##### 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 March 31, 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
    
    75-3158926(State or other jurisdiction
    
    (I.R.S. Employerof incorporation or organization)
    
    Identification Number)
 287 Carrizo Canyon Road
    
    88340Mescalero, New Mexico
    
    (Zip Code)(Address of principal executive offices)
 575-464-7777
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



INN OF THE MOUNTAIN GODS RESORT AND CASINO
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2010
INDEX
 PagesPART I. FINANCIAL INFORMATIONItem 1. Consolidated Financial Statements:Consolidated Balance Sheets as of September 30, 2009 (unaudited) and March 31, 2010 (unaudited)
    
    
    3Consolidated Income Statements for the Three Month Periods Ended March 31, 2009 (unaudited)
and 2010 (unaudited)
    
    
    4Consolidated Consolidated Income Statements for the Six Month Periods Ended March 31, 2009
(unaudited) and 2010 (unaudited)
    
    
    4Consolidated
Statements of Cash Flows for the Six Month Periods Ended March 31, 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
    
    
    36Item 4T. Controls and Procedures
    
    
    37PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    37Item 1A. Risk Factors
    
    
    37Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    37Item 3. Defaults Upon Senior Securities.
    
    
    37Item 4. Submission of Matters to a Vote of Security Holders
    
    
    37Item 5. Other Information
    
    
    37Item 6. Exhibits
    
    
    38Signatures
    
    
    39EX-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 March 31,2009
    
    
    2010Current assetsCash and cash equivalents
    
    $
    5,629,436
    
    
    $
    8,581,058Accounts receivable, net of allowance for doubtful accounts
    
    
    617,433
    
    
    
    491,102Inventories, net
    
    
    862,251
    
    
    
    802,262Prepaid expenses and other assets
    
    
    1,321,812
    
    
    
    914,864Total current assets
    
    
    8,430,932
    
    
    
    10,789,286Non-current assetsProperty, plant and equipment, net
    
    
    189,066,385
    
    
    
    184,756,542Other assets
    
    
    51,000
    
    
    
    51,000Deferred financing cost
    
    
    2,078,017
    
    
    
    1,187,438Total assets
    
    $
    199,626,334
    
    
    $
    196,784,266Liabilities and deficitCurrent liabilitiesAccounts payable
    
    $
    1,422,304
    
    
    $
    1,103,666Accrued expenses
    
    
    4,604,088
    
    
    
    3,598,253Accrued payroll and benefits
    
    
    2,806,727
    
    
    
    2,546,490Accrued interest
    
    
    22,386,667
    
    
    
    36,700,000Advance deposits
    
    
    413,046
    
    
    
    744,406Current portion of long-term debt
    
    
    202,924,922
    
    
    
    201,149,867Total current liabilities
    
    
    234,557,754
    
    
    
    245,842,682Non-current liabilitiesLong-term debt, net of current portion
    
    
    395,634
    
    
    
    177,402Total liabilities
    
    
    234,953,388
    
    
    
    246,020,084DeficitContributed capital
    
    
    (5,389,062
    )
    
    
    (16,389,062
    )Accumulated deficit
    
    
    (29,937,992
    )
    
    
    (32,846,756
    )Total deficit
    
    
    (35,327,054
    )
    
    
    (49,235,818
    )Total liabilities and deficit
    
    $
    199,626,334
    
    
    $
    196,784,266
  3




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(unaudited)
 Three Months Ended
    
    
    Three Months Ended
    
    
    Six months Ended
    
    
    Six months EndedMarch 31, 2009
    
    
    March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2010Revenues:Gaming
    
    $
    17,610,289
    
    
    $
    16,763,379
    
    
    $
    34,156,335
    
    
    $
    32,931,488Hotel
    
    
    2,636,886
    
    
    
    2,154,970
    
    
    
    5,236,961
    
    
    
    4,330,345Food and beverage
    
    
    2,509,197
    
    
    
    3,435,498
    
    
    
    5,710,942
    
    
    
    6,370,339Recreation and other
    
    
    4,483,343
    
    
    
    7,631,769
    
    
    
    8,485,977
    
    
    
    12,030,081Gross Revenue
    
    
    27,239,715
    
    
    
    29,985,616
    
    
    
    53,590,215
    
    
    
    55,662,253Less-promotional allowances
    
    
    217,014
    
    
    
    200,087
    
    
    
    389,525
    
    
    
    438,968Net Revenue
    
    
    27,022,701
    
    
    
    29,785,529
    
    
    
    53,200,690
    
    
    
    55,223,285Operating ExpensesGaming
    
    
    5,810,229
    
    
    
    5,428,057
    
    
    
    12,429,400
    
    
    
    10,801,617Hotel expenses
    
    
    1,011,829
    
    
    
    867,433
    
    
    
    2,143,812
    
    
    
    1,648,869Food and beverage
    
    
    2,603,021
    
    
    
    3,234,404
    
    
    
    6,159,613
    
    
    
    6,458,185Recreation and other
    
    
    2,665,792
    
    
    
    3,033,264
    
    
    
    5,292,814
    
    
    
    5,581,425Marketing
    
    
    2,134,579
    
    
    
    2,064,170
    
    
    
    3,930,690
    
    
    
    4,408,407General and administrative
    
    
    4,382,827
    
    
    
    4,708,278
    
    
    
    9,565,917
    
    
    
    9,263,076Management fees (Note 9)
    
    
    
    
    
    
    165,140
    
    
    
    
    
    
    
    165,140Depreciation and amortization
    
    
    3,100,684
    
    
    
    2,966,036
    
    
    
    6,124,341
    
    
    
    6,008,669Insurance reimbursement (Note 11)
    
    
    (495,637
    )
    
    
    (281,635)
    
    
    
    (4,175,247
    )
    
    
    (1,466,658

    )Storm costs (Note 11)
    
    
    28,136
    
    
    
    1,329
    
    
    
    260,157
    
    
    
    1,329Total operating expenses
    
    
    21,241,460
    
    
    
    22,186,476
    
    
    
    41,731,497
    
    
    
    42,870,059Operating income
    
    
    5,781,241
    
    
    
    7,599,053
    
    
    
    11,469,193
    
    
    
    12,353,226Other income (Expense)Interest Expense
    
    
    (6,526,194
    )
    
    
    (7,563,395
    )
    
    
    (13,067,292
    )
    
    
    (15,303,357
    )Other income (expense)
    
    
    14,972
    
    
    
    21,461
    
    
    
    23,079
    
    
    
    41,367Total other income (expense)
    
    
    (6,511,222
    )
    
    
    (7,541,934
    )
    
    
    (13,044,213
    )
    
    
    (15,261,990
    )Net income
(loss)
    
    $
    (729,981
    )
    
    $
    57,119
    
    
    $
    (1,575,020
    )
    
    $
    (2,908,764
    )
  4




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Six months ended
    
    
    Six months endedMarch 31, 2009
    
    
    March 31, 2010Cash flows from operating activities:Net loss
    
    $
    (1,575,020
    )
    
    $
    (2,908,764
    )Adjustments to reconcile net loss to net cash provided by
 operating activities:Depreciation and amortization
    
    
    5,725,887
    
    
    
    6,008,669Changes in assets and liabilities:Accounts receivable
    
    
    512,383
    
    
    
    126,331Tribal accounts receivable
    
    
    166,750
    
    
    
    Inventories
    
    
    146,092
    
    
    
    59,989Prepaid expenses
    
    
    470,867
    
    
    
    406,948Insurance reimbursement
    
    
    1,100,000
    
    
    
    Deferred financing cost
    
    
    812,622
    
    
    
    890,579Other long-term assets
    
    
    (10,160
    )
    
    
    Accounts payable
    
    
    (1,868,523
    )
    
    
    (318,638
    )Accrued expenses, payroll and benefits
    
    
    (96,281
    )
    
    
    (1,266,072
    )Accrued interest payable
    
    
    
    
    
    
    14,313,333Deposits and advanced payments
    
    
    (222,677
    )
    
    
    331,360Net cash provided by operating activities
    
    
    5,161,940
    
    
    
    17,643,735Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (6,954,912
    )
    
    
    (1,698,826
    )Net cash used in investing activities
    
    
    (6,954,912
    )
    
    
    (1,698,826
    )Cash flows from financing activities:Principal payments on long-term debt
    
    
    (1,902,635
    )
    
    
    (1,993,287
    )Distributions to Mescalero Apache Tribe
    
    
    (4,002,000
    )
    
    
    (11,000,000
    )Net cash used in financing activities
    
    
    (5,904,635
    )
    
    
    (12,993,287
    )Net (decrease) increase in cash and cash equivalents
    
    
    (7,697,607
    )
    
    
    2,951,622Cash and cash equivalents, beginning of period
    
    
    16,912,249
    
    
    
    5,629,436Cash and cash equivalents, end of period
    
    $
    9,214,642
    
    
    $
    8,581,058Supplemental cash flow information:Cash paid for interest
    
    $
    12,255,263
    
    
    $
    99,446Non-cash investing and financing activities:Property, plant and equipment acquired through reduction in
fire recovery receivable
    
    $
    3,075,247
    
    
    $
    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
  The three months ended March 31,2009
    
    
    2010Rooms
    
    $
    10,795
    
    
    $
    5,834Food and beverage
    
    
    195,520
    
    
    
    174,531Total
    
    $
    206,315
    
    
    $
    180,365
 Marketing
  Tribal Taxes
   Three Months EndedMarch 31, 2010Alternative minimum tax due
    
    $
    1,200,000Total taxes collected
    
    
    (886,246
    )Alternative minimum tax expensed
    
    $
    313,754
 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
    
    
    March 31, 2010Food and beverage
    
    $
    237,361
    
    
    $
    235,211Golf and pro shop
    
    
    65,853
    
    
    
    44,762Gift shops, fuel and other
    
    
    559,037
    
    
    
    522,289Inventories, net of reserves
    
    $
    862,251
    
    
    $
    802,262
 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
    
    
    March 31, 2010Land
    
    $
    1,000,473
    
    
    $
    1,000,473Buildings
    
    
    210,005,387
    
    
    
    216,396,686Lifts and Snowmaking equipment
    
    
    8,493,368
    
    
    
    5,686,867Non-gaming equipment, furniture and other
    
    
    52,480,709
    
    
    
    52,579,920Gaming equipment
    
    
    22,470,190
    
    
    
    22,550,738Leasehold and land improvements, lake and
golf course
    
    
    11,075,633
    
    
    
    11,075,633Subtotal
    
    
    305,525,760
    
    
    
    309,290,317Less accumulated depreciation and amortization
    
    
    (119,375,209
    )
    
    
    (125,385,590
    )Property, plant and equipment, net
    
    
    186,150,551
    
    
    
    183,904,727Construction in progress
    
    
    2,915,834
    
    
    
    851,815Net Property, plant and equipment
    
    $
    189,066,385
    
    
    $
    184,756,542
 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
    
    
    March 31, 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
    
    
    
    418,563Capital Equipment Loans with Key Equipment, Five (5) year term, 7.65% interest
    
    
    2,519,922
    
    
    
    726,953Xerox (3) year term,
    
    
    240,080
    
    
    
    181,753Total
    
    
    203,320,556
    
    
    
    201,327,269Less current portion
    
    
    (202,924,922
    )
    
    
    (201,149,867
    )Long-term portion
    
    $
    395,634
    
    
    $
    177,402
  2010
    
    $
    200,900,4972011
    
    
    426,772$
    201,327,269
 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 March 31, 2009Net Revenue
    
    $
    10,651
    
    
    $
    7,098
    
    
    $
    524
    
    
    $
    6,583
    
    
    $
    2,167
    
    
    $
    27,023Operating Income (Loss)
    
    
    8,229
    
    
    
    5,665
    
    
    
    (49
    )
    
    
    1,520
    
    
    
    (9,584
    )
    
    
    5,781Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,101
    
    
    
    3,101Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,526
    )
    
    
    (6,526
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    15Three months ended March
31, 2010Net Revenue
    
    $
    10,231
    
    
    $
    6,454
    
    
    $
    1,029
    
    
    $
    6,669
    
    
    $
    5,403
    
    
    $
    29,786Operating Income (Loss)
    
    
    8,081
    
    
    
    5,281
    
    
    
    367
    
    
    
    1,254
    
    
    
    (7,384
    )
    
    
    7,599Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,966
    
    
    
    2,966Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,563
    )
    
    
    (7,563
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    21Six months ended March
31, 2009Net Revenue
    
    $
    20,217
    
    
    $
    13,803
    
    
    $
    921
    
    
    $
    14,221
    
    
    $
    4,039
    
    
    $
    53,201Operating Income (Loss)
    
    
    14,985
    
    
    
    10,833
    
    
    
    17
    
    
    
    2,481
    
    
    
    (16,847
    )
    
    
    11,469Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,124
    
    
    
    6,124Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,067
    )
    
    
    (13,067
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    23Six months ended March
31, 2010Net Revenue
    
    $
    20,096
    
    
    $
    12,693
    
    
    $
    1,426
    
    
    $
    13,596
    
    
    $
    7,412
    
    
    $
    55,223Operating Income (Loss)
    
    
    15,771
    
    
    
    10,342
    
    
    
    403
    
    
    
    2,380
    
    
    
    (16,543
    )
    
    
    12,353Depreciation Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,009
    
    
    
    6,009Interest Expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,303
    )
    
    
    (15,303
    )Interest Income and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    41
    
    
    
    41
 NOTE 13CONSOLIDATING INFORMATION
 wholly-owned
Guarantors
  19




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
As of March 31, 2010
(unaudited)
 Wholly-ownedIMGRC
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash and cash equivalents
    
    $
    4,176,463
    
    
    $
    4,404,595
    
    
    $
    
    
    
    $
    8,581,058Accounts receivable
    
    
    111,921
    
    
    
    379,181
    
    
    
    
    
    
    
    491,102Inventories
    
    
    203,549
    
    
    
    598,713
    
    
    
    
    
    
    
    802,262Prepaid expenses
    
    
    914,864
    
    
    
    
    
    
    
    
    
    
    
    914,864Total current assets
    
    
    5,406,797
    
    
    
    5,382,489
    
    
    
    
    
    
    
    10,789,286Property, plant and equipment, net
    
    
    
    
    
    
    184,756,542
    
    
    
    
    
    
    
    184,756,542Other assets
    
    
    51,000
    
    
    
    
    
    
    
    
    
    
    
    51,000Deferred financing costs
    
    
    1,187,438
    
    
    
    
    
    
    
    
    
    
    
    1,187,438Advances to subsidiaries
    
    
    8,347,274
    
    
    
    12,557,969
    
    
    
    (20,905,243
    )
    
    
    Investment in subsidiaries
    
    
    191,614,872
    
    
    
    
    
    
    
    (191,614,872
    )
    
    
    Total Assets
    
    $
    206,607,381
    
    
    $
    202,697,000
    
    
    $
    (212,520,115
    )
    
    $
    196,784,266Accounts payable
    
    $
    1,103,666
    
    
    $
    
    
    
    $
    
    
    
    $
    1,103,666Accrued expenses
    
    
    2,026,368
    
    
    
    1,571,885
    
    
    
    
    
    
    
    3,598,253Accrued payroll and benefits
    
    
    2,546,490
    
    
    
    
    
    
    
    
    
    
    
    2,546,490Accrued interest
    
    
    36,700,000
    
    
    
    
    
    
    
    
    
    
    
    36,700,000Advance deposits
    
    
    
    
    
    
    744,406
    
    
    
    
    
    
    
    744,406Current portion of long-term debt
    
    
    200,851,629
    
    
    
    298,238
    
    
    
    
    
    
    
    201,149,867Total current liabilities
    
    
    243,228,153
    
    
    
    2,614,529
    
    
    
    
    
    
    
    245,842,682Non current liabilities:Advances from subsidiaries
    
    
    12,557,969
    
    
    
    8,347,274
    
    
    
    (20,905,243
    )
    
    
    Long-term debt, net of current portion
    
    
    57,077
    
    
    
    120,325
    
    
    
    
    
    
    
    177,402Total liabilities
    
    
    255,843,199
    
    
    
    11,082,128
    
    
    
    (20,905,243
    )
    
    
    246,020,084Contributed capital
    
    
    (16,389,062
    )
    
    
    (6,012,897
    )
    
    
    6,012,897
    
    
    
    (16,389,062
    )Retained earnings (deficit)
    
    
    (32,846,756
    )
    
    
    197,627,769
    
    
    
    (197,627,769
    )
    
    
    (32,846,756
    )Total equity (deficit)
    
    
    (49,235,818
    )
    
    
    191,614,872
    
    
    
    (191,614,872
    )
    
    
    (49,235,818
    )Total liabilities and equity (deficit)
    
    $
    206,607,381
    
    
    $
    202,697,000
    
    
    $
    (212,520,115
    )
    
    $
    196,784,266
 20




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2010
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    16,763,379
    
    
    $
    
    
    
    $
    16,763,379Hotel
    
    
    
    
    
    
    2,154,970
    
    
    
    
    
    
    
    2,154,970Food and beverage
    
    
    
    
    
    
    3,435,498
    
    
    
    
    
    
    
    3,435,498Recreation and other
    
    
    
    
    
    
    7,631,769
    
    
    
    
    
    
    
    7,631,769Gross revenue
    
    
    
    
    
    
    29,985,616
    
    
    
    
    
    
    
    29,985,616Less-promotional allowances
    
    
    18,631
    
    
    
    181,456
    
    
    
    
    
    
    
    200,087Net revenue
    
    
    (18,631
    )
    
    
    29,804,160
    
    
    
    
    
    
    
    29,785,529Operating expensesGaming
    
    
    
    
    
    
    5,428,057
    
    
    
    
    
    
    
    5,428,057Hotel
    
    
    
    
    
    
    867,433
    
    
    
    
    
    
    
    867,433Food and beverage
    
    
    
    
    
    
    3,234,404
    
    
    
    
    
    
    
    3,234,404Recreation and other
    
    
    
    
    
    
    3,033,264
    
    
    
    
    
    
    
    3,033,264Marketing
    
    
    
    
    
    
    2,064,170
    
    
    
    
    
    
    
    2,064,170General and administrative
    
    
    
    
    
    
    4,708,278
    
    
    
    
    
    
    
    4,708,278Management fees (Note 9)
    
    
    165,140
    
    
    
    
    
    
    
    
    
    
    
    165,140Depreciation and amortization
    
    
    
    
    
    
    2,966,036
    
    
    
    
    
    
    
    2,966,036Storm costs (Note 11)
    
    
    1,329
    
    
    
    
    
    
    
    
    
    
    
    1,329Insurance
reimbursement (Note 11)
    
    
    
    
    
    
    (281,635
    )
    
    
    
    
    
    
    (281,635
    )Total operating expenses
    
    
    166,469
    
    
    
    22,020,007
    
    
    
    
    
    
    
    22,186,476Operating
income (loss)
    
    
    (185,100
    )
    
    
    7,784,153
    
    
    
    
    
    
    
    7,599,053Other income (expense)Interest expense
    
    
    (7,563,395
    )
    
    
    
    
    
    
    
    
    
    
    (7,563,395
    )Income from subsidiaries
    
    
    7,784,153
    
    
    
    
    
    
    
    (7,784,153
    )
    
    
    Other income
    
    
    21,461
    
    
    
    
    
    
    
    
    
    
    
    21,461Total other
income (expense)
    
    
    242,219
    
    
    
    
    
    
    
    (7,784,153
    )
    
    
    (7,541,934
    )Net income (loss)
    
    $
    57,119
    
    
    $
    7,784,153
    
    
    $
    (7,784,153
    )
    
    $
    57,119
 21




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 2010
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    32,931,488
    
    
    $
    
    
    
    $
    32,931,488Hotel
    
    
    
    
    
    
    4,330,345
    
    
    
    
    
    
    
    4,330,345Food and beverage
    
    
    
    
    
    
    6,370,339
    
    
    
    
    
    
    
    6,370,339Recreation and other
    
    
    
    
    
    
    12,030,081
    
    
    
    
    
    
    
    12,030,081Gross revenue
    
    
    
    
    
    
    55,662,253
    
    
    
    
    
    
    
    55,662,253Less-promotional allowances
    
    
    38,274
    
    
    
    400,694
    
    
    
    
    
    
    
    438,968Net revenue
    
    
    (38,274
    )
    
    
    55,261,559
    
    
    
    
    
    
    
    55,223,285Operating expensesGaming
    
    
    
    
    
    
    10,801,617
    
    
    
    
    
    
    
    10,801,617Hotel
    
    
    
    
    
    
    1,648,869
    
    
    
    
    
    
    
    1,648,869Food and beverage
    
    
    
    
    
    
    6,458,185
    
    
    
    
    
    
    
    6,458,185Recreation and other
    
    
    
    
    
    
    5,581,425
    
    
    
    
    
    
    
    5,581,425Marketing
    
    
    
    
    
    
    4,408,407
    
    
    
    
    
    
    
    4,408,407General and administrative
    
    
    
    
    
    
    9,263,076
    
    
    
    
    
    
    
    9,263,076Management fees (Note 9)
    
    
    165,140
    
    
    
    
    
    
    
    
    
    
    
    165,140Depreciation and amortization
    
    
    
    
    
    
    6,008,669
    
    
    
    
    
    
    
    6,008,669Storm costs (Note 11)
    
    
    1,329
    
    
    
    
    
    
    
    
    
    
    
    1,329Insurance
reimbursement (Note 11)
    
    
    
    
    
    
    (1,466,658
    )
    
    
    
    
    
    
    (1,466,658
    )Total operating expenses
    
    
    166,469
    
    
    
    42,703,590
    
    
    
    
    
    
    
    42,870,059Operating
income (loss)
    
    
    (204,743
    )
    
    
    12,557,969
    
    
    
    
    
    
    
    12,353,226Other income (expense)Interest expense
    
    
    (15,303,357
    )
    
    
    
    
    
    
    
    
    
    
    (15,303,357
    )Income from subsidiaries
    
    
    12,557,969
    
    
    
    
    
    
    
    (12,557,969
    )
    
    
    Other income
    
    
    41,367
    
    
    
    
    
    
    
    
    
    
    
    41,367Total other expense
    
    
    (2,704,021
    )
    
    
    
    
    
    
    (12,557,969
    )
    
    
    (15,261,990
    )Net income (loss)
    
    $
    (2,908,764
    )
    
    $
    12,557,969
    
    
    $
    (12,557,969
    )
    
    $
    (2,908,764
    )
 22




---



##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Six Months Ended March 31, 2010
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (2,908,764
    )
    
    $
    12,557,969
    
    
    $
    (12,557,969
    )
    
    $
    (2,908,764
    )Adjustments
to reconcile net income (loss) to net cash provided by (used
in) operating activities:Depreciation and amortization
    
    
    
    
    
    
    6,008,669
    
    
    
    
    
    
    
    6,008,669Changes in assets and liabilities:Accounts receivable
    
    
    (124,226
    )
    
    
    250,557
    
    
    
    
    
    
    
    126,331Inventories
    
    
    20,272
    
    
    
    39,717
    
    
    
    
    
    
    
    59,989Prepaid expenses
    
    
    406,948
    
    
    
    
    
    
    
    
    
    
    
    406,948Deferred
financing costs
    
    
    890,579
    
    
    
    
    
    
    
    
    
    
    
    890,579Accounts payable
    
    
    (318,638
    )
    
    
    
    
    
    
    
    
    
    
    (318,638
    )Accrued expenses, payroll and benefits
    
    
    (955,048
    )
    
    
    (311,024
    )
    
    
    
    
    
    
    (1,266,072
    )Accrued interest
    
    
    14,313,333
    
    
    
    
    
    
    
    
    
    
    
    14,313,333Deposits and advance payments
    
    
    
    
    
    
    331,360
    
    
    
    
    
    
    
    331,360Net cash provided by (used in) operating activities
    
    
    11,324,456
    
    
    
    18,877,248
    
    
    
    (12,557,969
    )
    
    
    17,643,735Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (1,698,826
    )
    
    
    
    
    
    
    (1,698,826
    )Investment in subsidiaries
    
    
    (12,557,969
    )
    
    
    
    
    
    
    12,557,969
    
    
    
    Net cash provided by (used by) investing activities
    
    
    (12,557,969
    )
    
    
    (1,698,826
    )
    
    
    12,557,969
    
    
    
    (1,698,826
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    16,289,022
    
    
    
    (16,289,022
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (1,851,296
    )
    
    
    (141,991
    )
    
    
    
    
    
    
    (1,993,287
    )Distributions to Mescalero Apache Tribe
    
    
    (11,000,000
    )
    
    
    
    
    
    
    
    
    
    
    (11,000,000
    )Net cash provided by (used in) financing activities
    
    
    3,437,726
    
    
    
    (16,431,013
    )
    
    
    
    
    
    
    (12,993,287
    )Net increase in cash and cash equivalents
    
    
    2,204,213
    
    
    
    747,409
    
    
    
    
    
    
    
    2,951,622Cash and cash equivalents, beginning of period
    
    
    1,972,250
    
    
    
    3,657,186
    
    
    
    
    
    
    
    5,629,436Cash and cash equivalents, end of period
    
    $
    4,176,463
    
    
    $
    4,404,595
    
    
    $
    
    
    
    $
    8,581,058
 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 March 31, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    17,610,289
    
    
    $
    
    
    
    $
    17,610,289Hotel
    
    
    
    
    
    
    2,636,886
    
    
    
    
    
    
    
    2,636,886Food and beverage
    
    
    
    
    
    
    2,509,197
    
    
    
    
    
    
    
    2,509,197Recreation and other
    
    
    
    
    
    
    4,483,343
    
    
    
    
    
    
    
    4,483,343Gross revenue
    
    
    
    
    
    
    27,239,715
    
    
    
    
    
    
    
    27,239,715Less-promotional allowances
    
    
    6,939
    
    
    
    210,075
    
    
    
    
    
    
    
    217,014Net revenue
    
    
    (6,939
    )
    
    
    27,029,640
    
    
    
    
    
    
    
    27,022,701Operating expensesGaming
    
    
    
    
    
    
    5,810,229
    
    
    
    
    
    
    
    5,810,229Hotel
    
    
    
    
    
    
    1,011,829
    
    
    
    
    
    
    
    1,011,829Food and beverage
    
    
    
    
    
    
    2,603,021
    
    
    
    
    
    
    
    2,603,021Recreation and other
    
    
    
    
    
    
    2,665,792
    
    
    
    
    
    
    
    2,665,792Marketing
    
    
    
    
    
    
    2,134,579
    
    
    
    
    
    
    
    2,134,579General and administrative
    
    
    
    
    
    
    4,382,827
    
    
    
    
    
    
    
    4,382,827Depreciation and amortization
    
    
    
    
    
    
    3,100,684
    
    
    
    
    
    
    
    3,100,684Insurance reimbursement on storm loss
    
    
    (495,637
    )
    
    
    
    
    
    
    
    
    
    
    (495,637
    )Storm costs
    
    
    28,136
    
    
    
    
    
    
    
    
    
    
    
    28,136Total operating expenses
    
    
    (467,501
    )
    
    
    21,708,961
    
    
    
    
    
    
    
    21,241,460Operating income
    
    
    460,562
    
    
    
    5,320,679
    
    
    
    
    
    
    
    5,781,241Other income (expense)Interest expense
    
    
    (6,526,194
    )
    
    
    
    
    
    
    
    
    
    
    (6,526,194
    )Income from subsidiaries
    
    
    5,320,679
    
    
    
    
    
    
    
    (5,320,679
    )
    
    
    Other income
    
    
    14,972
    
    
    
    
    
    
    
    
    
    
    
    14,972Total other expense
    
    
    (1,190,543
    )
    
    
    
    
    
    
    (5,320,679
    )
    
    
    (6,511,222
    )Net income (loss)
    
    $
    (729,981
    )
    
    $
    5,320,679
    
    
    $
    (5,320,679
    )
    
    $
    (729,981
    )
 25




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##### Table of Contents



INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedRevenues:Gaming
    
    $
    
    
    
    $
    34,156,335
    
    
    $
    
    
    
    $
    34,156,335Hotel
    
    
    
    
    
    
    5,236,961
    
    
    
    
    
    
    
    5,236,961Food and beverage
    
    
    
    
    
    
    5,710,942
    
    
    
    
    
    
    
    5,710,942Recreation and other
    
    
    
    
    
    
    8,485,977
    
    
    
    
    
    
    
    8,485,977Gross revenue
    
    
    
    
    
    
    53,590,215
    
    
    
    
    
    
    
    53,590,215Less-promotional allowances
    
    
    19,482
    
    
    
    370,043
    
    
    
    
    
    
    
    389,525Net revenue
    
    
    (19,482
    )
    
    
    53,220,172
    
    
    
    
    
    
    
    53,200,690Operating expensesGaming
    
    
    
    
    
    
    12,429,400
    
    
    
    
    
    
    
    12,429,400Hotel
    
    
    
    
    
    
    2,143,812
    
    
    
    
    
    
    
    2,143,812Food and beverage
    
    
    
    
    
    
    6,159,613
    
    
    
    
    
    
    
    6,159,613Recreation and other
    
    
    
    
    
    
    5,292,814
    
    
    
    
    
    
    
    5,292,814Marketing
    
    
    
    
    
    
    3,930,690
    
    
    
    
    
    
    
    3,930,690General and administrative
    
    
    
    
    
    
    9,565,917
    
    
    
    
    
    
    
    9,565,917Depreciation and amortization
    
    
    
    
    
    
    6,124,341
    
    
    
    
    
    
    
    6,124,341Insurance reimbursement on storm loss
    
    
    (4,175,247
    )
    
    
    
    
    
    
    
    
    
    
    (4,175,247
    )Storm costs
    
    
    260,157
    
    
    
    
    
    
    
    
    
    
    
    260,157Total operating expenses
    
    
    (3,915,090
    )
    
    
    45,646,587
    
    
    
    
    
    
    
    41,731,497Operating income
    
    
    (3,895,608
    )

    
    7,573,585
    
    
    
    
    
    
    
    11,469,193Other income (expense)Interest expense
    
    
    (13,067,292
    )
    
    
    
    
    
    
    
    
    
    
    (13,067,292
    )Income from subsidiaries
    
    
    7,573,585
    
    
    
    
    
    
    
    (7,573,585
    )
    
    
    Other income
    
    
    23,079
    
    
    
    
    
    
    
    
    
    
    
    23,079Total other expense
    
    
    (5,470,608
    )
    
    
    
    
    
    
    (7,573,585
    )
    
    
    (13,044,213
    )Net income (loss)
    
    $
    (1,575,020
    )
    
    $
    7,573,585
    
    
    $
    (7,573,585
    )
    
    $
    (1,575,020
    )
 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 Six Months Ended March 31, 2009
(unaudited)
 GuarantorIMGRC
    
    
    Subsidiaries
    
    
    Eliminations
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    (1,575,020
    )
    
    $
    7,573,585
    
    
    $
    (7,573,585
    )
    
    $
    (1,575,020
    )Adjustments to reconcile net income (loss) to net cash (used
in) provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    5,725,887
    
    
    
    
    
    
    
    5,725,887Changes in assets and liabilities:Accounts receivable
    
    
    6,720
    
    
    
    505,663
    
    
    
    
    
    
    
    512,383Tribal accounts receivable
    
    
    166,750
    
    
    
    
    
    
    
    
    
    
    
    166,750Inventories
    
    
    (1,998
    )
    
    
    148,090
    
    
    
    
    
    
    
    146,092Prepaid expenses
    
    
    470,867
    
    
    
    
    
    
    
    
    
    
    
    470,867Insurance reimbursement
    
    
    1,100,000
    
    
    
    
    
    
    
    
    
    
    
    1,100,000Other long term assets
    
    
    (99,110
    )
    
    
    88,950
    
    
    
    
    
    
    
    (10,160
    )Deferred financing cost
    
    
    812,622
    
    
    
    
    
    
    
    
    
    
    
    812,622Accounts payable
    
    
    (1,868,523
    )
    
    
    
    
    
    
    
    
    
    
    (1,868,523
    )Accrued expenses, payroll and benefits
    
    
    465,684
    
    
    
    (561,965
    )
    
    
    
    
    
    
    (96,281
    )Deposits and advance payments
    
    
    
    
    
    
    (222,677
    )
    
    
    
    
    
    
    (222,677
    )Net cash provided by (used in) operating activities
    
    
    (522,008
    )
    
    
    13,257,533
    
    
    
    (7,573,585
    )
    
    
    5,161,940Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    
    
    
    
    (6,954,912
    )
    
    
    
    
    
    
    (6,954,912
    )Investment in subsidiaries
    
    
    (7,573,585
    )
    
    
    
    
    
    
    7,573,585
    
    
    
    Net cash provided by (used by) investing activities
    
    
    (7,573,585
    )
    
    
    (6,954,912
    )
    
    
    7,573,585
    
    
    
    (6,954,912
    )Cash flows from financing activities:Advances to (from) affiliates
    
    
    7,525,305
    
    
    
    (7,525,305
    )
    
    
    
    
    
    
    Principal payments on debt
    
    
    (1,764,824
    )
    
    
    (137,808
    )
    
    
    
    
    
    
    (1,902,635
    )Distributions to Mescalero Apache Tribe
    
    
    (4,002,000
    )
    
    
    
    
    
    
    
    
    
    
    (4,002,000
    )Net cash provided by (used in) financing activities
    
    
    1,758,481
    
    
    
    (7,663,113
    )
    
    
    
    
    
    
    (5,904,632
    )Net increase
(decrease) in cash and cash equivalents
    
    
    (6,337,111
    )
    
    
    (1,360,493
    )
    
    
    
    
    
    
    (7,697,607
    )Cash and cash equivalents, beginning of period
    
    
    12,782,806
    
    
    
    4,129,443
    
    
    
    
    
    
    
    16,912,249Cash and cash equivalents, end of period
    
    $
    6,445,695
    
    
    $
    2,768,950
    
    
    $
    
    
    
    $
    9,214,645
 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




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##### Table of Contents



Recreation and Other
 Market
Conditions and Outlook
   Revenue
Drivers
  Expense
Drivers
  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
 30




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##### Table of Contents



Deferred Financing and Refinancing Costs
 Impairment of Long Lived Assets.
  Results of Operations
 Three months Ended March 31, 2009 Compared to Three months Ended March 31, 2010.
 Net Revenues
 Gaming
 Hotel
 Food and Beverage
 31




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##### Table of Contents



Recreation and Other
 Promotional Allowances
 Total
Operating Expenses
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Marketing
 General
and Administrative.
 Management Fees
 Depreciation
 Insurance
Reimbursement.
 Storm Costs
 Income
from Operations
 32




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##### Table of Contents



Other
Income (Expenses)
 Six
months Ended March 31, 2009 Compared to Six months Ended
March 31, 2010.
 Net Revenues
 Gaming
 Hotel
 Food and Beverage
 Recreation and Other
 Promotional Allowances
 Total Operating
Expenses
 Gaming
 Hotel
 33




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##### Table of Contents



Food and Beverage
 Recreation and Other
 Marketing
 General
and Administrative.
 Management Fees.
 Insurance Reimbursement.
 Depreciation
 Storm Costs
 Income
from Operations
 Other Income
(Expenses)
 Liquidity and Capital Resources
   34




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##### Table of Contents



Description of Indebtedness
 The Senior Notes
      General Indebtedness
  35




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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.
   36




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##### Table of Contents



Item 4T. Controls and Procedures.
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  
 PART II OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information
  37




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##### Table of Contents



Item 6. 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.
 38




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##### Table of Contents



SIGNATURES
  INN OF THE MOUNTAIN GODS RESORT AND CASINODate: May 25, 2010
    By

/s/
Elizabeth Foster-AndersonName:
    Elizabeth  Foster-AndersonIts:
    Chief Operating Officer (Principal
Executive Officer) Date: May 25, 2010
    By
    /s/ Ben MartinezName:
    Ben MartinezIts:
    Chief Financial Officer
(Principal Financial Officer) 39




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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.
 40