UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                                 FORM 10-K

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

                For the fiscal year ended December 31, 2001

                                    OR

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

            For the transition period from ________ to ________

                     Commission file number 333-17795

                         WATERFORD GAMING, L.L.C.
          (Exact name of registrant as specified in its charter)

             Delaware                      06-1465402
   (State or other jurisdiction of       (IRS Employer
    incorporation or organization)     Identification No.)

    914 Hartford Turnpike, P.O. Box 715
            Waterford, CT                      06385
  (Address of principal executive offices)   (Zip Code)

Registrant's telephone number, including area code (860) 442-4559

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

Title of each class     Name of each exchange on which registered
     NONE


Securities registered pursuant to Section 12(g) of the Act:
                        NONE
                   (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days: Yes X No.

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

                         WATERFORD GAMING, L.L.C.
                            INDEX TO FORM 10-K

PART I.                                                      PAGE

Item 1.   Business                                              1
Item 2.   Properties                                            8
Item 3.   Legal Proceedings                                     8
Item 4.   Submission of Matters to a Vote of Security Holders   8

PART II.

Item 5.   Market for Registrant's Common Equity and
          Related Stockholder Matters                           9
Item 6.   Selected Financial Data                               9
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                  10
Item 7a.  Quantitative and Qualitative Disclosures about
          Market Risk                                          14
Item 8.   Financial Statements and Supplementary Data          14
Item 9.   Changes in and Disagreements with Accountants on
          Accounting and Financial Disclosure                  14

PART III.

Item 10.  Directors and Executive Officers of the Registrant   15
Item 11.  Executive Compensation                               16
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management                                           16
Item 13.  Certain Relationships and Related Transactions       17

PART IV.

Item 14.  Exhibits, Financial Statement Schedules and
          Reports on Form 8-K                                  18


                                  PART I

Certain Forward Looking Statements
----------------------------------

Certain  information  included in this Form 10-K and other materials filed or to
be filed by Waterford  Gaming,  L.L.C.  (the  "Company") with the Securities and
Exchange Commission (the "Commission") (as well as information  included in oral
statements  or  other  written  statements  made or to be  made by the  Company)
contains  forward-looking  statements,  within the meaning of Section 27A of the
Securities Act of 1933, as amended,  and Section 21E of the Securities  Exchange
Act of 1934,  as  amended.  Such  statements  include,  but are not  limited to,
information  relating to the Mohegan Sun Casino (the  "Mohegan  Sun")  including
plans for future expansion and other business development activities,  financing
sources,  the effects of regulation  (including  gaming and tax  regulation) and
competition. Any forward-looking statements included herein do not purport to be
predictions of future events or circumstances. Forward-looking statements can be
identified by, among other things, the use of  forward-looking  terminology such
as  "believes",  "expects",  "may",  "will",  "should",  "seeks",  "pro  forma",
"anticipates",  "intends",  or the  negative of any thereof or other  variations
thereon or comparable  terminology.  Such  forward-looking  information involves
important risks and uncertainties  that could  significantly  affect anticipated
results in the future  and,  accordingly,  such  results  may differ  from those
expressed in any forward-looking statements made by or on behalf of the Company.


ITEM 1. BUSINESS

A.  GENERAL

The  Company is a special  purpose  company,  formed  solely for the  purpose of
holding its  partnership  in Trading  Cove  Associates  ("TCA"),  a  Connecticut
general partnership and the manager (until January 1, 2000) and developer of the
Mohegan Sun. The Company also invested in certain financial  instruments  issued
by the Mohegan  Tribal  Gaming  Authority  (the  "Authority").  The Company is a
Delaware  limited  liability  company  formed on September  30, 1996.  Waterford
Gaming  Finance Corp.  ("Finance"),  a Delaware  corporation,  is a wholly owned
subsidiary of the Company.  The principal  executive  offices of the Company and
Finance are located at 914 Hartford Turnpike,  Waterford,  Connecticut 06385 and
their telephone number is (860) 442-4559.



The Limited  Liability  Company  Agreement of the Company (the  "Agreement")  is
effective until  September 30, 2020 and may be terminated by unanimous  decision
of the members or upon the occurrence of events as stated in the Agreement.  The
Agreement  provides for the property,  affairs and business of the Company to be
managed by a  four-member  Board of Directors  which  consists of two  directors
appointed by Slavik Suites,  Inc.  ("Slavik") and two directors appointed by LMW
Investments,  Inc. ("LMW") (the "Board of Directors"). A quorum for the Board of
Directors  requires  all four  members.  LMW and  Slavik  initially  contributed
capital to the Company  consisting of all of their respective  interests in TCA.
Prior to the offering of the Company's and  Finance's  12-3/4%  senior notes due
November 15, 2003 of which $65,000,000 in aggregate  principal amount was issued
on  November  8, 1996 (the "$65  Million  Senior  Notes"),  Slavik  and LMW were
partners of TCA. In connection with the formation of the Company, Slavik and LMW
each contributed to the Company their interests in TCA in exchange for a 66-2/3%
and 33-1/3% ownership interest,  respectively, of the Company. Upon consummation
of the offering of the $65 Million Senior Notes,  (i) $6,666,667 of the proceeds
were  distributed  directly  to Slavik  for the  purpose  of  redeeming  certain
ownership  interests  in  Slavik,  and  (ii)  $3,333,333  of the  proceeds  were
distributed  to LMW,  which in turn loaned such proceeds to Len and Mark Wolman,
as individuals, who used such funds to purchase certain interests in Slavik. The
Company used $10.6  million of the proceeds from the offering of the $65 Million
Senior Notes to purchase RJH Development Corp.'s ownership interest in TCA. As a
result of these transactions (collectively the "Reorganization"), each of Slavik
and LMW owned 67.7967% and 32.2033% of the Company, respectively. The Company is
a managing general partner of TCA. As a result of the  Reorganization,  the only
two partners of TCA are the Company and Sun Cove Limited ("Sun Cove").

In connection  with the  Company's  and Finance's  issuance on March 17, 1999 of
$125 Million  9-1/2% senior notes payable which mature March 15, 2010 (the "$125
Million Senior Notes"), each of Slavik and LMW have contributed their respective
interests in the Company  concurrently to a Delaware limited liability  company,
Waterford Group, L.L.C. (the "Waterford Group"). Waterford Group is now the sole
member of the Company. Slavik and LMW own Waterford Group in the same respective
interest as they had in the Company and are as follows:


     Slavik Suites, Inc.                67.7967%
     LMW Investments, Inc.              32.2033%
                                       ---------
                                       100.0000%
                                       =========

Upon  consummation of the offering of the $125 Million Senior Notes, (i) the $65
Million Senior Notes were redeemed,  (ii) a distribution of $37,050,000 was made
by the Company to its sole  member  Waterford  Group and (iii) $2.0  million was
paid to a former partner of TCA, Leisure Resort Technology, Inc. ("Leisure"), in
satisfaction of a contractual obligation.

Additional capital contributions may be made to the Company by its member. If it
is determined  that the Company  requires  additional  funds,  such funds may be
loaned  to the  Company  by its  member  pursuant  to the terms set forth in the
Agreement;  however,  the  indenture,  between the Company and  Finance,  as the
Issuers,  and State Street Bank and Trust Company, as Trustee,  relating to $125
Million  Senior Notes (the  "Indenture"),  prohibits the Company from  incurring
additional  indebtedness.  The Agreement  also provides that any disputes  which
arise under the  Agreement  and which  remain  unresolved  after 30 days will be
settled through arbitration.

                                       1

LMW, one of the two members of Waterford  Group, is a development  firm based in
southeastern Connecticut.  LMW is owned by Len Wolman and Mark Wolman. The other
member of Waterford Group, Slavik, is based in Detroit,  Michigan. The Directors
of Slavik are Del J. Lauria, Len Wolman, Mark Wolman and Stephan F. Slavik.

The $125  Million  Senior  Notes  bear  interest  at a rate of 9-1/2% per annum,
payable semi-annually in arrears on March 15 and September 15 which commenced on
September 15, 1999.

The  principal  amount of the $125 Million  Senior Notes is payable on March 15,
2010.  The Company and Finance may elect to redeem the $125 Million Senior Notes
at any  time on or  after  March  15,  2004 at a  redemption  price  equal  to a
percentage (105.182% after March 14, 2004, and declining to 104.318% after March
14, 2005, 103.455% after March 14, 2006, 102.591% after March 14, 2007, 101.727%
after March 14, 2008, 100.864% after March 14, 2009, and to 100% after March 14,
2010) of the principal  amount thereof plus accrued  interest.  The $125 Million
Senior  Notes  provide  that  upon the  occurrence  of a Change of  Control  (as
defined),  the holders thereof will have the option to require the redemption of
the  $125  Million  Senior  Notes  at a  redemption  price  equal to 101% of the
principal amount thereof plus accrued interest.

If the Company and Finance have any Company  Excess Cash, as defined,  they must
redeem the $125  Million  Senior Notes (on a  semi-annual  basis on March 15 and
September 15) equal to a percentage (109.500% after March 15, 1999 and declining
to 108.636% after March 14, 2000,  107.773% after March 14, 2001, 106.909% after
March 14, 2002,  106.045%  after March 14, 2003,  105.182% after March 14, 2004,
104.318%  after March 14, 2005,  103.455%  after March 14, 2006,  102.591% after
March 14, 2007,  101.727%  after March 14, 2008,  100.864% after March 14, 2009,
and to 100.000% after March 14, 2010). In certain  circumstances,  if either the
Company or its partner in TCA  exercises  the option to buy or sell  partnership
interests in TCA,  the Company and Finance  must redeem the $125 Million  Senior
Notes.

The  Indenture  relating  to the $125  Million  Senior  Notes  contains  certain
affirmative and negative covenants  customarily  contained in agreements of this
type,  including  without  limitation,   covenants  that  restrict,  subject  to
specified  exceptions  the Company's and Finance's  ability to (i) borrow money,
(ii) pay dividends on stock or make certain other restricted payments, (iii) use
assets as security in other transactions,  (iv) make investments, (v) sell other
assets or merge with other  companies and (vi) engage in any business  except as
currently  conducted or contemplated or amend their  relationship  with TCA. The
Indenture also provides for customary events of default and the establishment of
a restricted investment fund with a trustee for interest reserves.

The Company has one primary source of revenue and cash flow: payments from TCA.

Trading Cove Associates
-----------------------

TCA was  organized  on July 27,  1993.  The  primary  purpose of TCA has been to
assist the  Mohegan  Tribe of  Indians  of  Connecticut  (the  "Tribe")  and the
Authority,  an instrumentality  of the Tribe, in obtaining federal  recognition,
negotiate  the  tribal-state  compact  with  the  State of  Connecticut,  obtain
financing for the  development of the Mohegan Sun located on certain Tribal land
in Uncasville,  Connecticut,  negotiate the Amended and Restated Gaming Facility
Management Agreement (the "Management  Agreement") and participate in the design
and  development  of the Mohegan Sun which  commenced  operations on October 12,
1996.  Since the opening of the Mohegan Sun and until  January 1, 2000,  TCA had
overseen the Mohegan  Sun's  day-to-day  operations.  The TCA  partnership  will
terminate on December 31, 2040, or earlier,  in accordance with the terms of the
partnership agreement. The Company has a 50% voting and profits interest in TCA.
The  remaining  50%  interest  is  owned  by  Sun  Cove,  an  affiliate  of  Sun
International Hotels Limited ("Sun International").

Trading Cove Associates - Material Agreements
---------------------------------------------

On  February  7,  1998,  TCA,  the Tribe and the  Authority  finalized  contract
negotiations and are moving forward with a significant  expansion project at the
Mohegan Sun (the "Project").  As a result, TCA and the Authority have terminated
the Management Agreement effective January 1, 2000.

Under the terms of an agreement (the  "Relinquishment  Agreement") TCA continued
to manage the Mohegan Sun under the Management  Agreement until January 1, 2000.
On December 31, 1999 the Management  Agreement  terminated and the Tribe assumed
day-to-day management of the Mohegan Sun. Under this Relinquishment Agreement to
compensate TCA for terminating its rights under the Management Agreement and the
Hotel/Resort Management Agreement,  the Authority has agreed to pay to TCA 5% of
Revenues, as defined,  (the "Relinquishment  Fees") generated by the Mohegan Sun
during the 15-year period commencing on January 1, 2000.


                                       2

Relinquishment Agreement
------------------------

The  payments  under the  Relinquishment  Agreement  will be divided into senior
relinquishment  payments and junior relinquishment  payments, each of which will
be 2.5% of "Revenues". Revenues are defined as gross gaming revenues (other than
Class II gaming revenue, i.e. bingo) and all other facility revenues (including,
without limitation,  hotel revenues,  food and beverage sales, parking revenues,
ticket revenues and other fees or receipts from the convention/events  center in
the  expansion  and all rental or other  receipts  from  lessees,  licensees and
concessionaires  operating in the  facility  but not the gross  receipts of such
lessees, licensees and concessionaires).  Revenues exclude revenues generated by
any future expansion of the Mohegan Sun, after completion of the Project. Senior
relinquishment payments will be payable quarterly in arrears commencing on April
25, 2000 for the quarter  ended March 31,  2000,  and the junior  relinquishment
payments will be payable  semi-annually  in arrears  commencing on July 25, 2000
for the six months ended June 30, 2000.



A summary of relinquishment payments received is as follows:

                           Senior              Junior             Total
                          -----------         -----------        -----------
April 25, 2001            $ 5,090,622         $   ---            $ 5,090,622
July 25, 2001               5,472,900          10,563,521         16,036,421
September 7, 2001              68,233              68,234            136,467
October 25, 2001            5,765,232             ---              5,765,232
January 25, 2002            6,460,672          12,225,904         18,686,576
                          -----------         -----------        -----------
Relinquishment Fees
 for the year ended
   December 31, 2001      $22,857,659         $22,857,659        $45,715,318
                          ===========         ===========        ===========


April 25, 2000            $ 4,947,458         $   ---            $ 4,947,458
July 26, 2000               5,039,048           9,986,506         15,025,554
October 25, 2000            5,457,627             ---              5,457,627
January 25, 2001            5,057,792          10,515,418         15,573,210
                          -----------         -----------        -----------

Relinquishment Fees
 for the year ended
  December 31, 2000       $20,501,925         $20,501,924        $41,003,849
                          ===========         ===========        ===========

The  Relinquishment  Agreement  provides  that  each of the  senior  and  junior
relinquishment  payments  are  subordinated  in right of  payment  to payment of
senior secured obligations  including the Authority's bank credit facility,  and
that the junior  relinquishment  payments are further subordinated to payment of
all other senior  obligations  including the Authority's 8-1/8% Senior Notes due
2006.  The  Relinquishment  Agreement  also  provides  that  all  relinquishment
payments  are  subordinated  in right of payment to an annual  minimum  priority
distribution  to the Tribe from the  operations  of the Mohegan Sun.

Under the  Relinquishment  Agreement,  the Authority makes certain covenants for
the benefit of TCA, including the following:

     (1)  Payments to the Tribe.  Except for  payments  of the minimum  priority
distributions  and  reasonable  charges  for  utilities  or  other  governmental
services supplied by the Tribe to the Authority,  the Authority may not make any
distributions  to the  Tribe  or its  members  at any  time  any  relinquishment
payments are outstanding.

     (2)  Affiliate  Transactions.  Except for payments of the minimum  priority
distributions  and  reasonable  charges  for  utilities  or  other  governmental
services  supplied by the Tribe to the Authority,  the Authority agrees to abide
by certain  restrictions on transactions with the Tribe and its members,  all as
set forth in the Relinquishment Agreement.

     (3)  Replacement/Restoration  of the  Mohegan  Sun.  If any  portion of the
Mohegan  Sun's  facilities is damaged by fire or other  casualty,  the Authority
shall replace or restore such facilities to substantially  the same condition as
prior to such casualty,  but only to the extent insurance proceeds are available
to do so. If sufficient insurance proceeds are not available, the Authority will
use  reasonable  efforts  to obtain  the  required  financing,  on  commercially
reasonable terms, to undertake and complete such replacement or restoration.

     (4) Business Purpose.  The Authority has agreed that during the term of the
Relinquishment  Agreement  it will only  engage in the casino  gaming and resort
business (and any incidental  business or activity) and will continue to operate
the Mohegan Sun as currently operated.

Under the  Relinquishment  Agreement,  the Authority and TCA agreed that it will
not solicit any employee of the other party or any  affiliate of the other party
for five years.

TCA has granted to the Authority an exclusive and perpetual license with respect
to trademarks and other similar  rights,  including the "Mohegan Sun" name, used
at or developed for the Mohegan Sun. The Authority has agreed,  however, that it
will only use the word "Sun" in  conjunction  with the Mohegan Sun and  together
with "Mohegan" or "Mohegan Tribe".

With certain  limitations set forth in the  Relinquishment  Agreement,  both the
Tribe and the Authority have waived immunity from  unconsented  suit for certain
enforcement rights of TCA arising under the Relinquishment Agreement.


                                      3

Development Agreement
---------------------

TCA and the Authority entered into a development  services agreement on February
7, 1998. Under this "Development  Agreement",  TCA agreed to oversee the design,
construction,  furnishing,  equipping  and  staffing  of the Project for a $14.0
million  development  fee (the  "Development  Fee"). On May 24, 2000 TCA and the
Authority  agreed  that TCA had  performed  and  completed  all its  obligations
relating to the staffing of the Project and that TCA has no further obligations
relating to the staffing of the  Project.  The first phase of the Project,
the Casino of the Sky, opened on September 25, 2001.

The Authority will pay the Development Fee to TCA quarterly beginning on January
15, 2000 until the Completion Date, as defined in the Development Agreement,  of
the Project  based on  incremental  completion of the Project as of each payment
date. A summary of the  quarterly  Development  Fee payments  received by TCA in
accordance with the terms of the Development Agreement is as follows:


           January 15, 2000                  $ 1,372,000
           April 20, 2000                        896,000
           July 17, 2000                       1,260,000
           October 13, 2000                    1,372,000
           January 23, 2001                      588,000
           April 16, 2001                      1,582,000
           July 20, 2001                       2,212,000
           October 17, 2001                    1,974,000
           January 25, 2002                    1,260,000
                                             -----------
                                             $12,516,000
                                             ===========

On February 9, 1998 the Development Services Agreement Phase II was entered into
between TCA and Sun International  Management Limited ("SIML").  Pursuant to the
Development  Services  Agreement Phase II, TCA subcontracted  with SIML and SIML
agreed to perform those services  assigned to SIML by TCA in order to facilitate
TCA's  fulfillment  of its duties and  obligations  to the  Authority  under the
Development   Agreement.   The  Development  Services  Agreement  Phase  II  was
subsequently  assigned  to  Sun  Cove.  TCA  shall  pay to  Sun  Cove a fee,  as
subcontractor  (the  "Development  Services  Fee Phase  II")  equal to 3% of the
development  costs of the Project,  less all costs incurred by TCA in connection
with  the  Project.  The  Development  Services  Fee  Phase  II shall be paid in
installments  due on December 31, 1999 and 2000 and on the  Completion  Date, as
defined in the Development  Agreement,  with a final payment being made when the
actual  development  costs of the Project are known.  The fee is to be paid from
available  cash  flow of TCA,  if any,  subordinate  to  certain  other  fees as
described  below under the heading  "Amended  and Restated  Omnibus  Termination
Agreement".

SIML has further  subcontracted  with Wolman  Construction LLC  ("Construction")
(the  "Local  Construction  Services  Agreement")  to  provide  certain of those
services  assigned to SIML by TCA. This agreement was also assigned to Sun Cove.
Sun Cove shall pay 20.83% of the  Development  Services Fee Phase II as and when
Sun Cove receives  payment from TCA.  Construction  has  subcontracted  with The
Slavik Company for 14.30% of its fee.

During the design phase,  TCA will assist the Authority in the engagement of the
architect and the construction manager, the preparation of design, construction,
and furnishings budgets, preliminary program evaluation,  design development and
the  approval  of  final  detailed  plans  and  specifications  prepared  by the
architect.  The Authority has agreed to assign to TCA its responsibilities under
any architectural  and/or  engineering  agreements to allow TCA to supervise and
administer directly the duties of the architect and/or engineer thereunder.

The  Development  Agreement  provides  that the design and  construction  of the
Project must comply with all federal and  Connecticut  statutes and  regulations
that   otherwise   would  apply  if  the  Project  were   located   outside  the
jurisdictional boundaries of the Tribe's land.

During the construction  phase,  TCA will be responsible for the  administration
and supervision of the construction manager and the entire construction process.
TCA will act as the Authority's  representative  in connection with construction
contracts  that  are  approved  by the  Authority.  Specifically,  TCA  will  be
responsible  for  overseeing  all persons  performing  work on the Project site,
inspecting  the  progress  of  construction,  determining  completion  dates and
reviewing   contractor  payment  requests   submitted  to  the  Authority.   The
Development Agreement  specifically gives TCA the right to include provisions in
construction  contracts that impose  liquidated  damage payments in the event of
failure to meet construction schedules.

As permitted by the Development Agreement, the Authority has elected to engage a
retail  consultant  to  oversee  the  design  and  construction  of  the  retail
facilities in the Project.  This work will be under the overall  supervision  of
TCA, which will integrate the design and  construction of the retail  facilities
with that of the other components of the Project.

The Development  Agreement requires TCA to implement procedures described in the
Tribal  Employment  Rights  Ordinance.  In  effect,  this  requires  TCA to give
preference  to  business  entities  or persons  which have been  approved by the
Authority in the selection of all contractors,  vendors and suppliers engaged in
the development of the Project. In addition to the staffing of the operations of
the Project,  the  Development  Agreement  requires that TCA give  preference to
qualified  members of the Tribe (and their spouses and children) and  thereafter
to enrolled members of other federally recognized Indian tribes.

The Authority will purchase  equipment,  furniture and  furnishings  required to
operate  the  expanded  facilities  from  vendors  selected by TCA or lease such
equipment,  furniture and  furnishings  on terms arranged by TCA and approved by
the Authority.

The  Development  Agreement  terminates  after the earlier of  completion of the
Project or 10 years.  In  addition,  each party has the right to  terminate  the
Development  Agreement  if there is a default or failure to perform by the other
party.  The  parties  must  submit  disputes  arising  under  the  agreement  to
arbitration  and have agreed that punitive  damages may not be awarded to either
party by any arbitrator.  The Authority has also waived  sovereign  immunity for
the purposes of permitting,  compelling or enforcing  arbitration and has agreed
to be sued by TCA in any court of  competent  jurisdiction  for the  purposes of
compelling  arbitration  or enforcing any  arbitration or judicial award arising
out of the Development  Agreement.


                                       4


Management Agreement
--------------------

The  Management  Agreement  between TCA and the Tribe was entered into on August
30, 1995. The Tribe had assigned its rights and obligations in this agreement to
the Authority. The Authority and TCA had consented to this assignment.

Until January 1, 2000,  TCA was the exclusive  manager of the Mohegan Sun. Under
the Management  Agreement,  the Tribe had granted to TCA the exclusive right and
obligation  to develop,  manage,  operate and  maintain  the Mohegan Sun and all
other  related   facilities   that  are  owned  by  the  Tribe  or  any  of  its
instrumentalities, including the Authority and to train members of the Tribe and
others in the management of the Mohegan Sun.

Until January 1, 2000 TCA's primary source of revenue was management  fees under
the Management  Agreement (the "Management Fees"). The Management Fees were paid
monthly (the final payment was received by TCA from the Authority on January 25,
2000) and were calculated in three tiers based upon Net Revenues,  as defined in
the Management Agreement, of the Mohegan Sun set forth below (in thousands):

                 I                   II               III
           ---------------   ------------------  -----------------
             40% of Net      Revenues in Tier I    Revenues in
           Revenues up to     plus  35% of Net   Tiers I & II plus
                              Revenues between      30% of Net
                                                  Revenues above
           ---------------   ------------------  -----------------

Year 1        $50,546         $50,547-$63,183        $63,183
Year 2        $73,115         $73,116-$91,394        $91,394
Year 3        $91,798         $91,799-$114,747       $114,747
Year 4        $95,693         $95,694-$119,616       $119,616



In addition, TCA was required to fund $1.2 million per year ($100,000 per month)
from its  Management  Fees  into a  capital  replacement  reserve.  The  capital
replacement reserve is the property of the Authority.

Amended and Restated Omnibus Termination Agreement
--------------------------------------------------

Effective March 18, 1999, the Amended and Restated Omnibus Termination Agreement
(the "Amended and Restated Omnibus  Termination  Agreement") was entered into by
TCA,  Sun  International,   the  Company,   SIML,  LMW,  Sun  Cove,  Slavik  and
Construction;  which  (i)  terminated  the  memorandum  of  understanding  dated
February 7, 1998; and (ii) effective  January 1, 2000  terminated a) the Amended
and Restated Omnibus Financing Agreement, b) completion guarantee and investment
banking and financing  arrangement  fee agreement  (the  "Financing  Arrangement
Agreement");  c) the management  services  agreement;  d) the organizational and
administrative services agreement; e) the marketing services agreement; and f) a
letter agreement relating to expenses dated October 19, 1996.

In consideration  for the termination of such agreements,  TCA will use its cash
to pay the following obligations in the priority set forth below:

     (a)  First,  to  pay all  unpaid  amounts  which  may  be  due   under  the
          terminated  letter  agreement  and to pay  certain  affiliates  of the
          Company and to Sun Cove a percentage  of an annual fee of $2.0 million
          less the actual  expenses  incurred  by TCA.  Such annual fee shall be
          payable in equal quarterly  installments  beginning March 31, 2000 and
          ending  December 31, 2014.  For the years ended  December 31, 2001 and
          2000,  $1,712,791  ($856,396 to Sun Cove and $856,395 to affiliates of
          the  Company)and  $1,849,506  ($924,753  to Sun Cove and  $924,753  to
          affiliates of the Company),  respectively,  had been paid and incurred
          by TCA in terms of the first priority.


     (b)  Second, to return all capital  contributions  made  by  the   partners
          of TCA after September 29, 1995. TCA anticipates  making capital calls
          to fund expenses related to the development of the Project,  and these
          capital  calls will be  repaid,  based on cash  flow,  in the  quarter
          following the quarter in which the capital call was made. From January
          1, 2000 to December 31, 2001 these  capital  contributions  aggregated
          $5,100,000.  $3,600,000 has been repaid to the partners of TCA, 50% to
          the Company and 50% to Sun Cove.

          As of December 31, 2001, $1,500,000 in capital contributions  remained
          outstanding.  On January 28, 2002, a cash distribution of $750,000 was
          made to each  partner  and on March  8,  2002 a cash  contribution  of
          $200,000 was made by each partner.

     (c)  Third, to pay any  accrued amounts  for  obligations  performed  prior
          to January 1, 2000 under the Financing Arrangement Agreement.  For the
          year  ended   December  31,  2000   $2,977,932   ($2,069,525   to  Sun
          International  and  $908,407 to the  Company)  had been paid by TCA in
          terms of the third  priority.  All required  payments were made during
          2000.

     (d)  Fourth,  to  make the  payments  set forth in  the agreements relating
          to Development  Services Agreement Phase II and the Local Construction
          Services  Agreement.  For the year ended December 31, 2000 $10,807,000
          ($8,555,902 to Sun Cove,  $1,929,191 to  Construction  and $321,907 to
          The Slavik  Company) had been paid and incurred by TCA in terms of the
          fourth priority. No payments are required or due at December 31, 2001.
          The  contingent  obligation  at December  31,  2001 was  approximately
          $8,255,000.


                                       5


     (e ) Fifth,  to  pay  Sun Cove an annual  fee of $5.0  million  payable  in
          equal quarterly installments of $1.25 million beginning March 31, 2000
          and ending  December 31, 2006.  For the years ended  December 31, 2001
          and 2000 $5.0  million  had been paid and  incurred by TCA in terms of
          the fifth priority.

     (f)  Sixth, to  pay  any  accrued  amounts for obligations  performed  with
          respect  to periods  prior to  January  1, 2000  under the  management
          services  agreement,  the organizational  and administrative  services
          agreement and the marketing  services  agreement.  For the years ended
          December  31,  2001 and  2000,  $23,621,754  ($11,810,877  to SIML and
          $11,810,877 to the Company) and  $23,299,200  ($11,649,600 to SIML and
          $11,649,600 to the Company),  respectively, had been paid and incurred
          by TCA in terms of the sixth  priority.  The final  required  payments
          were made during 2001.

     (g)  Seventh,  for   the  period  beginning   March 31,  2000  and   ending
          December 31, 2014, to pay each of Sun Cove and the Company twenty-five
          percent  (25%) of the  relinquishment  payments.  For the years  ended
          December 31, 2001 and 2000,  $19,457,160  ($9,728,580  to Sun Cove and
          $9,728,580  to the  Company) and $0,  respectively,  had been paid and
          incurred  by TCA in  terms of the  seventh  priority.  The  contingent
          obligation at December 31, 2001 was approximately $23,902,000.

     (h)  Eighth, to distribute all excess cash.

In addition,  TCA shall not make any  distributions  pursuant to the Amended and
Restated Omnibus Termination  Agreement until it has annually distributed to its
partners  pro rata,  the amounts  related to its  partners  tax  obligations  as
described in Section 3.03a(1) of the partnership agreement less twice the amount
of all other funds paid or  distributed to the Company during such year pursuant
to the Amended and Restated Omnibus Termination Agreement.

To the extent TCA does not have adequate  cash to make the payments  pursuant to
the Amended and Restated Omnibus Termination Agreement,  such amounts due shall
be deferred without the accrual of interest until TCA has sufficient cash to pay
them.

Amended and Restated Omnibus Financing Agreement
------------------------------------------------

Until January 1, 2000 TCA's primary source of revenue was Management Fees. Those
fees  were  utlitized  by TCA  pursuant  to the  Amended  and  Restated  Omnibus
Financing Agreement which was termintated effective January 1, 2000.

The Mohegan Tribal Gaming Authority
-----------------------------------

The Tribe is a federally recognized Indian tribe with an approximately  390-acre
reservation  located in  southeastern  Connecticut.  The Tribe  established  the
Authority  on July 15, 1995 with the  exclusive  power to conduct  and  regulate
gaming activities for the Tribe. Under the Indian Gaming Regulatory Act of 1988,
as amended ("IGRA"), federally recognized Indian tribes are permitted to conduct
full-scale  casino  gaming  operations on  tribal-land,  subject to, among other
things,  the negotiation of a tribal state compact with the affected state.  The
Tribe and the  State of  Connecticut  have  entered  into  such a  compact  (the
"Mohegan Compact") that has been approved by the U.S. Secretary of the Interior.
The Authority is governed by a management board (the "Management Board"),  which
consists of the nine members of the Tribal  Council (the  governing  body of the
Tribe).

Under  the  terms of the  Relinquishment  Agreement  on  December  31,  1999 the
Management  Agreement  terminated  and on  January  1,  2000 the  Tribe  assumed
day-to-day management of the Mohegan Sun.

The Tribe and the Authority have entered into a land lease ("Lease") pursuant to
which the Tribe is leasing to the Authority the land on which the Mohegan Sun is
located (the "Site"). The Site is part of the Tribe's 390-acre reservation which
was acquired and is held in trust for the Tribe by the United  States of America
with the Tribe retaining perpetual rights to the use of the Site.



The Mohegan Sun
---------------

The  Authority  owns and  operates the Mohegan  Sun, a  full-service  gaming and
entertainment  complex on a 240-acre  site  overlooking  the Thames River on the
Tribe's  reservation  in  southeastern  Connecticut.  The  Mohegan Sun opened in
October  1996  at a cost  of  approximately  $303.0  million  and  is  currently
undergoing  a $960.0  million  expansion.  The Mohegan Sun is one of two legally
authorized  gaming  operations  in New England  offering both  traditional  slot
machines and table games.

The Mohegan Sun currently  operates in a 1.9 million  square foot facility which
coveys a historical northeastern Indian theme through architectural features and
the use of natural design elements such as timber, stone and water. The original
casino ("Casino of the Earth") is comprised of four quadrants, each of which has
its own unique entrance and reflects a separate seasonal theme - winter, spring,
summer and fall - emphasizing the importance of the seasonal  changes to Mohegan
Tribal life. On September 25, 2001, the Authority  opened the first phase of the
Project  ("Casino  of the Sky").  The  Casino of the Sky  includes  the  world's
largest  planetarium dome, which projects  changing displays of  constellations,
sun cycles and clouds.  Wombi Rock, a three-story  crystal mountain built inside
the Casino of the Sky,  is crafted  from more than 12,000  individual  plates of
onyx and  alabaster  fused to  glass.  The  Casino of the Sky also  includes  an
85-foot-high  waterfall,  which pays  tribute  to the  journey of the Tribe from
upstate New York.


                                       6


The Casino of the Earth includes  176,500 square feet of gaming space with 3,655
slot  machines,  158  table  games,  42 poker  tables  and a 9,000  square  foot
simulcasting race book facility.  On April 18, 2001, the Hall of the Lost Tribes
smoke-free gaming venue opened featuring 637 slot machines,  quick-service  food
and beverage  concessions,  and a new  cocktail  bar with video poker.  Food and
beverage  amenities include a 680-seat buffet,  three  full-service  themed fine
dining restaurants, a 24-hour coffee shop, a New York style delicatessen,  a ten
station food court featuring  international and domestic  cuisine,  and multiple
service bars for a total of 1,888 restaurant seats. The 350-seat,  10,000 square
foot Wolf Den Lounge located in the center of the Casino of the Earth hosts live
musical  entertainment  seven days a week. Three retail shops are located within
the Casino of the Earth and provide shopping  opportunities ranging from Mohegan
Sun souvenirs to clothing to cigars.

The Casino of the Sky  includes  119,000  square feet of gaming space with 2,564
slot machines, 82 table games, the Shops at Mohegan Sun, the 10,000-seat Mohegan
Sun Arena and a 300-seat cabaret.  Wombi Rock serves as a three-level lounge and
bar. Food and beverage  amenities  include  Jasper  White's  Summer Shack,  Todd
English's  Tuscany,  Michael  Jordan's  Steakhouse  and 23 Sportcafe,  Rain, the
Rising Moon Gallery of Eateries  and a 350-seat  Sunburst  Buffet.  The Shops at
Mohegan Sun located in the Casino of the Sky contain 32 different  retail shops,
five of which are owned and  operated by the  Authority.  The  remaining  27 are
tenants  of the  Authority  and  include,  but are  not  limited  to,  Boccelli,
Discovery  Channel,  Godiva,  Swarovski  and Lux, Bond & Green.  For  non-gaming
entertainment,  the Casino of the Sky offers an arcade-style recreation area and
a child care facility operated by New Horizon Kids Quest, Inc.

The  Authority  also  operates a 4,000 square  foot,  16-pump  gasoline  service
station and convenience center located adjacent to the Mohegan Sun.

The  Authority  believes  ease of access is one of the  important  factors  that
differentiate  the  Mohegan Sun from its local  competition.  The Mohegan Sun is
located  approximately one mile from the interchange of Interstate 395 and Route
2A in Uncasville, Connecticut. The Authority constructed a four-lane access road
and  entrance/exit  ramps off of Route 2A,  providing  guests  direct  access to
Interstate  395  and  Interstate  95,  the  main  highways   connecting  Boston,
Providence  and New York City.  The Mohegan Sun currently has parking spaces for
8,265 guests and 3,075 employees. The gaming industry in Connecticut experiences
seasonal  fluctuations,  with the  heaviest  gaming  activity at the Mohegan Sun
occuring during the period from July through October.




The Mohegan Sun Expansion
 -------------------------

In order to  capitalize  on the strong  demand for gaming  opportunities  in the
northeastern  United  States and the Mohegan  Sun's  popularity,  the  Authority
decided  in  1998  to  expand  the  casino  significantly  and to  add a  hotel,
convention   facilities,   an   entertainment   arena  and   additional   retail
establishments. The first phase of the Project, the Casino of the Sky, opened on
September 25, 2001. The remaining components,  including the majority of a 1,200
room luxury hotel and approximately 100,000 square feet of convention space, are
expected to open in April 2002 and full  completion of  construction is expected
in June 2002.

The  following is a summary of some of the  attributes of the Mohegan Sun before
and after the expansion:

<TABLE>

<S>                        <C>       <C>      <C>   <C>    <C>         <C>   <C>      <C>    <C>          <C>
                            Casino                                            Retail         Convention    Guest
                             Space   Slot     Table Poker  Restaurant  Hotel  Space    Event   Space      Parking
                           (sq. ft.) Machines Games Tables  Seats      Rooms (sq.ft.) Seating (sq. ft.)    Spaces
                           --------- -------- ----- ------ ----------  ----- -------  ------- ---------   -------
Resort before expansion
  (prior to September 25,
   2001) (1)..............  176,500   3,655    158   42      1,888       0     5,476   5,015        0      8,265

Resort after expansion
  (estimated) (2).........  295,500   6,219    240   42      2,976     1,200 135,476  10,350   100,000    12,865
__________________________


 (1) These  figures  include  the effect of the  establishment of the 4,665-seat
     Uncas  Pavillion (a temporary  entertainment  structure for special events)
     and the  effect of the  opening of the Hall of the Lost  Tribes  smoke-free
     gaming  venue which added an  additional  637 slot  machines as if both had
     occured prior to the  expansion.  The Uncas  Pavillion has been replaced by
     the 10,000-seat Mohegan Sun Arena and is no longer being used.

 (2) These figures include  2,700  additional  parking  spaces  associated  with
     the  construction of the Indian Summer Parking Garage which is projected to
     be opened in the summer of 2002, an additional  1,700 space parking  garage
     projected  to be opened  in the  spring  of 2002 and 200  additional  valet
     parking spaces available in the spring of 2002.



The information  concerning Sun  International,  the Tribe and the Authority has
been derived from pubicly filed information.


                                       7
</TABLE>


Item 2.   PROPERTIES

The Company does not have an interest in real property.

Item 3.   LEGAL PROCEEDINGS

On January 6, 1998, Leisure Resort Technology,  Inc.  ("Leisure") and defendants
Waterford Gaming,  L.L.C., Trading Cove Associates,  LMW Investments,  Inc., and
Slavik Suites,  Inc.  settled a prior lawsuit brought by Leisure.  In connection
with this  settlement,  Leisure and Trading Cove Associates,  Waterford  Gaming,
L.L.C., LMW Investments,  Inc. and Slavik Suites, Inc. entered into a settlement
and release  agreement.  Pursuant  to this  settlement  and  release  agreement,
Waterford Gaming,  L.L.C.  bought out Leisure's  beneficial  interest in Trading
Cove Associates.

By complaint dated January 7, 2000, as amended February 4, 2000, Leisure filed a
four count complaint naming as defendants Waterford Gaming, L.L.C., Trading Cove
Associates, LMW Investments, Inc., Slavik Suites, Inc., Waterford Group, L.L.C.,
Len Wolman and Mark Wolman (collectively, the "Defendants"). The matter has been
transferred  through the complex  litigation docket and is pending in Waterbury,
Connecticut.  The  complaint  alleged  breach of  fiduciary  duties,  fraudulent
non-disclosure,  violation of Connecticut Statutes Section 42-110a, et seq., and
unjust  enrichment  in  connection  with  the  negotiation  by  certain  of  the
Defendants of the settlement and release agreement. The complaint also brought a
claim for an accounting.  The complaint  seeks  unspecified  legal and equitable
damages. On February 29, 2000,  Defendants filed a Motion to Strike and a Motion
for  Summary  Judgement,  each with  respect to all  claims.  The Court  granted
Defendants'  Motion to Strike in part and denied  Defendants' Motion for Summary
Judgement,  on October 13, 2000.  The Court's  order  dismissed the claim for an
accounting and the claim under Connecticut Statutes Section 42-110a, et seq. The
Court  also  struck  the alter ego  allegations  in the  complaint  against  LMW
Investments,  Inc.,  Slavik  Suites,  Inc.,  Len  Wolman and Mark  Wolman.  In a
decision  dated  August 6, 2001,  the Court  dismissed  all claims  against  LMW
Investments, Inc., Slavik Suites, Inc., Len Wolman and Mark Wolman.

On November 15, 2000, the Company and its co-defendants  answered the complaint.
In addition,  the Company and Trading Cove Associates asserted counterclaims for
breach of the  settlement  and  release  agreement  and  breach  of the  implied
covenant  of good faith  against  Leisure  and its  president,  Lee Tyrol.  In a
decision dated June 6, 2001, the Court dismissed the  counterclaims  against Lee
Tyrol.

Discovery has commenced.  In a scheduling  order dated August 9, 2001, the Court
directed  the  parties  to  report  to the Court no later  than  March 29,  2002
regarding the feasibility of settlement,  the estimated length of jury selection
and the estimated length of trial. A trial date has not been set.

The Company believes that it has meritorious  defenses and intends to vigorously
contest the claims in this action and to assert all available  defenses.  At the
present time,  the Company is unable to express an opinion on the  likelihood of
an  unfavorable  outcome  or to give an  estimate  of the  amount  or  range  of
potential loss to the Company as a result of this litigation due to the disputed
issues of law and/or facts on which the outcome of this  litigation  depends and
due to the infancy of both the action and discovery in the action.

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

No matters were submitted to the Company's  security  holders for a vote for the
fiscal year ended December 31, 2001.



                                      8


                                  PART II

Item 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS
          MATTERS

Not applicable.

Item 6.   SELECTED FINANCIAL DATA

<TABLE>
                                    For the Year Ended
                                    ------------------

<S>                            <C>                  <C>                  <C>                  <C>              <C>

                                    2001                 2000                 1999                 1998                 1997
                               --------------       --------------       --------------       --------------       --------------


OPERATING RESULTS
  Organizational and
   administrative fee income-
    Trading Cove Associates    $  11,810,877        $  11,649,600        $  14,252,209        $   4,231,768              ---
  25% of relinquishment
    payments-Trading Cove
     Associates                    9,728,580              ---                  ---                  ---                  ---
  Interest and dividend
   income                          1,330,711            1,894,738            6,144,502            4,873,323            4,592,208
Subordinated notes fee
   income-Trading Cove
    Associates                       ---                  692,782            3,731,806            3,229,253            2,732,530
Completion guarantee notes
   fee income-Trading Cove
    Associates                       ---                  215,625              903,438              467,500              ---
Management services income-
   Trading Cove Associates           ---                  ---                1,664,699            3,584,313              ---
                               --------------       --------------       --------------       --------------       --------------
  Total revenue                   22,870,168           14,452,745           26,696,654           16,386,157            7,324,738
                               --------------       --------------       --------------       --------------       --------------

  Total expenses                 (13,579,600)         (13,490,367)         (24,789,253)          (9,576,278)          (9,340,510)

  Equity in income (loss)
   of Trading Cove Associates     (2,715,996)            (574,002)           6,115,300             (482,869)             834,643
                               --------------       --------------       --------------       --------------       --------------
  Net income (loss)            $   6,574,572        $     388,376        $   8,022,701        $   6,327,010        $  (1,181,129)
                               ==============       ==============       ==============       ==============       ==============
OTHER DATA:
  Interest expense             $  11,560,994        $  11,641,049        $  19,045,076        $   7,837,552        $   8,687,704
  Net cash used in
   operating activities              ---                1,556,537              ---                  ---                5,835,475
  Net cash provided by
   operating activities            5,394,941              ---               21,753,116            2,561,515              ---
  Net cash used in
   investing activities              ---               14,557,877              ---                  ---                  ---
  Net cash provided by
   investing activities              148,647              ---               18,920,350            1,020,625            9,043,282
Net cash used in
   financing activities            5,996,660           40,199,182              ---                1,031,555            3,816,560
  Net cash provided by
   financing activities              ---                  ---               16,880,807              ---                  ---

YEAR-END STATUS:
  Total current assets         $  38,127,059        $  34,708,598        $  72,724,437        $   6,459,361        $   9,980,267
  Trading Cove Associates-
   equity investment               5,778,458            7,944,454            9,041,568            8,662,198           10,384,292
  Beneficial interest-Leisure
   Resort Technology, Inc.         4,918,029            5,296,019            5,674,009            4,191,909              ---
  Investment in 15%
   subordinated notes
    receivable                       ---                  ---                  ---               32,059,517           27,742,146
  Investment in completion
   guarantee subordinated
    notes receivable                 ---                  ---                  ---                5,075,000            2,548,162
  Deferred financing costs net
   of accumulated amortization     3,010,202            3,377,066            3,781,051            3,339,780            2,702,744
  Fixed assets net of
   accumulated depreciation           22,476               33,256               44,036              ---                  ---
                               --------------       --------------       --------------       --------------       --------------
  Total assets                 $  51,856,224        $  51,359,393        $  91,265,101        $  59,787,765        $  53,357,611
                               ==============       ==============       ==============       ==============       ==============

  Total current liabilities    $   3,400,556        $   3,481,637        $   3,576,539        $   1,037,887        $   1,081,043
  12-3/4% senior notes
   payable                           ---                  ---                  ---               61,471,000           61,471,000
  9-1/2% senior notes
   payable                       115,434,000          119,691,000          122,159,000              ---                  ---
                               --------------       --------------       --------------       --------------       --------------
  Total liabilities            $ 118,834,556        $ 123,172,637        $ 125,735,539        $  62,508,887        $  62,552,043
                               ==============       ==============       ==============       ==============       ==============

</TABLE>

                                        9



Item 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS


Certain Risk Factors
--------------------

Lack of Operations; Dependence on the Mohegan Sun

The Company does not conduct any business  operations  other than in  connection
with its role as a managing general partner of TCA and activities  incidental to
the issuance of the $125 Million  Senior Notes and the making of restricted  and
temporary  investments.  The Company is prohibited by the terms of the Indenture
from engaging in any other business activities.  The Company intends to fund its
operating, debt service and capital needs primarily from cash flows from TCA and
from  cash  flows   (dividend and  interest)   from   restricted  and  temporary
investments.

TCA has two current sources of revenue and cash flows,  Relinquishment  Fees and
Development Fee. There can be no assurance that the Mohegan Sun will continue to
generate  sufficient  revenues for the  Authority to be profitable or to service
its debt  obligations,  or to pay  Relinquishment  Fees and Development Fee. The
Company is entirely  dependent upon the performance of the Mohegan Sun, which is
subject to matters  over which TCA and the  Company  have no control  including,
without  limitation,   general  economic  conditions,  effects  of  competition,
political,  regulatory  and  other  factors,  and the  actual  number  of gaming
customers and the amount wagered.

Although  TCA  is  entitled  to  a  $14.0  million  Development  Fee  under  the
Development  Agreement,  it has entered into a subcontract with Sun Cove who has
subcontracted  with affiliates of the Company to provide certain of the services
required  by such  agreement  and is to pay such  subcontractors  a  Development
Services  Fee Phase II and incur  expenses  equal to 3% of the total cost of the
Project.  On October 13, 2000 the Tribe approved a $160 million  increase to the
original  budget  (excluding  capitalized  interest)  of  $800  million  for the
Project. The final budget for the Project is $960 million.  Based upon the final
budgeted  cost of the Project of $960  million,  such  Development  Services Fee
Phase II and expenses  are  expected to be  approximately  $28.8  million.  Such
Development  Services  Fee Phase II is only  payable to the extent of  available
cash flow. Thus,  ultimately TCA may pay more in Development  Services Fee Phase
II to its subcontractors and expenses than it will receive under the Development
Agreement.  Although the Tribe has passed a  resolution  that the total costs of
the Project  cannot exceed $960 million,  excluding  capitalized  interest,  the
actual costs of the Project may exceed such  amount.   If the total costs of the
Project increase,  then the total Development Services Fee Phase II and expenses
paid  by  TCA  will  increase  proportionately,  which  reduces  the  cash  flow
distributable to the Company.

While the Company expects its future  operating cash flows will be sufficient to
cover its  expenses,  including  interest  costs,  the  Company  cannot give any
assurance that it will be able to do so.

Overview of Current and Future Cash Flows
-----------------------------------------

The Company  expects to fund its operating,  debt service and capital needs from
cash flows from the Company's share of payments from TCA, and from the Company's
available  cash.  Based  upon  the  Company's   anticipated  future  operations,
management  believes  that  available  cash flow will be  sufficient to meet the
Company's  anticipated  requirements  for  future  operating  expenses,   future
scheduled  payments of principal  and interest on the $125 Million  Senior Notes
and additional  investments  in TCA that may be required in connection  with the
Project. No assurance,  however,  can be given that the operating cash flow will
be sufficient for that purpose.

The following discussion should be read in conjunction with, and is qualified in
its  entirety  by, the  Company's  financial  statements  and the notes  thereto
included elsewhere herein.


Sources of Revenues
-------------------

The Company has one primary  source of revenue:  payments  from TCA. The Company
anticipates  regular  payments  from TCA based on the results of the Mohegan Sun
and Relinquishment Fees and Development Fee payments by the Authority.


Distributions on the Company's partnership interest in TCA
----------------------------------------------------------

For the year ended December 31, 2001, the Company received  $13,781,853 from TCA
and $8,357,604 was due from TCA which  represents the Company's  share under the
Amended and Restated Omnibus Termination Agreement of approximately  $45,715,000
in Relinquishment  Fees earned by TCA pursuant to the  Relinquishment  Agreement
for the same period and $7,028,000 in Development  Fee earned by TCA pursuant to
the Development  Agreement for the same period.  For the year ended December 31,
2000, the Company  received  $9,788,007 from TCA and $3,770,000 was due from TCA
which  represents  the  Company's  share under the Amended and Restated  Omnibus
Termination Agreement of approximately $41,004,000 in Relinquishment Fees earned
by TCA  pursuant  to the  Relinquishment  Agreement  for  the  same  period  and
$5,488,000  in  Development  Fee  earned  by TCA  pursuant  to  the  Development
Agreement for the same period.


                                       10


Results of Operations
---------------------

Comparison of Operating Results for the Years Ended
---------------------------------------------------
December 31, 2001 and 2000
--------------------------

     Total revenue for the twelve months ended December 31, 2001 was $22,870,168
compared with  $14,452,745  for the twelve months ended December 31, 2000.  This
increase was  primarily  attributable  to an increase in revenues of the Mohegan
Sun which  resulted  in  greater  Relinquishment  Fees  payments  to TCA,  by an
increase  in  Development  Fee  payments  to TCA and by the  timing of  payments
pursuant  to  the   Amended  and   Restated   Omnibus   Termination   Agreement.
Organizational  and  administrative  fee income - Trading  Cove  Associates,  as
detailed  under  point  (f) of the  table set forth  above  under  "Amended  and
Restated  Omnibus  Termination   Agreement"   increased  by  $161,277,   25%  of
relinquishment  payments - Trading Cove Associates,  as detailed under point (g)
of the table set forth above under  "Amended  and Restated  Omnibus  Termination
Agreement" increased by $9,728,580, subordinated notes fee income - Trading Cove
Assoicates and completion  guarantee notes fee income - Trading Cove Associates,
as detailed  under point (c) of the table set forth  above  under  "Amended  and
Restated  Omnibus  Termination  Agreement",  decreased by $692,782 and $215,625,
respectively. In addition, interest and dividend income decreased by $564,027.

Total  expenses for the twelve  months ended  December 31, 2001 was  $13,579,600
compared  with  $13,490,367  for the twelve  months  ended  December  31,  2000.
Interest  expense  decreased by $80,055 due  primarily to the  redemption of the
$125 Million Senior Notes in the principal amounts of $452,000 and $3,805,000 on
March 15, 2001 and September 15, 2001, respectively,  salaries - related parties
increased  by $47,116  due to the  increase  in  Revenues of the Mohegan Sun and
general and administrative costs increased by $29,293 (primarily attributable to
an  increase in bank sweep fees of  approximately  $15,800 and by an increase in
rating  services  expense of  approximately  $19,600 and offset by a decrease in
insurance  expense of approximately  $2,500 and by a decrease in legal and other
expenses  related to the defense of the Leisure  litigation,  as detailed  under
Part I: Item 3 Legal Proceedings, totaling approximately $3,000). In addition at
December  31, 1999  12-3/4%  senior  notes  tender  expense was over  accrued by
$90,000.

Equity in loss of Trading Cove  Associates  for the year ended December 31, 2001
was $2,715,996  compared with $574,002 for the year ended December 31, 2000 as a
result of the increase in the loss from Trading Cove Associates of approximately
$2,142,000  due  to  payments  pursant  to  the  Amended  and  Restated  Omnibus
Termination Agreement exceeding revenues during the period.

As a result of the  foregoing  factors  the  Company  experienced  net income of
$6,574,572  for the twelve  months  ended  December 31, 2001  compared  with net
income of $388,376 for the twelve months ended December 31, 2000.


Comparison of Operating Results for the Years Ended
---------------------------------------------------
December 31, 2000 and 1999
--------------------------

Total  revenue for the twelve  months ended  December  31, 2000 was  $14,452,745
compared with  $26,696,654  for the twelve months ended December 31, 1999.  This
decrease  was  primarily  attributable  to the  termination  of  the  Management
Agreement and the commencement of the Relinquishment Agreement and payment under
the  Development  Agreement,  and by the termination of the Amended and Restated
Omnibus  Financing  Agreement and the  commencement  of the Amended and Restated
Omnibus Termination Agreement on January 1, 2000.  Subordinated notes fee income
- Trading Cove Associates  decreased by $3,039,024,  completion  guarantee notes
fee income - Trading Cove Associates decreased by $687,813,  management services
income - Trading Cove Associates  decreased by $1,664,699 and organizational and
administrative fee income - Trading Cove Associates decreased by $2,602,609 as a
result of the  termination of the Management  Agreement and the  commencement of
the Relinquishment Agreement and payment under the Development Agreement, and by
the termination of the Amended and Restated Omnibus Financing  Agreement and the
commencement  of the Amended  and  Restated  Omnibus  Termination  Agreement  on
January 1, 2000 as detailed  above under  "Trading  Cove  Associates  - Material
Agreements".  In addition,  interest and dividend income decreased by $4,249,764
primarily attributable to the repayment on December 30, 1999 by the Authority of
the Authority subordinated notes.

Total  expenses for the twelve  months ended  December 31, 2000 was  $13,490,367
compared  with  $24,789,253  for the twelve  months  ended  December  31,  1999.
Interest expense decreased by $7,404,027 and amortization on deferred  financing
costs decreased by $3,269,920 due primarily to the redemption of the $65 Million
Senior  Notes and the  issuance of the $125 Million  Senior  Notes,  general and
administrative  costs  increased  by  $216,522  (primarily  attributable  to  an
increase  in legal and other  expenses  related to the  defense  of the  Leisure
litigation,  as  detailed  under  Part  I:  Item 3 Legal  Proceedings,  totaling
approximately  $395,200, an increase in rating services expense of approximately
$12,500,   and  partially  offset  by  a  decrease  in  SEC  filing  expense  of
approximately  $14,200,  by a  decrease  in other  legal  fees of  approximately
$62,000,  by a decrease  in federal  and state  payroll  taxes of  approximately
$15,700 and by a decrease in accounting  fees of  approximately  $90,900 (during
the years ended December 31, 2000 and 1999 the Company paid  accounting  fees to
an  affiliate  totalling $0 and $95,000,  respectively)),  12-3/4%  senior notes
tender  expense  decreased by $702,486 due to the  redemption of the $65 Million
Senior  Notes and to an over  accrual  of  $90,000 at  December  31,  1999 and a
decrease in amortization of beneficial interest Leisure Resort Technology,  Inc.
of $139,910 due to the increase in the period over which the asset is amortized.

Equity in (loss) income of Trading Cove  Associates  for the twelve months ended
December 31, 2000 was $(574,002)  compared with $6,115,300 for the twelve months
ended December 31, 1999, as a result of the decrease in income from Trading Cove
Associates of approximately $6,962,600 due to the timing of payments pursuant to
the Amended  and  Restated  Omnibus  Termination  Agreement  and the Amended and
Restated  Omnibus  Financing  Agreement  and by a decrease  in  amortization  of
interests purchased of approximately  $273,100 due to the increase in the period
over which the interests purchased is amortized.

As a result of the  foregoing  factors,  the Company  experienced  net income of
$388,376 for the twelve months ended  December 31, 2000 compared with net income
of $8,022,701 for the twelve months ended December 31, 1999.


                                       11


Liquidity and Capital Resources
-------------------------------

The initial capital of the Company consists of the partnership  interests in TCA
contributed  by Slavik and LMW in forming the Company.  In  connection  with the
offering of the $65 Million Senior Notes, the Company used  approximately  $25.1
million to purchase from Sun International  $19.2 million in principal amount of
Authority  subordinated  notes plus accrued and unpaid interest and subordinated
notes fee  amounts.  In  addition,  TCA  distributed  approximately  $850,000 in
principal  amount  of  Authority  subordinated  notes  to  the  Company.  During
September 1997 and on October 12, 1998 and 1999, the Company  purchased from Sun
International $2.5 million Authority  subordinated notes plus accrued and unpaid
interest and  completion  guarantee fee amounts (total cost  approximately  $2.8
million for each transaction).

On January 6, 1998 the Company paid  $5,000,000 to Leisure  whereby Leisure gave
up its beneficial  interest in 5% of the  organizational  and administrative fee
and excess cash of TCA and any other claims it may have had against the Company,
TCA and TCA's partners and former partner.

In connection  with the offering of the $125 Million  Senior Notes,  the Company
used  approximately  $72 million to  repurchase  its $65 Million  Senior  Notes,
distributed  approximately  $37 million to its new parent,  Waterford  Group and
paid the final $2 million to Leisure.

On  December  30,  1999,  the  Authority  paid to the  holders of the  Authority
subordinated  notes,  an amount to satisfy  all  obligations  of such  Authority
subordinated notes. The Company received $44,403,517 from the Authority.

On December 30, 1999, TCA distributed  $10,536,543 to its partners.  The Company
received $5,268,272.

On  January  4,  2000 in  accordance  with the  terms of the  Indenture  and the
Security  and Control  Agreement  dated as of March 17, 1999 between the Company
and Finance and State Street Bank and Trust Company, $15,000,000 was transferred
to restricted investments ("Interest Reserve Account").

On  January  4, 2000 also in  accordance  with the terms of the  Indenture,  the
Company  distributed  $34,671,789 to its sole member Waterford Group.

During 2000,  on January 11,  2001,  on April 12,  2001,  on June 11,  2001,  on
December 19, 2001 and on January 10, 2002,  the company  distributed  a total of
$3,059,393,    $339,356,   $30,104,   $1,206,200,   $164,000   and   $1,416,900,
respectively,  to Waterford Group as tax  distributions,  in accordance with the
terms of the Indenture.

Accordingly,  after taking into consideration net income (loss) since inception,
the Company has a members' deficit of approximately  $67,000,000 and $71,800,000
at December 31, 2001 and 2000, respectively.

For the twelve  months ended  December 31, 2001 and 2000,  net cash  provided by
(used in) operating  activities  (as shown in the  Statements of Cash Flows) was
$5,394,941 and $(1,556,537), respectively.

Current assets increased from $34,708,598 at December 31, 2000 to $38,127,059 at
December 31, 2001. The increase was caused primarily by approximately $5,395,000
of cash provided by operations and by the payment of fees and  distributions  by
TCA in terms of the Amended  and  Restated  Omnibus  Termination  Agreement  and
offset  by the  redemption  on March 15,  2001 and  September  15,  2001 of $125
Million  Senior  Notes in the  principal  amounts of  $452,000  and  $3,805,000,
respectively,  and by the scheduled semi-annual payment of interest on March 15,
2001 and September  15, 2001 on the $125 Million  Senior Notes in the amounts of
approximately $5,685,000 and $5,664,000, respectively.

Current liabilities decreased from $3,481,637 at December 31, 2000 to $3,400,556
at December 31, 2001. The decrease was primarily  attributable  to a decrease in
accrued interest on senior notes payable of approximately $119,000 (attributable
to the redemtion on March 15, 2001 and September 15, 2001 of $125 Million Senior
Notes in the principal  amounts of $452,000 and  $3,805,000,  respectively)  and
offset by an increase in accrued  expenses and accounts payable of approximately
$38,000  (primarily  attributable to an increase in the amount due for legal and
other  expenses  related to the defense of the Leisure  litigation,  as detailed
under  Part I: Item 3 Legal  Proceedings,  of  approximately  $29,200  and by an
increase  in the  amount  due  for  salaries-related  parties  of  approximately
$10,6000).

For the years ended  December  31, 2001 and 2000 net cash  provided by (used in)
investing  activities (as shown in the Statement of Cash Flows) was $148,647 and
$(14,557,877),  respectively.  The net cash provided by investing  activities in
2001  was  primarily  the  result  of  sales  and   (purchases)   of  restricted
investments-net  of approximately  $699,000,  distributions from TCA of $800,000
and  offset by  contributions  to TCA of  $1,350,000  (to fund  certain of TCA's
development expenses in connection with the Project at the Mohegan Sun). The net
cash  used  in  investing  activities  in  2000  was  primarily  the  result  of
contributions  to TCA of  $1,200,000  (to  fund  certain  of  TCA's  development
expenses  in  connection  with the Project at the  Mohegan  Sun),  the sales and
(purchases)     of     restricted      investments-net      of     approximately
$(15,081,000)(principally  due to the funding of the Interest Reserve Account in
the  amount of  approximately  $15  million  on  January  4, 2000) and offset by
distributions from TCA of approximately $1,723,000.


                                       12

The Company  anticipates that up to $1,950,000 in additional  contributions  may
have to be made by the  Company  to TCA (to fund  certain  of TCA's  development
expenses in connection  with the Project at the Mohegan Sun). As of December 31,
2001,  $3,550,000  had been  contributed  by the  Company to TCA and on March 8,
2002, the Company  contributed an additional  $200,000 to TCA to fund certain of
TCA's development expenses in connection with the Project at the Mohegan Sun.

For the  twelve  months  ended  December  31,  2001 and  2000,  net cash used in
financing  activities  (as shown in the Statements of Cash Flows) was $5,996,660
and $40,199,182, respectively. The net cash used in financing activities in 2001
was primarily the result of the  redemption of the $125 Million  Senior Notes in
the principal amounts of $452,000 and $3,805,000 on March 15, 2001 and September
15, 2001,  respectively,  and tax  distributions  to the  Company's  sole member
Waterford  Group of  approximately  $1,740,000.  The net cash used in  financing
activities  in 2000 was  primarily  the  result  of the  redemption  of the $125
Million  Senior Notes in the  principal  amounts of  $2,277,000  and $191,000 on
March 15, 2000 and September 15, 2000, respectively, and by distributions to the
Company's sole member Waterford Group of approximately $37,731,000, as described
above.

The Company and Finance are required to make a mandatory redemption on September
15 and March 15, of each year,  which began  September 15, 1999, of $125 Million
Senior Notes using Company Excess Cash, as defined in the  Indenture,  which the
Company  and Finance may have as of the  preceding  August 1 and  February 1. On
August 1, 1999 the Company and Finance had Company  Excess  Cash,  as defined in
the  Indenture,  available for mandatory  redemption of the $125 Million  Senior
Notes totaling approximately  $8,983,000,  and accordingly on September 15, 1999
the Company and Finance made a mandatory redemption of $125 Million Senior Notes
in the principal  amount of $2,841,000 at the  redemption  price of 109.50%.  On
February 1, 2000 the Company and Finance had Company  Excess Cash, as defined in
the  Indenture,  available for mandatory  redemption of the $125 Million  Senior
Notes totaling approximately  $8,276,000,  and accordingly on March 15, 2000 the
Company and Finance made a mandatory  redemption of $125 Million Senior Notes in
the  principal  amount of  $2,277,000 at the  redemption  price of 108.636%.  On
August 1, 2000 the Company and Finance  had  Company  Excess  Cash,  as defined,
available for mandatory  redemption of the $125 Million  Senior Notes,  totaling
approximately $5,902,000,  and accordingly on September 15, 2000 the Company and
Finance  made a  mandatory  redemption  of  $125  Million  Senior  Notes  in the
principal amount of $191,000 at the redemption price of 108.636%. On February 1,
2001 the Company and Finance had Company Excess Cash, as defined,  available for
mandatory  redemption of the $125 Million  Senior Notes  totaling  approximately
$6,173,000  and  accordingly  on March 15, 2001 the  Company and Finance  made a
mandatory redemption of the $125 Million Senior Notes in the principal amount of
$452,000 at the redemption price of 107.773%.  On August 1, 2001 the Company and
Finance had Company Excess Cash, as defined,  available for mandatory redemption
of  the  $125  Million  Senior  Notes  totaling  approximately  $9,765,000,  and
accordingly  on  September  15, 2001 the  Company  and Finance  made a mandatory
redemption  of the  $125  Million  Senior  Notes  in  the  principal  amount  of
$3,805,000 at the redemption price of 107.773%.  On February 1, 2002 the Company
and  Finance had Company  Excess  Cash,  as  defined,  available  for  mandatory
redemption of the $125 Million Senior Notes totaling  approximately  $9,793,000,
and  accordingly on March 15, 2002 the Company and Finance will make a mandatory
redemption  of the  $125  Million  Senior  Notes  in  the  principal  amount  of
$4,031,000, at the redemption price of 106.909%.

The Company  expects to fund its operating,  debt service and capital needs from
cash flows from the Company's share of payments from TCA, and from the Company's
available  cash.  Based  upon  the  Company's   anticipated  future  operations,
management  believes  that  available  cash flow will be  sufficient to meet the
Company's  anticipated  requirements  for  future  operating  expenses,   future
scheduled  payments of principal  and interest on the $125 Million  Senior Notes
and additional  investments  in TCA that may be required in connection  with the
Project  at the  Mohegan  Sun.  No  assurance,  however,  can be given  that the
operating cash flow will be sufficient for that purpose.


                                       13


Item 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk  represents the risk of changes in value of a financial  instrument,
derivative or non-derivative,  caused by fluctuations in interest rates, foreign
exchange  rates  and  equity  prices.  Changes  in  these  factors  could  cause
fluctuations in earnings and cash flows.

For fixed rate debt,  changes in interest rates generally affect the fair market
value  of the  debt  instrument,  but not  earnings  or cash  flows.  Therefore,
interest  rate risk and  changes  in the fair  market  value of fixed  rate debt
should not have a  significant  impact on earnings or cash flows until such debt
is refinanced,  if necessary.  For variable rate debt, changes in interest rates
generally  do not impact the fair market  value of the debt  instrument,  but do
affect  future  earnings  and cash flows.  The Company did not have any variable
rate debt  outstanding  at December 31, 2001 and 2000.  The fair market value of
the  Company's  long-term  debt at December 31, 2001 and 2000 is estimated to be
approximately $118,897,000 and $118,494,000,  respectively,  based on the quoted
market price for the same issue.

The Company is exposed to market risks from  fluctuations  in interest rates and
the  effects  of those  fluctuations  on  market  values of the  Company's  cash
equivalents and restricted  investments.  Cash equivalents  generally consist of
overnight investments while the restricted  investments at December 31, 2001 are
principally   comprised  of  an  investment  in  a  Federal  National   Mortgage
Association Discount Note which was purchased at a discount of 3.65% and matures
March 6, 2002 and an  investment  in the Federated  Treasury  Obligations  Fund.
These investments are not significantly exposed to interest rate risk, except to
the extent that changes in interest rates will  ultimately  affect the amount of
interest income earned and cash flow from these investments.

The Company does not currently  have any  derivative  financial  instruments  in
place to manage interest costs, but that does not mean that the Company will not
use them as a means to manage interest rate risk in the future.

The  Company  does  not use  foreign  currency  exchange  forward  contracts  or
commodity  contracts  and  does  not  have  foreign  currency  exposure  in  its
operations.



Item 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Statements on Page 20

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

None.


                                       14


                                    Part III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following  tables set forth certain  information with respect to persons who
are  members  of the Board of  Directors  of the  Company  or who are  executive
officers of the Company.

Name                     Age                   Position

Len Wolman               47             Chairman of the Board and Chief
                                        Executive Officer
Alan Angel               45             Chief Financial Officer
Del J. Lauria            53             Director and Secretary
Mark Wolman              44             Director
Stephan F. Slavik        55             Director
Richard Slavik           51             Vice President

Len Wolman.  Mr.  Wolman has been the Chairman of the Board of Directors and the
Chief  Executive of the Company  since its  formation.  Mr. Wolman is a managing
partner of TCA.  Since 1986,  Mr.  Wolman has been the  Chairman of the Board of
Directors and the Chief  Executive  Officer of the Waterford  Hotel Group,  Inc.
Under  Mr.  Wolman,  Waterford  Hotel  Group,  Inc.  has  grown  from one  hotel
management  contract to  twenty-seven  properties in ten states.  Mr. Wolman was
actively involved in the development,  construction and operation of the Mohegan
Sun  and  is  actively  involved  in the  development  and  construction  of the
expansion to the Mohegan Sun. Mr.  Wolman was  instrumental  in the formation of
the  relationship  of TCA and the Tribe and had been  actively  working with the
Tribe in connection with obtaining federal  recognition,  acquiring the site for
the Mohegan Sun and  obtaining  the  financing to construct the Mohegan Sun. Mr.
Wolman has served as President and Chief Executive  Officer of Finance since its
inception.  Mr. Wolman is a Director and Officer of Slavik Suites,  Inc., one of
Waterford  Group's  members.  Mr.  Wolman is the  brother  of Mark  Wolman.  Mr.
Wolman's wife and Mr. Angel's wife are sisters.

Alan Angel. Mr. Angel became Chief Financial  Officer of the Company in January,
1999.  Since  1997,  Mr.  Angel has been the Chief  Financial  Officer of Mystic
Suites, L.L.C. Mystic Suites,  L.L.C. is a commercial  development firm based in
eastern  Connecticut which currently holds an ownership  interest in a number of
hotels  managed by the  Waterford  Hotel  Group,  Inc.  Prior to joining  Mystic
Suites,  L.L.C., Mr. Angel resided in South Africa and served as Chief Financial
Officer of Rowan & Angel cc. Mr. Angel is a certified  public  accountant  and a
chartered accountant.  Mr. Angel has over 20 years of accounting experience. Mr.
Angel's wife and Mr. Len Wolman's wife are sisters.

Del J. Lauria.  Mr.  Lauria  became a Director of the Company,  Chief  Financial
Officer and  Secretary  upon its  formation.  Mr.  Lauria was succeeded as Chief
Financial  Officer in January  1999 by Mr.  Alan  Angel.  Mr.  Lauria is also an
Officer and Director of the Waterford  Hotel Group,  Inc. and is Executive  Vice
President and Director of Slavik Suites, Inc. Mr. Lauria first joined the Slavik
Organization in 1980 as the Chief Financial  Officer of its real estate property
management  division.  The Slavik  Organization  is an affiliated  group of full
service real estate companies first  established in Michigan in the early 1950s.
Mr. Lauria  rapidly  advanced at the Slavik  Organization  and  currently  holds
various key managerial  positions  within the  enterprise.  Prior to joining the
Slavik  Organization,  Mr. Lauria was associated  with the  accounting  firm now
known as Deloitte & Touche and is a certified public accountant.  Mr. Lauria has
served as Treasurer and Secretary of Finance since its inception.

Mark  Wolman.  Mr.  Mark  Wolman  became  a  Director  of the  Company  upon its
formation.  Mr.  Wolman is the  president  of Wolman  Homes,  Inc.  d/b/a Wolman
Construction.  Wolman Homes,  Inc. is a commercial  development and construction
firm based in eastern  Connecticut.  Mr. Mark Wolman has been  working  with the
Mohegan  Tribe since 1992 and had been  instrumental  in  assisting  the Mohegan
Tribe in obtaining a number of  governmental  approvals in  connection  with the
development  and  construction of the Mohegan Sun. Mr. Mark Wolman is a Director
of Slavik Suites, Inc. Mr. Mark Wolman is the brother of Mr. Len Wolman.

Stephan F. Slavik.  Mr. Slavik, was appointed a Director of the Company on April
9, 2001.  Mr. Slavik is the  President of Michigan  based Slavik  Builders.  Mr.
Slavik has over 30 years of experience with all phases of land planning, product
design,  estimating  and  site  construction  in  single  family,  multiple  and
commercial  design/build  developments.  Mr.  Slavik  is  a  Director  and  Vice
President  of Slavik  Suites,  Inc.  Mr.  Slavik is the  brother of Mr.  Richard
Slavik.

Mr.  Richard  Slavik.  Mr.  Richard Slavik was appointed a Vice President of the
Company on April 9, 2001. Mr. Richard Slavik is Chief  Operating  Officer of the
Fourmidable  Group,  Inc., a Michigan  based real estate  management  firm.  Mr.
Richard  Slavik  has over 20  years of  constructing  and  operating  commercial
residential  real estate  experience.  Mr. Richard Slavik is President of Slavik
Suites, Inc. Mr. Richard Slavik is the brother of Mr. Stephan F. Slavik.


                                     15

Item 11.  EXECUTIVE COMPENSATION

The following table summarizes the compensation paid to the Directors of
the Company.

  Name                      Year Ended              Salary
 ------                    ------------            --------

Len Wolman (1)                2001                 $707,153
                              2000                 $660,037
                              1999                 $165,000

Del Lauria                    2001                 $    ---
                              2000                 $    ---
                              1999                 $165,000


Stephan F. Slavik             2001                 $    ---
                              2000                 $    ---
                              1999                 $    ---


Mark Wolman                   2001                 $    ---
                              2000                 $    ---
                              1999                 $165,000


From January 1, 2000, the Company's Directors have also received compensation as
part of the  operating  expenses of TCA as detailed  under point a) of the table
set forth above under "Amended and Restated Omnibus  Termination  Agreement" and
until January 1, 2000 the Company's  Directors received  compensation as part of
the operating expenses and management  services fee of TCA. The Company does not
have a compensation  committee,  and all compensation  decisions are made by the
Board of Directors.

 (1) As detailed  in Item 13, Mr. Len  Wolman  has  an employment  contract with
     the Company.  For the years ended December 31, 2001 and 2000,  $707,153 and
     $660,037,  respectively,  was  paid  to  Mr.  Len  Wolman  pursuant  to the
     employment  contract.  For the year ended December 31, 1999 no compensation
     was paid to Mr. Len Wolman pursuant to the employment contract.



Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company's sole member is Waterford Group, L.L.C.

The following table sets forth the beneficial ownership interest in
Waterford Group, L.L.C.

Name of                            % Ownership
Beneficial Owner                  in the Company
----------------                  --------------

LMW Investments, Inc. (1)            32.2033%
Slavik Suites, Inc. (2)              67.7967%
                                    ---------
                                    100.0000%
                                    =========

(1)  LMW  Investments,  Inc.  is owned 50% by Mr. Len Wolman and 50% by Mr. Mark
     Wolman.  The address for LMW  Investments,  Inc. is 914 Hartford  Turnpike,
     P.O. Box 715, Waterford, Connecticut 06385.

(2)  Messrs.  Len  and  Mark  Wolman  each  own  approximately  11.875% of   the
     outstanding  shares of Slavik Suites,  Inc.  Messrs.  Stephan F. Slavik and
     Richard Slavik each own approximately  14.35% of the outstanding  shares of
     Slavik Suites,  Inc. The address for Slavik  Suites,  Inc. is 32605 West 12
     Mile Road, Suite 350, Farmington Hills, Michigan 48334.


                                       16


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Mr. Len  Wolman,  the  Company's  Chairman of the Board of  Directors  and Chief
Executive Officer is a managing partner of TCA.

On February 9, 1998 the Development Services Agreement Phase II was entered into
between TCA and SIML.  Pursuant to the Development  Services Agreement Phase II,
TCA  subcontracted  with SIML and SIML agreed to perform those services assigned
to SIML by TCA in  order to  facilitate  TCA's  fulfillment  of its  duties  and
obligations to the Authority  under the Development  Agreement.  The Development
Services Agreement Phase II was subsequently assigned to Sun Cove. TCA shall pay
to Sun Cove a fee, as subcontractor  (the  "Development  Services Fee Phase II")
equal to 3% of the  development  costs of the Project  exclusive of  capitalized
interest,  less all costs  incurred by TCA in connection  with the Project.  The
Development  Services Fee Phase II shall be paid in installments due on December
31,  1999 and 2000 and on the  Completion  Date,  as defined in the  Development
Agreement,  with a final payment being made when the actual development costs of
the Project are known. The payment of the Development Services Fee Phase II will
be made from  available  cash flow, if any, in  accordance  with the Amended and
Restated Omnibus  Termination  Agreement.  SIML has further  subcontracted  with
Construction to provide certain of those services  assigned to SIML by TCA. This
Local  Construction  Services  Agreement was also assigned to Sun Cove.  The fee
payable to Sun Cove to Construction  as and when Sun Cove receives  payment from
TCA is 20.83%  of the  Development  Services  Fee  Phase  II.  Construction  has
subcontracted  with The Slavik Company for 14.30% of its fee. On April 26, 2000,
July  26,  2000 and  January  26,  2001,  TCA paid  $3,095,000,  $1,238,000  and
$6,474,000  respectively,  as partial payment Development Services Fee Phase II.
Construction  received  $644,688,  $257,875 and  $1,348,534,  respectively,  and
Construction paid The Slavik Company $92,190,  $36,876 and $192,840 on April 26,
2000, July 26, 2000 and January 26, 2001, respectively.

Construction is owned 50% by Len Wolman (the Company's  Chief Executive  Officer
and Chairman of the Board of Director)  and 50% by Mark Wolman ( a member of the
Company's  Board of  Directors).  Del J. Lauria (the  Company's  Secretary and a
member of the Company's Board of Directors),  Stephan F. Slavik (a member of the
Company's Board of Directors) and Richard Slavik (Vice President of the Company)
have a financial interest in The Slavik Company.

The Company paid amounts to an affiliate for accounting  services totaling,  $0,
$0, and $95,200,  respectively,  during the years ended December 31, 2001,  2000
and 1999.

On September 28, 1998, the Company entered into an employment agreement with Mr.
Len Wolman.  The  employment  agreement  provides  for a base  annual  salary of
$250,000  reduced by any  amounts Mr.  Wolman  receives as a salary from TCA for
such period. Pursuant to such employment agreement, the Company shall pay to Mr.
Wolman an amount equal to 0.05% of the Revenues of the Mohegan Sun including the
expansion to the extent Mr.  Wolman has not  received  such amounts from TCA. On
and after  January  1,  2004,  the  Company  shall pay to Mr.  Wolman  incentive
compensation  based on the Revenues of the Mohegan Sun, including the expansion,
as a percentage  (ranging  from .00% to .10%) to be  determined  using a formula
attached  to  the  employment   agreement  which  compares  actual  revenues  to
predetermined  revenue targets.  For the years ended December 31, 2001 and 2000,
the Company paid and incurred $707,153 and $660,037,  respectively,  pursuant to
the  employment  agreement.  No payments  were made  pursuant to the  employment
agreement during 1999.

In 2001 and 2000, approximately $903,000 and $976,000,  respectively was paid to
the  principals  and  affiliates  of the  Company  as  part of  TCA's  operating
expenses.  In  1999  approximately  $756,000  was  paid  to the  principals  and
affiliates of the Company as part of TCA's  operating  expenses,  including the
payment of Mr. Len Wolman's  salary and bonus.  In addition,  for the year ended
December 31, 1999 $6,219,147 ($3,109,573 to SIML, $1,444,875 to the Directors of
the Company and  $1,664,699  to the Company) had been incurred by TCA in monthly
management services fees.

For the year ended  December  31, 1999,  the Company  paid the  Directors of the
Company $660,000 as salaries for various services provided to the Company.

In 1999,  the  Company  renovated  Mr. Len  Wolman's  office  space at a cost of
$32,413,  of which $30,000 was paid to Wolman Homes,  Inc. a related party. Cost
of the improvement is being  depreciated over five years.  Expense for the years
ended  December  31,  2001,  2000  and  1999  was  $6,480,  $6,480  and  $5,940,
respectively.

Waterford  Group,  Slavik  and the other  principals  of  Waterford  Group  have
interests  in and may acquire  interests in hotels in  southeastern  Connecticut
which have or may have  arrangements with the Mohegan Sun to reserve and provide
hotel rooms to patrons of the Mohegan Sun.


                                       17


                                    Part IV

Item 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  Exhibits
     --------

               Exhibit No.    Description
                 3.1          Certificate of Formation, as amended, of Waterford
                              Gaming, LLC (i)
                 3.2          Certificate of Incorporation of Waterford Gaming
                              Finance Corp. (i)
                 3.3          Bylaws of Waterford Gaming Finance
                              Corp. (i)
                 4.1          Indenture, dated as of November 8, 1996, between
                              Waterford Gaming, L.L.C. and Waterford Gaming
                              Finance Corp., the issuers, and Fleet National
                              Bank, as trustee, relating to $65,000,000 12-3/4%
                              Senior Notes due 2003. (i)
                 4.1.1        First Supplemental Indenture, dated as of March 4,
                              1999, among Waterford Gaming, L.L.C. and Waterford
                              Gaming Finance, Corp., as issuers, and State
                              Street Bank and Trust Company, as trustee,
                              relating to $65,000,000 12-3/4% Senior Notes due
                              2003.  (vi)
                 4.2          Indenture, dated as of March 17, 1999, among
                              Waterford Gaming, L.L.C. and Waterford Gaming
                              Finance Corp., as issuers, and State Street Bank
                              and Trust Company, as trustee, relating to
                              $125,000,000 9-1/2% Senior Notes
                              due 2010.  (vi)
                 4.3          Security and Control Agreement, dated as of March
                              17, 1999, among Waterford Gaming, L.L.C. and
                              Waterford Gaming Finance Corp., as pledgors and
                              State Street Bank and Trust Company, as securities
                              intermediary.  (vi)
                 4.4          Specimen Form of 9-1/2% Senior Notes due 2010
                              (included in Exhibit 4.2).  (vi)
                 10.1         Omnibus Financing Agreement, dated as of September
                              21, 1995, between Trading Cove Associates and Sun
                              International Hotels Limited. (i)
                 10.2         First Amendment to the Omnibus Financing
                              Agreement, dated as of October 19, 1996, among
                              Trading Cove Associates, Sun International Hotels
                              Limited and Waterford Gaming, L.L.C. (i)
                 10.2.1       Amended and Restated Omnibus Financing Agreement
                              dated September 10, 1997 (ii)
                 10.2.2       Omnibus Termination Agreement, dated as of March
                              18, 1999, among Sun International Hotels Limited,
                              Trading Cove Associates, Waterford Gaming, L.L.C.,
                              Sun International Management Limited, LMW
                              Investments, Inc., Sun Cove Limited, Slavik
                              Suites, Inc., and Wolman Construction, L.L.C.(vi)
                 10.2.3       Amended and Restated Omnibus Termination
                              Agreement, dated as of January 1, 2000 and
                              effective as of March 18, 1999, among Sun
                              International Hotels Limited, Trading Cove
                              Associates, Waterford Gaming, L.L.C., Sun
                              International Management Limited, LMW Investments,
                              Inc., Sun Cove Limited, Slavik Suites,Inc.,
                              and Wolman Construction, L.L.C. (vii)


                                       18

                 10.3         Amended and Restated Partnership Agreement of
                              Trading Cove Associates, dated as of September 21,
                              1994, among Sun Cove Limited, RJH Development
                              Corp., Leisure Resort Technology, Inc., Slavik
                              Suites , Inc., and LMW Investments, Inc. (i)
                 10.4         First Amendment to Amended and Restated
                              Partnership Agreement of Trading Cove Associates,
                              dated as of October 22, 1996, among Sun Cove
                              Limited, Slavik Suites, Inc., RJH Development
                              Corp., LMW Investments, Inc. and Waterford Gaming,
                              L.L.C. (i)
                 10.5         Purchase Agreement, dated as of March 10, 1999,
                              among Waterford Gaming, L.L.C., Waterford Gaming
                              Finance Corp., Bear, Stearns & Co., Inc., Merrill
                              Lynch, Pierce, Fenner and Smith Inc. and Salomon
                              Smith Barney. (vi)
                 10.5.1       Agreement with Respect to Redemption or Repurchase
                              of Subordinated Notes, dated September 10,
                              1997(ii)
                 10.6         Amended and Restated Limited Liability Company
                              Agreement of Waterford Gaming, L.L.C., dated as of
                              March 17, 1999 by Waterford Group, L.L.C.  (vi)
                 10.7         Note Purchase Agreement, dated as of October 19,
                              1996, among Sun International Hotels Limited,
                              Waterford Gaming, L.L.C. and Trading Cove
                              Associates. (i)
                 10.8         Note Purchase Agreement, dated as of September 29,
                              1995, between the Mohegan Tribal Gaming Authority
                              and Sun International Hotels Limited relating to
                              the Subordinated Notes. (i)
                 10.9         Management Agreement, dated as of July 28, 1994,
                              between the Mohegan Tribe of Indians of
                              Connecticut and Trading Cove Associates. (i)
                 10.10        Management Services Agreement, dated September 10,
                              1997. (ii)
                 10.11        Development Services Agreement, dated September
                              10, 1997. (ii)
                 10.12        Subdevelopment Services Agreement, dated September
                              10, 1997. (ii)
                 10.13        Completion Guarantee and Investment Banking and
                              Financing Arrangement Fee Agreement, dated
                              September 10, 1997. (ii)
                 10.14        Settlement and Release Agreement, dated January 6,
                              1998, by and among Leisure Resort Technology,
                              Inc., Lee R. Tyrol, Trading Cove Associates,
                              Slavik Suites, Inc., LMW Investments, Inc., RJH
                              Development Corp., Waterford Gaming, L.L.C. and
                              Sun Cove Limited.  (iii)
                 10.15        Waiver and Acknowledgment of Noteholder. (iv)
                 10.16        Relinquishment Agreement, dated February 7, 1998,
                              between the Mohegan Tribal Gaming Authority and
                              Trading Cove Associates.  (v)
                 10.17        Development Services Agreement, dated February 7,
                              1998, between the Mohegan Tribal Gaming Authority
                              and Trading Cove Associates.  (v)
                 10.18        Agreement, dated September 28, 1998, by and among,
                              Waterford Gaming, L.L.C., Slavik Suites, Inc., LMW
                              Investments, Inc., Len Wolman, Mark Wolman,
                              Stephan F. Slavik, Sr. and Del J. Lauria (Len
                              Wolman's Employment Agreement).  (v)
                 10.19        Agreement Relating to Development Services, dated
                              as of February 9, 1998, between Trading Cove
                              Associates and Sun International Management
                              Limited.  (vi)
                 10.20        Local Construction Services Agreement, dated as of
                              February 9, 1998 between Sun International
                              Management Limited and Wolman Construction,
                              L.L.C. (vi)
                 10.21        Escrow Deposit Agreement, dated as of the 3rd day
                              of March 1999, by and among the Mohegan Tribal
                              Gaming Authority and First Union National Bank, as
                              Defeasance Agent.  (vi)
                 21.1         Subsidiaries of Waterford Gaming,
                              L.L.C. (i)
                 21.2         Subsidiaries of Waterford Gaming Finance Corp. (i)


(i)      Incorporated by reference to the Registrant's  Registration  Statement
         on Form S-4,  Securities and Exchange  Commission  (the  "Commission")
         File No. 333-17795, declared effective on May 15, 1997.

(ii)     Incorporated by reference to the Registrant's Quarterly Report on Form
         10-Q for the period  ended  September  30, 1997,  Commission  File No.
         333-17795, as accepted by the Commission on November 14, 1997.

(iii)    Incorporated  by reference to the  Registrant's  Annual Report on Form
         10-K for the fiscal year ended December 31, 1997,  Commission File No.
         333-17795, as accepted by the Commission on March 30, 1998.

(iv)     Incorporated by reference to the Registrant's Quarterly Report on Form
         10-Q  for the  period  ended  March  31,  1998,  Commission  File  No.
         333-17795, as accepted by the Commission on May 14, 1998.

(v)      Incorporated by reference to the Registrant's Quarterly Report on Form
         10-Q for the period  ended  September  30, 1998,  Commission  File No.
         333-17795, as accepted by the Commission on November 13, 1998.

(vi)     Incorporated by reference to the Registrant's Quarterly Report on Form
         10-Q  for the  period  ended  March  31,  1999,  Commission  File  No.
         333-17795 as accepted by the Commission on May 17, 1999.

(vii)    Incorporated by reference to the Registrant's Quarterly Report on Form
         10-Q for the period ended March 31, 2001, Commission File No.
         333-17795 as accepted by the Commission on May 14, 2001.


                                     19

(b)  Financial Statement Schedules
     -----------------------------

INDEX TO FINANCIAL STATEMENTS

        Report of Independent Accountants                               F-1
        Financial Statements:
        Balance Sheets as of December 31, 2001 and 2000                 F-2
        Statements of Operations for the years ended
                December 31, 2001, 2000 and 1999                        F-3
        Statements of Changes in Member's Deficiency for the
                years ended December 31, 2001, 2000 and 1999            F-4
        Statements of Cash Flows for the years ended
                December 31, 2001, 2000 and 1999                        F-5
        Notes to Financial Statements                                   F-6



                                       20


                       REPORT OF INDEPENDENT ACCOUNTANTS


TO THE MEMBER OF
WATERFORD GAMING, L.L.C.



In our opinion,  the accompanying  balance sheets and the related  statements of
operations,  changes in member's deficiency and of cash flows present fairly, in
all material respects,  the financial position of Waterford Gaming,  L.L.C. (the
"Company")  at December  31, 2001 and  December  31, 2000 and the results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 2001 in conformity with accounting principles generally accepted in
the United States of America.  These financial statements are the responsibility
of the  Company's  management;  our  responsibility  is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements  in  accordance  with auditing  standards  generally  accepted in the
United  States of America  which  require  that we plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting the amounts and  disclosures in the financial  statements,  assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP



March 20, 2002

                                      F-1

                            Waterford Gaming, L.L.C.

                                 Balance Sheets

                           December 31, 2001 and 2000
                            -------------------------


                                                2001              2000
                                            ------------      ------------


        ASSETS

Current assets
   Cash and cash equivalents               $  3,570,949       $  4,024,021
   Restricted investments                    26,189,434         26,888,081
   Due from Trading Cove Associates           8,357,604          3,770,000
   Other assets                                   9,072             26,496
                                           ------------       ------------
        Total current assets                 38,127,059         34,708,598
                                           ------------       ------------

Trading Cove Associates-equity
  investment                                  5,778,458          7,944,454
Beneficial interest-Leisure Resort
  Technology, Inc.                            4,918,029          5,296,019
Deferred  financing  costs,
  net of  accumulated  amortization  of
  $1,024,974 and $658,110 at December 31,
  2001 and 2000, respectively                 3,010,202          3,377,066
Fixed assets, net of accumulated
  depreciation of $31,442 and $20,662 at
  December 31, 2001 and 2000, respectively       22,476             33,256
                                           ------------       ------------
                Total assets               $ 51,856,224       $ 51,359,393
                                           ============       ============


        LIABILITIES AND MEMBERS' DEFICIENCY

Current liabilities
   Accrued expenses and accounts payable   $    171,610       $    133,614
   Accrued interest on senior notes
     payable                                  3,228,946          3,348,023
                                           ------------       ------------

        Total current liabilities             3,400,556          3,481,637
                                           ------------       ------------

9-1/2% senior notes payable                 115,434,000        119,691,000
                                           ------------       ------------

        Total liabilities                   118,834,556        123,172,637
                                           ------------       ------------

Contingencies                                   ---                ---

Members' deficiency                         (66,978,332)       (71,813,244)
                                           ------------       ------------
                Total liabilities
                and members' deficiency    $ 51,856,224       $ 51,359,393
                                           ============       ============


The accompanying notes are an integral part of these financial statements.

                                       F-2



                            Waterford Gaming, L.L.C.

                            Statements of Operations

              For the Years Ended December 31, 2001, 2000 and 1999
                           --------------------------

<TABLE>
<S>                                      <C>               <C>              <C>
                                              2001              2000              1999
                                          ------------      ------------      ------------

Revenue
   Organizational and administrative
     fee income-Trading Cove
     Associates                            $11,810,877       $11,649,600       $14,252,209
   25% of relinquishment payments-
     Trading Cove Assoicates                 9,728,580           ---               ---
   Interest and dividend income              1,330,711         1,894,738         6,144,502
   Subordinated notes fee income-
     Trading Cove Associates                   ---               692,782         3,731,806
   Completion guarantee notes fee
     income-Trading Cove Associates            ---               215,625           903,438
   Management services income-
     Trading Cove Associates                   ---               ---             1,664,699

                                          ------------      ------------      ------------
        Total revenue                       22,870,168        14,452,745        26,696,654
                                          ------------      ------------      ------------
Expenses
   Interest expense                         11,560,994        11,641,049        19,045,076
   Salaries-related parties                    707,153           660,037           660,000
   General and administrative                  555,819           526,526           310,004
   12-3/4% senior notes tender expense           ---             (90,000)          612,486
   Amortization of beneficial interest-
     Leisure Resort Technology, Inc.           377,990           377,990           517,900
   Amortization on deferred financing
     costs                                     366,864           363,985         3,633,905
   Depreciation                                 10,780            10,780             9,882
                                          ------------      ------------      ------------
        Total expenses                      13,579,600        13,490,367        24,789,253
                                          ------------      ------------      ------------
                                             9,290,568           962,378         1,907,401
   Equity in income (loss)income of
    Trading Cove Associates                 (2,715,996)         (574,002)        6,115,300
                                          ------------      ------------      ------------
        Net income                         $ 6,574,572        $  388,376       $ 8,022,701
                                          ============      ============      ============

The accompanying notes are an integral part of these financial statements.

</TABLE>

                                       F-3



                            Waterford Gaming, L.L.C.

                  Statements of Changes in Members' Deficiency

              For the Years Ended December 31, 2001, 2000 and 1999
                           --------------------------



<TABLE>

<S>                                  <C>                   <C>                    <C>                    <C>
                                     Slavik Suites,Inc.    LMW Investments,Inc.   Waterford Group,L.L.C.       Total
                                     ------------------    -------------------    ---------------------  --------------

Balance, January 1,1999                    $(1,765,936)           $  (955,186)                            $ (2,721,122)

Contributions,
        January 1 - March 17                    33,220                 15,780                                   49,000

Distributions,
        January 1 - March 17                (1,277,787)              (606,945)                              (1,884,732)

Net loss,
        January 1 - March 17                (5,043,441)            (2,395,625)                              (7,439,066)

Transfer of interest                         8,053,944              3,941,976            $(11,995,920)               0

Distributions,
        March 17- December 31                  ---                    ---                 (37,936,285)     (37,936,285)

Net income,
        March 17 - December 31                 ---                    ---                  15,461,767       15,461,767
                                        --------------          --------------         --------------     ------------

Balance, December 31, 1999                     ---                    ---                 (34,470,438)     (34,470,438)

Distributions                                  ---                    ---                 (37,731,182)     (37,731,182)

Net income                                     ---                    ---                     388,376          388,376
                                        --------------          --------------         --------------     ------------

Balance, December 31, 2000                     ---                    ---                 (71,813,244)     (71,813,244)

Distributions                                  ---                    ---                  (1,739,660)      (1,739,660)

Net income                                     ---                    ---                   6,574,572        6,574,572
                                        --------------          --------------         --------------     ------------

Balance, December 31, 2001                  $  ---                 $  ---                $(66,978,332)    $(66,978,332)
                                        ==============          ==============         ==============     ============

The accompanying notes are an integral part of these financial statements.

</TABLE>

                                       F-4




                            Waterford Gaming, L.L.C.

                            Statements of Cash Flows

               For the Years ended December 31, 2001, 2000 and 1999

                           --------------------------
<TABLE>

<S>                                            <C>              <C>             <C>
                                                   2001             2000            1999
                                               ------------     ------------    ------------

Cash flows from operating activities
   Net income                                  $  6,574,572      $   388,376     $ 8,022,701
                                               ------------     ------------    ------------
   Adjustments to reconcile net income
     to net cash provided by (used in)
     operating activities
        Amortization                                744,854          741,975       4,151,805
        Depreciation                                 10,780           10,780           9,882
        Equity in (income)loss of Trading
          Cove Associates                         2,715,996          574,002      (6,115,300)
        Changes in operating assets
          and liabilities
            Decrease in accrued
              interest receivable-15%
              subordinated notes receivable          ---             ---          12,059,517
            Decrease in accrued
              interest receivable-completion
              guarantee subordinated notes
              receivable                             ---             ---              75,000
            (Increase) decrease in due from
              Trading Cove Associates            (4,587,604)      (3,277,093)      1,118,381
            Decrease (increase) in other
              assets                                 17,424           60,325         (67,522)
            Increase in accrued
              expenses and accounts payable          37,996           14,134          84,308
            (Decrease) increase in accrued
              interest on senior notes
              payable                              (119,077)         (69,036)      2,414,344
                                               ------------     ------------    ------------
                  Total adjustments              (1,179,631)      (1,944,913)     13,730,415
                                               ------------     ------------    ------------

               Net cash provided by
                (used in)operating
                 activities                       5,394,941       (1,556,537)     21,753,116
                                               ------------     ------------    ------------

   Cash flows from investing activities
     Contributions to Trading Cove
      Associates                               (1,350,000)       (1,200,000)        (600,000)
     Distributions from Trading Cove
       Associates                                 800,000         1,723,112        6,335,930
    (Purchases) and sales of
       restricted investments-net                 698,647       (15,080,989)     (11,807,092)
     Beneficial interest-Leisure
       Resort Technology, Inc.                      ---               ---         (2,000,000)
     Sales and (purchases) of
       temporary investments-net                    ---               ---          2,045,430
     Purchase of completion
       guarantee subordinated note
       receivable                                   ---               ---         (2,798,125)
     Return on investment in completion
       guarantee subordinated notes
       receivable                                   ---               ---            298,125
     Redemption of completion guarantee
       subordinated notes receivable                ---               ---          7,500,000
     Redemption of 15% subordinated notes
       receivable                                   ---               ---         20,000,000
     Fixed assets                                   ---               ---            (53,918)
                                               ------------     ------------    ------------

                Net cash provided by (used in)
                  investing activities              148,647      (14,557,877)     18,920,350
                                               ------------     ------------    ------------

   Cash flows from financing activities
     Contributions by members                       ---              ---              49,000
     Distributions to member                     (1,739,660)     (37,731,182)    (39,821,017)
     Redemption of 9-1/2% senior notes           (4,257,000)      (2,468,000)     (2,841,000)
     Proceeds from 9-1/2% senior notes
       issuance                                     ---              ---         125,000,000
     Redemption of 12-3/4% senior
       notes                                        ---              ---         (61,471,000)
     Deferred financing costs                       ---              ---          (4,035,176)
                                               ------------     ------------    ------------
                Net cash (used in)
                  provided by
                  financing activities          (5,996,660)      (40,199,182)     16,880,807
                                               ------------     ------------    ------------

   Net (decrease) increase in cash
     and cash equivalents                          (453,072)     (56,313,596)     57,554,273

   Cash and cash equivalents at
     beginning of year                            4,024,021       60,337,617       2,783,344
                                               ------------     ------------    ------------
   Cash and cash equivalents at
     end of year                               $  3,570,949     $  4,024,021    $ 60,337,617
                                               ============     ============    ============
   Supplemental disclosure of cash
     flow information:
       Cash paid during the year
         for interest                          $ 11,680,071     $ 11,710,084    $ 16,630,732
                                               ============     ============    ============
   Supplemental disclosure of
     non-cash financing activities:
       Deferred financing costs (overaccrued)
       funded through accrued expenses         $    ---         $    (40,000)   $     40,000
                                               ============     ============    ============

The accompanying notes are an integral part of these financial statements.

</TABLE>


                                      F-5

                            WATERFORD GAMING, L.L.C.

                          NOTES TO FINANCIAL STATEMENTS
                           --------------------------


ORGANIZATION, MEMBERSHIP AGREEMENT, CHANGE OF OWNERSHIP AND MEMBER ALLOCATIONS:

Waterford Gaming, L.L.C. (the "Company"),  a Delaware limited liability company,
was formed on September  30, 1996.  The Company  initially  acquired and owns an
interest in Trading Cove Associates ("TCA") a Connecticut  general  partnership,
and invested in certain notes issued by the Mohegan Tribal Gaming Authority (the
"Authority").  The Company is  governed  by a board of managers  pursuant to the
limited liability company  agreement (the  "Agreement").  In connection with the
Company's and the Company's  wholly-owned  subsidiary  Waterford  Gaming Finance
Corp.  ("Finance")  issuance of $125 million  9-1/2%  senior notes payable which
mature March 15, 2010 (the "$125 Million Senior Notes"),  each of Slavik Suites,
Inc.  ("Slavik")  and LMW  Investments,  Inc.  ("LMW")  have  contributed  their
respective  interests in the Company as of March 17, 1999 to a Delaware  limited
liability company,  Waterford Group, L.L.C. (the "Waterford  Group").  Waterford
Group is now the sole member of the Company.  Slavik and LMW own Waterford Group
in the same respective  interest as they had in the Company and are generally as
follows:

         Slavik Suites, Inc.                     67.7967%
         LMW Investments, Inc.                   32.2033%
                                                ---------
                                                100.0000%
                                                =========

The  Agreement is effective  until  September  30, 2020 and may be terminated by
unanimous decision of the member or any other event as stated in the Agreement.

During  December 1999, the Company  received a payment on notes it held due from
the Authority and a distribution  from TCA. As  contemplated in the $125 Million
Senior Notes offering (the "Offering"),  the Company  distributed  approximately
$34,672,000  to Waterford  Group during  January 2000.  In  connection  with the
Offering the Company  distributed  $37,050,000  to Waterford  Group during March
1999. In addition tax distributions totaling approximately  $5,685,000 were made
by the Company during 2001, 2000 and 1999.

1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

        Accounting Method

          The accrual  method of  accounting is used in the  preparation  of the
          financial statements and the partnership income tax returns.

        Cash and Cash Equivalents

          Cash and cash equivalents represent cash and short-term, highly liquid
          investments with original maturities of three months or less.

        Restricted Investments

          Restricted  investments at December 31,2001 are principally  comprised
          of an investment in a Federal National Mortgage  Association  Discount
          Note which was  purchased at a discount of 3.65% and matures  March 6,
          2002 and an investment in the Federated Treasury  Obilgations Fund and
          at December 31, 2000 are  principally  comprised of an investment in a
          Federal  National  Mortgage   Association   Discount  Note  which  was
          purchased  at a  discount  of 6.30%  and  matured  March  8,2001.  The
          investments  represent  a  restricted  investment  fund  that has been
          established  with a trustee in terms of the $125 Million  Senior Notes
          indenture  and is  reported  at  cost  plus  accrued  interest,  which
          approximates market.

        Trading Cove Associates - Equity Investment

          The Trading Cove  Associates  - equity  investment  is  accounted  for
          utilizing the equity method. Included in the investment is $10,600,000
          which  represents the purchase  price paid to a corporation  for their
          12.5%  interest  in TCA.  This  amount was  initially  amortized  on a
          straight-line  basis over a 7-year term,  which represents the term of
          the management agreement between TCA and the Authority,  through March
          1999.  As a  result  of  the  Relinquishment  Agreement,  as  defined,
          becoming  effective the remaining  balance will be amortized  over 189
          months beginning April 1999.

        Deferred Financing Costs

          All costs  incurred  with the issuance of the  Company's and Finance's
          $125 Million  Senior Notes,  were  capitalized  and are amortized on a
          straight-line  basis over the 11-year term of the $125 Million  Senior
          Notes.

        Fixed Assets

          Fixed  Assets are  stated at cost.  Depreciation  is  charged  against
          income over the estimated life of the fixed assets. The estimated life
          is five years for furniture and fixtures and leasehold improvements.

        Income Taxes

          The Company,  as a limited liability company,  files federal and state
          partnership  income tax returns which  indicate the  member's share of
          taxable income or loss to be reported on the  member's tax return.  As
          a result,  no  provision  for federal and state  income taxes has been
          made in the accompanying financial statements.

        Concentration of Credit Risk

          The Company has one primary source of revenue:  payments from TCA. The
          Company anticipates regular payments from TCA based upon the operating
          results of the  Authority  and the  related  Relinquishment  Fees,  as
          defined, and Development Fees, as defined,  paid and to be paid by the
          Authority.   Financial  instruments,  which  potentially  subject  the
          Company to a concentration of credit risk, principally consist of cash
          in excess of the financial institutions' insurance limits. The Company
          invests available cash with high credit quality institutions.

        Fair Value of Financial Instruments

          Fair  values  generally  represent  estimates  of  amounts  at which a
          financial  instrument could be exchanged  between willing parties in a
          current  transaction other than forced  liquidation.  However, in many
          instances,  current  exchange  prices are not available for certain of
          the Company's financial instruments,  since no active market generally
          exists for such financial instruments.

          Fair value  estimates are  subjective and are dependent on a number of
          significant  assumptions,  based on  management's  judgment  regarding
          future expected loss  experience,  current economic  conditions,  risk
          characteristics of various financial  instruments,  and other factors.
          In addition,  technical pronouncements allow a wide range of valuation
          techniques,  therefore, comparisons between entities, however similar,
          may be difficult.



        Use of Estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles requires management to make estimates
          and  assumptions  that  affect  the  reported  amounts  of assets  and
          liabilities and disclosure of contingent assets and liabilities at the
          date of the financial  statements,  as well as the reported amounts of
          revenues and expenses  during the  reporting  period.  Actual  results
          could differ from those estimates.

                                      F-6

2.   TRADING COVE ASSOCIATES - EQUITY INVESTMENT:

     TCA was organized on July 27, 1993. The primary  purpose of TCA has been to
     assist the Mohegan  Tribe of Indians of  Connecticut  (the "Tribe") and the
     Authority,   an   instrumentality   of  the  Tribe,  in  obtaining  federal
     recognition,   negotiate  the  tribal-state   compact  with  the  State  of
     Connecticut, obtain financing for the development of the Mohegan Sun Casino
     (the  "Mohegan   Sun")  located  on  certain  Tribal  land  in  Uncasville,
     Connecticut, negotiated the Amended and Restated Gaming Facility Management
     Agreement (the  "Management  Agreement")  and  participated  in the design,
     development and construction of the Mohegan Sun, which commenced operations
     on October  12,  1996.  Since the  opening of the  Mohegan  Sun,  and until
     January 1, 2000 TCA had overseen the Mohegan Sun's day-to-day operations.

     TCA will terminate on December 31, 2040, or earlier, in accordance with the
     terms of the partnership  agreement.  On November 8, 1996, certain partners
     of TCA  withdrew  and,  concurrently,  consented  to the  admission  of the
     Company  as a partner to TCA.  Also,  on  November  8,  1996,  the  Company
     acquired  an  additional  interest  (12.5%) in TCA from a  corporation  for
     $10,600,000.  The Company has a 50% voting and profits interest in TCA. The
     remaining  50%  interest  is owned by Sun Cove  Limited  ("Sun  Cove"),  an
     affiliate of Sun International  Hotels Limited ("Sun  International").

     As of December 31, 2001, 2000  and 1999 the following  summary  information
     relates to Trading Cove  Associates.  Total revenues and net income are for
     the years ended December 31, 2001, 2000 and 1999.

<TABLE>

<S>                                         <C>              <C>              <C>
                                                2001             2000             1999
                                            ------------     ------------     ------------

Total assets                                $ 23,522,567     $ 21,452,587      $ 8,634,840
Total liabilities                            (21,394,854)     (15,872,938)      (1,741,019)
                                            ------------     ------------     ------------
Partners' capital                           $  2,127,713     $  5,579,649      $ 6,893,821
                                            ============     ============     ============

Total revenue                               $ 48,327,998     $ 46,072,404      $72,179,041
                                            ============     ============     ============

Net income (loss)                           $ (4,551,936)    $   (267,948)     $13,656,908
                                            ============     ============     ============



                                                2001             2000             1999
                                            ------------     ------------     ------------
Company's interest:
  Trading Cove Associates -
   equity investment, beginning
   of year                                   $ 7,944,454      $ 9,041,568      $ 8,662,198
  Contributions                                1,350,000        1,200,000          600,000
  Distributions                                 (800,000)      (1,723,112)      (6,335,930)
                                            ------------     ------------     ------------

                                               8,494,454        8,518,456        2,926,268
                                            ------------     ------------     ------------
Income (loss)from Trading Cove
  Associates                                  (2,275,968)        (133,974)       6,828,454
Amortization of interests
  purchased                                     (440,028)        (440,028)        (713,154)
                                            ------------     ------------     ------------
Equity in income (loss)of
  Trading Cove Associates                     (2,715,996)        (574,002)       6,115,300
                                            ------------     ------------     ------------
Trading Cove Associates -
  equity investment, end of year             $ 5,778,458      $ 7,944,454      $ 9,041,568
                                            ============     ============     ============

</TABLE>


Trading Cove Associates - Material Agreements
---------------------------------------------

On  February  7,  1998,  TCA,  the Tribe and the  Authority  finalized  contract
negotiations and are moving forward with a significant  expansion project at the
Mohegan Sun (the "Project").  As a result, TCA and the Authority have terminated
the Management Agreement effective January 1, 2000.

Under the terms of an agreement (the  "Relinquishment  Agreement") TCA continued
to manage the Mohegan Sun under the Management  Agreement until January 1, 2000.
On December 31, 1999 the Management  Agreement  terminated and the Tribe assumed
day-to-day management of the Mohegan Sun. Under this Relinquishment Agreement to
compensate TCA for terminating its rights under the Management Agreement and the
Hotel/Resort Management Agreement,  the Authority has agreed to pay to TCA 5% of
Revenues, as defined,  (the "Relinquishment  Fees") generated by the Mohegan Sun
during the 15-year period commencing on January 1, 2000.

                                      F-7

Relinquishment Agreement
------------------------

The  payments  under the  Relinquishment  Agreement  will be divided into senior
relinquishment  payments and junior relinquishment  payments, each of which will
be 2.5% of Revenues.  Revenues are defined as gross gaming  revenues (other than
Class II gaming revenue, i.e. bingo) and all other facility revenues (including,
without limitation,  hotel revenues,  food and beverage sales, parking revenues,
ticket revenues and other fees or receipts from the convention/events  center in
the  expansion  and all rental or other  receipts  from  lessees,  licensees and
concessionaires  operating in the  facility  but not the gross  receipts of such
lessees, licensees and concessionaires).  Revenues exclude revenues generated by
any other expansion of the Mohegan Sun. Senior  relinquishment  payments will be
payable quarterly in arrears  commencing on April 25, 2000 for the quarter ended
March  31,  2000,  and  the  junior  relinquishment  payments  will  be  payable
semi-annually  in arrears  commencing  on July 25, 2000 for the six months ended
June 30, 2000, assuming sufficient funds are available after satisfaction of the
Tribe's senior obligations.

For the years ended  December 31, 2001 and 2000 the  Relinquishment  Fees earned
were $45,715,318 and $41,003,849,  respectively, based upon Revenues reported to
TCA by the Authority.


Development Agreement
---------------------

TCA and the Authority entered into a development  services agreement on February
7, 1998. Under this "Development  Agreement",  TCA agreed to oversee the design,
construction,  furnishing,  equipping  and  staffing  of the Project for a $14.0
million  development  fee (the  "Development  Fee"). On May 24, 2000 TCA and the
Authority  agreed  that TCA had  performed  and  completed  all its  obligations
relating to the staffing of the Project and that TCA has no further  obligations
relating to the  staffing of the Project.  The first phase of the  Project,  the
Casino of the Sky, opened on September 25, 2001.

The Authority will pay the Development Fee to TCA quarterly beginning on January
15, 2000 until the Completion Date, as defined in the Development Agreement,  of
the Project  based on  incremental  completion of the Project as of each payment
date. As of December 31, 2001 total  Development  Fee earned was  $12,516,000 of
which  $11,256,000  had been paid by the  Authority.  $1,260,000 was paid by the
Authority on January 24, 2002.

On February 9, 1998 the Development Services Agreement Phase II was entered into
between TCA and Sun International  Management Limited ("SIML").  Pursuant to the
Development  Services  Agreement Phase II, TCA subcontracted  with SIML and SIML
agreed to perform those services  assigned to SIML by TCA in order to facilitate
TCA's  fulfillment  of its duties and  obligations  to the  Authority  under the
Development   Agreement.   The  Development  Services  Agreement  Phase  II  was
subsequarterly  assigned to Sun Cove. TCA shall pay to Sun Cove as subcontractor
a Development  Services Fee Phase II equal to 3% of the development costs of the
Project,  less all costs  incurred by TCA in  connection  with the Project.  The
Development  Services Fee Phase II shall be paid in installments due on December
31,  1999 and 2000 and on the  Completion  Date,  as defined in the  Development
Agreement,  with a final payment being made when the actual development costs of
the Project are known. The fee is to be paid from available cash flow of TCA, if
any,  subordinate  to certain  other fees as  described  below under the heading
"Amended and Restated Omnibus Termination Agreement".

SIML has further subcontracted with Wolman Construction L.L.C.  ("Construction")
(the  "Local  Construction  Services  Agreement")  to  provide  certain of those
services  assigned to SIML by TCA. This agreement was also assigned to Sun Cove.
Sun Cove shall pay 20.83% of the  Development  Services Fee Phase II as and when
Sun Cove receives  payment from TCA.  Construction  has  subcontracted  with The
Slavik Company for 14.30% of its fee.

                                       F-8

Management Agreement
--------------------

The  Management  Agreement  between TCA and the Tribe was entered into on August
30, 1995. The Tribe had assigned its rights and obligations in this agreement to
the Authority. The Authority and TCA had consented to this assignment.


Until January 1, 2000,  TCA was the exclusive  manager of the Mohegan Sun. Under
the Management  Agreement,  the Tribe had granted to TCA the exclusive right and
obligation  to develop,  manage,  operate and  maintain  the Mohegan Sun and all
other  related   facilities   that  are  owned  by  the  Tribe  or  any  of  its
instrumentalities, including the Authority and to train members of the Tribe and
others in the management of the Mohegan Sun.

Until January 1, 2000 TCA earned a management fee from the Authority pursuant to
the Management  Agreement (the "Management Fees"). The Management Fees were paid
monthly (the final payment was received by TCA from the Authority on January 25,
2000) and were  calculated in three tiers based upon net revenues of the Mohegan
Sun set forth below (in thousands):

                          I                    II                 III

                   --------------       ------------------    -----------------
                     40% of Net         Revenues in Tier I       Revenues in
                   Revenues up to         plus 35% of Net     Tiers I & II plus
                                         Revenues between        30% of Net
                                                               Revenues above
                   --------------        ----------------     -----------------
     Year 1              $50,546        $50,547-$63,183            $63,183
     Year 2              $73,115        $73,116-$91,394            $91,394
     Year 3              $91,798        $91,799-$114,747          $114,747
     Year 4              $95,693        $95,694-$119,616          $119,616


In addition, TCA was required to fund $1.2 million per year ($100,000 per month)
from its  Management  Fees  into a  capital  replacement  reserve.  The  capital
replacement reserve is the property of the Authority.


Amended and Restated Omnibus Termination  Agreement
---------------------------------------------------


Effective March 18, 1999, the Amended and Restated Omnibus Termination Agreement
(the "Amended and Restated Omnibus  Termination  Agreement") was entered into by
TCA,  Sun  International,   the  Company,   SIML,  LMW,  Sun  Cove,  Slavik  and
Construction;  which  (i)  terminated  the  memorandum  of  understanding  dated
February 7, 1998; and (ii) effective  January 1, 2000  terminated a) the Amended
and Restated Omnibus Financing Agreement; b) completion guarantee and investment
banking and financing  arrangement  fee agreement  (the  "Financing  Arrangement
Agreement");  c) the management  services  agreement;  d) the organizational and
administrative services agreement; e) the marketing services agreement; and f) a
letter agreement relating to expenses dated October 19, 1996.

In consideration  for the termination of such agreements,  TCA will use its cash
(primarily  cash from payments from the  Authority for  Relinquishment  Fees and
Development  Fee) to pay the  following  obligations  in the priority set forth
below:

                                       F-9



      (a) First,  to  pay  all  unpaid  amounts  which  may  be  due  under  the
          terminated  letter  agreement  and to pay  certain  affiliates  of the
          Company and to Sun Cove a percentage  of an annual fee of $2.0 million
          less the actual  expenses  incurred  by TCA.  Such annual fee shall be
          payable in equal quarterly  installments  beginning March 31, 2000 and
          ending  December 31, 2014.  For the years ended  December 31, 2001 and
          2000,  $1,712,791  ($856,396 to Sun Cove and $856,395 to affiliates of
          the  Company)  and  $1,849,506  ($924,753  to Sun Cove and $924,753 to
          affiliates of the Company),  respectively,  had been paid and incurred
          by TCA in terms of the first priority.

      (b) Second, to return all  capital contributions  made by the  partners of
          TCA after September 29, 1995. TCA anticipates  making capital calls to
          fund expenses  related to the  development  of the Project,  and these
          capital  calls will be  repaid,  based on cash  flow,  in the  quarter
          following the quarter in which the capital call was made. From January
          1, 2000 to December 31, 2001 these  capital  contributions  aggregated
          $5,100,000.  $3,600,000 has been repaid to the partners of TCA, 50% to
          the Company and 50% to Sun Cove.

          As of December 31, 2001, $1,500,000 in capital contributions  remained
          outstanding.  On January 28, 2002, a cash distribution of $750,000 was
          made to each partner and on March 8,  2002,  a  cash  contribution  of
          $200,000 was made by each partner.

      (c) Third, to pay any accrued  amounts for obligations  performed prior to
          January 1, 2000 under the  Financing  Arrangement  Agreement.  For the
          year  ended   December  31,  2000   $2,977,932   ($2,069,525   to  Sun
          International  and  $908,407 to the  Company)  had been paid by TCA in
          terms of the third  priority.  All required payments were  made during
          2000.

      (d) Fourth,  to  make the payments  set forth in  the  agreement  relating
          to Development  Services Agreement Phase II and the Local Construction
          Services  Agreement.  For the year ended December 31, 2000 $10,807,000
          ($8,555,902 to Sun Cove,  $1,929,191 to  Construction  and $321,907 to
          The Slavik  Company) had been paid and incurred by TCA in terms of the
          fourth priority. No payments are required or due at December 31, 2001.
          The  contingent  obligation  at December  31,  2001 was  approximately
          $8,255,000.


      (e) Fifth,  to pay Sun Cove  an  annual  fee of $5.0  million  payable  in
          equal quarterly installments of $1.25 million beginning March 31, 2000
          and ending  December 31, 2006.  For the years ended  December 31, 2001
          and 2000,  $5.0  million had been paid and incurred by TCA in terms of
          the fifth priority.

      (f) Sixth, to pay any accrued  amounts  for  obligations  performed   with
          respect  to periods  prior to  January  1, 2000  under the  management
          services  agreement,  the organizational  and administrative  services
          agreement and the marketing  services  agreement.  For the years ended
          December  31,  2001 and  2000,  $23,621,754  ($11,810,877  to SIML and
          $11,810,877 to the Company) and  $23,299,200  ($11,649,600 to SIML and
          $11,649,600 to the Company),  respectively, had been paid and incurred
          by TCA in terms of the sixth  priority.  The final  required  payments
          were made during 2001.

      (g) Seventh,  for  the  period  beginning  March  31,  2000  and    ending
          December 31, 2014, to pay each of Sun Cove and the Company twenty-five
          percent  (25%) of the  relinquishment  payments.  For the years  ended
          December 31, 2001 and 2000,  $19,457,160  ($9,728,580  to Sun Cove and
          $9,728,580  to the  Company)  and $0, respectively,  had been paid and
          incurred  by TCA in  terms of the  seventh  priority.  The  contingent
          obligation at December 31, 2001, was approximately $23,902,000.

     (h)  Eighth, to distribute all excess cash.


In addition,  TCA shall not make any distributions  pursuant to the Ammended and
Restated Omnibus Termination  Agreement until it has annually distributed to its
partners  pro rata,  the amounts  related to its  partners  tax  obligations  as
described in Section 3.03a(1) of the partnership agreement less twice the amount
of all other funds paid or  distributed to the Company during such year pursuant
to the Amended and Restated Omnibus Termination Agreement.

To the extent TCA does not have adequate  cash to make the payments  pursuant to
the Amended and Restated Omnibus Termination  Agreement,  such amounts due shall
be deferred  without the accrual of interest until TCA has  sufficient  cash, if
any, to pay them.


AMENDED AND RESTATED OMNIBUS FINANCING AGREEMENT
------------------------------------------------

Until January 1, 2000 TCA's primary source of revenue was Management Fees. Those
fees were utilized by TCA pursuant to the Amended and Restated Omnibus Financing
Agreement which was terminated effective January 1, 2000.

                                      F-10

3.   BENEFICIAL INTEREST - LEISURE RESORT TECHNOLOGY, INC.:

On January 6, 1998, the Company paid  $5,000,000 to Leisure  Resort  Technology,
Inc.  ("Leisure")  whereby  Leisure  gave up its  beneficial  interest  in 5% of
certain fees and excess cash flows,  as defined,  of TCA and any other claims it
may have had against the Company,  TCA and TCA's partners and former partner. On
August 6, 1997,  Leisure,  a former partner of TCA, had filed a lawsuit  against
TCA, Sun Cove,  former partner of TCA RJH Development Corp. and the Company and
its owners,  claiming breach of contract,  breach of fiduciary  duties and other
matters in  connection  with the  development  of the  Mohegan  Sun by TCA.  The
Company agreed to acquire Leisure's  contractual  rights and settle all matters.
The  Company  no  longer  has  the  obligation  to  pay  to  Leisure  5% of  the
Organizational  and  Administrative  fee, as defined in the  Organizational  and
Administrative  Services  Agreement,  and 5% of TCA's  Excess Cash as defined in
TCA's partnership  agreement.  The Company is now entitled to such cash flow. On
March 17,  1999,  the Company and  Finances'  $65  million  12-3/4%  senior note
payable (the "$65 Million Senior Notes") were retired and on March 18, 1999, the
Company paid an additional  $2,000,000 to Leisure pursuant to the settlement and
release agreement.

The Leisure  payments plus  associated  costs were amortized on a  straight-line
basis over the remaining term of TCA's  Management  Agreement  through March 17,
1999.  As a result  of the  Relinquishment  Agreement  becoming  effective,  the
remaining  balance will be amortized over 189 months which began March 18, 1999.
Accumulated amortization at December 31, 2001 and 2000 amounts to $2,139,182 and
$1,761,192, respectively.


4.   $125 MILLION 9-1/2% SENIOR NOTES PAYABLE:

On March 17, 1999,  the Company and Finance,  issued $125 Million  Senior Notes.
Payment of the principal  of, and interest on, the $125 Million  Senior Notes is
subordinate  in right of payment  to all of their  existing  and future  secured
debts.

Interest is payable  semi-annually  in arrears on March 15 and September 15 at a
rate of 9-1/2% per annum which commenced on September 15, 1999.

The  principal  amount of the $125 Million  Senior Notes is payable on March 15,
2010.  The Company and Finance may elect to redeem the $125 Million Senior Notes
at any  time on or  after  March  15,  2004 at a  redemption  price  equal  to a
percentage  (105.182% after March 14, 2004 and declining to 104.318% after March
14, 2005, 103.455% after March 14, 2006, 102.591% after March 14, 2007, 101.727%
after March 14, 2008, 100.864% after March 14, 2009, and to 100% after March 14,
2010) of the principal  amount thereof plus accrued  interest.  The $125 Million
Senior  Notes  provide  that  upon the  occurrence  of a Change of  Control  (as
defined),  the holders thereof will have the option to require the redemption of
the  $125  Million  Senior  Notes  at a  redemption  price  equal to 101% of the
principal amount thereof plus accrued interest.



If the Company and Finance have any Company  Excess Cash, as defined,  they must
redeem the $125  Million  Senior Notes (on a  semi-annual  basis on March 15 and
September 15) equal to a percentage (109.500% after March 15, 1999 and declining
to 108.636% after March 14, 2000,  107.773% after March 14, 2001, 106.909% after
March 14, 2002,  106.045%  after March 14, 2003,  105.182% after March 14, 2004,
104.318%  after March 14, 2005,  103.455%  after March 14, 2006,  102.591% after
March 14, 2007,  101.727%  after March 14, 2008,  100.864% after March 14, 2009,
and to 100.000% after March 14, 2010). On August 1, 1999 the Company and Finance
had Company Excess Cash, as defined,  available for mandatory  redemption of the
$125 Million Senior Notes totaling approximately  $8,983,000,and  accordingly on
September  15, 1999 the Company and Finance made a mandatory  redemption of $125
Million  Senior Notes in the principal  amount of  $2,841,000 at the  redemption
price of 109.50%.  On February 1,2000 the Company and Finance had Company Excess
Cash, as defined,  available for mandatory redemption of the $125 Million Senior
Notes totaling approximately  $8,276,000 and accordingly the Company and Finance
made a mandatory redemption of $125 Million Senior Notes in the principal amount
of $2,277,000 at the  redemption  price of 108.636% on March 15, 2000. On August
1, 2000 the Company and Finance had Company  Excess Cash, as defined,  available
for mandatory redemption of the $125 Million Senior Notes totaling  aproximately
$5,902,000, and accordingly on September 15, 2000 the Company and Finance made a
mandatory  redemption of $125 Million  Senior Notes in the  principal  amount of
$191,000 at the  redemption  price of 108.636%.  On February 1, 2001 the Company
and  Finance had Company  Excess  Cash,  as  defined,  available  for  mandatory
redemption of the $125 Million Senior Notes totaling  approximately  $6,173,000,
and  accordingly  on March 15, 2001 the  Company  and  Finance  made a mandatory
redemption of $125 Million  Senior Notes in the principal  amount of $452,000 at
the redemption price of 107.773%.  On August 1, 2001 the Company and Finance had
Company Excess Cash, as defined,  available for mandatory redemption of the $125
Million  Senior Notes  totaling  approximately  $9,765,000,  and  accordingly on
September  15, 2001 the Company and Finance made a mandatory  redemption  of the
$125  Million  Senior  Notes  in  the  principal  amount  of  $3,805,000  at the
redemption  price of  107.773%.  On February 1, 2002 the Company and Finance had
Company Excess Cash, as defined,  available for mandatory  redemtion of the $125
Million  Senior Notes  totaling  approximately  $9,793,000 , and  accordingly on
March 15, 2002 the Company and Finance made a mandatory  redemption  of the $125
Million Senior Notes in the principal  amount of  $4,031,000,  at the redemption
price of  106.909%.  In  certain  circumstances,  if either  the  Company or its
partner in TCA exercises the option to buy or sell partnership interests in TCA,
the Company and Finance must redeem the $125 Million Senior Notes.

The  indenture  relating  to the $125  Million  Senior  Notes (the  "Indenture")
contains certain  affirmative and negative  covenants  customarily  contained in
agreements of this type, including without limitation,  covenants that restrict,
subject to specified  exceptions  the  Company's  and  Finance's  ability to (i)
borrow  money,  (ii) pay  dividends  on stock or make certain  other  restricted
payments,  (iii)  use  assets  as  security  in other  transactions,  (iv)  make
investments, (v) sell other assets or merge with other companies and (vi) engage
in any business  except as currently  conducted or  contemplated  or amend their
relationship  with TCA. The  Indenture  also  provides for  customary  events of
default and the establishment of a restricted investment fund with a trustee for
interest reserves.

The fair value of the Company's  long term debt at December 31, 2001 and 2000 is
estimated to be approximately $118,897,000 And $118,494,000, respectively, based
on the quoted market price for the same issue.

                                      F-11

5.   RECONCILIATION OF FINANCIAL STATEMENT AND TAX INFORMATION:

The following is a reconciliation of net income for financial statement purposes
to net  income  (loss)  for  federal  income tax  purposes  for the years  ended
December 31, 2001, 2000 and 1999.

<TABLE>

<S>                              <C>                        <C>                     <C>
                                      For the                   For the                  For the
                                     Year Ended                Year Ended              Year Ended
                                 December 31, 2001          December 31, 2000      December 31, 1999
                                 -----------------          -----------------       -----------------

Financial Statement
 net income                            $6,574,572                  $  388,376              $8,022,701
Financial statement
 equity in (income) loss
 of Trading Cove Associates
 over tax basis equity in
 (income) loss of Trading
 Cove Associates                         (394,380)                  1,184,388                 176,879
Other                                       6,188                       4,682                  (6,603)
                                 ----------------           -----------------       -----------------
Federal income tax basis
 net income                            $6,186,380                  $1,577,446              $8,192,977
                                 ================           =================       =================

</TABLE>





The following is a reconciliation of members' deficiency for financial statement
purposes to members'  deficiency  for federal income tax purposes as of December
31, 2001, 2000 and 1999.

<TABLE>

<S>                                     <C>                <C>                <C>
                                            2001               2000               1999
                                        ------------       ------------       -----------

Financial statement members'
 deficiency                             $(66,978,332)      $(71,813,244)      $(34,470,438)
Adjustment for cumulative
 difference between tax basis
 of Trading Cove Associates-
 equity investment and GAAP
 basis of Trading Cove
 Associates-equity investment              1,655,983            466,913            296,637
Current year financial
 statement net income over
 (under) federal income tax
 basis net income                           (388,192)         1,189,070            170,276
                                        ------------       ------------       ------------
Federal income tax basis
 members' deficiency                    $(65,710,541)      $(70,157,261)      $(34,003,525)
                                        ============       ============       ============

</TABLE>



6. CONTINGENCIES:

LEGAL PROCEEDINGS

On January 6, 1998, Leisure Resort Technology,  Inc.  ("Leisure") and defendants
Waterford Gaming,  L.L.C., Trading Cove Associates,  LMW Investments,  Inc., and
Slavik Suites,  Inc.  settled a prior lawsuit brought by Leisure.  In connection
with this  settlement,  Leisure and Trading Cove Associates,  Waterford  Gaming,
L.L.C., LMW Investments, Inc., and Slavik Suites, Inc. entered into a settlement
and release  agreement.  Pursuant  to this  settlement  and  release  agreement,
Waterford Gaming,  L.L.C.  bought out Leisure's  beneficial  interest in Trading
Cove Associates.

By complaint dated January 7, 2000, as amended February 4, 2000, Leisure filed a
four count complaint naming as defendants Waterford Gaming, L.L.C., Trading Cove
Associates, LMW Investments, Inc., Slavik Suites, Inc., Waterford Group, L.L.C.,
Len Wolman and Mark Wolman (collectively, the "Defendants"). The matter has been
transfered  through the complex  litigation  docket and is pending in Waterbury,
Connecticut.  The  complaint  alleged  breach of  fiduciary  duties,  fraudulent
non-disclosure,  violation of Connecticut Statutes Section 42-110a, et seq., and
unjust  enrichment  in  connection  with  the  negotiation  by  certain  of  the
Defendants of the settlement and release agreement. The complaint also brought a
claim for an accounting.  The complaint  seeks  unspecified  legal and equitable
damages. On February 29, 2000,  Defendants filed a Motion to Strike and a Motion
for  Summary  Judgement,  each with  respect to all  claims.  The Court  granted
Defendants'  Motion to Strike in part and denied  Defendants' Motion for Summary
Judgement,  on October 13, 2000.  The Court's  order  dismissed the claim for an
accounting and the claim under Connecticut Statutes Section 42-110a, et seq. The
Court  also  struck  the alter ego  allegations  in the  complaint  against  LMW
Investments,  Inc.,  Slavik  Suites,  Inc.,  Len  Wolman and Mark  Wolman.  In a
decision  dated  August 6, 2001,  the Court  dismissed  all claims  against  LMW
Investments, Inc., Slavik Suites, Inc., Len Wolman and Mark Wolman.

On November 15, 2000, the Company and its co-defendants  answered the complaint.
In addition,  the Company and Trading Cove Associates asserted counterclaims for
breach of the  settlement  and  release  agreement  and  breach  of the  implied
covenant  of good faith  against  Leisure  and its  president,  Lee Tyrol.  In a
decision dated June 6, 2001, the Court dismissed the  counterclaims  against Lee
Tyrol.

Discovery has commenced.  In a scheduling  order dated August 9, 2001, the Court
directed  the  parties  to  report  to the Court no later  than  March 29,  2002
regarding the feasibility of settlement,  the estimated length of jury selection
and the estimated length of trial. A trial date has not been set.

The Company believes that it has meritorious  defenses and intends to vigorously
contest the claims in this action and to assert all available  defenses.  At the
present time,  the Company is unable to express an opinion on the likelihood of
an  unfavorable  outcome  or to give an  estimate  of the amount or  range of
potential loss to the Company as a result of this litigation due to the disputed
issues of law and/or facts on which the outcome of this  litigation  depends and
due to the infancy of both the action and discovery in the action.

                                      F-12

7.  RELATED PARTY AGREEMENT AND TRANSACTIONS:

Len Wolman, the Company's Chairman of the Board of Directors and Chief Executive
Officer, is a managing partner of TCA.

On February 9, 1998 the Development Services Agreement Phase II was entered into
between TCA and SIML.  Pursuant to the Development  Services Agreement Phase II,
TCA  subcontracted  with SIML and SIML agreed to perform those services assigned
to SIML by TCA in  order to  facilitate  TCA's  fulfillment  of its  duties  and
obligations to the Authority  under the Development  Agreement.  The Development
Services Agreement Phase II was subsequently assigned to Sun Cove. TCA shall pay
to Sun Cove, as subcontractor, the Development Services Fee Phase II equal to 3%
of the  development  costs of the  Project,  less all costs  incurred  by TCA in
connection with the Project. The Development Services Fee Phase II shall be paid
in installments due on December 31, 1999 and 2000 and on the Completion Date, as
defined in the Development  Agreement,  with a final payment being made when the
actual  development  costs  of  the  Project  are  known.  The  payment  of  the
Development  Services Fee Phase II will be made from available cash flow if any,
in accordance with the Amended and Restated Omnibus Termination Agreement.  SIML
has further  subcontracted with Construction to provide certain of those sevices
assigned to SIML by TCA.  This Local  Construction  Services  Agreement was also
assigned to Sun Cove.  The fee payable by Sun Cove to  Construction  as and when
Sun Cove  receives  payment from TCA is 20.83% of the  Development  Services Fee
Phase II.  Construction has subcontracted  with The Slavik Company for 14.30% of
its fee.  On April 26,  2000,  July 26,  2000 and  January  26,  2001,  TCA paid
$3,095,000,   $1,238,000  and  $6,474,000   respectively,   as  partial  payment
Development Services Fee Phase II. Construction received $644,688,  $257,875 and
$1,348,534,  respectively,  and  Construction  paid The Slavik Company  $92,190,
$36,876 and  $192,840  on April 26,  2000,  July 26, 2000 and January 26,  2001,
respectively.

Construction is owned 50% by Len Wolman (the Company's  chief Executive  Officer
and Chairman of the Board of Director)  and 50% by Mark Wolman ( a member of the
Company's  Board of  Directors).  Del J. Lauria (the  Company's  Secretary and a
member of the Company's Board of Directors), Stephan F. Slavik ( a member of the
Company's Board of Directors) and Richard Slavik (Vice President of the Company)
have a financial interest in The Slavik Company.

The Company paid amounts to an affiliate for accounting services totaling $0, $0
and $95,200,  respectively,  during the years ended December 31, 2001, 2000, and
1999.

On September 28, 1998, the Company entered into an employment agreement with Len
Wolman.  The employment  agreement provides for a base annual salary of $250,000
reduced by any amounts Mr. Wolman receives as a salary from TCA for such period.
Pursuant to such  employment  agreement,  the Company shall pay to Mr. Wolman an
amount equal to 0.05% of the revenues of the Mohegan Sun including the expansion
to the extent Mr.  Wolman has not  received  such amounts from TCA. On and after
January 1, 2004,  the Company  shall pay to Mr.  Wolman  incentive  compensation
based  on the  revenues  of the  Mohegan  Sun,  including  the  expansion,  as a
percentage (ranging from .00% to .10%) to be determined using a formula attached
to the employment  agreement  which compares  actual  revenues to  predetermined
revenue targets. For the years ended December 31, 2001 and 2000 the Company paid
and incurred  $707,153 and $660,037,  respectively,  pursuant to the  employment
agreement.  No payments were made pursuant to the  employment  agreement  during
1999.

In 2001 and 2000, approximately $903,000 and $976,000, respectively, was paid to
the  principals  and  affiliates  of the  Company  as  part of  TCA's  operating
expenses.  In  1999  approximately  $756,000  was  paid  to the  principals  and
affiliates  of the Company as part of TCA's  operating  expenses,  including the
payment of Mr. Len Wolman's  salary and bonus.  In addition,  for the year ended
December 31, 1999 $6,219,147 ($3,109,573 to SIML, $1,444,875 to the Directors of
the Company and  $1,664,699  to the Company) had been incurred by TCA in monthly
management services fees.

For the year ended  December  31, 1999,  the Company  paid the  Directors of the
Company $660,000 as salaries for various services provided to the Company.

In 1999, the Company  renovated Mr.  Wolman's office space at a cost of $32,413,
of which $30,000 was paid to Wolman,  Homes Inc., a related  party.  Cost of the
improvement is being  depreciated  over five years . Expense for the years ended
December 31, 2001, 2000 and 1999 was $6,480, $6,480 and $5,940, respectively.

Waterford  Group,  Slavik  and the other  principals  of  Waterford  Group  have
interests  in and may acquire  interests in hotels in  southeastern  Connecticut
which have or may have  arrangements with the Mohegan Sun to reserve and provide
hotel rooms to patrons of the Mohegan Sun.

                                      F-13


(c)  Reports on Form 8-K
     -------------------

            (i)     Form 8-K filed on December 28, 2001

                    Item 5.

                    The Mohegan Tribal Gaming  Authority (the  "Authority")  has
                    filed its  annual  report  on Form  10-K for the year  ended
                    September  30,  2001,  a copy of which has been  filed as an
                    exhibit to this report and is  incorporated  by reference to
                    the  Authority's  electronic  filing of such  report on Form
                    10-K,  Securities and Exchange Commission file reference no.
                    033-80655.

                    Date of Report: December 17, 2001

            (ii)    Form 8-K filed on February 15, 2002

                    Item 5.

                    The Mohegan Tribal Gaming  Authority (the  "Authority")  has
                    filed its  quarterly  report  on Form  10-Q for the  quarter
                    ended  December  31, 2001, a copy of which has been filed as
                    an exhibit to this report and is  incorporated  by reference
                    to the Authority's  electronic filing of such report on Form
                    10-Q,  Securities and Exchange Commission file reference no.
                    033-80655.

                    On February 12, 2002,  the Mohegan  Tribal Gaming  Authority
                    (the  "Authority")  has filed a copy of an amendment to its
                    senior secured credit  facility on Form 8-K, a copy of which
                    has  been  filed  as  an  exhibit  to  this  report  and  is
                    incorporated  by  reference to the  Authority's  electronic
                    filing of such report on Form 8-K,  Securities  and Exchange
                    Commission file reference No. 033-80655.

                    Date of Report: February 8, 2002


                                       21


     Pursuant to the  requirements  of Section 13 or 15(d) of the Securities and
     Exchange  Act of 1934,  as  amended,  the  registrant  has duly caused this
     report  to be  signed  on its  behalf  by the  undersigned  thereunto  duly
     authorized.



                         WATERFORD GAMING, L.L.C.


Date: March 28, 2002    By: /s/ Len Wolman
                        Len Wolman, Chairman of the Board of Directors,
                        Chief Executive Officer


Date: March 28, 2002    By: /s/ Alan Angel
                        Alan Angel, Chief Financial Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed by the following persons on behalf of
the registrant and in capacities indicated on March 28, 2002.

SIGNATURE                      TITLE



/s/ Len Wolman                 Chairman of the Board of Directors,
-------------------            Chief Executive Officer
Len Wolman




/s/ Del J. Lauria              Member of the Board of Directors,
--------------------           Secretary
Del J. Lauria




/s/ Mark Wolman                Member of the Board of Directors
--------------------
Mark Wolman




/s/ Stephan F. Slavik          Member of the Board of Directors
---------------------
Stephan F. Slavik


                                       22