##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTER FROM  TO
 Commission file number 333-113140
 INN OF THE MOUNTAIN GODS RESORT AND CASINO
  Not Applicable
(State or other jurisdiction 
of incorporation or organization)
    
    75-3158926
(I.R.S. Employer
Identification Number)287 Carrizo Canyon Road 
Mescalero, New Mexico
(Address of principal executive offices)
    
    88340
(Zip Code)
 575-464-7777
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



INN OF THE MOUNTAIN GODS RESORT AND CASINO
FORM 10-Q
FOR THE QUARTER ENDED June 30, 2010
INDEX
 PagesPART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements:Consolidated Balance Sheets as of September 30, 2009 (unaudited) and June 30, 2010 (unaudited)
    
    
    3Consolidated Statements of Operations for the Three Month and the Nine Month Periods Ended June 30, 2009
(unaudited) and 2010 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the Nine Month Periods Ended June 30, 2009
(unaudited) and 2010 (unaudited)
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    28Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    38Item 4T. Controls and Procedures
    
    
    38PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    39Item 1A. Risk Factors
    
    
    39Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    39Item 3. Defaults Upon Senior Securities.
    
    
    39Item 4. (Removed and Reserved)
    
    
    39Item 5. Other Information
    
    
    39Item 6. Exhibits
    
    
    39Signatures
    
    
    41EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
(unaudited)
 As of September 30,
    
    
    As of June 30,2009
    
    
    2010Current assetsCash and cash equivalents
    
    $
    5,629,436
    
    
    $
    11,223,791Accounts receivable, net of allowance for doubtful accounts
    
    
    617,433
    
    
    
    583,186Inventories, net
    
    
    862,251
    
    
    
    937,414Prepaid expenses and other assets
    
    
    1,321,812
    
    
    
    824,956Total current assets
    
    
    8,430,932
    
    
    
    13,569,347Non-current assetsProperty, plant and equipment, net
    
    
    189,066,385
    
    
    
    183,317,181Other assets
    
    
    51,000
    
    
    
    51,000Deferred financing cost
    
    
    2,078,017
    
    
    
    742,149Total assets
    
    $
    199,626,334
    
    
    $
    197,679,677Liabilities and deficitCurrent liabilitiesAccounts payable
    
    $
    1,422,304
    
    
    $
    1,118,283Accrued expenses
    
    
    4,604,088
    
    
    
    4,821,485Accrued payroll and benefits
    
    
    2,806,727
    
    
    
    1,967,755Accrued interest
    
    
    22,386,667
    
    
    
    44,175,000Advance deposits
    
    
    413,046
    
    
    
    1,135,633Current portion of long-term debt
    
    
    202,924,922
    
    
    
    200,467,694Total current liabilities
    
    
    234,557,754
    
    
    
    253,685,850Non-current liabilitiesLong-term debt, net of current portion
    
    
    395,634
    
    
    
    65,672Total liabilities
    
    
    234,953,388
    
    
    
    253,751,522DeficitContributed capital
    
    
    (5,389,062
    )
    
    
    (20,055,728
    )Accumulated deficit
    
    
    (29,937,992
    )
    
    
    (36,016,117
    )Total deficit
    
    
    (35,327,054
    )
    
    
    (56,071,845
    )Total liabilities and deficit
    
    $
    199,626,334
    
    
    $
    197,679,677
  3




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 Three Months Ended
    
    
    Three Months Ended
    
    
    Nine Months Ended
    
    
    Nine Months EndedJune 30, 2009
    
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    June 30, 2010Revenues:Gaming
    
    $
    18,437,030
    
    
    $
    19,145,963
    
    
    $
    52,593,364
    
    
    $
    52,077,452Hotel
    
    
    2,861,132
    
    
    
    2,349,505
    
    
    
    8,098,092
    
    
    
    6,679,851Food and beverage
    
    
    3,136,992
    
    
    
    2,894,769
    
    
    
    8,847,935
    
    
    
    9,265,107Recreation and other
    
    
    2,366,365
    
    
    
    2,575,296
    
    
    
    10,852,343
    
    
    
    14,605,377Gross revenue
    
    
    26,801,519
    
    
    
    26,965,533
    
    
    
    80,391,734
    
    
    
    82,627,787Less-promotional allowances
    
    
    235,235
    
    
    
    239,631
    
    
    
    664,090
    
    
    
    678,599Net Revenue
    
    
    26,566,284
    
    
    
    26,725,902
    
    
    
    79,727,644
    
    
    
    81,949,188Operating expenses:Gaming
    
    
    6,046,156
    
    
    
    6,120,623
    
    
    
    18,436,227
    
    
    
    16,922,240Hotel expenses
    
    
    899,878
    
    
    
    909,456
    
    
    
    3,043,690
    
    
    
    2,558,325Food and beverage
    
    
    2,808,730
    
    
    
    3,173,431
    
    
    
    8,968,343
    
    
    
    9,631,616Recreation and other
    
    
    2,095,793
    
    
    
    2,442,891
    
    
    
    7,388,606
    
    
    
    8,024,316Marketing
    
    
    2,062,495
    
    
    
    2,073,652
    
    
    
    5,993,185
    
    
    
    6,482,059General and administrative
    
    
    3,559,552
    
    
    
    3,175,056
    
    
    
    13,108,434
    
    
    
    11,525,982Management fees (Note 9)
    
    
    
    
    
    
    414,011
    
    
    
    
    
    
    
    579,151Refinance charges
    
    
    
    
    
    
    932,660
    
    
    
    
    
    
    
    1,671,620Depreciation and amortization
    
    
    2,957,827
    
    
    
    2,744,086
    
    
    
    9,082,168
    
    
    
    8,752,754Insurance reimbursement (Note 11)
    
    
    (134,296
    )
    
    
    
    
    
    
    (4,306,380
    )
    
    
    (1,466,658
    )Storm costs (Note 11)
    
    
    15,925
    
    
    
    9,126
    
    
    
    293,118
    
    
    
    183,647Gain on disposal of assets
    
    
    
    
    
    
    (10,460
    )
    
    
    (3,163
    )
    
    
    (10,460
    )Total operating expenses
    
    
    20,312,060
    
    
    
    21,984,532
    
    
    
    62,004,228
    
    
    
    64,854,592Operating income:
    
    
    6,254,224
    
    
    
    4,741,370
    
    
    
    17,723,416
    
    
    
    17,094,596Other income (expense)Interest expense
    
    
    (6,502,328
    )
    
    
    (7,942,402
    )
    
    
    (19,569,619
    )
    
    
    (23,245,759
    )Other income
    
    
    4,242
    
    
    
    31,671
    
    
    
    27,321
    
    
    
    73,038Total other income (expense)
    
    
    (6,498,086
    )
    
    
    (7,910,731
    )
    
    
    (19,542,298
    )
    
    
    (23,172,721
    )Net loss
    
    $
    (243,862
    )
    
    $
    (3,169,361
    )
    
    $
    (1,818,882
    )
    
    $
    (6,078,125
    )
  4




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Nine months ended
    
    
    Nine months endedJune 30, 2009
    
    
    June 30, 2010Cash flows from operating activities:Net loss
    
    $
    (1,818,882
    )
    
    $
    (6,078,125
    )Adjustments to reconcile net loss to net cash provided
by operating activities:Depreciation and amortization
    
    
    9,082,168
    
    
    
    8,752,754Changes in assets and liabilities:Gain on disposal of assets
    
    
    (3,163
    )
    
    
    (10,460
    )Accounts receivable
    
    
    345,157
    
    
    
    34,247Tribal accounts receivable
    
    
    166,750
    
    
    
    Inventories
    
    
    94,973
    
    
    
    (75,163
    )Prepaid expenses
    
    
    795,560
    
    
    
    496,856Insurance reimbursement
    
    
    1,100,000
    
    
    
    Other long-term assets
    
    
    (146,160
    )
    
    
    Deferred financing costs
    
    
    722,057
    
    
    
    1,335,868Accounts payable
    
    
    (2,249,350
    )
    
    
    (304,021
    )Accrued expenses, payroll and benefits
    
    
    (292,980
    )
    
    
    (621,575
    )Accrued interest payable
    
    
    6,000,000
    
    
    
    21,788,333Deposits and advanced payments
    
    
    189,405
    
    
    
    722,587Net cash provided by operating activities
    
    
    13,985,535
    
    
    
    26,041,301Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (8,495,073
    )
    
    
    (2,993,090
    )Net cash used in investing activities
    
    
    (8,495,073
    )
    
    
    (2,993,090
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    (2,844,149
    )
    
    
    (2,787,190
    )Distributions to Mescalero Apache Tribe
    
    
    (12,703,000
    )
    
    
    (14,666,666
    )Net cash used in financing activities
    
    
    (15,547,149
    )
    
    
    (17,453,856
    )Net (decrease) increase in cash and cash equivalents
    
    
    (10,056,687
    )
    
    
    5,594,355Cash and cash equivalents, beginning of period
    
    
    16,912,249
    
    
    
    5,629,436Cash and cash equivalents, end of period
    
    $
    6,855,562
    
    
    $
    11,223,791Supplemental cash flow information:Cash paid for interest
    
    $
    12,350,316
    
    
    $
    121,559Non-cash investing and financing activitiesProperty, plant and equipment acquired through
reduction in storm recovery receivable
    
    $
    3,209,543
    
    
    $
    1,466,658
  5




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 1-BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Change in Fiscal Year
 the Board
  Reporting Entity and Operations
 IMG
Resort and Casino Company Tribe Resort Casino Apache Enterprise Travel Center Travel Center Casino Ski Apache Inn Inn Hotel
 IGRA
 Principles of Consolidation
  Going Concern
 Notes
 6




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
    Reclassifications
  Use of Estimates
  Cash and Cash Equivalents
  Accounts Receivable
  7




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Inventories
  Property, Plant and Equipment
   Non gaming equipment, furniture and other
    
    3  15 yearsGaming equipment
    
    5  7 yearsLeasehold and land improvements, lake and golf course
    
    5  30 yearsBuildings, lifts and snowmaking equipment
    
    10  39 years
 Deferred Financing and Refinancing Costs
  Impairment of Long Lived Assets
   8




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Fair Value of Financial Instruments
  Contributed Capital
  Revenues
 s .
 Promotional Allowances
  9




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 EITF Revenue Recognition, Customer payments and
Incentives (prior authoritative literature: , Accounting for Certain Sales
Incentives (FASB ASC 605-50 (FAS Accounting
for Points and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for
Reproduces, or Services to be delivered in the future
  Three Months Ended June
30,
    
    
    Nine Months Ended June
30,2009
    
    
    2010
    
    
    2009
    
    
    2010Rooms
    
    $
    17,385
    
    
    $
    3,406
    
    
    $
    46,738
    
    
    $
    26,063Food and beverage
    
    
    160,276
    
    
    
    280,555
    
    
    
    499,447
    
    
    
    663,234Total
    
    $
    177,661
    
    
    $
    283,961
    
    
    $
    546,185
    
    
    $
    689,297
 Marketing
  Tribal Taxes
  Three Months Ended
    
    
    Nine Months EndedJune 30, 2010
    
    
    June 30, 2010Alternative minimum tax due
    
    $
    600,000
    
    
    $
    1,800,000Total taxes collected
    
    
    (498,650
    )
    
    
    (1,384,896
    )Alternative minimum tax expensed
    
    $
    101,350
    
    
    $
    415,104
 10




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Classification of Departmental Costs
  Income Taxes
  New Accounting Pronouncements
  Intangible- Goodwill and Other, Prior
authoritative literature: Determination of the Useful Life of Intangible Assets,
  11




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles (prior authoritative literature: The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles, FASB ASC 106-10-65 (SFAS No. 168)
 Entertainment-Casinos (Topic 924): Accruals for Casino Jackpot Liabilities, a
consensus of the FASB Emerging Issues Task Force.
 NOTE 2ALLOWANCE FOR DOUBTFUL ACCOUNTS
   NOTE 3INVENTORIES
  September 30, 2009
    
    
    June 30, 2010Food and beverage
    
    $
    237,361
    
    
    $
    262,444Golf and pro shop
    
    
    65,853
    
    
    
    86,135Gift shops, fuel and other
    
    
    559,037
    
    
    
    588,835Inventories, net of reserves
    
    $
    862,251
    
    
    $
    937,414
 12




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 4PROPERTY, PLANT AND EQUIPMENT, NET
  September 30, 2009
    
    
    June 30, 2010Land
    
    $
    1,000,473
    
    
    $
    1,000,473Buildings
    
    
    210,005,387
    
    
    
    211,090,409Lifts and snowmaking equipment
    
    
    8,493,368
    
    
    
    10,993,144Non-gaming equipment, furniture and other
    
    
    52,480,709
    
    
    
    52,444,815Gaming equipment
    
    
    22,470,190
    
    
    
    23,675,024Leasehold and land improvements, lake and golf course
    
    
    11,075,633
    
    
    
    11,075,633Subtotal
    
    
    305,525,760
    
    
    
    310,279,498Less accumulated depreciation and amortization
    
    
    (119,375,209
    )
    
    
    (127,719,320
    )Property, plant and equipment, net
    
    
    186,150,551
    
    
    
    182,560,178Construction in progress
    
    
    2,915,834
    
    
    
    757,003Net Property, plant and equipment
    
    $
    189,066,385
    
    
    $
    183,317,181
 NOTE 5LONG-TERM DEBT
      13




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
   September 30, 2009
    
    
    June 30, 2010Senior Notes, bearing interest at a fixed rate of 12%, maturing in 2010
    
    $
    200,000,000
    
    
    $
    200,000,000Bureau of Indian Affairs (BIA), unsecured notes payable with payments of
$27,100 per month, including interest at 8.5%, maturing in 2011
    
    
    560,554
    
    
    
    346,352Capital Equipment Loans with Key Equipment, Five (5) year term, 7.65% interest
    
    
    2,519,922
    
    
    
    35,286Xerox (3) year term
    
    
    240,080
    
    
    
    151,728Total
    
    
    203,320,556
    
    
    
    200,533,366Less current portion
    
    
    (202,924,922
    )
    
    
    (200,467,694
    )Long-term portion
    
    $
    395,634
    
    
    $
    65,672
  2010
    
    $
    200,106,5932011
    
    
    426,773$
    200,533,366
 NOTE 6GAMING REVENUE SHARING AND REGULATORY FEES
 Commission
 State Compact"
  14




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 7  EMPLOYEE BENEFITS
   NOTE 8  RISK MANAGEMENT
    NOTE 9  COMMITMENTS AND CONTINGENCIES
 Legal Matters
  15




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 Occupancy Fee
  Employment Agreements
  Consulting Agreement and Management Agreement
 Registrant Tribal Parties Management
Agreement Manager NIGC
 Management
Board
   16




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 NOTE 10RELATED-PARTY TRANSACTIONS
   Shared Services and Cost Allocations
  Employee Benefits Cost Allocations
   NOTE 11INSURANCE RECOVERIES
  17




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
   NOTE 12  OPERATING SEGMENTS
   18




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 SELECTED OPERATING SEGMENT FINANCIAL INFORMATION
(unaudited, in thousands)
 Gaming
    
    
    GamingIMG
    
    
    Travel Ctr
    
    
    Ski
    
    
    Non Gaming
    
    
    Non Segment
    
    
    ConsolidatedThree months ended June 30, 2009Net Revenue
    
    $
    11,424
    
    
    $
    6,952
    
    
    $
    
    
    
    $
    8,440
    
    
    $
    (250
    )
    
    $
    26,566Operating Income (Loss)
    
    
    9,069
    
    
    
    5,645
    
    
    
    (8
    )
    
    
    2,652
    
    
    
    (11,104
    )
    
    
    6,254Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,958
    
    
    
    2,958Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,502
    )
    
    
    (6,502
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    4Three months ended June 30, 2010Net Revenue
    
    $
    11,448
    
    
    $
    7,589
    
    
    $
    41
    
    
    $
    7,612
    
    
    $
    36
    
    
    $
    26,726Operating Income (Loss)
    
    
    9,076
    
    
    
    6,287
    
    
    
    (4
    )
    
    
    1,376
    
    
    
    (11,994
    )
    
    
    4,741Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,744
    
    
    
    2,744Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,942
    )
    
    
    (7,942
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    32Nine months ended
June 30, 2009Net Revenue
    
    $
    31,641
    
    
    $
    20,755
    
    
    $
    921
    
    
    $
    22,660
    
    
    $
    3,751
    
    
    $
    79,728Operating Income (Loss)
    
    
    24,054
    
    
    
    16,478
    
    
    
    8
    
    
    
    5,133
    
    
    
    (27,950
    )
    
    
    17,723Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,082
    
    
    
    9,082Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,570
    )
    
    
    (19,570
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    27Nine months ended
June 30, 2010Net Revenue
    
    $
    31,544
    
    
    $
    20,283
    
    
    $
    1,466
    
    
    $
    21,208
    
    
    $
    7,448
    
    
    $
    81,949Operating Income (Loss)
    
    
    24,800
    
    
    
    16,681
    
    
    
    399
    
    
    
    3,761
    
    
    
    (28,546
    )
    
    
    17,095Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,753
    
    
    
    8,753Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,246
    )
    
    
    (23,246
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    73
 NOTE 13CONSOLIDATING INFORMATION
 wholly-owned
Guarantors
  19




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
As of June 30, 2010
(unaudited)
 Wholly-ownedIMGRC
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    6,314,151
    
    
    $
    4,909,640
    
    
    $
    
    
    
    $
    11,223,791Accounts receivable
    
    
    251,552
    
    
    
    331,634
    
    
    
    
    
    
    
    583,186Inventories
    
    
    214,520
    
    
    
    722,894
    
    
    
    
    
    
    
    937,414Prepaid expenses
    
    
    824,956
    
    
    
    
    
    
    
    
    
    
    
    824,956Total current assets
    
    
    7,605,179
    
    
    
    5,964,168
    
    
    
    
    
    
    
    13,569,347Property, plant and equipment, net
    
    
    
    
    
    
    183,317,181
    
    
    
    
    
    
    
    183,317,181Other assets
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Deferred financing costs
    
    
    742,149
    
    
    
    
    
    
    
    
    
    
    
    742,149Advances to subsidiaries
    
    
    7,081,900
    
    
    
    19,575,753
    
    
    
    (26,657,653
    )
    
    
    Investment in subsidiaries
    
    
    198,632,656
    
    
    
    
    
    
    
    (198,632,656
    )
    
    
    Total Assets
    
    $
    214,112,884
    
    
    $
    208,857,102
    
    
    $
    (225,290,309
    )
    
    $
    197,679,677Accounts payable
    
    $
    1,118,283
    
    
    $
    
    
    
    $
    
    
    
    $
    1,118,283Accrued expenses
    
    
    3,160,924
    
    
    
    1,660,561
    
    
    
    
    
    
    
    4,821,485Accrued payroll and benefits
    
    
    1,967,755
    
    
    
    
    
    
    
    
    
    
    
    1,967,755Accrued interest
    
    
    44,175,000
    
    
    
    
    
    
    
    
    
    
    
    44,175,000Advance deposits
    
    
    
    
    
    
    1,135,633
    
    
    
    
    
    
    
    1,135,633Current portion of long-term debt
    
    
    200,163,073
    
    
    
    304,621
    
    
    
    
    
    
    
    200,467,694Total current liabilities
    
    
    250,585,035
    
    
    
    3,100,815
    
    
    
    
    
    
    
    253,685,850Non current liabilities:Advances from subsidiaries
    
    
    19,575,753
    
    
    
    7,081,900
    
    
    
    (26,657,653
    )
    
    
    Long-term debt, net of current portion
    
    
    23,941
    
    
    
    41,731
    
    
    
    
    
    
    
    65,672Total liabilities
    
    
    270,184,729
    
    
    
    10,224,446
    
    
    
    (26,657,653
    )
    
    
    253,751,522Contributed capital
    
    
    (20,055,728
    )
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    (20,055,728
    )Retained earnings (deficit)
    
    
    (36,016,117
    )
    
    
    204,645,553
    
    
    
    (204,645,553
    )
    
    
    (36,016,117
    )Total equity (deficit)
    
    
    (56,071,845
    )
    
    
    198,632,656
    
    
    
    (198,632,656
    )
    
    
    (56,071,845
    )Total liabilities and equity (deficit)
    
    $
    214,112,884
    
    
    $
    208,857,102
    
    
    $
    (225,290,309
    )
    
    $
    197,679,677
 20




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended June 30, 2010
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    19,145,963
    
    
    $
    
    
    
    $
    19,145,963Hotel
    
    
    
    
    
    
    2,349,505
    
    
    
    
    
    
    
    2,349,505Food and beverage
    
    
    
    
    
    
    2,894,769
    
    
    
    
    
    
    
    2,894,769Recreation and other
    
    
    
    
    
    
    2,575,296
    
    
    
    
    
    
    
    2,575,296Gross revenue
    
    
    
    
    
    
    26,965,533
    
    
    
    
    
    
    
    26,965,533Less-promotional allowances
    
    
    8,466
    
    
    
    231,165
    
    
    
    
    
    
    
    239,631Net revenue
    
    
    (8,466
    )
    
    
    26,734,368
    
    
    
    
    
    
    
    26,725,902Operating expensesGaming
    
    
    
    
    
    
    6,120,623
    
    
    
    
    
    
    
    6,120,623Hotel
    
    
    
    
    
    
    909,456
    
    
    
    
    
    
    
    909,456Food and beverage
    
    
    
    
    
    
    3,173,431
    
    
    
    
    
    
    
    3,173,431Recreation and other
    
    
    
    
    
    
    2,442,891
    
    
    
    
    
    
    
    2,442,891Marketing
    
    
    
    
    
    
    2,073,652
    
    
    
    
    
    
    
    2,073,652General and administrative
    
    
    
    
    
    
    3,175,056
    
    
    
    
    
    
    
    3,175,056Management fees (Note 9)
    
    
    414,011
    
    
    
    
    
    
    
    
    
    
    
    414,011Refinance Charges
    
    
    932,660
    
    
    
    
    
    
    
    
    
    
    
    932,660Depreciation and amortization
    
    
    
    
    
    
    2,744,086
    
    
    
    
    
    
    
    2,744,086Storm costs (Note 11)
    
    
    9,126
    
    
    
    
    
    
    
    
    
    
    
    9,126Gain on disposal of assets
    
    
    
    
    
    
    (10,460
    )
    
    
    
    
    
    
    (10,460
    )Total operating expenses
    
    
    1,355,797
    
    
    
    20,628,735
    
    
    
    
    
    
    
    21,984,532Operating income (loss)
    
    
    (1,364,263
    )
    
    
    6,105,633
    
    
    
    
    
    
    
    4,741,370Other income (expense)Interest expense
    
    
    (7,942,402
    )
    
    
    
    
    
    
    
    
    
    
    (7,942,402
    )Income from subsidiaries
    
    
    6,105,633
    
    
    
    
    
    
    
    (6,105,633
    )
    
    
    Other income
    
    
    31,671
    
    
    
    
    
    
    
    
    
    
    
    31,671Total other expense
    
    
    (1,805,098
    )
    
    
    
    
    
    
    (6,105,633
    )
    
    
    (7,910,731
    )Net income (loss)
    
    $
    (3,169,361
    )
    
    $
    6,105,633
    
    
    $
    (6,105,633
    )
    
    $
    (3,169,361
    )
 21




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended June 30, 2010
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    52,077,452
    
    
    $
    
    
    
    $
    52,077,452Hotel
    
    
    
    
    
    
    6,679,851
    
    
    
    
    
    
    
    6,679,851Food and beverage
    
    
    
    
    
    
    9,265,107
    
    
    
    
    
    
    
    9,265,107Recreation and other
    
    
    
    
    
    
    14,605,377
    
    
    
    
    
    
    
    14,605,377Gross revenue
    
    
    
    
    
    
    82,627,787
    
    
    
    
    
    
    
    82,627,787Less-promotional allowances
    
    
    46,739
    
    
    
    631,860
    
    
    
    
    
    
    
    678,599Net revenue
    
    
    (46,739
    )
    
    
    81,995,927
    
    
    
    
    
    
    
    81,949,188Operating expensesGaming
    
    
    
    
    
    
    16,922,240
    
    
    
    
    
    
    
    16,922,240Hotel
    
    
    
    
    
    
    2,558,325
    
    
    
    
    
    
    
    2,558,325Food and beverage
    
    
    
    
    
    
    9,631,616
    
    
    
    
    
    
    
    9,631,616Recreation and other
    
    
    
    
    
    
    8,024,316
    
    
    
    
    
    
    
    8,024,316Marketing
    
    
    
    
    
    
    6,482,059
    
    
    
    
    
    
    
    6,482,059General and administrative
    
    
    
    
    
    
    11,525,982
    
    
    
    
    
    
    
    11,525,982Management fees (Note 9)
    
    
    579,151
    
    
    
    
    
    
    
    
    
    
    
    579,151Refinance Charges
    
    
    1,671,620
    
    
    
    
    
    
    
    
    
    
    
    1,671,620Depreciation and amortization
    
    
    
    
    
    
    8,752,754
    
    
    
    
    
    
    
    8,752,754Insurance reimbursement (Note 11)
    
    
    
    
    
    
    (1,466,658
    )
    
    
    
    
    
    
    (1,466,658
    )Storm costs (Note 11)
    
    
    183,647
    
    
    
    
    
    
    
    
    
    
    
    183,647Gain on disposal of assets
    
    
    
    
    
    
    (10,460
    )
    
    
    
    
    
    
    (10,460
    )Total operating expenses
    
    
    2,434,418
    
    
    
    64,480,174
    
    
    
    
    
    
    
    64,854,592Operating income (loss)
    
    
    (2,481,157
    )
    
    
    19,575,753
    
    
    
    
    
    
    
    17,094,596Other income (expense)Interest expense
    
    
    (23,245,759
    )
    
    
    
    
    
    
    
    
    
    
    (23,245,759
    )Income from subsidiaries
    
    
    19,575,753
    
    
    
    
    
    
    
    (19,575,753
    )
    
    
    Other income
    
    
    73,038
    
    
    
    
    
    
    
    
    
    
    
    73,038Total other expense
    
    
    (3,596,968
    )
    
    
    
    
    
    
    (19,575,753
    )
    
    
    (23,172,721
    )Net income (loss)
    
    $
    (6,078,125
    )
    
    $
    19,575,753
    
    
    $
    (19,575,753
    )
    
    $
    (6,078,125
    )
 22




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended June 30, 2010
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (6,078,125
    )
    
    $
    19,575,753
    
    
    $
    (19,575,753
    )
    
    $
    (6,078,125
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    8,752,754
    
    
    
    
    
    
    
    8,752,754Gain on disposal of fixed assets
    
    
    
    
    
    
    (10,460
    )
    
    
    
    
    
    
    (10,460
    )Changes in assets and liabilities:Accounts receivable
    
    
    (263,857
    )
    
    
    298,104
    
    
    
    
    
    
    
    34,247Inventories
    
    
    9,301
    
    
    
    (84,464
    )
    
    
    
    
    
    
    (75,163
    )Prepaid expenses
    
    
    496,856
    
    
    
    
    
    
    
    
    
    
    
    496,856Deferred financing cost
    
    
    1,335,868
    
    
    
    
    
    
    
    
    
    
    
    1,335,868Accounts payable
    
    
    (304,021
    )
    
    
    
    
    
    
    
    
    
    
    (304,021
    )Accrued expenses, payroll and benefits
    
    
    (399,227
    )
    
    
    (222,348
    )
    
    
    
    
    
    
    (621,575
    )Accrued interest
    
    
    21,788,333
    
    
    
    
    
    
    
    
    
    
    
    21,788,333Deposits and advance payments
    
    
    
    
    
    
    722,587
    
    
    
    
    
    
    
    722,587Net cash provided by (used in) operating activities
    
    
    16,585,128
    
    
    
    (29,031,926
    )
    
    
    (19,575,753
    )
    
    
    26,041,301Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (2,993,090
    )
    
    
    
    
    
    
    (2,993,090
    )Investment in subsidiaries
    
    
    (19,575,753
    )
    
    
    
    
    
    
    19,575,753
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (19,575,753
    )
    
    
    (2,993,090
    )
    
    
    19,575,753
    
    
    
    (2,993,090
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    24,572,180
    
    
    
    (24,572,180
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (2,572,988
    )
    
    
    (214,202
    )
    
    
    
    
    
    
    (2,787,190
    )Distributions to Mescalero Apache Tribe
    
    
    (14,666,666
    )
    
    
    
    
    
    
    
    
    
    
    (14,666,666
    )Net cash provided by (used in) financing activities
    
    
    7,332,526
    
    
    
    (24,786,382
    )
    
    
    
    
    
    
    (17,453,856
    )Net increase in cash and cash equivalents
    
    
    4,341,901
    
    
    
    1,252,454
    
    
    
    
    
    
    
    5,594,355Cash and cash equivalents, beginning of period
    
    
    1,972,250
    
    
    
    3,657,186
    
    
    
    
    
    
    
    5,629,436Cash and cash equivalents, end of period
    
    $
    6,314,151
    
    
    $
    4,909,640
    
    
    $
    
    
    
    $
    11,223,791
 23




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEETS
As of September 30, 2009
(unaudited)
 Wholly-ownedIMGRC
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    1,972,250
    
    
    $
    3,657,186
    
    
    $
    
    
    
    $
    5,629,436Accounts receivable
    
    
    (12,305
    )
    
    
    629,738
    
    
    
    
    
    
    
    617,433Inventories
    
    
    223,821
    
    
    
    638,430
    
    
    
    
    
    
    
    862,251Prepaid expenses
    
    
    1,321,812
    
    
    
    
    
    
    
    
    
    
    
    1,321,812Total current assets
    
    
    3,505,578
    
    
    
    4,925,354
    
    
    
    
    
    
    
    8,430,932Property, plant and equipment, net
    
    
    
    
    
    
    189,066,385
    
    
    
    
    
    
    
    189,066,385Other assets
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Deferred financing costs
    
    
    2,078,017
    
    
    
    
    
    
    
    
    
    
    
    2,078,017Advances to subsidiaries
    
    
    26,423,434
    
    
    
    14,345,107
    
    
    
    (40,768,541
    )
    
    
    Investment in subsidiaries
    
    
    179,056,903
    
    
    
    
    
    
    
    (179,056,903
    )
    
    
    Total Assets
    
    $
    211,114,932
    
    
    $
    208,336,846
    
    
    $
    (219,825,444
    )
    
    $
    199,626,334Accounts payable
    
    $
    1,422,304
    
    
    $
    
    
    
    $
    
    
    
    $
    1,422,304Accrued expenses
    
    
    2,721,179
    
    
    
    1,882,909
    
    
    
    
    
    
    
    4,604,088Accrued payroll and benefits
    
    
    2,806,727
    
    
    
    
    
    
    
    
    
    
    
    2,806,727Accrued interest
    
    
    22,386,667
    
    
    
    
    
    
    
    
    
    
    
    22,386,667Advance deposits
    
    
    
    
    
    
    413,046
    
    
    
    
    
    
    
    413,046Current portion of long-term debt
    
    
    202,630,139
    
    
    
    294,783
    
    
    
    
    
    
    
    202,924,922Total current liabilities
    
    
    231,967,016
    
    
    
    2,590,738
    
    
    
    
    
    
    
    234,557,754Non current liabilities:Advances from subsidiaries
    
    
    14,345,107
    
    
    
    26,423,434
    
    
    
    (40,768,541
    )
    
    
    Long-term debt, net of current portion
    
    
    129,863
    
    
    
    265,771
    
    
    
    
    
    
    
    395,634Total liabilities
    
    
    246,441,986
    
    
    
    29,279,943
    
    
    
    (40,768,541
    )
    
    
    234,953,388Contributed capital
    
    
    (5,389,062
    )
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    (5,389,062
    )Retained earnings (deficit)
    
    
    (29,937,992
    )
    
    
    185,069,800
    
    
    
    (185,069,800
    )
    
    
    (29,937,992
    )Total equity (deficit)
    
    
    (35,327,054
    )
    
    
    179,056,903
    
    
    
    (179,056,903
    )
    
    
    (35,327,054
    )Total liabilities and equity (deficit)
    
    $
    211,114,932
    
    
    $
    208,336,846
    
    
    $
    (219,825,444
    )
    
    $
    199,626,334
 24




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS

For the Three Months Ended June 30, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    18,437,030
    
    
    $
    
    
    
    $
    18,437,030Hotel
    
    
    
    
    
    
    2,861,132
    
    
    
    
    
    
    
    2,861,132Food and beverage
    
    
    
    
    
    
    3,136,992
    
    
    
    
    
    
    
    3,136,992Recreation and other
    
    
    
    
    
    
    2,366,365
    
    
    
    
    
    
    
    2,366,365Gross revenue
    
    
    
    
    
    
    26,801,519
    
    
    
    
    
    
    
    26,801,519Less-promotional allowances
    
    
    30,738
    
    
    
    204,497
    
    
    
    
    
    
    
    235,235Net revenue
    
    
    (30,738
    )
    
    
    26,597,022
    
    
    
    
    
    
    
    26,566,284Operating expensesGaming
    
    
    
    
    
    
    6,046,156
    
    
    
    
    
    
    
    6,046,156Hotel
    
    
    
    
    
    
    899,878
    
    
    
    
    
    
    
    899,878Food and beverage
    
    
    
    
    
    
    2,808,730
    
    
    
    
    
    
    
    2,808,730Recreation and other
    
    
    
    
    
    
    2,095,793
    
    
    
    
    
    
    
    2,095,793Marketing
    
    
    
    
    
    
    2,062,495
    
    
    
    
    
    
    
    2,062,495General and administrative
    
    
    
    
    
    
    3,559,552
    
    
    
    
    
    
    
    3,559,552Depreciation and amortization
    
    
    
    
    
    
    2,957,827
    
    
    
    
    
    
    
    2,957,827Insurance reimbursement
    
    
    (134,296
    )
    
    
    
    
    
    
    
    
    
    
    (134,296
    )Storm costs
    
    
    15,925
    
    
    
    
    
    
    
    
    
    
    
    15,925Total operating expenses
    
    
    (118,371
    )
    
    
    20,430,431
    
    
    
    
    
    
    
    20,312,060Operating income
    
    
    87,633
    
    
    
    6,166,591
    
    
    
    
    
    
    
    6,254,224Other income (expense)
Interest expense
    
    
    (6,502,328
    )
    
    
    
    
    
    
    
    
    
    
    (6,502,328
    )Income from subsidiaries
    
    
    6,166,591
    
    
    
    
    
    
    
    (6,166,591
    )
    
    
    Other income
    
    
    4,242
    
    
    
    
    
    
    
    
    
    
    
    4,242Total other expense
    
    
    (331,495
    )
    
    
    
    
    
    
    (6,166,591
    )
    
    
    (6,498,086
    )Net income (loss)
    
    $
    (243,862
    )
    
    $
    6,166,591
    
    
    $
    (6,166,591
    )
    
    $
    (243,862
    )
 25




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Nine Months Ended June 30, 2009
(unaudited)
 GuarantorIMGRC
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    52,593,364
    
    
    $
    
    
    
    $
    52,593,364Hotel
    
    
    
    
    
    
    8,098,092
    
    
    
    
    
    
    
    8,098,092Food and beverage
    
    
    
    
    
    
    8,847,935
    
    
    
    
    
    
    
    8,847,935Recreation and other
    
    
    
    
    
    
    10,852,343
    
    
    
    
    
    
    
    10,852,343Gross revenue
    
    
    
    
    
    
    80,391,734
    
    
    
    
    
    
    
    80,391,734Less-promotional allowances
    
    
    50,220
    
    
    
    613,870
    
    
    
    
    
    
    
    664,090Net revenue
    
    
    (50,220
    )
    
    
    79,777,864
    
    
    
    
    
    
    
    79,727,644Operating expensesGaming
    
    
    
    
    
    
    18,436,227
    
    
    
    
    
    
    
    18,436,227Hotel
    
    
    
    
    
    
    3,043,690
    
    
    
    
    
    
    
    3,043,690Food and beverage
    
    
    
    
    
    
    8,968,343
    
    
    
    
    
    
    
    8,968,343Recreation and other
    
    
    
    
    
    
    7,388,606
    
    
    
    
    
    
    
    7,388,606Marketing
    
    
    
    
    
    
    5,993,185
    
    
    
    
    
    
    
    5,993,185General and administrative
    
    
    
    
    
    
    13,108,434
    
    
    
    
    
    
    
    13,108,434Depreciation and amortization
    
    
    
    
    
    
    9,082,168
    
    
    
    
    
    
    
    9,082,168Insurance reimbursement
    
    
    (4,306,380
    )
    
    
    
    
    
    
    
    
    
    
    (4,306,380
    )Storm costs
    
    
    293,118
    
    
    
    
    
    
    
    
    
    
    
    293,118Loss on disposal of assets
    
    
    
    
    
    
    (3,163
    )
    
    
    
    
    
    
    (3,163
    )Total operating expenses
    
    
    (4,013,262
    )
    
    
    66,017,490
    
    
    
    
    
    
    
    62,004,228Operating income
    
    
    3,963,042
    
    
    
    13,760,374
    
    
    
    
    
    
    
    17,723,416Other income (expense)Interest expense
    
    
    (19,569,619
    )
    
    
    
    
    
    
    
    
    
    
    (19,569,619
    )Income from subsidiaries
    
    
    13,760,374
    
    
    
    
    
    
    
    (13,760,374
    )
    
    
    Other income
    
    
    27,321
    
    
    
    
    
    
    
    
    
    
    
    27,321Total other expense
    
    
    (5,781,924
    )
    
    
    
    
    
    
    (13,760,374
    )
    
    
    (19,542,298
    )Net income (loss)
    
    $
    (1,818,882
    )
    
    $
    13,760,374
    
    
    $
    (13,760,374
    )
    
    $
    (1,818,882
    )
 26




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Nine Months Ended June 30, 2009
(unaudited)
 GuarantorIMGRC
    
    Subsidiaries
    
    Eliminations
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (1,818,882
    )
    
    $
    13,760,374
    
    
    $
    (13,760,374
    )
    
    $
    (1,818,882
    )Adjustments to reconcile net income (loss) to net
cash provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    9,082,168
    
    
    
    
    
    
    
    9,082,168Gain on disposal of fixed assets
    
    
    
    
    
    
    (3,163
    )
    
    
    
    
    
    
    (3,163
    )Changes in assets and liabilities:Accounts receivable
    
    
    47,575
    
    
    
    297,582
    
    
    
    
    
    
    
    345,157Tribal accounts receivable
    
    
    166,750
    
    
    
    
    
    
    
    
    
    
    
    166,750Inventories
    
    
    (4,274
    )
    
    
    99,247
    
    
    
    
    
    
    
    94,973Prepaid expenses
    
    
    795,560
    
    
    
    
    
    
    
    
    
    
    
    795,560Deferred financing cost
    
    
    722,057
    
    
    
    
    
    
    
    
    
    
    
    722,057Insurance reimbursement
    
    
    1,100,000
    
    
    
    
    
    
    
    
    
    
    
    1,100,000Other long term assets
    
    
    (235,110
    )
    
    
    88,950
    
    
    
    
    
    
    
    (146,160
    )Accounts payable
    
    
    (2,249,350
    )
    
    
    
    
    
    
    
    
    
    
    (2,249,350
    )Accrued expenses, payroll and benefits
    
    
    56,184
    
    
    
    (349,164
    )
    
    
    
    
    
    
    (292,980
    )Accrued interest
    
    
    6,000,000
    
    
    
    
    
    
    
    
    
    
    
    6,000,000Deposits and advance payments
    
    
    
    
    
    
    189,405
    
    
    
    
    
    
    
    189,405Net cash provided by (used in) operating activities
    
    
    4,580,510
    
    
    
    23,165,399
    
    
    
    (13,760,374
    )
    
    
    13,985,535Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (8,495,073
    )
    
    
    
    
    
    
    (8,495,073
    )Investment in subsidiaries
    
    
    (13,760,374
    )
    
    
    
    
    
    
    13,760,374
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (13,760,374
    )
    
    
    (8,495,073
    )
    
    
    13,760,374
    
    
    
    (8,495,073
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    15,016,003
    
    
    
    (15,016,003
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (2,639,124
    )
    
    
    (205,025
    )
    
    
    
    
    
    
    (2,844,149
    )Distributions to Mescalero Apache Tribe
    
    
    (12,703,000
    )
    
    
    
    
    
    
    
    
    
    
    (12,703,000
    )Net cash used in financing activities
    
    
    (326,121
    )
    
    
    (15,221,028
    )
    
    
    
    
    
    
    (15,547,149
    )Net decrease in cash and cash equivalents
    
    
    (9,505,985
    )
    
    
    (550,702
    )
    
    
    
    
    
    
    (10,056,687
    )Cash and cash equivalents, beginning of period
    
    
    12,782,806
    
    
    
    4,129,443
    
    
    
    
    
    
    
    16,912,249Cash and cash equivalents, end of period
    
    $
    3,276,821
    
    
    $
    3,578,741
    
    
    $
    
    
    
    $
    6,855,562
 27




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##### Table of Contents



FORWARDLOOKING STATEMENTS
 This Form 10-Q includes forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. 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)
restrictive covenants in our debt instruments; (d) realizing the benefits of our business plan and
business strategies; (e) changes in gaming laws or regulations, including potential legalization of
gaming in certain jurisdictions; (f) the impact of competition in our markets; (g) our ability to
attract increasing numbers of customers; and (h) 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.
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Reference 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 or the Company refers to Inn of the Mountain Gods Resort and Casino, a business
enterprise of the Tribe, (c) Resort refers to the Inn of the Mountain Gods Resort and Casino, (d)
Casino Apache refers to Casino Apache, a business enterprise of the Tribe, (e) the Inn refers
to Inn of the Mountain Gods, a business enterprise of the Tribe, (f) the Travel Center refers to
Casino Apache Travel Center, a business enterprise of the Tribe and (g) 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. Reference in this Form 10-Q to
we, our, and us refer to IMG Resort and Casino.
    28




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##### Table of Contents



Overview
  Gaming Travel Center Casino
 Food and Beverage
 Hotel
 29




---



##### Table of Contents



Recreation and Other
 Market Conditions and Outlook
   Revenue Drivers
  Expense Drivers
  Collection of Tribal Taxes.
 30




---



##### Table of Contents



Critical Accounting Policies
  Revenue Recognition
 Promotional Allowances
  EITF Revenue Recognition, Customer payments
and Incentives (prior authoritative literature: Accounting for Certain
Sales Incentives)( (FAS Accounting
for Points and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for
Reproduces, or Services to be delivered in the future
 Classification of Departmental Costs
 Deferred Financing and Refinancing Costs
 31




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##### Table of Contents



Impairment of Long Lived Assets.
  Results of Operations
 Three Months Ended June 30, 2009 Compared to Three Months Ended June 30, 2010.
 Net Revenues
 Gaming
 Hotel
 32




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##### Table of Contents



Food and Beverage
 Recreation and Other
 Promotional Allowances
 Total Operating
Expenses
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Marketing
 General and Administrative.
 Management Fees
 Restructuring Costs.
 33




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##### Table of Contents



Depreciation
 Insurance Reimbursement.
 Storm Costs
 Other Income (Expenses)
 Nine Months Ended June 30, 2009 Compared to Nine Months Ended June 30, 2010.
 Net Revenues
 Gaming
 Hotel
 34




---



##### Table of Contents



Food and Beverage
 Recreation and Other
 Promotional Allowances
 Total Operating
Expenses
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Marketing
 35




---



##### Table of Contents



General and Administrative.
 Management Fees.
 Restructuring Costs.
 Insurance Reimbursement.
 Depreciation
 Storm Costs
 Income from Operations
 Other Income (Expenses)
 Liquidity and Capital Resources
    36




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##### Table of Contents



Description of Indebtedness
 The Senior Notes
      General Indebtedness
  37




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##### Table of Contents



Credit Facility
   Credit Rating
   Off-Balance Sheet Arrangements
  Regulation and Taxes
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
   
 Item 4T. Controls and Procedures.
 Disclosure Controls and Procedures
  38




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  
 PART II OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors.
  Our Chief Financial Officer has given notice of his resignation. It may be difficult for us to
find a new Chief Financial Officer with the appropriate level of experience.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. (Removed and Reserved)
 
 Item 5. Other Information
  
 Item 6. Exhibits.
 39




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##### Table of Contents



Exhibit No.
    
    Description31.1
    
    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.
 40




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##### Table of Contents



SIGNATURES
  INN OF THE MOUNTAIN GODS RESORT AND
CASINODate: August 20, 2010
    By
    /s/ Scott EldredgeName:
    Scott EldredgeIts:  Chief Operating Officer
(Principal Executive Officer)Date: August 20, 2010
    By
    /s/ Ben MartinezName:
    Ben MartinezIts: Chief Financial Officer
(Principal Financial Officer) 41




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description31.1
    
    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.
 42