED WITH THE CONSTRUCTION OF OUR TWO-PHASE
CONSTRUCTION PROJECT, WHICH WE REFER TO AS THE PROJECT, AND DISRUPTIONS CAUSED
THEREBY; (D) RESTRICTIVE COVENANTS IN OUR DEBT INSTRUMENTS; (E) REALIZING THE
BENEFITS OF OUR BUSINESS PLAN AND BUSINESS STRATEGIES; (F) CHANGES IN GAMING
LAWS OR REGULATIONS, INCLUDING POTENTIAL LEGALIZATION OF GAMING IN CERTAIN
JURISDICTIONS; (G) THE IMPACT OF COMPETITION IN OUR MARKETS; (H) OUR ABILITY TO
ATTRACT INCREASING NUMBERS OF CUSTOMERS ONCE THE PROJECT IS COMPLETE; AND (I)
GENERAL LOCAL, DOMESTIC AND GLOBAL ECONOMIC CONDITIONS.

     YOU ARE URGED TO CONSIDER THESE FACTORS CAREFULLY IN EVALUATING THE
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS FORM 10-Q. 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-Q ARE MADE ONLY AS OF
THE DATE OF THIS FORM 10-Q. WE DO NOT INTEND, AND UNDERTAKE NO OBLIGATION, TO
UPDATE THESE FORWARD-LOOKING STATEMENTS.

OVERVIEW

     IMG Resort and Casino is an unincorporated business enterprise of the
Tribe. The Tribe formed IMG Resort and Casino to operate its resort enterprises,
comprised of Casino Apache, Casino Apache Travel Center, Ski Apache and Inn of
the Mountain Gods, each of which is an unincorporated Tribal business 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 the Indian Gaming
Regulatory Act of 1988, or IGRA, our gaming compact with the State of New Mexico
and a Tribal gaming ordinance. As of January 31, 2005, we had 39,600-square feet
of combined gaming space featuring 917 slot machines and 38 table games between
our facilities at Casino Apache, opened in 1992, and the Travel Center, opened
in May 2003.

     FOOD AND BEVERAGE. Our current food and beverage operations consist
primarily of casual dining fare, including: a 100-seat casual restaurant
adjacent to Casino Apache; a 100-seat buffet-style restaurant in Casino Apache;
a 135-seat casual dining restaurant in the Travel Center; two video poker bars
in the Travel Center; and two bars in Casino Apache.

     ROOMS. Until we demolished the Inn in January 2003, our room operations
included 252 rooms at the Inn. During the construction period, we have continued
to maintain a minimal operations staff to service our "Tower" building that is
primarily used for office space.

     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



                                       22
<PAGE>


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-Q. 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,
pension costs and accounts receivable. 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 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.

     CLASSIFICATION OF DEPARTMENTAL COSTS. Gaming direct costs are comprised of
all costs of the Resort's gaming operations, including labor costs for
casino-based personnel (including personnel supporting the food and beverage
operations located in the casinos), facilities rent, occupancy costs, supply
costs, certain marketing, advertising and promotional expenses (including costs
of operating our players' club) and other direct operating costs of the casinos.
Food and beverage direct costs are comprised of all costs of the Resort's food
and beverage operations, including labor costs for personnel employed by the
Resort's restaurants and other food outlets (but not including personnel
supporting the food and beverage operations located in the casinos), facilities
rent, occupancy costs, supply costs for all food and beverages served in the
casinos or sold in the Resort's restaurants and other food outlets and other
direct operating costs of the food and beverage operations. Recreation and other
expenses include direct labor and operating expenses related to the activities.
General and administrative direct costs are comprised of administrative expense
at our headquarters, including the salaries of corporate officers, rent,
accounting, finance, legal and other professional expense and occupancy costs
and other indirect costs not included in the direct costs of our operating
departments.

     DISPOSAL OF LONG-LIVED ASSETS. On May 1, 2002, we adopted Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," or SFAS 144, which 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.



                                       23
<PAGE>


     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 approximately $9.7 million as of January 31, 2005.

     DISAGREEMENTS WITH THE STATE OF NEW MEXICO. The Tribe challenged the
legality of the revenue sharing fees prescribed by the compact entered into
between the Tribe and the State of New Mexico in 1997, which we refer to as the
1997 Compact, claiming them to be an illegal tax on Indian gaming under 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. On June 1, 2004, the Tribe
and the State of New Mexico entered into the 2001 Compact. On August 10, 2004,
we made the final $23.0 million payment to the State required by the settlement
agreement which was paid out of a Trustee held Construction Reserve Account.

RESULTS OF OPERATIONS

QUARTER ENDED JANUARY 31, 2005 COMPARED TO QUARTER ENDED JANUARY 31, 2004.

     NET REVENUES. Net revenues increased $1.3 million, or 6.4%, to $21.7
million for the quarter ended January 31, 2005 from $20.4 million for the
quarter ended January 31, 2004. The increase in net revenue was primarily
attributable to an increase in revenue in our ski operations of $1.4 million, up
43.2% over last year due to an increase in skier visits, directly attributable
to more snowfall this year compared to last. This increase was partially offset
by a $0.6 million, or a 4.4%, decline in gaming revenue for the fiscal quarter
ended January 31, 2005 compared to the prior year. The decline in gaming revenue
primarily relates to the impact from transitioning slots from the old casino
(which was subsequently closed on February 21, 2005) to the new resort for the
purpose of converting them to ticket-in ticket-out and also to inclement weather
beginning in mid-November as compared to last year. Player reward redemptions
are included in gross revenues but are deducted as a promotional allowance to
arrive at net revenues.

     GAMING. Gaming revenues decreased $0.6 million, or 4.4%, to $13.0 million
for the quarter ended January 31, 2005 from $13.6 million for the quarter ended
January 31, 2004. Slot revenues decreased to $11.0 million for the quarter ended
January 31, 2005 from $11.5 million for the quarter ended January 31, 2004, a
decrease of $0.5 million, or 4.3%. Gross slot win per unit was $122 for the
quarter ended January 31, 2005 compared to $116 for the quarter ended January
31, 2004; in this period the weighted average number of units declined from
1,180 units in the quarter ended January 31, 2004 to 1,091 for the quarter ended
January 31, 2005. Table games revenue decreased $0.1 million, or 4.8%, to $2.0
million for the quarter ended January 31, 2005 from $2.1 million for the quarter
ended January 31, 2004. The decrease was the result of a decline of 11.4% or
$1.1 million in drop offset by an increase in table game hold percentage to
23.9% for the quarter ended January 31, 2005 from 21.9% for the quarter ended
January 31, 2004.

     FOOD AND BEVERAGE. Food and beverage revenues remained constant at $1.4
million for the quarter ended January 31, 2005 as compared to the quarter ended
January 31, 2004.

     RECREATION AND OTHER. Recreation and other revenues increased $1.6 million,
or 27.6%, to $7.4 million for the quarter ended January 31, 2005 from $5.8
million for the quarter ended January 31, 2004. The increase was due to
increased revenues from Ski Apache, the convenience store, smoke shop, and
gasoline and diesel sales located at Travel Center.

     PROMOTIONAL ALLOWANCES. Promotional allowances declined $0.3, or 60%, to
$0.2 million for the quarter ended January 31, 2005 compared to $0.5 million for
the quarter ended January 31, 2004.

     TOTAL OPERATING EXPENSES. Total operating expenses increased $4.7 million,
or 28.5%, to $21.2 million for the quarter ended January 31, 2005 from $16.5
million for the quarter ended January 31, 2004. The increase was primarily due
to an increase of $1.9 million in pre-opening expenses associated with the
opening of our new resort, Ski Apache expenses and general and administrative
expenses offset by a $1.3 million decrease in gaming expenses.


                                       24
<PAGE>



     GAMING. Gaming expenses decreased $1.3 million, or 18.6%, to $5.7 million
for the quarter ended January 31, 2005 from $7.0 million for the quarter ended
January 31, 2004. The decrease was primarily due to a reduction in revenue
sharing expenses associated with the Compact settlement.

     FOOD AND BEVERAGE. Food and beverage expenses remained constant at $1.5
million for the quarter ended January 31, 2005 compared to the quarter ended
January 31, 2004.

     RECREATION AND OTHER. Recreation and other costs increased $1.3 million, or
41.9%, to $4.4 million for the quarter ended January 31, 2005 from $3.1 million
for the quarter ended January 31, 2004. The increase was primarily attributable
to the addition of new team members at the Travel Center and Ski Apache and
increased cost of sales and related expenses for Ski Apache, the convenience
store, smoke shop, refueling center.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$1.6 million, or 13.3%, to $2.8 million for the quarter ended January 31, 2005
from $1.2 million for the quarter ended January 31, 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.

     PRE-OPENING COSTS AND EXPENSES. Pre-opening expenses increased $1.9
million, or 316.7%, to $2.5 million for the quarter ended January 31, 2005 from
$0.6 million for the quarter ended January 31, 2004. The increase was primarily
due to expenditures for staff, training and marketing related to the opening of
our new resort in March 2005. Pre-opening costs and expenses are expensed as
incurred.

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased $0.6
million to $2.0 million for the quarter ended January 31, 2005 from $1.4 million
for the quarter ended January 31, 2004. The increase was primarily the result of
the addition of the Travel Center in May 2003 and additional equipment at ski
apache and Casino Apache.

     OPERATING INCOME. Operating income decreased $3.4 million, or 87.2%, to
$0.5 million for the quarter ended January 31, 2005 from $3.9 million for the
quarter ended January 31, 2004. The decrease was primarily due to the reduction
of gaming revenue and increased operating expenses associated with the
preparations for the opening of our new resort in March 2005.

     OTHER INCOME (EXPENSES). Other non-operating expenses increased $0.9
million to $1.8 million for the quarter ended January 31, 2005 from $0.9 million
for the quarter ended January 31, 2004. The increase was primarily due to
interest expense, net of amounts capitalized. Other income (expenses) is
comprised of interest income and other income minus interest expense and other
expense.

NINE MONTHS ENDED JANUARY 31, 2005 COMPARED TO NINE MONTHS ENDED JANUARY 31,
2004

     NET REVENUES. Net revenues increased $8.2 million, or 13.9%, to $67.0
million for the nine months ended January 31, 2005 from $58.8 million for the
nine months ended January 31, 2004. The increase was due to an increase in
gaming revenues, ski revenues and retail revenues. Player reward redemptions are
included in gross revenues but are deducted as a promotional allowance to arrive
at net revenues.

     GAMING. Gaming revenues increased $2.6 million, or 5.7%, to $48.0 million
for the nine months ended January 31, 2005 from $45.4 million for the nine
months ended January 31, 2004. Slot revenues increased to $41.4 million for the
nine months ended January 31, 2005 from $39.6 million for the nine months ended
January 31, 2004, an increase of $1.8 million, or 4.5%. Gross slot win per unit
was $145 for the nine months ended January 31, 2005 compared to $142 for the
nine months ended January 31, 2004; in this period the weighted average number
of units declined from 1,180 for the nine months ended January 31, 2004 to 1,151
for the nine months ended January 31, 2005. Table games revenue increased $0.8
million, or 13.8%, to $6.6 million for the nine months ended January 31, 2005
from $5.8 million for the nine months ended January 31, 2004. The increase was
the result of an increase in the table game hold percentage to 21.6% for the
nine months ended January 31, 2005 from 18.1% for the nine months ended January
31, 2004, while table game drop increased $0.2 million, or 0.8%, to $31.3
million for the nine months ended January 31, 2005 from $31.1 million for the
nine months ended January 31, 2004.

     FOOD AND BEVERAGE. Food and beverage revenues increased $0.1 million, or
2.4%, to $4.2 million for the nine months ended January 31, 2005 from $4.1
million for the nine months ended January 31, 2004.


                                       25
<PAGE>



     RECREATION AND OTHER. Recreation and other revenues increased $4.9 million,
or 47.6%, to $15.2 million for the nine months ended January 31, 2005 from $10.3
million for the nine months ended January 31, 2004. The increase was due to
increased revenues from Ski Apache, the convenience store, smoke shop, and
gasoline and diesel sales located at Travel Center.

     PROMOTIONAL ALLOWANCES. Promotional allowances declined $0.6 million, or
66.7%, to $0.3 million for the nine months ended January 31, 2005 compared to
$0.9 million for the nine months ended January 31, 2004.

     TOTAL OPERATING EXPENSES. Total operating expenses increased $6.1 million,
or 12.8%, to $53.7 million for the nine months ended January 31, 2005 from $47.6
million for the nine months ended January 31, 2004. The increase was primarily
due to additional expenses associated with the opening of our new resort in
March 2005 and increases in ski, retail and recreation expenses.

     GAMING. Gaming expenses decreased $4.0 million, or 19.9%, to $16.1 million
for the nine months ended January 31, 2005 from $20.1 million for the nine
months ended January 31, 2004. The decrease was primarily due to a reduction in
revenue sharing expenses associated with the Compact settlement.

     FOOD AND BEVERAGE. Food and beverage expenses increased $0.1 million or
2.0%, to $5.1 million for the nine months ended January 31, 2005 from $5.0
million for the nine months ended January 31, 2004, primarily due to a decrease
in the cost of sales at both the Travel Center and Casino Apache.

     RECREATION AND OTHER. Recreation and other costs increased $4.0 million, or
55.6%, to $11.2 million for the nine months ended January 31, 2005 from $7.2
million for the nine months ended January 31, 2004. 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 Ski Apache, the convenience
store, smoke shop, refueling center.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$1.8 million, or 31.0%, to $7.5 million for the nine months ended January 31,
2005 from $5.8 million for the nine months ended January 31, 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.

     PRE-OPENING COSTS AND EXPENSES. Pre-opening expenses increased $1.8
million, or 72%, to $4.3 million for the nine months ended January 31, 2005
compared to $2.5 million for the nine months ended January 31, 2004, as a result
of personnel costs and marketing expenditures in preparation of the opening of
our new resort in March 2005. Pre-opening costs and expenses are expensed as
incurred.

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased $1.2
million, or 31.6%, to $5.0 million for the nine months ended January 31, 2005
from $3.8 million for the nine months ended January 31, 2004. The increase was
primarily the result of the addition of the Travel Center and additional
equipment at Ski Apache and Casino Apache.

     OPERATING INCOME. Operating income increased $2.1 million, or 18.8%, to
$13.3 million for the nine months ended January 31, 2005 from $11.2 million for
the nine months ended January 31, 2004. The increase in operating income was
primarily due to improved operating margins in gaming, food and beverage, and
operations in Casino Apache and the Travel Center and in improved operating
results at Ski Apache.

     OTHER INCOME (EXPENSES). Other non-operating expenses increased $6.0
million to $6.8 million for the nine months ended January 31, 2005 from $0.8
million for the nine months ended January 31, 2004. The increase was primarily
due to interest expense, net of amounts capitalized. 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, 2004 and January 31, 2005, we had cash and cash equivalents
(net of amounts in restricted accounts) of $15.8 million and 15.3 million,
respectively. Our principal sources of liquidity for the nine months ended
January 31, 2005 and the nine months ended January 31, 2004 consisted of cash
flows from operating activities, which was $14.0 million used by operating
activities for the nine months ended January 31, 2005 compared to $38.6 million
provided by operating activities for the nine months ended January 31, 2004. Net
income provided $6.6 million for the nine months ended January 31, 2005,



                                       26
<PAGE>


compared to $10.3 million for the nine months ended January 31, 2004. A total of
$23.0 million was used to pay the final compact settlement in August 2004 as
compared to $7.7 million provided by revenue sharing and regulatory fees in the
nine months ended January 31, 2004.

     Cash used in investing activities for the nine months ended January 31,
2005 and 2004 was $71.5 million and $85.2 million, respectively, and primarily
relates to construction costs for the Project.

     Cash provided by financing activities for the nine months ended January 31,
2005 and 2004 was $85.0 million and $51.7 million, respectively. The $33.3
million increase in cash provided from financing activities is comprised of
$62.7 million of cash held for use in paying construction expenditures for the
construction project with the $23.0 million payment of the Compact settlement
and a $10.0 million capital contribution by the Tribe offset by $11.7 million in
distributions to the Tribe.

     Construction of the Resort, which began in January 2003, is expected to be
completed in April 2005. As of January 31, 2005, we paid $140.9 million
designing, developing and constructing the Resort. We expect to incur an
additional $5.8 million under our fixed price contract to complete the Project
during fiscal 2005 (the Resort is expected to be completed by April 2005). At
January 31, 2005, we had balances in restricted accounts in the aggregate amount
of $47.6 million, $12.0 million of which will be available for the next two
payments on the notes and $28.0 million of which was used for completion of the
Project, including amounts remaining under our fixed price contract, furniture,
fixtures and equipment and construction contingencies and $7.6 million for
retainage. Capital expenditures in fiscal year 2005, other than those related to
the Project, are not expected to be significant.

     We believe that existing cash balances, operating cash flows as well as
funds available from our contemplated equipment leasing lines (permitted by the
indenture) will provide adequate funds for completion of construction of the
Resort, our working capital needs, planned capital expenditures, including the
new resort equipment and furnishings 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.
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 January 31, 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 will be used to
          fund completion of the Resort. As of January 31, 2005, the balance in
          the construction disbursement account was $0.0 million;

     o    a construction reserve account, which was funded at the time the notes
          were sold approximately $53.6 million and (i) will be used to fund
          contingencies related to the construction of the Resort and (ii) $25.0
          million of which was used to fund a resolution of the Tribe's
          disagreement relating to the 1997 Compact. As of January 31, 2005, the
          balance in the construction reserve account was $28.0 million, which
          reflects the $25.0 million payment made to settle all disputes with
          the State of New Mexico related to the 1997 Compact; and



                                       27
<PAGE>


     o    a construction retainage account. As of January 31, 2005, the balance
          the construction retainage accounts was $7.6 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 January 31, 2005, there is approximately $1.6 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. The fixed rate loan
is fully 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. As of January 31, 2005, there
were no funds drawn under this facility.

OFF-BALANCE SHEET ARRANGEMENTS

     As of January 31, 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 January 31, 2005, our scheduled
principal, interest and other contractual annual cash obligations due by us for
each of the periods indicated below (Dollars in thousands):

<TABLE>
<CAPTION>

                                                PAYMENTS DUE BY PERIOD
                                        --------------------------------------
<S>                                  <C>         <C>        <C>     <C>       <C>
                                               LESS THAN     1-3     3-5    MORE THAN
           CONTRACTUAL OBLIGATIONS    TOTAL     1 YEAR      YEARS   YEARS      YEARS
          ------------------------   -------  ----------   ------  -------  -----------
          Long-Term Debt
          Obligations............    $201,593    $192       $426    $507      $200,468
                                     --------    ----       ----    ----      --------
          Purchase Obligations (1)          6       6          -       -             -
                                           --      --       ----    ----      --------
          Total..................    $201,599    $198       $426    $507      $200,468
                                     ========  ========   =======  ======     ========

----------

<FN>
     (1)  Amounts remaining to be paid pursuant to the $135.2 million fixed
          price design and build contract with Centex/Worthgroup for
          construction of the Resort Project.
</FN>

</TABLE>


     In addition, under a settlement agreement entered into with the State of
New Mexico on April 20, 2004, we paid $25.0 million on behalf of the Tribe with
respect to its settlement of its dispute with the State of New Mexico with
respect to the 1997 Compact. This settlement payment was funded out of the
construction reserve account provided for by the indenture.

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


                                       28
<PAGE>


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 business
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 quarters ended January 31, 2005 or 2004, 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.

                                  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 January 31, 2005, we had an aggregate of approximately $201.6 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;

     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.


                                       29
<PAGE>


     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.

CONSTRUCTION OF THE RESORT IS SUBJECT TO CONTINGENCIES ASSOCIATED WITH
CONSTRUCTION AND FAILURE TO COMPLETE THE RESORT ON TIME OR ON BUDGET COULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND OUR ABILITY
TO MEET OUR DEBT SERVICE OBLIGATIONS.

     Construction projects such as the Resort are subject to significant
development and construction risks, any of which could cause unanticipated cost
increases and delays. These include, among others, the following:

     o    shortages of energy, material and skilled labor;

     o    weather interference or delays;

     o    engineering problems;

     o    environmental problems;

     o    changes in the scope of the Resort or to the plans or specifications;

     o    labor disputes and work stoppages;

     o    fire, earthquake, flood and other natural disasters or acts of war or
          terrorism; and

     o    geological, construction, excavation and equipment problems.

     If we cannot meet our construction schedule, we may need to devote
additional resources to construction of the Resort, which could increase costs
and divert management time and attention away from our existing operations and
could cause our business to suffer. If we cannot complete the Resort on budget
or on time, 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.

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 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


                                       30
<PAGE>


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 Casinos
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. Upon completion of the Project, 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 will begin 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. After we complete the Project, we expect to
increase our market reach, but if our marketing strategy is not successful, our
primary customer base will continue to be a predominately local one. Therefore,
we are subject to greater risks than more geographically diversified gaming or
resort operations. Among others, the following conditions could have a material
adverse effect on our results of operations:

     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.

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


                                       31
<PAGE>


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 will be significantly
expanded in size and diversity. Our gaming space will grow 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
will 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.

     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 with four voting members elected each year.
The Vice President of the Tribe resigned in February 2005 and as a result, there
is a vacancy on the Tribal Council. 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Market risk is the risk of loss arising from adverse changes in market
rates and prices, such as interest rates, foreign currency exchange rates and
commodity prices. The Resort's primary exposure to market risk is interest rate
risk associated with our short term variable rate debt. As of January 31, 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 January 31, 2005, the Resort held no derivative instruments.


                                       32
<PAGE>


ITEM 4. CONTROLS AND PROCEDURES.

     As of the end of the period covered by this 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.



                                       33
<PAGE>


PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

(a) EXHIBITS:

31.1 Certification of Principal Executive Officer Pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002.

31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the
     Sarbanes-Oxley Act of 2002.

32.1 Certification of Principal Executive Officer and Principal Financial
     Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



                                       34
<PAGE>



                                   SIGNATURES

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

                                      INN OF THE MOUNTAIN GODS RESORT AND CASINO



Date:  March 17, 2005                   By  /s/ Michael French
                                            ------------------------------------
                                                Michael French
                                        Its:    Chief Executive Officer
                                                (Principal Executive Officer
                                                and Authorized Signatory)




Date: March 17, 2005                    By  /s/ Richard Williams
                                            ------------------------------------
                                                Richard Williams
                                        Its:    Chief Financial Officer
                                                (Principal Financial Officer)



<PAGE>

<TABLE>
<CAPTION>

EXHIBITS INDEX

      EXHIBIT NO.        DESCRIPTION

<S>      <C>             <C>
         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 December 5, 2002, between the Mescalero
                         Apache Tribe and Michael French.
         10.5*           Employment Agreement dated September 22, 2003, between the Mescalero
                         Apache Tribe and Richard Williams.
         10.6**          Employment Agreement dated December 12, 2002 between the Mescalero
                         Apache Tribe and Brian Parrish.
         10.7**          2001 Compact between the Mescalero Apache Tribe and the State of New
                         Mexico, entered into June 1, 2004.
         31.1            Certification of Michael French, Principal Executive
                         Officer, pursuant to Rule 13a-14 and 15d-14 of the
                         Securities Exchange Act of 1934.
         31.2            Certification of Richard Williams, Principal Financial Officer,
                         pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of
                         1934.
         32.1            Certification of Michael French, Principal Financial
                         Officer and Richard Williams, Principal Financial
                         Officer, pursuant to 18 U.S.C. Section 1350, as adopted
                         pursuant to Section 906 of the Sarbanes-Oxley Act of
                         2002.

</TABLE>

* 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 Annual Report on Form
10-K filed with the SEC on July 29, 2004.