UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~July~~December 31, 2009


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

FOR THE ~~TRANSITION~~QUARTER ~~PERIOD~~ FROM ___________ TO _________

Commission file number 333-113140

INN OF THE MOUNTAIN GODS RESORT AND CASINO

(Exact name of registrant as specified in its charter)

Not Applicable		75-3158926
Not Applicable (State or other jurisdiction of incorporation or organization)		75-3158926 (I.R.S. Employer Identification Number)
(State or other jurisdiction		(I.R.S. Employer
287 Carrizo Canyon Road Mescalero, New Mexico (Address of principal executive offices)		88340 (Zip Code)
of incorporation or organization)		Identification Number)

287 Carrizo Canyon Road
Mescalero, New Mexico		88340
(Address of principal executive offices)		(Zip Code)

575-464-7777
(Registrant’s telephone number, including area code)

(505) 464-7000 (Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ ~~Smaller reporting company o~~ (Do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

INN OF THE MOUNTAIN GODS RESORT AND CASINO FORM ~~AND SUBSIDIARIESFORM~~ 10-Q FOR THE ~~QUARTERLY~~QUARTER ~~PERIOD~~ ENDED ~~JULY~~DECEMBER 31, ~~2009INDEX~~2009 INDEX

	Pages
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:		1
Consolidated Balance Sheets as of April 30, 2009 and July 31, 2009 (unaudited)		3
Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2009 (unaudited)		3
Consolidated Statements of Operations for the Three Month Periods Ended July 31, 2008 (unaudited) and 2009 (unaudited)		4
Consolidated Income Statements for the Three Month Periods Ended December 31, 2008 (unaudited) and 2009 (unaudited)		4
Consolidated Statements of Cash Flows for the Three Month Periods Ended July 31, 2008 (unaudited) and 2009 (unaudited)		5
Consolidated Statements of Cash Flows for the Three Month Periods Ended December 31, 2008 (unaudited) and 2009 (unaudited)		5
Notes to Consolidated Financial Statements (unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2526
Item 3. Quantitative and Qualitative Disclosures about Market Risk		3133
Item 4T. Controls and Procedures		3233
PART II. OTHER INFORMATION		32
Item 1. Legal Proceedings		3233
Item 1A. Risk Factors		3233
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3233
Item 3. Defaults Upon Senior Securities.		3233
Item 4. Submission of Matters to a Vote of Security Holders		3233
Item 5. Other Information		3234
Item 6. Exhibits		3436
Signatures		3537
EX-31.1
EX-32.1
EX-31.1
EX-31.2
EX-32.1
EX-10.1
EX-31.1
EX-31.2
EX-32.1

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

CONSOLIDATED BALANCE SHEETS


	As of September 30,			As of December 31,
	2009			2009
Current assets
Cash and cash equivalents	$	5,629,436		$	6,648,067
Accounts receivable, net of allowance for doubtful accounts		617,433			1,149,023
Inventories, net		862,251			903,590
Prepaid expenses and other assets		1,321,812			1,342,754

Total current assets		8,430,932			10,043,434
Non-current assets
Property, plant and equipment, net		189,066,385			187,394,995
Other assets		51,000			51,000
Deferred financing cost		2,078,017			1,632,727

Total assets	$	199,626,334		$	199,122,156


Liabilities and deficit
Current liabilities
Accounts payable	$	1,422,304		$	1,837,623
Accrued expenses		5,469,293			3,900,366
Accrued payroll and benefits		1,941,522			1,481,612
Accrued interest		22,386,667			29,621,603
Advance deposits		413,046			240,101
Current portion of long-term debt		202,924,922			201,995,343

Total current liabilities		234,557,754			239,076,648
Non-current liabilities
Long-term debt, net of current portion		395,634			338,445

Total liabilities		234,953,388			239,415,093

Deficit
Contributed capital		(5,389,062	)		(7,389,062	)
Accumulated deficit		(29,937,992	)		(32,903,875	)

Total deficit		(35,327,054	)		(40,292,937	)

Total liabilities and deficit	$	199,626,334		$	199,122,156

	As of April 30,			As of July 31,
	2009			2009 ( unaudited)
Current assets
Cash and cash equivalents	$	7,556,735		$	9,518,994
Accounts receivable, net of allowance for doubtful accounts		380,936			385,352
Inventories		789,564			870,680
Prepaid expenses and other assets		449,368			1,135,082
Total current assets		9,176,603			11,910,108
Non-current assets
Property plant and equipment		307,605,269			308,317,223
Accumulated depreciation		(114,666,272	)		(117,624,698	)
Property plant and equipment, net		192,938,997			190,692,525
Other assets		161,000			51,000
Deferred financing cost		2,820,165			2,990,306
Total assets	$	205,096,765		$	205,643,939
Liabilities and deficit
Current liabilities
Accounts payable	$	2,122,703		$	2,395,903
Accrued expenses		3,744,079			4,237,548
Accrued payroll and benefits		1,378,300			1,749,119
Accrued interest		11,200,000			17,200,000
Advance deposits		347,995			566,923
Current portion of long-term debt		203,931,091			203,474,802
Total current liabilities		222,724,168			229,624,295
Non-current liabilities
Long-term debt, net of current portion		990,786			492,452
Total liabilities		223,714,954			230,116,747
Deficit
Contributed capital		13,644,939			5,610,939
Accumulated deficit		(32,263,128	)		(30,083,747	)
Total deficit		(18,618,189	)		(24,472,808	)
Total liabilities and deficit	$	205,096,765		$	205,643,939

The accompanying notes are an integral part of these statements.

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

CONSOLIDATED STATEMENTS OF OPERATIONS


	Three months ended			Three months ended
	December 31, 2008			December 31, 2009
Revenues:
Gaming	$	16,546,046		$	16,168,109
Hotel		2,600,075			2,175,376
Food and beverage		3,201,745			2,934,841
Recreation and other		4,002,634			4,398,312

Gross revenue		26,350,500			25,676,638

Less-promotional allowances		172,511			238,881

Net revenue		26,177,989			25,437,757


Operating expenses
Gaming		6,619,171			5,373,560
Hotel		1,131,983			781,436
Food and beverage		3,556,592			3,223,781
Recreation and other		2,627,022			2,548,161
Marketing		1,796,111			2,344,236
General and administrative		5,183,042			4,554,801
Depreciation and amortization		3,023,656			3,042,632
Insurance reimbursement (Note 11)		(3,677,047	)		(1,185,023	)
Storm costs (Note 11)		232,022			—
Gain on disposal of assets		(2,563	)		—

Total operating expenses		20,489,989			20,683,584


Operating income		5,688,000			4,754,173


Other expense
Interest expense, net		(6,533,294	)		(7,737,702	)

Other income		303			17,646

Total other expense		(6,532,991	)		(7,720,056	)


Net loss	$	(844,991	)	$	(2,965,883	)

(unaudited)

	Three months ended			Three months ended
	July 31, 2008			July 31, 2009
Revenues:
Gaming	$	21,439,995		$	20,779,971
Hotel		4,104,367			3,639,388
Food and beverage		3,866,700			3,628,663
Recreation and other		4,232,600			3,052,957
Gross revenue		33,643,662			31,100,979
Less-promotional allowances		256,784			173,205
Net revenue		33,386,878			30,927,774
Operating expenses
Gaming		7,346,919			6,750,288
Hotel expenses		1,421,946			965,671
Food and beverage		3,885,545			3,174,236
Recreation and other		3,589,158			2,304,600
Marketing		1,764,509			2,292,990
General and administrative		4,315,667			3,731,220
Depreciation and amortization		3,076,918			3,046,303
Insurance reimbursement (Note 11)		(1,100,000	)		(20,000	)
Storm costs (Note 11)		62,227			14,605
Loss on disposal of assets		46,118			—
Total operating expenses		24,409,007			22,259,913
Operating income		8,977,871			8,667,861
Other expense
Interest income		12,271			4,270
Interest expense		(6,559,504	)		(6,497,499	)
Other income		—			4,750
Total other expense		(6,547,233	)		(6,488,479	)
Net income	$	2,430,638		$	2,179,382

The accompanying notes are an integral part of these statements.

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

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Three months ended			Three months ended
	December 31, 2008			December 31, 2009
Cash flows from operating activities:
Net loss	$	(844,991	)	$	(2,965,883	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		3,083,484			3,488,950
Changes in assets and liabilities:
Accounts receivable		341,857			(531,590	)
Tribal accounts receivable		143,910			—
Inventories		131,083			(41,339	)
Prepaid expenses		160,905			(20,942	)
Insurance reimbursement		(2,777,047	)		—
Other long-term assets		(4,160	)		—
Accounts payable		803,927			415,319
Accrued expenses, payroll and benefits		2,093,634			(2,028,837	)
Accrued interest payable		(6,000,000	)		7,234,936
Deposits and advanced payments		(126,331	)		(172,945	)

Net cash (used in) provided by operating activities		(2,993,729	)		5,377,669


Cash flows from investing activities:
Purchase of property, plant and equipment		(5,741,923	)		(1,372,271	)

Net cash used in investing activities		(5,741,923	)		(1,372,271	)


Cash flows from financing activities:
Principal payments on long-term debt		(909,988	)		(986,767	)
Distributions to Mescalero Apache Tribe		(2,001,000	)		(2,000,000	)

Net cash used in financing activities		(2,910,988	)		(2,986,767	)


Net (decrease) increase in cash and cash equivalents		(11,646,640	)		1,018,631
Cash and cash equivalents, beginning of period		16,912,249			5,629,436

Cash and cash equivalents, end of period	$	5,265,609		$	6,648,067


Supplemental cash flow information:
Cash paid for interest	$	12,138,528		$	59,737


Non-cash investing and financing activities
Property, plant and equipment acquired through reduction in storm recovery receivable	$	3,253,273		$	1,185,023

(unaudited)

	Three months ended			Three months ended
	July 31, 2008			July 31, 2009
Cash flows from operating activities:
Net income	$	2,430,638		$	2,179,382
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		3,498,170			2,788,285
Insurance reimbursement (paid directly to contractor)		(1,100,000	)		—
Loss on disposal of assets		46,118			—
Changes in assets and liabilities:
Accounts receivable		(27,895	)		(4,416	)
Tribal accounts receivable		(191,750	)		—
Inventories		79,103			(81,116	)
Prepaid expenses		(134,512	)		(685,714	)
Other long-term assets		(213,502	)		110,000
Accounts payable		510,172			273,200
Accrued expenses, payroll and benefits		203,832			864,288
Accrued interest payable		(6,000,000	)		6,000,000
Deposits and advanced payments		645,875			218,928
Net cash (used in) provided by operating activities		(253,751	)		11,662,837
Cash flows from investing activities:
Purchase of property, plant and equipment		(494,032	)		(711,954	)
Net cash used in investing activities		(494,032	)		(711,954	)
Cash flows from financing activities:
Principal payments on long-term debt		(858,617	)		(954,624	)
Distributions to Mescalero Apache Tribe		(2,001,001	)		(8,034,000	)
Net cash used in financing activities		(2,859,618	)		(8,988,624	)
Net (decrease) increase in cash and cash equivalents		(3,607,401	)		1,962,259
Cash and cash equivalents, beginning of period		14,975,093			7,556,735
Cash and cash equivalents, end of period	$	11,367,692		$	9,518,994
Supplemental cash flow information:
Cash paid for interest	$	12,153,193		$	497,499

The accompanying notes are an integral part of these statements.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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

Change in Fiscal Year

On September 3, 2009, Board of Directors (the “Board”) of IMG Resort and Casino resolved by unanimous consent to change the Company’s fiscal year, formerly ending April 30, to a fiscal year end, effective September 30, 2009. This change in fiscal year end makes the Company’s year-end coincide with the Mescalero Apache Tribe’s Fiscal Year End.

This report contains unaudited three months consolidated statements of operations for the period ended December 30, 2009 and 2008; an unaudited consolidated statement of cash flows for the three months ended December 31, 2009 and 2008, and includes unaudited consolidated balance sheet information as of September 30, 2009 and December 31, 2009.

Reporting Entity and Operations

The Inn of the Mountain Gods Resort and Casino and subsidiaries (“IMG Resort and Casino” or the “Company"”), an unincorporated enterprise of the Mescalero Apache Tribe (the “Tribe”), was established April 30, 2003 by the Tribe and manages and owns all resort, hotel and gaming enterprises of the Tribe including the Inn of the Mountain Gods Resort and Casino (the “Resort”), a gaming, hotel and resort complex opened on March 15, 2005, and its wholly-owned subsidiaries, each of which is an unincorporated enterprise of the Tribe: Casino Apache (the “Casino Apache Enterprise”), which owned and operated the Tribe’s former casino, ~~Casino Apache,~~ closed in February 2005; Casino Apache Travel Center (the “Travel Center”), which owns the Tribe’s second casino facility opened in May 2003 (the “Travel Center Casino”); Ski Apache ~~(the “Ski Apache”)~~, which owns the Tribe’s ski resort, Ski Apache Resort (~~the~~ “Ski Apache ~~Resort~~”); and Inn of the Mountain Gods (the " “Inn”), which owned the Tribe’s former resort hotel, Inn of the Mountain Gods (the “Inn Hotel”). The Tribe is the sole owner of IMG Resort and Casino. IMG Resort and Casino is a separate legal entity from the Tribe and is managed by a separate management board.

The Resort, which opened for commercial business on March 15, 2005, is located on tribal land in Mescalero, New Mexico and consists of a casino (the “Inn of the Mountain Gods Casino”) offering Class III gaming as defined by the Indian Gaming Regulatory Act (“IGRA”) and a 273 luxury room resort hotel. The Travel Center Casino, which opened for business on May 22, 2003, also offers Class III gaming as defined by IGRA, on tribal land in Mescalero. Ski Apache operates the Ski Apache Resort, a ski resort located within the Tribe’s reservation in Mescalero and on the U.S. Forest Service land.

Principles of Consolidation

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

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company has incurred significant losses and did not generate sufficient cash to make the May 15, 2009 ~~interest~~and ~~payment~~November 15, 2009, interest payments on its 12% senior ~~notes~~ Notes due 2010 (the “Notes”). This non-payment of interest constitutes an event of default under the ~~indenture~~ Indenture governing the ~~senior notes~~Notes. ~~The Company is currently in discussions with certain of its debtholders~~ regarding these issues. As of July 31, 2009, the Company had negative working capital of approximately $218 million and a total deficit of approximately $30.1 million. The event of default, along with the Company’s history of recurring losses, negative working capital and limited access to capital, has raised substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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

The Company is currently in discussions with certain of its debtholders regarding these issues. As of December 31, 2009, the Company had negative working capital of approximately $229.0 million and a total deficit of approximately $40.3 million.

The event of default, along with the Company’s history of recurring losses, negative working capital and limited access to capital, has raised substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Historically, IMG Resort and Casino has not generated sufficient cash flow from operations to satisfy its capital requirements and relied upon debt financing arrangements to satisfy such requirements. The current cash flows and capital resources may force IMG Resort and Casino to reduce or delay activities and capital expenditures if IMG Resort and Casino is unable to refinance its debt. In the event that IMG Resort and Casino is unable to refinance or restructure its debt, IMG Resort and Casino will be left without sufficient liquidity and IMG Resort and Casino will not be able to meet the debt service requirements and repayment obligations.

The Tribe has been exploring the potential to refinance the Notes. If the refinancing transaction fails to close on or before the maturity date of the outstanding Notes, the existing noteholders have certain rights under the Notes. If the existing noteholders pursue those rights upon the collateral securing the Notes; our financial viability may be materially and adversely impacted, and we may be forced to: (1) negotiate with the noteholders regarding the restructuring of the Notes; (2) sell some or all of the assets to satisfy our obligations under the Notes; or (3) pursue other alternatives available through formal proceedings, any of which would cause the business to suffer.

Reclassifications

Certain reclassifications have been made in the prior year’s consolidated financial statements to conform to the current presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates included in the accompanying financial statements relate to the liability associated with the unredeemed Apache Spirit Club points, the estimated lives of depreciable assets, the determination of bad debt, inventory reserves, asset impairment and the capitalization of construction bond interest costs. Actual results could differ from those estimates.

Cash and Cash Equivalents

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

Accounts Receivable

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

Inventories

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

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

Inventories

Property, Plant and Equipment

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

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

Non —gaming equipment, furniture and other		3 -— 15 years
Gaming equipment		5 -— 7 years
Leasehold and land improvements, lake and golf course		5 -— 30 years
Buildings, lifts and snowmaking equipment		10 -— 39 years

Deferred Financing and Refinancing Costs

Debt issuance costs incurred in connection with the issuance of the Resort Project financing were capitalized and are being amortized to interest expense using the straight-line method over the stated maturity of the debt, which approximates the effective interest method. Unamortized deferred financing costs totaled $2.81 million as of ~~April~~September 30, 2009 and $31.06 million as of ~~July~~December 31, ~~2009, of~~ ~~which $576,451 was capitalized in association with the refinancing transaction described above during the quarter ended July 31,~~ 2009 ~~but are not currently being amortized~~.

Impairment of Long Lived Assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Accounting Standards FASB ASC 360-10, Property, Plant and Equipment, (prior authoritative literature: SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets) (“FASB ASC 360-10 (SFAS No. 144)”), which established the approach to be used in the determination of impairment. Under the provisions of FASB ASC 360-10 (SFAS No. 144), a long-lived asset to be abandoned is disposed of when it ceases to be used. If an entity commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, depreciation estimates shall be revised to reflect the use of the asset over its shortened useful life.

~~Under~~During the ~~provisions~~three ofmonths ~~SFAS~~ended ~~144~~December 31, a2008, ~~long-lived~~IMG ~~asset~~Resort toand beCasino ~~abandoned~~recorded isa ~~disposed~~gain ofon ~~when it ceases~~disposal toof beassets ~~used.~~of If$2,563 anrelated ~~entity commits~~ to astorm ~~plan~~damage. toDuring ~~abandon~~the athree ~~long-lived~~months ~~asset~~ended ~~before~~December 31, ~~the~~2009, ~~end of its~~IMG ~~previously~~Resort ~~estimated~~and ~~useful~~Casino ~~life,~~recorded ~~depreciation~~other ~~estimates~~expenses ~~shall~~of be$0 ~~revised~~related to ~~reflect~~storm ~~the~~damage. ~~use~~(See ofNote ~~the~~11) ~~asset over its shortened useful life.~~

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, bank financing facilities and capital lease obligations approximate fair value.

The fair value of IMG Resort and Casino’s senior notes were approximately $28.0 million at July 31, 2009, versus $200.0 million recorded value, based on the most recent quoted market price. The notes are not heavily traded, and price quotes ranged from $41.00 to $14.00 during the quarter ended July 31, 2009.

Contributed Capital

Contributed capital represents contributions from the Tribe and consists of (i) cash to fund certain construction and development of the Resort Project, (ii) forgiveness of debt from the Inn to the Tribe and (iii) allocated costs related to the Mescalero Apache Tribe Defined Benefit Plan (see Note 7). For the quarter ended July 31, 2009, IMG Resort and Casino distributed $8.0 million to the Tribe.

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

Fair Value of Financial Instruments

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, bank financing facilities and capital lease obligations approximate fair value. The fair value of IMG Resort and Casino’s senior Notes were approximately $84.0 million at December 31, 2009, versus $200.0 million recorded value, based on the most recent quoted market price. The Notes are not heavily traded, and price quotes ranged from $45.88 to $40.00 during the three months ended December 31, 2009.

Contributed Capital

Contributed capital represents contributions from the Tribe and consists of (i) cash to fund certain construction and development of the Resort Project, (ii) forgiveness of debt from the Inn to the Tribe and (iii) allocated costs related to the Mescalero Apache Tribe Defined Benefit Plan (see Note 7). For the three months ended December 31, 2009 IMG distributed $2.0 million to the Tribe which is being held in a reserve account. The accumulated reserve is $13.0 million as of December 31, 2009.

Revenues

In accordance with gaming industry practice, the Casino recognizes casino revenue as the net win from gaming activities, which is the difference between gaming wins and losses. Gaming revenues are net of accruals for anticipated payouts of progressive slot jackpots and table games. Such anticipated jackpot payments are reflected as accrued expenses in the accompanying consolidated balance sheets. The total accrual for jackpots and progressives was approximately $~~271~~150,000 and $~~213~~71,000 at ~~April~~September 30, 2009 and ~~July~~December 3130, 2009, respectively.

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

Promotional Allowances

IMG Resort and Casino periodically rewards rooms and other promotions, including Apache Spirit Club points and gift certificates, to its customers. The retail value of these player rebates ~~are~~is recognized by IMG Resort and Casino as a reduction from gross revenue. The total vouchers recognized by IMG Resort and Casino were approximately $~~257~~172,~~000~~511 and $~~173~~238,~~000~~881 for the three months ended ~~July~~December 31, 2008 and 2009, respectively. The Casino’s Apache Spirit Club allows customers to earn “points” based on the volume of their gaming activity. These points are redeemable for certain promotion dollars, complimentary services or merchandise. Points are accrued based upon their historical redemption rate multiplied by the cash value or the cost of providing the applicable complimentary services. The player’s club point liability is included in accrued expenses and totaled $884,821 at September 30, 2009 and $805,545 at December 31, 2009.

The Casino’s Apache Spirit Club allows customers to earn “points” based on the volume of their gaming activity. These points are redeemable for certain complimentary services or merchandise. Points are accrued based upon their historical redemption rate multiplied by the cash value or the cost of providing the applicable complimentary services. The player’s club point liability is included in accrued expenses and totaled $1,153,398 at April 30, 2009 and $1,091,394 at July 31, 2009.

Emerging Issues Task Force (“EITF”) Issue No. 00-14, Accounting for Certain Sales Incentives requires that discounts which result in a reduction in or refund of the selling price of a product or service in a single exchange transaction be recorded as a reduction of revenues. IMG Resort and Casino adopted EITF 00-14 on April 30, 2001. IMG Resort and Casino’s accounting policy related to free or discounted food and beverage and other services already complies with EITF 00-14, and those free or discounted services are generally deducted from gross revenues as “promotional allowances.” In January 2001, the EITF reached a consensus on certain issues related to Issue No. 00-22, Accounting for “Points” and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Reproduces, or Services to be delivered in the future. Effective January 1, 2001, IMG Resort and Casino, through its wholly-owned subsidiaries adopted EITF 00-22, which requires that cash or equivalent amounts provided or returned to customers as part of a transaction not be shown as an expense, but instead as an offset to the related revenue.

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

~~The~~Emerging ~~estimated~~Issues ~~retail~~Task ~~cost~~Force (“EITF”) FASB ASC 605-50, Revenue Recognition, Customer payments and Incentives (prior authoritative literature: FASB EITF Issue No. 00-14, Accounting for Certain Sales Incentives (“FASB ASC 605-50 (FAS Issue No. 00-14)”), requires that discounts which result in a reduction in or refund of ~~providing~~the ~~such~~selling price of a product or service in a single exchange transaction be recorded as a reduction of revenues. IMG Resort and Casino adopted FASB ASC 605-50 (FAS Issue No. 00-14) on April 30, 2001. IMG Resort and Casino’s accounting policy related to free or discounted ~~allowances~~food and beverage and other services already complies with FASB ASC 605-50 (FAS Issue No. 00-14), and those free or discounted services are generally deducted from gross revenues as “promotional ~~they~~allowances.” ~~relate~~In January 2001, the EITF reached a consensus on certain issues related to ~~operations~~Issue No. 00-22, Accounting for “Points” and Certain Other Time-Based or Volume-Based Sales ~~was~~Incentive ~~included~~Offers, and Offers for Reproduces, or Services to be delivered in ~~casino~~the ~~expenses~~future. Effective January 1, 2001, IMG Resort and Casino, through its wholly-owned subsidiaries adopted EITF 00-22, which requires that cash or equivalent amounts provided or returned to customers as ~~follows:~~part of a transaction not be shown as an expense, but instead as an offset to the related revenue.

	Quarter ended July 31,
	2008			2009
Rooms	$	25,792		$	55,272
Food and beverage		159,905			198,252
Other		(20	)		(265	)
Retail	$	185,677		$	253,259

The estimated cost of providing such promotional allowances, as they relate to operations, was included in casino expenses as follows:


	The three months ended December 31,
	2008		2009
Rooms	$	18,558	$	16,823
Food and beverage		143,651		208,148

	$	162,209	$	224,971

Marketing

IMG Resort and Casino’s marketing costs to outside parties are expensed as incurred and for the three months ended ~~July~~December 31, 2008 and 2009 were $1.8 million and $2.3 million, respectively.

Tribal Taxes

IMG Resort and Casino is subject to Mescalero Apache Tribal taxes aswhich ~~long~~employs asan ~~its enterprises are not subject to New~~alternative ~~Mexico~~minimum ~~State~~tax ~~Gross Receipts Tax~~system. ~~IMG~~Other ~~Resort and Casino operations, other~~ than a portion of the operations at Ski Apache, ~~are~~IMGRC’s operations are not subject to ~~the~~ New Mexico State Gross Receipts Tax. A Tribal tax charge of 10.75% of room revenue, 6.75% of food and beverage revenue, and 6.5% of other revenue is charged at non-Ski Apache outlets. Under ~~There~~the istribe’s ~~also~~alternative aminimum ~~Tribal~~tax ~~excise~~system, ~~tax~~IMGRC ~~that~~is ~~equals~~assessed the ~~difference between~~greater of a fixed rate of $200,000 ~~per~~or ~~month~~the ~~and~~amount ~~the~~collected ~~total~~from ofsales ~~the~~taxes ~~non-Ski~~on ~~Apache~~a ~~taxes~~per ~~collected, should~~month basis. In prior periods the taxes collected bewere ~~less~~included ~~than~~in ~~$200,000~~net ~~per~~revenue ~~month.~~and ~~The~~tax ~~related~~payments ~~tax~~included ~~ordinances~~in ~~are~~expenses ~~unclear~~ as opposed to ~~what~~being recorded ~~happens~~as ~~when~~a ~~the~~liability ~~amount~~and ~~collected~~subsequent ~~from~~release ~~sales~~of isthe ~~greater~~liability. ~~than $200~~Currently,~~000~~ ~~per~~taxes ~~month.~~are being ~~Additionally,~~collected ~~the~~and ~~taxes~~recorded ~~collected~~as ~~are~~a ~~included~~liability inon ~~net~~IMGRC’s ~~revenue~~balance sheet and ~~tax~~are ~~payments~~no ~~are~~longer included in net ~~expenses~~revenue. asExcess ~~opposed~~tax toamounts ~~being~~due ~~recorded~~under asthe aalternative ~~liability~~minimum ~~and~~tax ~~subsequent~~system ~~release~~are ofexpensed in the ~~liability~~month they are due. The tax payment is made at the beginning of the month ofin ~~the~~which ~~same month that~~ the taxes are being collected. ~~IMG~~For ~~Resort and Casino has recorded and paid~~ the ~~Tribe $600,000 for the~~ three months ended ~~July~~December 31, ~~2008 and~~ 2009., ~~The~~IMGRC ~~amount~~collected of$444,986 in taxes, ~~collected~~paid the ~~from~~$600,000 ~~sales~~alternative ~~materially~~minimum ~~approximates~~tax ~~the amount~~due, ~~paid~~and torecorded ~~the~~$155,014 ~~Tribe~~in ~~each~~alternative ~~month~~minimum tax expense.

Classification of Departmental Costs

Gaming direct costs are comprised of all costs of the Resorts’ gaming operation, including labor costs employed in gaming departments, casino-based supply costs and other direct operating costs of the casinos (including costs in operating our player’s club). Food and beverage direct costs are comprised of all costs of the Resorts’ food and beverage operations, including labor costs for personnel employed by the Resorts’ restaurants and food and beverage, supply costs for all food and beverages served in the casinos or sold in the Resorts’ restaurants and other food outlets and other expenses including other direct operating expenses related to these activities. General and administrative direct costs are comprised of administrative expenses at our headquarters, including the salaries of corporate officers, accounting, finance, legal and other professional expense and occupancy, facilities, utility costs and other indirect costs not included in the direct costs of our operating departments.

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

The following chart highlights IMGRC’s tribal tax activity for the three months ended December 31, 2009.


	Three Months Ended
	December 31, 2009
Alternative minimum tax due	$	600,000
Total taxes collected		(444,986	)

Alternative minimum tax expensed	$	155,014

Classification of Departmental Costs

Gaming direct costs are comprised of all costs of the Resorts’ gaming operation, including labor costs employed in gaming departments, casino-based supply costs and other direct operating costs of the casinos (including costs in operating our player’s club). Food and beverage direct costs are comprised of all costs of the Resorts’ food and beverage operations, including labor costs for personnel employed by the Resorts’ restaurants and food and beverage, supply costs for all food and beverages served in the casinos or sold in the Resorts’ restaurants and other food outlets and other expenses including other direct operating expenses related to these activities. General and administrative direct costs are comprised of administrative expenses at our head quarters, including the salaries of corporate officers, accounting, finance, legal and other professional expense and occupancy, facilities, utility costs and other indirect costs not included in the direct costs of our operating departments.

Income Taxes

As unincorporated enterprises of the Tribe, IMG Resort and Casino and its subsidiaries are exempt from federal and state income taxes.

New Accounting Pronouncements

InThe ~~September 2006,~~adjustment ~~the~~to ~~Financial~~reflect ~~Accounting~~the ~~Standards~~difference ~~Board~~between ~~(“FASB”)~~the ~~issued~~fair ~~SFAS~~value ~~No. 157~~and ~~Fair~~the ~~Value Measurements~~current ~~(“SFAS~~carrying ~~157”).~~amount ~~SFAS 157 provides a new single authoritative definition~~ of the ~~fair~~assets ~~value~~ and ~~provides~~liabilities ~~enhanced~~for ~~guidance~~which ~~for~~a ~~measuring~~company ~~the~~elects fair -value ofmeasurement ~~assets~~is ~~and~~reported ~~liabilities~~as ~~and requires~~a ~~additional~~cumulative-effect ~~disclosures~~adjustment ~~related~~ to the ~~extent~~opening tobalance ~~which~~of ~~companies~~retained ~~measure~~earnings ~~assets~~upon ~~and~~adoption. ~~liabilities at~~Companies ~~fair~~that ~~value,~~adopt ~~the~~FASB ~~information~~ASC ~~used~~825-10 to(SFAS ~~measure~~159) ~~fair~~early ~~value,~~must ~~and~~also ~~the~~adopt ~~effect~~all of ~~fair~~FASB ~~value~~ASC ~~measurements on~~825-10’s ~~earnings.~~ (SFAS 157) requirements ~~was~~at ~~effective for~~ the ~~Company~~early asadoption ofdate. ~~May 1,~~The ~~2008 and the~~ adoption of this standard did not have a material effect on IMG Resort and Casino’s financial statements.

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). SFAS 159 provides that companies may elect to measure specified financial instruments and warranty and insurance contracts at fair value on a contract-by-contract basis, with changes in fair value recognized in earnings each reporting period. The election, called the “fair value option,” will enable some companies to reduce the variability in reported earnings caused by measuring related assets and liabilities differently. Companies may elect fair-value measurement when an eligible asset or liability is initially recognized or when an event, such as a business combination, triggers a new basis of accounting for that asset or liability. The election is irrevocable for every contract chosen to be measured at fair value and must be applied to an entire contract, not to only specified risks, specific cash flows, or portions of that contract. SFAS 159 is effective as of the beginning of a company’s first fiscal year that begins after November 15, 2007. Retrospective application is not allowed. Companies may adopt SFAS 159 as of the beginning of a fiscal year that begins on or before November 15, 2007 if the choice to adopt early is made after SFAS 159 has been issued and within 120 days of the beginning of the fiscal year of adoption and the entity has not issued GAAP financial statements for any interim period of the fiscal year that includes the early adoption date. Companies are permitted to elect fair-value measurement for any eligible item within SFAS 159’s scope at the date they initially adopt SFAS 159. The adjustment to reflect the difference between the fair value and the current carrying amount of the assets and liabilities for which a company elects fair-value measurement is reported as a cumulative-effect adjustment to the opening balance of retained earnings upon adoption. Companies that adopt SFAS 159 early must also adopt all of SFAS 157’s requirements at the early adoption date. The adoption of this standard did not have a material effect on IMG Resort and Casino’s financial statements.

In April 2008, the FASB issued Staff Position FSP FAS 142-3,“Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3”). The FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets”. The intent of the FSP is to improve the consistency between the useful life of a recognized intangible asset under SFAS No. 142 and the period of expected cash flows used to measure the fair value of the asset under other accounting principles generally accepted in the United States of America. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. The company adopted SFAS No. 142 at the beginning of fiscal year 2010. The adoption did not have a significant effect on the Company’s financial statements.

In April 2009, the FASB issued FSP No. 107-1 and Accounting Principles Board Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments “(“FSP No. 107-1”). FSP No. 107-1 extends the disclosure requirements of SFAS No. 107, “Disclosures about Fair Value of Financial Instruments”, to interim period financial statements, in addition to the existing requirements for annual periods and reiterates SFAS No. 107’s requirement to disclose the methods and significant assumptions used to estimate fair value. FSP No. 107-1 is effective for interim and annual periods ending after June 15, 2009. The adoption of this statement did have a material impact on the Company’s consolidated financial position or results of operations.

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

In ~~May~~April ~~2009~~2008, the FASB issued ~~SFAS~~Staff ~~No. 165~~Position FASB ASC 350, ~~Subsequent~~Intangible- ~~Events.~~Goodwill and Other, (Prior authoritative literature: FASB SFAS ~~No. 165~~142-3: ~~establishes~~Determination ~~general standards~~of the Useful Life of ~~accounting~~Intangible ~~for~~Assets, issued ~~and~~April 2008) ~~disclosure~~(“FASB ofASC ~~events~~350 ~~that~~(FSP ~~occur~~FAS ~~after~~142-3)”). The FSP amends the ~~balance~~factors ~~sheet~~that ~~date,~~should ~~but~~be ~~before~~considered ~~financial~~in ~~statements~~developing ~~are~~renewal ~~issued~~ or ~~are~~extension ~~available~~assumptions used to bedetermine ~~issued.~~the ~~SFAS~~useful ~~No. 165~~life isof ~~effective for~~a ~~interim~~recognized ~~and~~intangible ~~annual~~asset ~~fiscal~~under ~~periods~~FASB ~~ending~~ASC ~~after~~350 ~~June~~(SFAS No. 15142), ~~2009~~“Goodwill and Other Intangible Assets”. The ~~Company~~intent isof ~~required~~the FSP is to ~~adopt~~improve ~~SFAS~~the consistency between the useful life of a recognized intangible asset under FASB ASC 350 (SFAS No. ~~165~~142) inand the ~~first~~period ~~quarter~~of expected cash flows used to measure the fair value of the asset under other accounting principles generally accepted in the United States of America. The FSP is effective for financial statements issued for fiscal ~~2010~~years beginning after December 15, 2008, and ~~does~~interim ~~not~~periods ~~expect~~within ~~that~~those fiscal years. Early adoption ofis prohibited. The company adopted FASB ASC 350 (SFAS No. ~~165~~142) ~~will~~at the beginning of fiscal year 2010. The adoption did not have a ~~material~~significant ~~impact~~effect on ~~its~~the ~~consolidated~~Company’s financial statements.

In ~~June~~April 2009, the FASB issued ~~SFAS~~FSP No. ~~168,~~107-1 ~~“the FASB Accounting Codification~~ and ~~the Hierarchy of Generally Accepted~~ Accounting Principles”, ~~Replaces~~Board ~~SFAS~~Opinion No. ~~162~~28-1, “Interim ~~establishes~~Disclosures ~~the~~about ~~sources~~Fair Value of ~~authoritative~~ ~~U.S.~~Financial ~~generally~~Instruments” ~~accepted~~(“FSP ~~accounting~~No.107-1”). ~~principles~~FASB ASC 825-10 (~~GAAP)~~FSP No. ~~recognized~~107-1) byextends the disclosure requirements of FASB toASC be825-10 (SFAS No. 107), “Disclosures ~~applied~~about byFair ~~nongovernmental~~Value ~~entities.~~of OnFinancial ~~the~~Instruments”, ~~effective~~to ~~date~~interim ~~for~~period financial statements, ~~issued~~in ~~for~~addition to ~~interim~~the ~~and~~existing requirements for annual periods ~~ending~~and ~~after~~reiterates ~~September~~FASB ASC 825-10’s (SFAS No. ~~15,~~107) requirement ~~2009,~~to disclose the ~~Codification~~methods ~~will~~and ~~supersede~~significant ~~all then-existing~~assumptions ~~non~~used ~~–SEC~~to ~~accounting~~estimate ~~and~~fair ~~reporting standards~~value. ~~SFAS~~FASB ASC 825-10 (FSP No. ~~168~~107-1) ~~became~~if effective onfor ~~July 1~~interim and annual periods ending after June 15, 2009. The adoption of ~~SFAS~~this ~~No. 168~~statement did ~~not~~ have a material ~~effect~~ impact on the Company’s consolidated financial position or results of operations ~~and financial position~~.

The FASB issued FASB FAS 855-10, Generally Accepted Accounting Principles (prior authoritative literature: FASB SFAS No. 165, Subsequent Events, issued May 2009) (“FASB ASC 105-10 (SFAS No. 165)”). FASB 105-10 (SFAS No. 165) establishes general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or are available to be issued. FASB 105-10 (SFAS No. 165) is effective for interim and annual fiscal periods ending after June 15, 2009. The Company is required to adopt FASB 105-10 (SFAS No. 165) in the first three months of fiscal 2010 and does not expect that adoption of FASB 105-10 (SFAS No. 165) will have a material impact on its consolidated financial statements.

The FASB issued FASB ASC 105-10, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (prior authoritative literature: FASB SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles, issued June 2009) (“FASB ASC 106-10-65 (SFAS No. 168)”), replaces SFAS No. 162, establishes the sources of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. On the effective date for financial statements issued for interim and annual periods ending after September 15, 2009, the Codification will supersede all then-existing non —SEC accounting and reporting standards. FASB ASC 106-10 (SFAS No. 168) is effective for fiscal years and interim periods ending after September 15, 2009. The adoption of FASB ASC 105-10 (SFAS 168) did not have a material impact on our consolidated financial statements.

NOTE 2—ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

The allowance for doubtful accounts was $3744,~~104~~538 asat ~~of April~~September 30, 2009 and $5796,~~669~~982 asat ~~of July~~December 31, 2009.

NOTE 3—INVENTORIES

Inventories consist of the following as of:

	April 30, 2009		July 31, 2009
Food and beverage	$	240,183	$	229,027
Golf and pro shop		60,962		93,813
Gift shops, fuel and other		488,419		547,840
Inventories, net of reserves	$	789,564	$	870,680

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

NOTE 3—INVENTORIES

Inventories consist of the following as of:


	September 30, 2009		December 31, 2009
Food and beverage	$	237,361	$	244,026
Golf and pro shop		65,853		50,654
Gift shops, fuel and other		559,037		608,910

Inventories, net of reserves	$	862,251	$	903,590

NOTE 4—PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment is summarized as follows:

	April 30, 2009			July 31, 2009
	September 30, 2009			December 31, 2009
Land	$	1,000,473		$	1,000,473
Buildings		~~212~~210,~~103~~005,~~949~~387			~~212~~216,~~103~~396,~~949~~686
Lifts and Snowmaking equipment		68,~~394~~493,~~805~~368			65,~~394~~686,~~805~~867
Non-gaming equipment, furniture and other		52,~~513~~480,~~112~~709			52,~~497~~580,~~274~~605
Gaming equipment		2122,~~807~~470,~~497~~190			22,~~281~~550,~~747~~738
Leasehold and land improvements, lake and golf course		11,075,633			11,075,633
Subtotal		~~304~~305,~~895~~525,~~469~~760			~~305~~309,~~353~~291,~~881~~002
Less accumulated depreciation and amortization		(~~114~~119,~~666~~375,~~272~~209	)		(~~117~~122,~~624~~419,~~698~~554	)
Property, plant and equipment, net		~~190~~186,~~229~~150,~~197~~551			~~187~~186,~~729~~871,~~183~~448
Construction in progress (CIP)		2,709,800			2,963,342
Construction in progress		2,915,834			523,547
Net Property, plant and equipment	$	~~192~~189,~~938~~066,~~997~~385		$	~~190~~187,~~692~~394,~~525~~995

NOTE 5—LONG-TERM DEBT

On November 3, 2003, IMG Resort and Casino issued $200.0 million of its 12% Senior Notes (the “Notes”). The Notes bear interest at 12% per year, payable on May 15 and November 15 of each year, beginning on May 15, 2004. The Notes will mature on November 15, 2010. The Notes may be redeemed at any time on or after November 15, 2007 at fixed redemption prices plus accrued and unpaid interest, if any. If a change in control occurs, holders of the Notes will have the right to require the repurchase of their Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any. The Notes are guaranteed by all of IMG Resort and Casino’s subsidiaries.

The ~~indenture~~Indenture governing the Notes (the “Indenture”) contains covenants that limit, among other things, IMG Resort and Casino and the guarantors’ ability to pay dividends and make distributions to the Tribe; make investments; incur additional debt; create liens; sell equity interests in subsidiaries; enter into transactions with affiliates; enter into sale and leaseback transactions; engage in other businesses; transfer or sell assets; and merge or consolidate with or into other entities.

The Company did not make the scheduled $12.0 million interest ~~payment~~payments on the Company’s Notes on May 15, 2009 and November 15, 2009. Under the terms of the ~~indenture governing the Notes (the “~~Indenture”), the Company had a 30 day grace period with respect to ~~the~~each interest payment but did not make ~~this~~these ~~payment~~payments. Failure to make the interest ~~payment~~payments on or before June 15, 2009 ~~constitutes~~and anDecember 15, ~~event~~2009 constituted separate events of default under the Indenture. Upon the occurrence of an event of default, the trustee or holders of at least 25% of the outstanding principal amount of the Notes could declare all of the Notes ~~immediately due~~ and payable. Pursuant to the indenture, we are obligated to pay interest on overdue installments of interest payable on the Notes at a rate equal to 13% per annum (1% per annum in excess of the then applicable annual interest rate on the Notes). The Tribe has engaged a financial advisor, to begin discussions with bondholders related to restructuring the Notes. If the Notes are declared immediately due and payable~~, it would constitute a default under the terms of the Company’s furniture and equipment loan and the lenders thereunder could declare the outstanding loan to be immediately due and payable~~. ~~Although the furniture and equipment loans are not technically in~~ default, the Company entered into forbearance agreements with its lenders whereby the lenders agreed to forebear existing rights and remedies in the event of default (see below). Due to the event of default, the Notes have been classified as current in the accompanying consolidated balance sheet.

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

OnPursuant ~~June 15,~~to ~~2004~~the Indenture, ~~IMG~~we ~~Resort~~are ~~and~~obligated ~~Casino~~to ~~entered~~pay ~~into~~penalty ainterest ~~$15.0 million~~on ~~fixed~~overdue ~~credit~~principal ~~facility~~at ~~with an~~the ~~equipment~~rate ~~finance~~equal ~~company.~~to ~~The~~1% ~~fixed~~per ~~credit~~annum ~~facility~~in isexcess ~~fully~~of ~~amortizable~~the ~~over~~applicable ~~five years and bears fixed~~ interest ~~rates~~rate ~~ranging~~on ~~from 7.55% to 8.18%. Proceeds from~~ the ~~loan~~Notes ~~were used to fund furniture~~(12%), ~~fixtures~~ and ~~equipment~~to ~~for the Resort. Although the furniture and equipment loans are~~pay ~~not~~interest ~~technically~~on inoverdue ~~default,~~installments ~~the~~of ~~Company~~interest ~~entered~~payable ~~into~~on ~~forbearance agreements with its lenders whereby~~ the ~~lenders~~Notes ~~agreed~~at ~~to forebear existing rights and remedies in~~ the ~~event~~same ~~of default~~rate. As of ~~April 30,~~ ~~2009 and July~~ December 31, 2009, ~~$4.2 million~~the ~~and~~interest ~~$3.4 million,~~accrued ~~respectively,~~as ~~remained~~a ~~outstanding on~~result ~~this~~was ~~facility~~$1,335,000.

~~Long-term~~The ~~debt~~Tribe athas ~~April 30~~engaged a financial advisor, ~~2009~~and is in discussions with bondholders related to restructuring the Notes. If the Notes are declared immediately due and ~~July 31~~payable, ~~2009~~it iswould ~~summarized~~constitute a default under the terms of the Company’s furniture and equipment loan and the lenders thereunder could declare the outstanding loan to be immediately due and payable. Due to the events of default, the Notes have been classified as ~~follows:~~current in the accompanying consolidated balance sheet.

	April 30, 2009			July 31, 2009
Senior Notes, bearing interest at a fixed rates of 12%, maturing in 2010	$	200,000,000		$	200,000,000
Bureau of Indian Affairs, unsecured notes payable with payments of $27,100 per month, including interest at 8.5%, maturing in 2011		673,505			606,209
Capital Equipment Loans,Three (3)to Five (5) year terms, interest ranging from 7.55% to 9.9%		4,248,372			3,361,045
		204,921,877			203,967,254
Less current portion		(203,931,091	)		(203,474,802	)
Long-term portion	$	990,786		$	492,452

On June 15, 2004, IMG Resort and Casino entered into a $15.0 million fixed credit facility with an equipment finance company. The fixed credit facility is fully amortizable over five years and bears fixed interest rates ranging from 7.55% to 8.18%. Proceeds from the loan were used to fund furniture, fixtures and equipment for the Resort. As of September 30, 2009 and December 31, 2009, $2.5 million and $1.6 million, respectively, remained outstanding on this facility.

~~The maturities of long~~Long-term debt asat ofSeptember 30, ~~July~~2009 and December 31, 2009 ~~are~~is summarized as follows:

2010	$	202,976,468
	September 30, 2009			December 31, 2009
2011		847,467
Senior Notes, bearing interest at a fixed rate of 12%, maturing in 2010	$	200,000,000		$	200,000,000
2012		143,319
Bureau of Indian Affairs, unsecured notes payable with payments of $27,100 per month, including interest at 8.5%, maturing in 2011		560,554			490,628
	$	203,967,254
Capital Equipment Loans with Key Equipment, Five (5) year term, 7.65% interest		2,519,922			1,631,995
Xerox (3) year term,		240,080			211,165
Total		203,320,556			202,333,788
Less current portion		(202,924,922	)		(201,995,343	)
Long-term portion	$	395,634		$	338,445

The maturities of long-term debt as of December 31, 2009 are as follows:


2010	$	201,995,343
2011		338,445

	$	202,333,788

NOTE 6—GAMING REVENUE SHARING AND REGULATORY FEES

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

On June 1, 2004 the Tribe and the State of New Mexico (the “State”) entered into a Tribal-State ~~Compact~~ Compact (the “Compact”) to govern gaming on the Mescalero Apache Reservation. The terms of the Compact subject the Casino to various regulatory fees and revenues sharing payable to the State.

On June 22, 2004, the Department of the Interior approved the 2001 Compact. The 2001 Compact provides for a revenue sharing amount equal to 8% of “net win” from gaming machines, payable no later than 25 days after the last day of each calendar quarter and an annual regulatory fee of $100,000 paid in quarterly installments of $25,000 on the first day of each calendar quarter. As of April 30, 2009 and July 31, 2009, the amount payable to the State was $392,817 and $568,992, respectively, for regulatory fees.

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

On June 22, 2004, the Department of the Interior approved the 2001 Compact. The 2001 Compact provides for a revenue sharing amount equal to 8% of “net win” from gaming machines, payable no later than 25 days after the last day of each calendar month and an annual regulatory fee of $100,000 paid in quarterly installments of $25,000 on the first day of each calendar month. As of September 30, 2009 and December 31, 2009, the amount payable to the State was $1,546,113 and $1,162,156, respectively, for regulatory fees.

NOTE 7 — EMPLOYEE BENEFITS

In connection with the issuance of the original ~~notes~~Notes, IMG Resort and Casino and the Tribe entered into an employee benefits cost allocation agreement (see Note 10), which provides that the Tribe will continue to provide IMG Resort and Casino and its resort enterprises with certain employee benefits in accordance with past practice, including group health benefits, worker’s compensation insurance, disability insurance, unemployment benefits and pension benefits. IMG Resort and Casino ~~reimburses~~ reimburses the Tribe for its employees’ direct costs for coverage as billed by the third party.

On May 1, 2009, the Tribe suspended ~~IMG~~the ~~Resort and Casino’s matching of employee contributions up to~~ 4% inmatching ~~the~~contribution ~~Tribe sponsored 401(k) savings plan,~~ as a cost saving measure. The total amount of match made by IMG Resort and Casino was $~~226~~214,~~683~~300 for the ~~quarter~~three ~~ended~~months ~~July~~ended December 31, 2008 and $0 for the ~~quarter~~three months ended ~~July~~December 31, 2009. The IRS sets the maximum allowed each year for qualified 401(k) plans. The maximum the IRS allows for an employee deferral amount for 2008 and 2009 for an employee, who is under 50 years old, is $15,500, and for an employee who is over 50 years old, is $20,500.

NOTE 8 — RISK MANAGEMENT

IMG Resort and Casino manages the exposure to the risk of most losses through various commercial insurance policies. There have been no reductions in insurance coverage. Settlement amounts have not exceeded insurance coverage for the period ended ~~July~~December 31, 2009.

The Tribe is self —-insured for employee health and accident insurance. IMG Resort and Casino’s employees are covered by the Tribe’s policy and remit amounts to the Tribe for their share of the self-insurance costs. The total amounts reimbursed to the Tribe were approximately $864,230 and $694,197 for the three months ended December 31, 2008 and 2009, respectively.

The total amounts reimbursed to the Tribe were approximately $849,000 and $846,401 for the three months ended July 31, 2008 and 2009, respectively.

The Tribe maintains worker’s compensation insurance coverage under a retrospective rated policy whereby premiums and catastrophic cases are accrued based on the loss experience of the Tribe and its various enterprises. The IMG Resort and Casino’s employees are covered under this plan. Under this policy, premiums may be adjusted at the end of the coverage period based on loss experience for the coverage period. Management of the Tribe and the IMG Resort and Casino have monitored their claims and loss experiences. Workers compensation insurance coverage, combined with the Tribe and IMG Resort and Casino’s causality and liability claims, have been below projected levels and properly accrued for.

NOTE 9 — COMMITMENTS AND CONTINGENCIES

Legal Matters

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

Occupancy Fee

A special use permit was obtained from the United States Department of Agriculture Forest Service for Ski Apache’s use of 80 acres of land in Lincoln National Forest. The permit is dated April 23, 1985, and has a term of 30 years with an annual occupancy fee based on revenue and gross fixed assets. Occupancy fees for the three months ended July 31, 2008 and July 31, 2009 were $0 and $24,712, respectively.

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

Occupancy Fee

A special use permit was obtained from the United States Department of Agriculture Forest Service for Ski Apache’s use of 80 acres of land in Lincoln National Forest. The permit is dated April 23, 1985, and has a term of 30 years with an annual occupancy fee based on revenue and gross fixed assets. Occupancy fees for the three months ended December 31, 2008 and December 30, 2009 were $29,317 and $14,191 respectively.

Employment Agreements

The ~~Company~~Board ~~entered~~for ~~into~~IMG anhas ~~agreement~~discontinued ~~with Ms. Pamela Gallegos on August 1, 2008 whereby Ms. Gallegos agreed to serve as Director of Finance of~~ the ~~Company~~practice ~~from August 7, 2008 through July 31, 2010 and the Company agreed to pay Ms. Gallegos an annual base salary~~ of ~~$176,000.~~employment ~~Ms. Gallegos was~~agreements ~~allowed to participate in all employee benefit plans and programs. The agreement also provided that Ms. Gallegos may receive one month of severance~~ for ~~every three full months of employment with~~ the ~~Company~~ ~~up to twelve months total. Ms. Gallegos left the~~ Company ~~as of July 10, 2009~~. ~~On August~~ ~~23, 2009, IMG Resort and Casino’s management board declined to mediate the employment agreement.~~

Consulting Agreement and Management Agreement

On ~~February~~January 136, ~~2009~~2010, Inn of the ~~IMG~~Mountain Gods Resort and Casino ~~executed~~(the “Registrant”), a ~~consulting~~tribal enterprise ~~agreement,~~wholly-owned ~~dated~~by ~~February 10, 2009~~the Mescalero Apache Tribe (~~“Consulting~~the ~~Agreement~~“Tribe”), ~~with~~ a ~~subsidiary~~federally-recognized ofIndian tribe, ~~Warner~~along ~~Gaming~~with the Registrant’s tribally-chartered subsidiaries, ~~LLC~~Casino Apache Travel Center and Ski Apache (collectively, the “~~Consultant~~Tribal Parties”)., ~~The Consulting~~entered ~~Agreement~~into ~~provides~~a ~~that~~management agreement (the “Management ~~Consultant~~Agreement”) ~~will~~with WG-IMG, ~~over~~LLC (the ~~three-year~~“Manager”), ~~term~~a Nevada limited liability company. The majority owner of the ~~Consulting Agreement~~Manager, ~~evaluate~~William ~~and~~W. ~~make~~Warner, ~~recommendations~~and ~~with~~the ~~respect~~Tribe toeach ~~the~~signed ~~following~~a ~~operations~~joinder atto the ~~IMG~~ ~~Resort~~Management ~~and~~Agreement. ~~Casino:~~The ~~gaming~~Management ~~operations~~Agreement ~~and~~became ~~related~~effective ~~marketing,~~following ~~non-gaming~~approval ~~marketing~~by ~~programs,~~the ~~hotel~~National ~~and~~Indian ~~other~~Gaming ~~operations,~~Commission ~~food~~(“NIGC”) ~~and~~in ~~beverage~~a ~~operations,~~letter ~~human~~dated ~~resources~~January 19, ~~and finance and accounting~~2010.

The ~~Company,~~Management ~~the~~Agreement ~~Subsidiaries~~grants ~~and~~the Manager the ~~Consultant~~exclusive ~~currently~~right ~~intend~~and obligation to ~~replace~~manage, ~~the Consulting~~operate ~~Agreement~~and ~~with~~maintain athe ~~Management~~casino ~~Agreement~~and ~~which~~other ~~will~~businesses ~~allow~~of the ~~Consultant~~Registrant toand ~~actively~~its ~~manage~~subsidiaries ~~all~~and to train ~~aspects~~the ofTribe in the ~~operations~~operation (and maintenance thereof during the “term of the Management Agreement”). The ~~Consulting~~Manager ~~Agreement~~has ~~became~~a ~~effective~~duty to physically maintain the facilities, operate the facilities consistent ~~February 13~~with “4-star/4-diamond” hospitality standards, ~~2009~~pay bills and expenses, advertise and ~~terminates~~provide security. onThe ~~February 18,~~Manager ~~2012,~~may ~~upon~~enter ~~the~~into ~~approval~~contracts byon behalf of the ~~National~~Registrant ~~Indian~~or its subsidiaries ~~Gaming~~provided ~~Commission~~that ~~(the~~it ~~“NIGC”)~~receives ofapproval ~~the~~in ~~Management~~advance ~~Agreement~~for contracts with a value, or ~~upon~~potential exposure, in excess of $50,000 from the ~~occurrence~~management board of ~~certain~~the ~~other events~~Registrant, as ~~set~~selected ~~forth~~by in the ~~Consulting~~Tribe ~~Agreement~~(the “Management Board”). ~~Unless~~The ~~and~~Manager ~~until~~is entitled to receive a management fee for its services under the Management Agreement. This management fee is ~~approved~~ bycalculated based on the ~~NIGC,~~EBITDA ~~IMG~~of ~~Resort~~the ~~and~~businesses of ~~Casino~~the ~~will~~Registrant, ~~continue~~but toshall ~~manage~~be ~~the~~no ~~day-to-day~~less ~~operations~~than $60,000 per month.

The term of the Management Agreement is five years from the date the NIGC approved the Management Agreement. The Tribal Parties may terminate the Management Agreement if, among other things, the Manager breaches the Management Agreement, including a change of ownership of the Manager. After two years, the Registrant may terminate the Management Agreement by paying the Manager an amount equal to the discounted value of the future fees the Manager was entitled to receive under the Management Agreement. The Manager may terminate the Management Agreement if, among other things, a Tribal Party fails to pay any amount due to the Manager, if a Tribal Party breaches the Management Agreement, or if the Manager does not receive its minimal monthly fee for three consecutive months. The Manager also has the right to terminate the Management Agreement within 60 days of a legally required suspension of gaming operations.

The foregoing description of the Management Agreement is not complete and is subject to and qualified in its entirety by reference to the Management Agreement, a copy of which is attached as Exhibit 33.1 and is incorporated herein by reference.

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

NOTE 10—RELATED-PARTY TRANSACTIONS

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

The Tribe provides certain shared services which it administers for all of its enterprises. IMG Resort and Casino uses Mescalero Apache Telecommunications for some of its telecommunications related services. IMG Resort and Casino paid Mescalero Apache Telecommunications approximately $5132,~~000~~191 and $49,~~000~~992 for the three months ended ~~July~~December 31, 2008 and 2009, respectively.

Shared Services and Cost Allocations

In connection with the issuance of the original ~~notes~~Notes, IMG Resort and Casino and the Tribe entered into a service and cost allocation agreement, which provides that the Tribe or its enterprises will continue to provide IMG Resort and Casino and its resort enterprises the following services in accordance with past practice: (i) insurance; (ii) telecommunications; (iii) propane; and (iv) gaming regulation, and that IMG Resort and Casino and its resort enterprises will pay, on behalf of the Tribe, for (a) revenue sharing and regulatory fee obligations required under the 2001 Compact or any new compact, (b) federal regulatory fees required by IGRA, (c) an amount equal to the monthly payments required under the BIA Note (See Note 5) and (d) amounts for certain other miscellaneous liabilities. IMG Resort and Casino reimburses the Tribe for its direct costs as billed by the third party.

16Employee Benefits Cost Allocations

In connection with the issuance of the original Notes, IMG Resort and Casino and the Tribe entered into an employee benefits cost allocation agreement, which provides that the Tribe will continue to provide IMG Resort and Casino and its resort enterprises with certain employee benefits in accordance with past practice, including group health benefits, worker’s compensation insurance, disability insurance, unemployment benefits and pension benefits. IMG reimburses the Tribe for its employees’ direct costs for coverage as billed by the third party.

The Tribe provides employee benefits to the IMG Resort and Casino, which reimburses the Tribe for all costs and expenses associated with this health and dental insurance. IMG Resort and Casino paid the Tribe $864,230 and $694,197 for the three months ended December 31, 2008 and 2009, respectively.

NOTE 11—INSURANCE RECOVERIES

In late July 2008, the remnants of Hurricane Dolly brought torrential rain and caused significant flash flood damage at Ski Apache and the Inn of the Mountain Gods Championship Golf Course, damaging buildings, land, and equipment. A majority of assets that were damaged or destroyed were fully or nearly fully depreciated. IMG Resort and Casino’s insurance carrier agreed to provide approximately $5.0 million of coverage for the damage that occurred as a result of the flooding. Additionally, FEMA had deemed the area a Federal Disaster area and has assured financial assistance of at least the deductible on our insurance policy.

For the three months ended December 31, 2009, IMG Resort and Casino has incurred approximately $0 in costs associated with the storm recovery compared to $232,022 for the three months ended December 31, 2008, which includes payroll, supplies and immediate repairs.

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

~~Employee~~On ~~Benefits~~September 4, ~~Cost~~2008, ~~Allocations~~IMG Resort and Casino’s insurance carrier agreed to provide at least $1.1 million of coverage for the damage that occurred as a result of the flooding. Additionally, FEMA deemed the area a Federal Disaster area and has assured financial assistance of at least the deductible on our insurance policy, which is $100,000. Any further proceeds will be used to replace damaged equipment, building and land and will be capitalized to property and equipment.

InOn ~~connection with~~ the ~~issuance~~morning of ~~the~~November 7, ~~original notes~~2008, ~~IMG~~Ski ~~Resort~~Apache ~~and~~experienced ~~Casino~~a ~~and~~fire. ~~the~~The ~~Tribe~~fire ~~entered into~~was anconfined ~~employee~~to ~~benefits~~a single ~~cost~~metal ~~allocation~~building ~~agreement,~~used ~~which~~largely ~~provides~~for ~~that~~maintenance ~~the~~and ~~Tribe~~repair ~~will~~parts ~~continue~~for ~~to provide~~ski ~~IMG~~operations ~~Resort~~related equipment. ~~and~~The ~~Casino~~IMGRC ~~and~~carries ~~its~~an ~~resort~~insurance ~~enterprises~~policy with ~~certain~~a ~~employee~~$100,000 ~~benefits~~deductible inon all property losses. ~~accordance~~The ~~with~~actual ~~past~~insured ~~practice~~value of the maintenance building is $1,012,492. ~~including~~The ~~group~~contents ~~health~~have ~~benefits~~an insured value of $62,312. ~~worker’s~~The ~~compensation~~replacement ~~insurance~~costs for the damaged building, ~~disability~~ ~~insurance~~its contents, ~~unemployment~~other ~~benefits~~large equipment, and ~~pension~~vehicles ~~benefits.~~affected ~~IMG~~should ~~reimburses~~be ~~the~~adequately ~~Tribe~~insured ~~for~~to ~~its employees’~~cover ~~direct~~the replacement costs ~~for~~and/or actual ~~coverage~~cash asvalue ~~billed~~after by the ~~third~~deductible ~~party~~is met.

~~The~~During ~~Tribe~~the ~~provides~~quarter ~~employee~~ended ~~benefits~~December 31, to2009 ~~the~~ IMG Resort and Casino, ~~which~~received ~~reimburses~~$1,185,023 ~~the~~in ~~Tribe~~insurance reimbursement for ~~all~~ ~~costs~~the ~~and~~damage ~~expenses~~that ~~associated~~occurred ~~with~~at ~~this~~Ski ~~health~~Apache, ~~and~~which ~~dental~~was ~~insurance.~~dispensed ~~IMG~~to ~~Resort~~a ~~and~~third ~~Casino~~party ~~paid~~for ~~the~~expenses ~~Tribe~~related ~~$849,000~~to ~~and $846,401 for~~ the ~~quarters ended July 31, 2008 and 2009, respectively~~damage.

NOTE 11 — STORM RECOVERY

IMG Resort and Casino’s insurance carrier agreed to provide approximately $5.0 million of coverage for the damage that occurred as a result of the flooding. Additionally, FEMA had deemed the area a Federal Disaster area and has assured financial assistance of at least the deductible on our insurance policy.

For the period ended July 31, 2009, IMG Resort and Casino has incurred approximately $0.01 million in costs associated with the storm recovery compared to $0.06 million for the three months ended July 31, 2008.

NOTE 12 — OPERATING SEGMENTS

The IMG Resort and Casino has four operating segments and a consolidating segment: Gaming at the IMG, Gaming at the Travel Center, Ski, and all other non-gaming. The Gaming segments include the activities of the two casinos. The Ski segment includes Ski lifts and Ski school at Ski Apache. The Non-Gaming segment includes the hotel, hunts, golf, food and beverage, banquets, conferences, retail shops, convenience store and truck stop fuel sales. As a result of realigning its operations, the resulting reporting of the segments has changed. Due to the change in fiscal year, the Company has restated prior year’s segment information to be consistent with the current reporting and operating structure in place today. Assets and liabilities have been consolidated under the non-segment group, and as a result, depreciation and interest expenses are not broken out separately by segment, which is consistent with the internal decision makers’ information requirements.

As a result of realigning its operations, the resulting reporting of the segments has changed. The Company has restated prior year’s segment information to be consistent with the current reporting and operating structure in place today. Assets and liabilities have been consolidated under the non-segment group, and as a result, depreciation and interest expenses are not broken out separately by segment, which is consistent with the internal decision makers’ information requirements.

These operating segments represent distinct business activities, which are managed separately from a profit and loss perspective, but jointly from a balance sheet perspective.

1718

~~SELECTED~~INN ~~OPERATING~~OF ~~SEGMENT~~THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL ~~INFORMATION~~STATEMENTS (unaudited~~, in thousands~~)

	Gaming		Gaming
	IMG		Travel Ctr		Ski			Non Gaming		Non Segment			Consolidated
Quarter ended
July 31, 2008
Net Revenue	$	12,840	$	8,463	$	1		$	12,109	$	(26	)	$	33,387
Operating Income (Loss)		9,903		6,765		(1	)		3,210		(10,899	)		8,978
Depreciation Expense		—		—		—			—		3,077			3,077
Interest Expense		—		—		—			—		(6,560	)		(6,560	)
Interest Income and Other		—		—		—			—		12			12
Quarter ended
July 31, 2009
Net Revenue	$	13,178	$	7,597	$	2		$	10,299	$	(148	)	$	30,928
Operating Income (Loss)		10,505		6,177		3			3,841		(11,858	)		8,668
Depreciation Expense		—		—		—			—		3,046			3,046
Interest Expense		—		—		—			—		(6,497	)		(6,497	)
Interest Income and Other		—		—		—			—		9			9

SELECTED OPERATING SEGMENT FINANCIAL INFORMATION
(unaudited, in thousands)


	Gaming		Gaming
	IMG		Travel Ctr		Ski		Non Gaming		Non Segment			Consolidated
Three months ended December 31, 2008
Net Revenue	$	9,829	$	6,705	$	397	$	7,638	$	1,609		$	26,178
Operating Income (Loss)		6,756		5,168		65		961		(7,262	)		5,688
Depreciation Expense		—		—		—		—		3,024			3,024
Interest Expense		—		—		—		—		(6,533	)		(6,533	)
Interest Income and Other		—		—		—		—		8			8
Three months ended December 31, 2009
Net Revenue	$	9,865	$	6,240	$	397	$	6,927	$	2,009		$	25,438
Operating Income (Loss)		7,691		5,062		36		1,126		(9,161	)		4,754
Depreciation Expense		—		—		—		—		3,043			3,043
Interest Expense		—		—		—		—		(7,738	)		(7,738	)
Interest Income and Other		—		—		—		—		18			18

NOTE 13—CONSOLIDATING INFORMATION

In connection with IMG Resort and Casino’s issuance in November 2003 of the Notes, IMG Resort and Casino’s subsidiaries, Casino Apache, the Inn, the Travel Center and Ski Apache (“wholly-owned Guarantors”) have, jointly and severally, fully and unconditionally guaranteed the Notes. These guarantees were secured only until the completion of the Resort and thereafter unsecured.

Pursuant to Rule 3-10 of Regulation S-X, the following consolidating information is for IMG Resort and Casino and the wholly owned Guarantors of the Notes. This consolidating financial information has been prepared from the books and records maintained by IMG Resort and Casino and the wholly-owned Guarantors. The consolidating financial information may not necessarily be indicative of results of operations or financial position had the wholly-owned Guarantors operated as independent entities. The separate financial statements of the wholly-owned Guarantors are not presented because management has determined they would not be material to investors. The following consolidating information is presented as of September 30, 2009 and December 31, 2009 and for the three months ended December 31, 2008 and 2009.

The following consolidating information is presented as of July 31, 2009 and April 30, 2009 and for the three months ended July 31, 2009 and 2008.

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES CONSOLIDATING BALANCE SHEETS As of July 31, 2009 (unaudited)

				Wholly-owned
	IMGRC			Guarantors			Eliminations			Consolidated
Cash and cash equivalents	$	5,125,756		$	4,393,238		$	—		$	9,518,994
Accounts receivable		(14,689	)		400,041			—			385,352
Inventories		222,218			648,462			—			870,680
Prepaid expenses		1,135,082			—			—			1,135,082
Total current assets		6,468,367			5,441,741			—			11,910,108
Fixed assets		—			308,317,223			—			308,317,223
Depreciation		—			(117,624,698	)		—			(117,624,698	)
Net fixed assets		—			190,692,525			—			190,692,525
Non current assets
Other assets		51,000			—			—			51,000
Deferred financing costs		2,990,306			—			—			2,990,306
Advances to subsidiaries		29,229,379			8,689,726			(37,919,105	)		—
Investment in subsidiaries		173,401,522			—			(173,401,522	)		—
Total Assets	$	212,140,574		$	204,823,992		$	(211,320,627	)	$	205,643,939
Accounts payable	$	2,395,903		$	—		$	—		$	2,395,903
Accrued expenses		3,217,589			1,019,959			—			4,237,548
Accrued payroll and benefits		1,749,119			—			—			1,749,119
Accrued interest		17,200,000			—			—			17,200,000
Advance deposits		—			566,923			—			566,923
Current portion of long-term debt		203,192,938			281,864			—			203,474,802
Total current liabilities		227,755,549			1,868,746			—			229,624,295
Non current liabilities:
Advances from subsidiaries		8,689,726			29,229,379			(37,919,105	)		—
Long-term debt, net of current portion		168,107			324,345			—			492,452
Total liabilities		236,613,382			31,422,470			(37,919,105	)		230,116,747
Contributed capital		5,610,939			(6,012,897	)		6,012,897			5,610,939
Retained earnings (deficit)		(30,083,747	)		179,414,419			(179,414,419	)		(30,083,747	)
Total equity (deficit)		(24,472,808	)		173,401,522			(173,401,522	)		(24,472,808	)
Total liabilities and equity (deficit)	$	212,140,574		$	204,823,992		$	(211,320,627	)	$	205,643,939

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES CONSOLIDATING ~~STATEMENT~~BALANCE ~~OF OPERATIONS~~SHEET ~~For~~As ~~the~~of ~~Three Months Ended July~~December 31, 2009 (~~Unaudited~~unaudited)

				Guarantor
				Wholly-owned
	IMGRC			~~Subsidiaries~~Guarantors			Eliminations			Consolidated
Revenues:
Cash and cash equivalents	$	1,890,254		$	4,757,813		$	—		$	6,648,067
Gaming	$	—		$	20,779,971		$	—		$	20,779,971
Accounts receivable		705,349			443,674			—			1,149,023
Hotel		—			3,639,388			—			3,639,388
Inventories		222,724			680,866			—			903,590
Food and beverage		—			3,628,663			—			3,628,663
Prepaid expenses		1,342,754			—			—			1,342,754
Recreation and other		—			3,052,957			—			3,052,957
Total current assets		4,161,081			5,882,353			—			10,043,434
Gross revenue		—			31,100,979			—			31,100,979
Property, plant and equipment, net		—			187,394,995			—			187,394,995
Less -promotional allowances		27,260			145,945			—			173,205
Other assets		51,000			—			—			51,000
Net revenue		(27,260	)		30,955,034			—			30,927,774
Deferred financing costs		1,632,727			—			—			1,632,727
Operating expenses
Advances to subsidiaries		11,869,171			3,588,793			(15,457,964	)		—
Gaming		—			6,750,288			—			6,750,288
Investment in subsidiaries		182,645,696			—			(182,645,696	)		—
Hotel		—			965,671			—			965,671
Total Assets	$	200,359,675		$	196,866,141		$	(198,103,660	)	$	199,122,156
Food and beverage		—			3,174,236			—			3,174,236
Accounts payable	$	1,837,623		$	—		$	—		$	1,837,623
Recreation and other		—			2,304,600			—			2,304,600
Accrued expenses		2,279,821			1,620,545			—			3,900,366
Marketing		—			2,292,990			—			2,292,990
Accrued payroll and benefits		1,481,612			—			—			1,481,612
General and administrative		—			3,731,220			—			3,731,220
Accrued interest		29,621,603			—			—			29,621,603
Depreciation and amortization		—			3,046,303			—			3,046,303
Advance deposits		—			240,101			—			240,101
Insurance reimbursement (Note 11)		(20,000	)		—			—			(20,000	)
Current portion of long-term debt		201,753,752			241,591			—			201,995,343
Storm costs		14,605			—			—			14,605
Total current liabilities		236,974,411			2,102,237			—			239,076,648
Total operating expenses		(5,395	)		22,265,308			—			22,259,913
Non current liabilities:
Operating income (loss)		(21,865	)		8,689,726			—			8,667,861
Advances from subsidiaries		3,588,793			11,869,171			(15,457,964	)		—
Other income (expense)
Long-term debt, net of current portion		89,408			249,037			—			338,445
Interest income		4,270			—			—			4,270
Total liabilities		240,652,612			14,220,445			(15,457,964	)		239,415,093
Interest expense		(6,497,499	)		—			—			(6,497,499	)
Contributed capital		(7,389,062	)		(6,012,897	)		6,012,897			(7,389,062	)
Income from subsidiaries		8,689,726			—			(8,689,726	)		—
Retained earnings (deficit)		(32,903,875	)		188,658,593			(188,658,593	)		(32,903,875	)
Other income		4,750			—			—			4,750
Total equity (deficit)		(40,292,937	)		182,645,696			(182,645,696	)		(40,292,937	)
Total other income (expense)		2,201,247			—			(8,689,726	)		(6,488,479	)
Total liabilities and equity (deficit)	$	200,359,675		$	196,866,141		$	(198,103,660	)	$	199,122,156
Net income (loss)	$	2,179,382		$	8,689,726		$	(8,689,726	)	$	2,179,382

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES CONSOLIDATING STATEMENT OF ~~CASH FLOWS~~OPERATIONS For the Three Months Ended ~~July~~December 31, 2009 (unaudited)

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Revenues:
Net income	$	2,179,382		$	8,689,726		$	(8,689,726	)	$	2,179,382
Gaming	$	—		$	16,168,109		$	—		$	16,168,109
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Hotel		—			2,175,376			—			2,175,376
Depreciation and amortization		(170,141	)		2,958,426			—			2,788,285
Food and beverage		—			2,934,841			—			2,934,841
Changes in assets and liabilities:
Recreation and other		—			4,398,312			—			4,398,312
Accounts receivable		127,884			(132,300	)		—			(4,416	)
Gross revenue		—			25,676,638			—			25,676,638
Inventories		(37,452	)		(43,664	)		—			(81,116	)
Less-promotional allowances		19,643			219,238			—			238,881
Prepaid expenses		(685,714	)		—			—			(685,714	)
Net revenue		(19,643	)		25,457,400			—			25,437,757
Other long term assets		110,000			—			—			110,000
Operating expenses
Accounts payable		273,200			—			—			273,200
Gaming		—			5,373,560			—			5,373,560
Accrued expenses, payroll and benefits		759,517			104,771			—			864,288
Hotel		—			781,436			—			781,436
Accrued interest		6,000,000			—			—			6,000,000
Food and beverage		—			3,223,781			—			3,223,781
Deposits and advance payments		—			218,928			—			218,928
Recreation and other		—			2,548,161			—			2,548,161
Net cash provided by (used in) operating activities		8,556,676			11,795,887			(8,689,726	)		11,662,837
Marketing		—			2,344,236			—			2,344,236
Cash flows from investing activities:
General and administrative		—			4,554,801			—			4,554,801
Purchase of property, plant and equipment		—			(711,954	)		—			(711,954	)
Depreciation and amortization		—			3,042,632			—			3,042,632
Investment in subsidiaries		(8,689,726	)		—			8,689,726			—
Insurance reimbursement (Note 11)		(1,185,023	)		—			—			(1,185,023	)
Net cash provided by (used by) investing activities		(8,689,726	)		(711,954	)		8,689,726			(711,954	)
Total operating expenses		(1,185,023	)		21,868,607			—			20,683,584
Cash flows from financing activities:
Operating income		1,165,380			3,588,793			—			4,754,173
Advances to (from) affiliates		9,659,920			(9,659,920	)		—			—
Other income (expense)
Principal payments on debt		(887,327	)		(67,297	)		—			(954,624	)
Interest expense		(7,737,702	)		—			—			(7,737,702	)
Distributions to Mescalero Apache Tribe		(8,034,000	)		—			—			(8,034,000	)
Income from subsidiaries		3,588,793			—			(3,588,793	)		—
Net cash provided by (used in) financing activities		738,593			(9,727,217	)		—			(8,988,624	)
Other income		17,646			—			—			17,646
Net increase in cash and cash equivalents		605,543			1,356,716			—			1,962,259
Total other expense		(4,131,263	)		—			(3,588,793	)		(7,720,056	)
Cash and cash equivalents, beginning of period		4,520,213			3,036,522			—			7,556,735
Net income (loss)	$	(2,965,883	)	$	3,588,793		$	(3,588,793	)	$	(2,965,883	)
Cash and cash equivalents, end of period	$	5,125,756		$	4,393,238		$	—		$	9,518,994

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES CONSOLIDATING ~~BALANCE~~STATEMENT ~~SHEETS~~OF CASH FLOWS AsFor ofthe ~~April~~Three Months Ended December 3031, 2009 (unaudited)

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash and cash equivalents	$	4,520,213		$	3,036,522		$	—		$	7,556,735
Cash flows from operating activities:
Accounts receivable		113,195			267,741			—			380,936
Net income (loss)	$	(2,965,883	)	$	3,588,793		$	(3,588,793	)	$	(2,965,883	)
Inventories		184,766			604,798			—			789,564
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Prepaid expenses		449,368			—			—			449,368
Depreciation and amortization		445,290			3,043,660			—			3,488,950
Total current assets		5,267,542			3,909,061			—			9,176,603
Changes in assets and liabilities:
Fixed assets		—			307,605,269						307,605,269
Accounts receivable		(717,654	)		186,064			—			(531,590	)
Accumulated depreciation		—			(114,666,272	)		—			(114,666,272	)
Inventories		1,097			(42,436	)		—			(41,339	)
Net fixed assets		—			192,938,997			—			192,938,997
Prepaid expenses		(20,942	)		—			—			(20,942	)
Non-current assets
Accounts payable		415,319			—			—			415,319
Other assets		161,000			—						161,000
Accrued expenses, payroll and benefits		(1,766,473	)		(262,364	)		—			(2,028,837	)
Deferred financing costs		2,820,165			—			—			2,820,165
Accrued interest		7,234,936			—			—			7,234,936
Advances to subsidiaries		50,198,590			19,999,016			(70,197,606	)		—
Deposits and advance payments		—			(172,945	)		—			(172,945	)
Investment in subsidiaries		164,711,796			—			(164,711,796	)		—
Net cash provided by (used in) operating activities		2,625,690			6,340,772			(3,588,793	)		5,377,669
Total Assets	$	223,159,093		$	216,847,074		$	(234,909,402	)	$	205,096,765
Cash flows from investing activities:
Accounts payable	$	2,122,703		$	—		$	—		$	2,122,703
Purchase of property, plant and equipment		—			(1,372,271	)		—			(1,372,271	)
Accrued expenses		2,828,891			915,188			—			3,744,079
Investment in subsidiaries		(3,588,793	)		—			3,588,793			—
Accrued payroll and benefits		1,378,300			—			—			1,378,300
Net cash provided by (used by) investing activities		(3,588,793	)		(1,372,271	)		3,588,793			(1,372,271	)
Accrued interest		11,200,000			—			—			11,200,000
Cash flows from financing activities:
Advance deposits		—			347,995			—			347,995
Advances to (from) affiliates		3,797,949			(3,797,949	)		—			—
Current portion of long-term debt		203,655,133			275,958			—			203,931,091
Principal payments on debt		(916,842	)		(69,925	)		—			(986,767	)
Total current liabilities		221,185,027			1,539,141			—			222,724,168
Distributions to Mescalero Apache Tribe		(2,000,000	)		—			—			(2,000,000	)
Non-current liabilities
Net cash provided by (used in) financing activities		881,107			(3,867,874	)		—			(2,986,767	)
Advances from subsidiaries		19,999,016			50,198,590			(70,197,606	)		—
Net increase in cash and cash equivalents		(81,996	)		1,100,627			—			1,018,631
Long-term debt, net of current portion		593,239			397,547			—			990,786
Cash and cash equivalents, beginning of period		1,972,250			3,657,186			—			5,629,436
Total liabilities		241,777,282			52,135,278			(70,197,606	)		223,714,954
Cash and cash equivalents, end of period	$	1,890,254		$	4,757,813		$	—		$	6,648,067
Contributed Capital		13,644,939			(6,012,897	)		6,012,897			13,644,939
Retained Earnings (accumulated deficit)		(32,263,128	)		170,724,693			(170,724,693	)		(32,263,128	)
Total (deficit) equity		(18,618,189	)		164,711,796			(164,711,796	)		(18,618,189	)
Total liabilities and equity (deficit)	$	223,159,093		$	216,847,074		$	(234,909,402	)	$	205,096,765

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES CONSOLIDATING ~~STATEMENT~~BALANCE ~~OF OPERATIONS~~SHEETS ~~For~~As ~~the~~of ~~Three Months Ended July~~September 3130, ~~2008~~2009 (unaudited)

				Guarantor
				Wholly-owned
	IMGRC			~~Subsidiaries~~Guarantors			Eliminations			Consolidated
Revenues:
Cash and cash equivalents	$	1,972,250		$	3,657,186		$	—		$	5,629,436
Gaming	$	—		$	21,439,995		$	—		$	21,439,995
Accounts receivable		(12,305	)		629,738			—			617,433
Hotel		—			4,104,367			—			4,104,367
Inventories		223,821			638,430			—			862,251
Food and beverage		—			3,866,700			—			3,866,700
Prepaid expenses		1,321,812			—			—			1,321,812
Recreation and other		—			4,232,600			—			4,232,600
Total current assets		3,505,578			4,925,354			—			8,430,932
Gross revenue		—			33,643,662			—			33,643,662
Property, plant and equipment, net		—			189,066,385			—			189,066,385
Less -promotional allowances		15,402			241,382			—			256,784
Other assets		51,000			—			—			51,000
Net revenue		(15,402	)		33,402,280			—			33,386,878
Deferred financing costs		2,078,017			—			—			2,078,017
Operating Expenses											—
Advances to subsidiaries		26,423,434			14,345,107			(40,768,541	)		—
Gaming		—			7,346,919			—			7,346,919
Investment in subsidiaries		179,056,903			—			(179,056,903	)		—
Hotel expenses		—			1,421,946			—			1,421,946
Total Assets	$	211,114,932		$	208,336,846		$	(219,825,444	)	$	199,626,334
Food and beverage		—			3,885,545			—			3,885,545
Accounts payable	$	1,422,304		$	—		$	—		$	1,422,304
Recreation and other		—			3,589,158			—			3,589,158
Accrued expenses		3,586,384			1,882,909			—			5,469,293
Marketing		—			1,764,509			—			1,764,509
Accrued payroll and benefits		1,941,522			—			—			1,941,522
General and administrative		2,370,546			1,945,121			—			4,315,667
Accrued interest		22,386,667			—			—			22,386,667
Depreciation and amortization		—			3,076,918			—			3,076,918
Advance deposits		—			413,046			—			413,046
Storm recovery		16,108			46,119			—			62,227
Current portion of long-term debt		202,630,139			294,783			—			202,924,922
Insurance reimbursement on storm loss		(1,100,000	)		—			—			(1,100,000	)
Total current liabilities		231,967,016			2,590,738			—			234,557,754
Gain (loss) on disposal of assets		—			46,118			—			46,118
Non current liabilities:
Total operating expenses		1,286,654			23,122,353			—			24,409,007
Advances from subsidiaries		14,345,107			26,423,434			(40,768,541	)		—
Operating income (loss)		(1,302,056	)		10,279,927			—			8,977,871
Long-term debt, net of current portion		129,863			265,771			—			395,634
Other income (expense)											—
Total liabilities		246,441,986			29,279,943			(40,768,541	)		234,953,388
Interest income		12,271			—			—			12,271
Contributed capital		(5,389,062	)		(6,012,897	)		6,012,897			(5,389,062	)
Interest expense		(6,559,504	)		—			—			(6,559,504	)
Retained earnings (deficit)		(29,937,992	)		185,069,800			(185,069,800	)		(29,937,992	)
Income from subsidiaries		10,279,927			—			(10,279,927	)		—
Total equity (deficit)		(35,327,054	)		179,056,903			(179,056,903	)		(35,327,054	)
Total other income (expense)		3,732,694			—			(10,279,927	)		(6,547,233	)
Total liabilities and equity (deficit)	$	211,114,932		$	208,336,846		$	(219,825,444	)	$	199,626,334
Net income (loss)	$	2,430,638		$	10,279,927		$	(10,279,927	)	$	2,430,638

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES CONSOLIDATING STATEMENT OF ~~CASH FLOWS~~OPERATIONS For the Three Months ~~ended~~Ended ~~July~~December 31, 2008 (unaudited)

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Revenues:
Net income	$	2,430,638		$	10,279,927		$	(10,279,927	)	$	2,430,638
Gaming	$	—		$	16,546,046		$	—		$	16,546,046
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Hotel		—			2,600,075			—			2,600,075
Depreciation and amortization		406,311			3,091,859			—			3,498,170
Food and beverage		—			3,201,745			—			3,201,745
Insurance reimbursement (paid directly to contractor)		(1,100,000	)		—			—			(1,100,000	)
Recreation and other		—			4,002,634			—			4,002,634
Loss on disposal of fixed assets		—			46,118			—			46,118
Gross revenue		—			26,350,500			—			26,350,500
Changes in assets and liabilities:
Less-promotional allowances		12,543			159,968			—			172,511
Accounts receivable		(1,037	)		(26,858	)		—			(27,895	)
Net revenue		(12,543	)		26,190,532			—			26,177,989
Tribal accounts receivable		(191,750	)		—			—			(191,750	)
Operating Expenses
Inventories		16,337			62,766			—			79,103
Gaming		—			6,619,171			—			6,619,171
Prepaid expenses		(307,862	)		173,350			—			(134,512	)
Hotel		—			1,131,983			—			1,131,983
Other long term assets		—			(213,502	)		—			(213,502	)
Food and beverage		—			3,556,592			—			3,556,592
Accounts payable		510,172			—			—			510,172
Recreation and other		—			2,627,022			—			2,627,022
Accrued expenses, payroll and benefits		(28,929	)		232,761			—			203,832
Marketing		—			1,796,111			—			1,796,111
Accrued interest payable		(6,000,000	)		—			—			(6,000,000	)
General and administrative		900,056			4,282,986			—			5,183,042
Deposits and advance payments		—			645,875			—			645,875
Depreciation and amortization		—			3,023,656			—			3,023,656
Net cash (used in) provided by operating activities		(4,266,120	)		14,292,296			(10,279,927	)		(253,751	)
Insurance reimbursement on storm loss (Note 11)		—			(3,677,047	)		—			(3,677,047	)
Cash flows from investing activities:
Storm costs (Note 11)		—			232,022			—			232,022
Purchase of property, plant and equipment		—			(494,032	)		—			(494,032	)
Loss on disposal of assets		—			(2,563	)		—			(2,563	)
Investment in subsidiaries		(10,279,927	)		—			10,279,927			—
Total operating expenses		900,056			19,589,933			—			20,489,989
Net cash used by investing activities		(10,279,927	)		(494,032	)		10,279,927			(494,032	)
Operating income (loss)		(912,599	)		6,600,599			—			5,688,000
Cash flows from financing activities:
Other income (expense)
Advances to (from) affiliates		13,526,182			(13,526,182	)		—			—
Interest expense, net		(6,533,294	)		—			—			(6,533,294	)
Principal payments on debt		(796,880	)		(61,737	)		—			(858,617	)
Income from subsidiaries		6,600,599			—			(6,600,599	)		—
Distributions to Mescalero Apache Tribe		(2,001,001	)		—			—			(2,001,001	)
Other income		303			—			—			303
Net cash provided by (used in) financing activities		10,728,301			(13,587,919	)		—			(2,859,618	)
Total other income (expense)		67,608			—			(6,600,599	)		(6,532,991	)
Net (decrease) increase in cash and cash equivalents		(3,817,746	)		210,345			—			(3,607,401	)
Net income (loss)	$	(844,991	)	$	6,600,599		$	(6,600,599	)	$	(844,991	)
Cash and cash equivalents, beginning of period		11,083,394			3,891,699			—			14,975,093
Cash and cash equivalents, end of period	$	7,265,648		$	4,102,044		$	—		$	11,367,692

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF CASH FLOWS
For the Three Months Ended December 31, 2008
(unaudited)


				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(844,991	)	$	6,600,599		$	(6,600,599	)	$	(844,991	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		406,311			2,677,173			—			3,083,484
Changes in assets and liabilities:
Accounts receivable		2,567			339,290			—			341,857
Tribal accounts receivable		143,910			—			—			143,910
Inventories		3,928			127,155			—			131,083
Prepaid expenses		160,905			—			—			160,905
Insurance reimbursement		(2,777,047	)		—			—			(2,777,047	)
Other long term assets		(43,110	)		38,950			—			(4,160	)
Accounts payable		803,927			—			—			803,927
Accrued expenses, payroll and benefits		2,537,988			(444,354	)		—			2,093,634
Accrued interest payable		(6,000,000	)		—			—			(6,000,000	)
Deposits and advance payments		—			(126,331	)		—			(126,331	)

Net cash provided by (used in) operating activities		(5,605,612	)		9,212,482			(6,600,599	)		(2,993,729	)


Cash flows from investing activities:
Purchase of property, plant and equipment		—			(5,741,923	)		—			(5,741,923	)
Investment in subsidiaries		(6,600,599	)		—			6,600,599			—

Net cash used by investing activities		(6,600,599	)		(5,741,923	)		6,600,599			(5,741,923	)


Cash flows from financing activities:
Advances to (from) affiliates		12,218,320			(12,218,320	)		—			—
Principal payments on debt		(9,577,136	)		8,667,148			—			(909,988	)
Distributions to Mescalero Apache Tribe		(2,001,000	)		—			—			(2,001,000	)

Net cash provided by (used in) financing activities		640,184			(3,551,171	)		—			(2,910,988	)


Net increase (decrease) in cash and cash equivalents		(11,566,027	)		(80,612	)		—			(11,646,640	)
Cash and cash equivalents, beginning of period		12,782,806			4,129,443			—			16,912,249

Cash and cash equivalents, end of period	$	1,216,779		$	4,048,831		$	—		$	5,265,609

FORWARD—LOOKING STATEMENTS

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements regarding our expected financial condition, results of operations, business, strategies and financing plans under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q are forward-looking statements. In addition, in those and other portions of this Form 10-Q, the words “anticipate,” “expect,” “plan,” “intend,” “will,” “designed,” “estimate,” “adjust” and similar expressions, as they relate to us or our management, indicate forward-looking statements. These forward-looking statements may prove to be incorrect. Important factors that could cause actual results to differ materially from these forward-looking statements disclosed in this Form 10-Q include, without limitation, risks relating to the following: (a) our levels of leverage and ability to meet our debt service obligations; (b) our financial performance; (c) restrictive covenants in our debt instruments; (d) realizing the benefits of our business plan and business strategies; (e) changes in gaming laws or regulations, including potential legalization of gaming in certain jurisdictions; (f) the impact of competition in our markets; (g) our ability to attract increasing numbers of customers; and (h) general local, domestic and global economic conditions

You are urged to consider these factors carefully in evaluating the forward-looking statements contained in this Form 10-Q. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by our cautionary statements. The forward-looking statements included in this Form 10-Q are made only as of the date of this Form 10-Q. We do not intend, and undertake no obligation, to update these forward-looking statements.


Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Reference in this Quarterly ~~Report~~report on Form 10-Q (this “Form 10-Q” or this “Report”) to (a) the “Tribe” refers to the Mescalero Apache Tribe, a federally recognized Indian tribe, (b) “IMG Resort and Casino” or” the “Company” refers to Inn of the Mountain Gods Resort and Casino, a business enterprise of the Tribe, (c) “Resort” refers to the Inn of the Mountain Gods Resort and Casino, (d) “Casino Apache” refers to Casino Apache, a business enterprise of the Tribe, (e) the “Inn” refers to Inn of the Mountain Gods, a business enterprise of the Tribe, (f) the “Travel Center” refers to Casino Apache Travel Center, a business enterprise of the Tribe and (g) “Ski Apache” refers to Ski Apache, a business enterprise of the Tribe. Each of Casino Apache, the Inn, the Travel Center and Ski Apache is a wholly-owned subsidiary of IMG Resort and Casino. Reference in this Form 10-Q to “we,” “our,” and “us” refer to IMG Resort and Casino.

~~The~~On ~~accompanying~~September 3, ~~consolidated financial statements have been prepared assuming that the Company will continue as a going concern~~2009, ~~which contemplates~~ the ~~realization~~Board of ~~assets~~IMG ~~and~~Resort ~~the liquidation of liabilities in the normal course of business. The Company has incurred significant losses~~ and ~~did~~ ~~not~~Casino ~~generate~~resolved ~~sufficient~~by ~~cash~~unanimous consent to ~~make the May 15, 2009 interest payment on its 12% senior notes~~change ~~due 2010. This non-payment of interest constitutes an event of default under~~ the ~~indenture governing~~Company’s ~~the~~fiscal ~~senior~~year, ~~notes.~~formerly Asending of April 30, ~~2009,~~to ~~the Company had negative working capital of approximately $218 million and~~ a ~~total~~fiscal ~~deficit~~year ofending ~~approximately $~~September 30.~~1 million.~~ ~~The~~This change ~~event~~in ~~of default,~~fiscal ~~along~~year ~~with~~makes the Company’s ~~history~~year-end ofcoincide ~~recurring~~with ~~losses, negative working capital and limited access to capital, has raised substantial doubt regarding~~ the ~~Company~~Tribe’s ~~ability~~fiscal toyear ~~continue as a going concern~~end. ~~The accompanying consolidated financial statements do not include any adjustments~~This ~~that~~quarterly ~~might~~report ~~result~~covers ~~from~~ the ~~outcome~~three ofmonth ~~this~~period ~~uncertainty~~ended December 31, 2009.

WeThe ~~did~~accompanying ~~not~~consolidated ~~make~~financial ~~the~~statements ~~scheduled~~have ~~$12.0 million~~been ~~interest~~prepared ~~payment~~assuming onthat ~~our~~the ~~senior notes due 2010~~Company ~~scheduled~~will tocontinue beas ~~made~~a ongoing ~~May 15~~concern, ~~2009.~~which ~~Our~~contemplates ~~failure to make~~ the ~~interest~~realization ~~payment~~of onassets orand ~~before~~the ~~June~~liquidation ~~15,~~of ~~2009~~liabilities ~~constitutes~~in anthe ~~event~~normal course of ~~default~~business. ~~under~~The ~~the~~Company ~~indenture~~has ~~governing~~incurred ~~the~~significant ~~senior~~losses ~~notes~~ and ~~the~~ ~~trustee~~did ornot ~~holders~~generate ofsufficient atcash ~~least~~to ~~25%~~make of the ~~outstanding~~May 15, ~~principal~~2009 ~~amount~~and ofNovember 15, ~~the~~2009 ~~notes~~interest ~~could declare~~payments ~~all~~on ofits ~~the~~12% ~~notes~~senior ~~immediately~~Notes due ~~and payable~~2010. ~~Pursuant~~These tonon-payments ~~the~~of ~~indenture, we are obligated to pay~~ interest onconstituted ~~overdue~~events ~~installments~~ of ~~interest~~default under ~~payable~~the onIndenture governing the senior ~~notes~~Notes. atAs aof ~~rate~~September 30, ~~equal~~2009, tothe ~~13%~~Company ~~per~~had negative ~~annum~~working ~~(1%~~capital ~~per annum in excess~~ of ~~the~~$226 million ~~then~~and ~~applicable~~a ~~annual~~total ~~interest~~deficit ~~rate~~of onapproximately ~~the~~$35.3 million. ~~senior~~As ~~notes).~~of ~~The~~December ~~Tribe~~31, ~~has~~2009, ~~engaged financial advisors to assist~~ the Company ~~with~~had ~~the~~negative ~~evaluation~~working ~~and~~capital ~~implementation~~ of ~~financial~~approximately ~~and strategic alternatives~~$229.0 million Ifand ~~our~~a ~~senior notes are declared immediately due and~~total ~~payable,~~deficit itof ~~would~~approximately ~~constitute~~$40.3 million. aThe ~~default~~event ~~under the terms~~ of ~~our~~default, ~~furniture~~along ~~and~~with ~~equipment~~the ~~loan~~Company’s ~~and~~history ~~the~~of ~~lenders~~recurring ~~thereunder~~losses, ~~could~~negative ~~declare~~working ~~the~~capital ~~outstanding~~and ~~loan~~limited access to becapital, ~~immediately~~has ~~due~~raised ~~and~~substantial doubt ~~payable~~regarding ~~and~~the ~~may enforce~~Company’s ~~their~~ability ~~rights~~ to ~~the~~continue ~~collateral~~as ~~securing~~a ~~the~~going ~~loan,~~concern. ~~which~~The ~~would~~accompanying ~~have~~consolidated financial astatements ~~material~~do ~~adverse effect~~not oninclude ~~our~~any ~~business.~~adjustments Wethat ~~are~~might ~~currently~~result infrom ~~discussions~~the ~~with~~outcome ~~certain~~ of ~~our debtholders regarding~~this uncertainty.

We did not make the scheduled $12.0 million interest payments on our senior Notes due 2010 scheduled to be made on May 15, 2009 and November 15, 2009. Our failure to make the interest payments on or before June 15, 2009 and December 15, 2009 constituted separate events of default under the Indenture governing the senior Notes and the trustee or holders of at least 25% of the outstanding principal amount of the Notes could declare all of the Notes immediately due and payable. Pursuant to the Indenture, we are obligated to pay interest on overdue principal

~~these~~at ~~issues~~the rate equal to 1% per annum in excess of the applicable interest rate on the Notes (12%), ~~although~~and to wepay ~~have~~interest ~~received~~on ~~temporary~~overdue ~~forbearance~~installments ~~agreements~~of ~~from~~interest ~~those~~payable ~~lenders~~on ~~with~~the Notes at the same rate. The ~~respect~~Tribe has engaged financial advisors, and is in discussions with bondholders related to restructuring the Notes. If the Notes are declared immediately due and payable, it would constitute a default under the terms of our ~~failure~~furniture and equipment loan and the lenders thereunder could declare the outstanding loan to ~~make~~be immediately due and payable and may enforce their rights to the ~~interest~~collateral ~~payment~~securing the loan, which would have a material adverse effect on our business.

Historically, IMG Resort and Casino has not generated sufficient cash flow from operations to satisfy our capital requirements and relied upon debt financing arrangements to satisfy such requirements. The current cash flows and capital resources may be insufficient to meet both short and long term debt obligations and commitments, and IMG Resort and Casino may be forced to reduce or delay activities and capital expenditures if IMG Resort and Casino is unable to refinance its debt. In the event that IMG Resort and Casino is unable to refinance or restructure its debt, IMG Resort and Casino will be left without sufficient liquidity and IMG Resort and Casino will not be able to meet the debt service requirements and repayment obligations.

We are undergoing a comprehensive review of our operations to determine ways to improve revenues, reduce operating and non-operating expenses and limit our uses of cash. We expect to realize the benefits of certain of these measures immediately, while the benefit of others will not be realized until future periods. However, we can give no assurance that the expected benefits will be realized in the amount or at the times we anticipate, or at all.

We believe that our ability to fund our operations, make planned capital expenditures, and make scheduled payments depends on our future operating performance and success in seeking to increase operating efficiencies and reduce operating expenses, which are subject to economic, financial, business and other conditions, some of which are beyond our control.

~~Additionally, our ability to incur additional indebtedness is limited under the terms of the indenture governing the Notes.~~ If our expected operating performance or success in increasing operating efficiencies and reducing operating expenses does not meet management expectations, we may need to arrange for additional sources of funding in the form of ~~permitted~~ borrowings under our ~~indenture~~ Indenture or contributions from the Tribe, which sources of funding cannot be assured.

Overview

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

Gaming. Our gaming activities are authorized by the Indian Gaming Regulatory Act of 1988, or IGRA, our gaming compact with the State of New Mexico and a Tribal gaming ordinance. As of ~~July~~ December 31, 2009, we had 55,000-square feet of combined gaming space featuring 1,~~302~~280 slot machines and 37 ~~table~~ table games between our facilities at the Resort, opened in March 2005, and Casino Apache Travel ~~Center~~ Center (the “Travel Center Casino”), opened in May 2003.

Food and Beverage. The Resort features: Wendell’s, a 116-seat casual and fine dining restaurant; Gathering of Nations Buffet, a 260-seat buffet style restaurant; a 72-seat sports bar; an 80-seat night club featuring live entertainment, dancing and DJ music; Wendell’s Lounge, a “piano” lounge featuring an oversized fireplace; and the Apache Summit BBQ, an 88-seat casual restaurant in the golf clubhouse. Casino Apache Travel Center features Smokey B’s, a 130-seat casual dining restaurant and one sports bar. Ski Apache operates one main restaurant and five satellite food and beverage outlets.

Hotel. On March 15, 2005, we opened the Resort which features 273 luxury hotel rooms. The hotel varies between four and eight stories in height, depending upon the location along the hotel corridor, and allows for easy traveling distance to and from the casino and events center. Our over-sized deluxe guest rooms are either 480 square feet or 610 square feet and our suites are 1,200 square feet (with the ability to connect to a 480 square foot deluxe guest room, providing a total of 1,680 square feet in that configuration). In-room amenities include high-speed Internet access, coffee makers, ironing boards and irons, mini-bars, toiletries, free and pay-per-view movies and ~~other standard and premium channels. All rooms feature a balcony view of Lake Mescalero,~~ ~~Sierra Blanca Mountain or the forest-lined golf course. The hotel also features an indoor swimming pool and fitness center, steam and sauna facilities for both men and women and a family locker area.~~

2627

other standard and premium channels. All rooms feature a balcony view of Lake Mescalero, Sierra Blanca Mountain or the forest-lined golf course. The hotel also features an indoor swimming pool and fitness center, steam and sauna facilities for both men and women and a family locker area.

Recreation and Other. Our all-season recreational operations include, Ski Apache with 11 ski lifts covering 55 trails over 750 acres and is the second largest in New Mexico, an 18-hole championship golf course, seasonal big-game hunts, a shooting range, horseback riding, boating and fishing. Our ski resort is typically open from Thanksgiving until Easter, while our golf course generally operates from April through November. Our retail outlets include a gift shop, golf and pro shop, ski shop, a 2,500-square foot convenience store, a fuel station with 12 gasoline and eight diesel pumping stations and laundry and shower facilities.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the recorded amount of assets and liabilities at the date of the financial statements and revenues and expenses during the period. Significant accounting policies employed by us, including the use of estimates and assumptions, are presented in the ~~notes~~Notes to our consolidated financial statements included elsewhere in this Form 10-Q. Our management bases its estimates on its historical experience, together with other relevant factors, in order to form the basis for making judgments that will affect the carrying value of assets and liabilities. On an ongoing basis, management evaluates its estimates and makes changes to carrying values as deemed necessary and appropriate. Actual results could differ from those estimates.

Revenue Recognition. In accordance with gaming industry practice, we recognize gaming revenues as the net win from gaming activities, which is the difference between gaming wins and losses. Gaming revenues are net of accruals for anticipated payouts of progressive slot jackpots and table games. These anticipated jackpot payments are reflected as current liabilities on our balance sheets. Net slot win represents all amounts played in the slot machines reduced by the winnings paid out. Table games net win represents the difference between table game wins and losses. The table games historical win percentage is reasonably predictable over time, but may vary considerably during shorter periods. Revenues from food, beverage, rooms, recreation, retail and other are recognized at the time the related service or sale is completed. Player reward redemptions for food and beverage, hotel rooms and other items are included in gross revenue at full retail value.

Promotional Allowances. IMG Resort and Casino periodically rewards rooms and other promotions, including Apache Spirit Club points and gift certificates, to its customers. The retail value of these player rebates are recognized by IMG Resort and Casino as a reduction from gross revenue.

The Casino’s Apache Spirit Club allows customers to earn “points” based on the volume of their gaming activity. These points are redeemable for certain services or merchandise. Points are accrued based upon their historical redemption rate multiplied by the cash value or the cost of providing the applicable rewards services.

Emerging Issues Task Force (“EITF”) FASB ASC 605-50, Revenue Recognition, Customer payments and Incentives (prior authoritative literature: FASB EIFT Issue No. 00-14, Emerging Issues Task Force Issue No. 00-14: Accounting for Certain Sales Incentives, )(“FASB ASC 605-50 (FAS Issue No. 00-14)”), requires that discounts which result in a reduction in or refund of the selling price of a product or service in a single exchange transaction be recorded as a reduction of revenues. We adopted EITF 00-14 on April 30, 2001. Our accounting policy related to free or discounted food and beverage and other services already complies with EITF 00-14, and those free or discounted services ~~are~~ are generally deducted from gross revenues as “promotional allowances.” In January 2001, the EITF reached a consensus on certain issues related to Issue No. 00-22, Accounting for “Points” and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Reproduces, or Services to be delivered in the future. Effective January 1, 2001, we, through our wholly-owned subsidiaries adopted EITF 00-22, which requires that cash or equivalent amounts provided or returned to customers as part of a transaction not be shown as an expense, but instead as an offset to the related revenue.

Classification of Departmental Costs. Gaming direct costs are comprised of all costs of the Resorts’ gaming operation, including labor costs for casino-based supply costs, certain (including costs in operating our players’ ~~clubs) and other direct operating costs of the casinos. Food and~~ beverage direct costs are comprised of all costs of the Resorts’ food and beverage operations, including labor costs for personnel employed by the Resorts’ restaurants and food and beverage, supply costs for all food and beverages served in the casinos or sold in the Resorts’ restaurants and other food outlets and other expenses including other direct operating expenses related to these activities. General and administrative direct costs are comprised of administrative expenses at our headquarters,

including the salaries of corporate officers, accounting, finance, legal and other professional expense and occupancy costs and other indirect costs not included in the direct costs of our operating departments.

Deferred Financing and Refinancing Costs. Debt issuance costs incurred in connection with the issuance of the Resort Project financing were capitalized and are being amortized to interest expense using the straight-line method over the stated maturity of the debt, which approximates the effective interest method. Unamortized deferred financing costs totaled $2.8 million as of April 30, 2009 and $3.0 million as of July 31, 2009, of which $576,451 was capitalized in association with the refinancing transaction described above during the quarter ended July 31, 2009 but are not being amortized.

Impairment of Long Lived Assets. Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. In August 2001, the Financial Accounting Standards Board issued Statement of Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS 144”), which established the approach to be used in the determination of impairment.

Under the provisions of SFAS 144, a long-lived asset to be abandoned is disposed of when it ceases to be used. If an entity commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, depreciation estimates shall be revised to reflect the use of the asset over its shortened useful life.

Results of Operations

Quarter Ended July 31, 2009 Compared to Quarter Ended July 31, 2008.

Net Revenues. Net revenues decreased $2.5 million, or 7%, to $30.9 million for the quarter ended July 31, 2009 from $33.4 million for the quarter ended July 31, 2008 due to a decrease in all areas of our business caused by a decline in the economy and discretionary spending of our guests. Gaming net revenues decreased $0.6 million, down 3% from the comparable prior period; food and beverage revenues decreased $0.3 million, or 6%, from the comparable prior period; hotel revenues decreased $0.5 million from a year ago. Recreation and other revenue for the 2009 period decreased $1.2 million, or 28%, from July 31, 2008. Promotional allowances decreased $0.1 million, or 33%, for the quarter ended July 31, 2009 compared to the quarter ended July 31, 2008.

Gaming. Net gaming revenues decreased $0.6 million, or 3%, to $20.8 million for the quarter ended July 31, 2009 from $21.4 million for the quarter ended July 31, 2008. Slot revenues decreased to $19.1 million for the quarter ended July 31, 2009 from $19.7 million for the quarter ended July 31, 2008, a decrease of $0.6 million. Gross slot win per unit, per day was $159 for the quarter ended July 31, 2009 compared to $146 for the quarter ended July 31, 2008; the weighted average number of machines declined to 1,302 for the quarter ended July 31, 2009 from 1,462 for the quarter ended July 31, 2008. Table games revenue remained flat at $3.0 million for the quarters ended July 31, 2009 and 2008. Daily Net Win per Table for the quarter ended July 31, 2009 was $764 as compared to $660 for the same period a year ago, a 16% increase.

Hotel. Hotel revenue for the quarter ended July 31, 2009 decreased $0.5 million to $3.6 million from $4.1 million from the quarter ended July 31, 2008. Occupancy rates averaged 86%, a decrease of 1%, for the quarter ended July 31, 2009, the average daily rate decreased to $181, for the quarter ended July 31, 2009; as compared to $184 for the same period a year ago. Revenue per available room was $157 for the quarter ended July 31, 2009, a 2% decrease.

Food and Beverage. Food and beverage revenues decreased $0.3 million, or 6%, to $3.6 million for the quarter ended July 31, 2009 from $3.9 million for the quarter ended July 31, 2008 due to a decrease in covers.

Recreation and Other. Recreation and other revenues decreased $1.2 million, or 28% to $3.1 million for the quarter ended July 31, 2009 compared to $4.2 million for the quarter ended July 31, 2008 due to a decrease in fuel sales price.

Promotional Allowances. Promotional allowances were $0.2 million for the quarter ended July 31, 2009 compared to $0.3 million for the quarter ended July 31, 2008, a decrease of $0.1 million or 33%.

~~Total~~clubs) ~~Operating~~and ~~Expenses.~~other ~~Total~~direct operating ~~expenses~~costs ~~decreased~~of $2the casinos.~~2 million~~ toFood ~~$22.2 million~~and ~~for~~beverage direct costs are comprised of all costs of the ~~quarter~~Resorts’ ~~ended~~food ~~July 31~~and beverage operations, ~~2009~~including ~~from~~labor ~~$24.4 million~~costs for personnel employed by the ~~quarter~~Resorts’ ~~ended~~restaurants ~~July 31~~and food and beverage, ~~2008~~supply ~~due~~costs tofor all food and ~~decreases~~beverages served in ~~various~~the ~~divisions~~casinos ~~throughout~~or sold in the ~~organization~~Resorts’ restaurants and other food outlets and other expenses including other direct operating expenses related to these activities. General and administrative direct costs are comprised of administrative expenses at our three months, including the salaries of corporate officers, accounting, finance, legal and other professional expense and occupancy costs and other indirect costs not included in the direct costs of our operating departments.

~~Gaming.~~Deferred ~~Gaming~~Financing ~~expenses~~and ~~decreased~~Refinancing $0Costs.~~6 million,~~ orDebt ~~8%,~~issuance ~~for~~costs incurred in connection with the issuance ~~quarter~~of ~~ended~~the ~~July 31,~~Resort ~~2009~~Project financing were capitalized and are being amortized to interest ~~$6.8 million~~expense ~~from~~using ~~$7.3 million~~the ~~for~~straight-line method over the ~~quarter~~stated ~~ended~~maturity ~~July 31~~of the debt, ~~2008~~which ~~due~~approximates tothe effective ainterest ~~decrease~~method. inUnamortized ~~salaries,~~deferred financing costs totaled $2.1 million as of ~~wages~~September 30, ~~benefits,~~2009 and ~~supplies~~$1.6 million as of December 31, 2009.

~~Hotel.~~Impairment ~~Hotel~~of ~~expenses~~Long ~~decreased~~Lived $0Assets.~~4 million~~ toManagement ~~$1.0 million~~reviews ~~for~~long-lived ~~the~~assets ~~quarter~~for ~~ended~~impairment ~~July 31,~~whenever ~~2009~~events ~~from~~or ~~$1.4 million~~changes ~~for~~in circumstances indicate the ~~quarter~~carrying ~~ended~~amount ~~July~~of such assets may not be recoverable. In August 312001, ~~2008,~~the ~~due~~Financial aAccounting ~~decrease~~Standards inBoard ~~salaries,~~issued ~~wages~~Statement ~~and~~of ~~benefits.~~Accounting ~~Hotel~~Standards isFASB ~~running~~ASC at360-10-35, aProperty, ~~73%~~Plant ~~profit~~and Equipment, (prior authoritative literature SFAS No. 144, Accounting for the ~~quarter~~Impairment ~~ended~~or ~~July 31~~Disposal of Long-Lived Assets), ~~2009~~which established upthe ~~12%~~approach ~~from~~to be used in the ~~comparable~~ ~~prior~~determination ~~2008~~of ~~period~~impairment.

~~Food~~Under ~~and~~the ~~Beverage.~~provisions ~~Food~~of FASB ASC 360-10-35, Property, Plant and ~~beverage~~Equipment, ~~expenses~~(prior authoritative ~~decreased~~literature $0SFAS No.7 ~~million~~144, Accounting for the Impairment or ~~18%~~Disposal of Long-Lived Assets), a long-lived asset to $3be abandoned is disposed of when it ceases to be used.~~2 million~~ If an entity ~~for~~commits to a plan to abandon a long-lived asset before the ~~quarter~~end ~~ended~~of ~~July 31~~its previously estimated useful life, ~~2009~~depreciation ~~from~~estimates ~~$3.9 million~~shall ~~for~~be revised to reflect the ~~quarter~~use ~~ended~~of ~~July 31,~~the ~~2008~~asset over its shortened useful life.

~~Recreation~~Results and Other. Recreation and other costs decreased $1.3 million, or 36% to $2.3 million for the quarter ended July 31, 2009 from $3.6 million for the quarter ended July 31, 2008 due to a decrease in cost of ~~goods sold in the areas of gas and diesel and merchandise.~~Operations

~~Marketing.~~Three ~~Marketing~~months ~~costs~~Ended ~~increased $0.5~~December ~~million to $2.3 million for the quarter ended July~~ 31, 2009 ~~from~~Compared ~~$1.8 million~~to ~~for~~Three ~~the~~months ~~quarter~~Ended ~~ended July~~December 31, 2008 ~~due to an increase in direct marketing costs associated with gaming and hotel offers~~.

~~General and Administrative~~Net Revenues. ~~General~~Net ~~and~~revenues ~~administrative expenses~~ decreased $0.68 million, or 14 2%, to $325.74 million for the ~~quarter~~three months ended ~~July~~December 31, 2009 from $426.32 million for the ~~quarter~~three months ended ~~July~~ December 31, 2008 due to a decrease in ~~salaries~~certain areas of our business caused by a decline in the economy and ~~wages~~leisure and business travel discretionary spending of our guests. Gaming net revenues decreased $0.4 million from the comparable prior period; food and beverage revenues decreased $0.3 million, or 9%, from the comparable prior period; hotel revenues decreased $0.4 million from a year ago. Recreation and other revenue for the 2009 period increased $0.4 million, or 10%, from December 31, 2008. Promotional allowances remained flat at $0.2 million for the three months ended December 31, 2008 and 2009.

~~Depreciation~~Gaming. Net ~~Depreciation~~gaming revenues decreased $0.13 million to $316.2 million for the three months ended December 31, 2009 from $16.5 million for the three months ended December 31, 2008. Slot revenues decreased to $15.0 million for the ~~quarter~~three months ended ~~July~~December 31, 2009 from $15.1 million for the three months ended December 31, 2008 a decrease of $0.1 million. Gross slot win per unit, per day was $127 for the three months ended December 31, 2009 compared to $114 for the three months ended December 31, 2008; the weighted average number of machines declined to 1,280 for the three months ended December 31, 2009 from 1,438 for the three months ended December 31, 2008. Table games revenue decreased $30.3 million to $1.7 million for the ~~quarter~~three months ended ~~July~~December 31, 2009 from $2.0 million for the three months ended December 31, 2008. ~~due~~Daily Net Win per Table for the three months ended December 31, 2009 was $483 as compared to ~~fully~~$528 ~~depreciated~~for ~~equipment~~the same period a year ago, a 9% decrease.

~~Storm Costs~~Hotel. ~~Storm~~Hotel ~~costs~~revenue ~~were~~for the three months ended December 31, 2009 decreased $0.014 million to $2.2 million from $2.6 million from the three months ended December 31, 2008. Occupancy rates averaged 69%, an increase of 15%, for the ~~quarter~~three months ended ~~July~~December 31, 2009, ~~and~~the average daily rate decreased to $~~0.06~~150, for the ~~quarter~~three months ended ~~July~~December 31, 2009; as compared to $173 for the same period a year ago. Revenue per available room remained flat at $103 for the three months ended December 31, 2008 and 2009.

Income from Operations. Income from operations decreased $0.3 million, or 3%, to $8.7 million for the quarter ended July 31, 2009 from $9.0 million for the quarter ended July 31, 2008 due to a decrease in both revenue and operating expenses.

Other Income (Expenses). Other non-operating expenses remained flat at $6.5 million for the quarter ended July 31, 2009 and 2008. Other income (expenses) is comprised primarily of interest income and interest expense along with other expenses.

Liquidity and Capital Resources

As of July 31, 2009 and April 30, 2009, we had cash and cash equivalents of $9.5 million and $7.6 million, respectively. Our principal source of liquidity for the three months ended July 31, 2009 was cash provided by operating activities of $11.7 million primarily due to not making the $12.0 million required interest payment.

Cash used in investing activities for the three months ended July 31, 2009 was $0.7 million which consisted of capital expenditures in the form of purchases of snowmaking equipment and gaming equipment.

Cash used in financing activities for the three months ended July 31, 2009 was $9.0 million, which primarily consisted of $8.0 million in distributions to the Tribe and $1.0 million in principal payments on our capital equipment loan.

~~increase~~ Food ~~operating~~and ~~efficiencies~~Beverage. Food and ~~reduce~~beverage ~~operating~~revenues ~~expenses~~decreased $0.3 million, ~~which~~or ~~are~~9%, ~~subject~~ to ~~economic,~~$2.9 million ~~financial~~for the three months ended December 31, ~~business~~2009 ~~and~~from ~~other~~$3.2 million ~~conditions~~for the three months ended December 31, ~~some~~2008 ofdue ~~which~~to ~~are~~a ~~beyond~~decrease ~~our~~in ~~control~~covers and decline in group business sales.

WeRecreation ~~currently~~and ~~have~~Other. ~~outstanding~~Recreation and other revenues increased $~~200.~~0.4 million, ~~aggregate~~or ~~principal amount of 12~~10% ~~Senior~~to ~~Notes~~$4.4 ~~due~~million ~~2010~~for (the ~~“Senior~~three ~~Notes”).~~months Weended ~~did~~December 31, ~~not~~2009 ~~make~~compared ~~the~~to ~~scheduled~~ $124.0 million ~~interest~~for ~~payment~~the onthree ~~our~~months ~~senior~~ended ~~notes~~December 31, 2008 due ~~2010~~to ~~scheduled~~an toincrease bein ~~made~~ski onrevenue ~~May 15,~~associated with new snow making equipment and an increase in natural snowfall for the 2009-2010 ski season.

~~Additionally,~~Promotional ~~our~~Allowances. ~~ability~~Promotional toallowances ~~incur~~were ~~additional~~$0.2 million ~~indebtedness~~for ~~is limited under~~ the ~~terms~~three ofmonths ~~the~~ended ~~indenture governing the Senior Notes. If our expected operating performance or success in increasing operating efficiencies and reducing operating expenses does not meet management expectations~~December 31, we2009 ~~may~~compared ~~need~~ to ~~arrange~~$0.2 million for ~~additional sources of funding in~~ the ~~form~~three ofmonths ~~permitted borrowings~~ended ~~under our indenture or contributions from the Tribe~~December 31, ~~which sources of funding cannot be assured~~2008.

Total Operating Expenses. Total operating expenses increased $0.2 million to $20.7 million for the three months ended December 31, 2009 from $20.5 million for the three months ended December 31, 2008 due to decreases in various divisions throughout the organization, as well as credit to expense associated with the fire damage experienced at Ski Apache.

Gaming. Gaming expenses decreased $1.2 million, or 19%, for the three months ended December 31, 2009 to $5.4 million from $6.6 million for the three months ended December 31, 2008 due to a decrease in head count, wages, benefits, supplies and regulatory fees associated with a decrease in gaming revenue.

Hotel. Hotel expenses decreased $0.3 million to $0.8 million for the three months ended December 31, 2009 from $1.1 million for the three months ended December 31, 2008, resulting from a decrease in salaries, wages, benefits and supplies expense. Hotel is running at a 64% profit for the three months ended December 31, 2009 up 8% from the comparable prior 2008 period.

Food and Beverage. Food and beverage expenses decreased $0.4 million, or 11%, to $3.2 million for the three months ended December 31, 2009 from $3.6 million for the three months ended December 31, 2008 due to a decrease in head count resulting in a reduction of salaries, wages and benefits, as well as an employee meal cost program.

Recreation and Other. Recreation and other costs decreased $0.1 million, or 4% to $2.5 million for the three months ended December 31, 2009 from $2.6 million for the three months ended December 31, 2008 due to a decrease in cost of goods sold in the areas of gas and diesel and merchandise.

Marketing. Marketing costs increased $0.5 million to $2.3 million for the three months ended December 31, 2009 from $1.8 million for the three months ended December 31, 2008 due to an increase in direct marketing costs associated with gaming and hotel offers. Marketing programs were discontinued in the first quarter of 2008 as a cost saving measure and were reinstated in March 2009.

General and Administrative. General and administrative expenses decreased $0.6 million, or 12%, to $4.6 million for the three months ended December 31, 2009 from $5.2 million for the three months ended December 31, 2008 due to a decrease in salaries, wages, benefits and outside services, offset by legal and consulting fees related to the bond restructuring.

Depreciation. Depreciation remained flat at $3.0 million for the three months ended December 31, 2009 and 2008 due to fully depreciated equipment.

Storm Costs. Storm costs were $0 for the three months ended December 31, 2009 and $232,022 for the three months ended December 31, 2008.

Income from Operations. Income from operations decreased $0.9 million, or 16%, to $4.8 million for the three months ended December 31, 2009 from $5.7 million for the three months ended December 31, 2008 due to an insurance recovery of $3.6 million in 2008.

Other Income (Expenses). Other non-operating expenses were $7.7 million for the three months ended December 31, 2009 and $6.5 million for the three months ended December 31, 2008. Other income (expenses) is comprised primarily of interest income and interest expense along with other expenses.

Liquidity and Capital Resources

As of September 30, 2009 and December 31, 2009, we had cash and cash equivalents of $5.6 million and $6.6 million, respectively. Our principal source of liquidity for the three months ended December 31, 2009 was cash provided by operating activities of $5.3 million primarily due to not making the November 15, 2009 $12.0 million required interest payment as well as the increase in operating income due to cost savings measurement and new marketing strategies to slow the growth of declining revenues.

Cash used in investing activities for the three months ended December 31, 2009 was $1.4 million which consisted of capital expenditures in the form of purchases of gaming equipment, non-gaming equipment and the re-building of the maintenance building destroyed in a fire.

Cash used in financing activities for the three months ended December 31, 2009 was $3.0 million, which primarily consisted of $2.0 million in distributions to the Tribe and $1.0 million in principal payments on our capital equipment loan.

Our ability to fund our operations, make planned capital expenditures, and make scheduled payments depends on our ability to refinance our long-term debt, as well as our future operating performance and success in seeking to increase operating efficiencies and reduce operating expenses, which are subject to economic, financial, business and other conditions, some of which are beyond our control.

We currently have outstanding $200.0 million aggregate principal amount of 12% Senior Notes due 2010 (the “Senior Notes”). We did not make the scheduled $12.0 million interest payments on our senior Notes due 2010 scheduled to be made on May 15, 2009 and November 15, 2009.

Additionally, our ability to incur additional indebtedness is limited under the terms of the Indenture governing the Senior Notes. If our expected operating performance or success in increasing operating efficiencies and reducing operating expenses does not meet management expectations, we may need to arrange for additional sources of funding in the form of permitted borrowings under our Indenture or contributions from the Tribe, which sources of funding cannot be assured.

Description of Indebtedness

The Senior Notes

On November 3, 2003, we issued $200.0 million senior ~~notes~~Notes, with fixed interest payable at a rate of 12% per annum. Interest on the ~~notes~~Notes is payable semi-annually on May 15 and November 15. The ~~notes~~Notes mature on November 15, 2010. As of ~~July~~December 31, 2009 accrued interest payable on the ~~Senior~~ Senior Notes was $1729.26 million.

The Senior Notes rank senior in right of payment to all of our future indebtedness or other obligations that are, by their terms, expressly subordinated in right of payment to the ~~notes~~Notes. In addition, the Senior Notes rank equal in right of payment to all of our existing and future senior unsecured indebtedness and other obligations that are not, by their terms, expressly subordinated in right of payment to the ~~notes~~Notes. Each of our wholly-owned subsidiaries are guarantors of the Senior Notes.

We did not make the scheduled $12.0 million interest ~~payment~~payments on our senior ~~notes~~Notes due 2010 scheduled to be made on May 15, 2009 and November 15, 2009. Our failure to make the interest payments ~~payment~~ on or before June 15, 2009 ~~constitutes~~and anDecember 15, ~~event~~2009 constituted separate events of default under the ~~indenture~~Indenture governing the senior ~~notes~~Notes and the trustee or holders of at least 25% of the outstanding principal amount of the ~~notes~~Notes could declare all of the ~~notes~~Notes immediately due and payable.

~~Incurrence of Additional Indebtedness~~31

In general, we are restricted in connection with the issuance of the Senior Notes and the related Indenture, that we would not incur any indebtedness if and to the extent the indebtedness would appear as a liability upon our balance sheet prepared in accordance with GAAP; provided however, we may incur indebtedness if certain financial ratios meet certain criteria. Furthermore, we agreed that we would not incur any indebtedness that is contractually subordinated in right of payment to our other indebtedness unless such indebtedness is also contractually subordinated in right of payment to the Senior Notes. Our ability to create liens (other than certain permitted liens) upon any of our property or assets, or any proceeds, income or profits therefrom, or assign or convey any right to receive income therefrom are restricted unless payments due under the Indenture and the Senior Notes are secured on an equal and ratable basis with (or, in the case of subordinated indebtedness, senior thereto, with the same relative priority that the Senior Notes shall have with respect to such subordinated indebtedness) the obligation so secured until such time as such obligations are no longer secured by a lien. Accordingly, our ability to incur additional debt financing is severely limited.

General Indebtedness

The Tribe, for the benefit of the Inn of the Mountain Gods, a wholly-owned subsidiary of IMG Resort and Casino, executed a promissory note dated September 1, 1982, which we refer to as the BIA Note in favor of the Department of Interior, Bureau of Indian Affairs in the amount of approximately $3.5 million. The BIA Note accrues interest at the rate of 8.5% per annum payable annually from the date of the BIA Note until paid in full on September 1, 2011. As of July 31, 2009, there is approximately $0.6 million outstanding on the BIA Note.

General Indebtedness

The Tribe, for the benefit of the Inn of the Mountain Gods, a wholly-owned subsidiary of IMG Resort and Casino, executed a promissory note dated September 1, 1982, which we refer to as the BIA Note in favor of the Department of Interior, Bureau of Indian Affairs in the amount of approximately $3.5 million. The BIA Note accrues interest at the rate of 8.5% per annum payable annually from the date of the BIA Note until paid in full on September 1, 2011. As of December 31, 2009, there is approximately $0.5 million outstanding on the BIA Note.

Credit Facility

On June 15, 2004, we entered into a $15.0 million fixed credit facility with an equipment finance company. The fixed rate loan is fully amortizable over five years. Proceeds from the interest rate loan were used to fund furniture, fixtures and equipment for the Resort. As of ~~July~~ December 31, 2009, approximately $31.46 million remains outstanding.

As discussed above, we did not make the scheduled $12.0 million interest ~~payment~~payments on our ~~senior~~ ~~notes~~senior Notes due 2010 scheduled to be made on May 15, 2009 and November 15, 2009. If our senior Notes ~~notes~~ are declared immediately due and payable, it would constitute a default under the terms of our furniture and equipment loan and the lenders thereunder could declare the outstanding loan to be immediately due and payable and may enforce their rights to the collateral securing the loan, which would have a material adverse effect on our business. ~~Although the furniture and equipment loans are not technically in default,~~ ~~the Company entered into forbearance agreements with its lenders whereby the lenders agreed to forebear existing rights and remedies in the event of default.~~

Pursuant to the Indenture, we are obligated to pay penalty interest on overdue principal at the rate equal to 1% per annum in excess of the applicable interest rate on the Notes (12%), and to pay interest on overdue installments of interest payable on the Notes at the same rate. As of December 31, 2009 the interest accrued as a result was $1,335,000.

The Tribe has engaged financial advisors, and is in discussions with bondholders related to restructuring the Notes. If the Notes are declared immediately due and payable, it would constitute a default under the terms of the Company’s furniture and equipment loan and the lenders thereunder could declare the outstanding loan to be immediately due and payable and may enforce their rights to the collateral securing the loan, which would have a material adverse effect on our business. Due to the events of default, the Notes have been classified as current in the accompanying consolidated balance sheet.

Credit Rating

On August 14, 2009, Moody’s Investor Service lowered IMG Resort and Casino probability of default rating to ‘Ca/LD’ from ‘Ca’. The ‘Ca/LD’ probability of default rating recognizes a payment default under the $200 million 12% Senior Notes due November 2010. The last rating action by Moody’s Investor Service was on March 20, 2009, at which time they lowered IMG Resort and Casino’s rating from ‘Caa2’ to ‘Ca’.

On May 18, 2009, Standard and Poor’s Ratings Services lowered its issuer credit rating for IMG Resort and Casino to ‘D’ from ‘CCC’,. asAs well as lowered the issue-level rating on IMG Resort and Casino’s $200 million 12% senior unsecured ~~notes~~Notes due ~~Nov.~~ November 15, 2010 to ‘D’ from ‘CCC’”. The ~~rationale~~ rationale behind the decrease in the ratings was due to IMG Resort and Casino not making its $12 ~~million~~ million interest payment on its senior note scheduled for May 15, 2009, as described ~~below~~above.

Off-Balance Sheet Arrangements

As of ~~July~~December 31, 2009, we have no off-balance sheet arrangements that affect our financial condition, liquidity and results of operation. We have certain contractual obligations including long-term debt, operating leases and employment contracts.

Regulation and Taxes

We are subject to extensive regulation by the Mescalero Apache Tribal Gaming Commission, the National Indian Gaming Commission, the NIGC, and, to a lesser extent, the New Mexico Gaming Control Board. Changes in applicable laws or regulations could have a significant impact on our operations. We are unincorporated Tribal business enterprises, directly or indirectly owned by the Tribe, a federally recognized Indian tribe, and are located on reservation land held in trust by the United States of America; therefore, we were not subject to federal or state income taxes for the periods ended ~~July~~December 31, ~~2009~~2008 or ~~2008~~2009, nor is it anticipated we will be subject to such taxes for the foreseeable future. Various efforts have been made in the U.S. Congress over the past several years to enact legislation that would subject the income of tribal business entities, such as us, to federal income tax. Although no such legislation has been enacted, similar legislation could be passed in the future. A change in our non-taxable status could have a material adverse effect on our cash flows from operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates and commodity prices. As of ~~July~~December 31, 2009, we had no variable rate debt outstanding.

As of ~~July~~December 31, 2009, we held no derivative instruments.

Item 4T. Controls and Procedures.

Disclosure Controls and Procedures.

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(c) of the Securities Exchange Act of 1934) as of the end of the period covered by this Report, have concluded that as of the date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rules 13a-15(d) that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

See “Notes to Consolidated Financial Statements (unaudited) — Note 9- — Commitments and Contingencies- — Legal Matters”

Item 1A. Risk Factors.

There were no material changes during the three months ended ~~July~~December 31, 2009 to our risk ~~factors~~ factors disclosed in our Annual Report on Form 10-KQT for the year ended ~~April~~September 30, 2009.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5. Other Information.

~~Ben Martinez~~On November 9, ~~age 38~~2009, ~~was appointed to~~ the ~~position~~Mescalero ofApache ~~Chief~~Tribe ~~Financial Officer for~~ (the ~~IMG~~“Tribe”) ~~Resort~~elected ~~and Casino~~Mark ~~August 25,~~Chino ~~2009.~~to ~~Mr. Martinez~~serve ~~worked in banking with JP Morgan / Chase from June 1994 to~~as ~~September 2000.~~President ~~During~~of ~~his tenure with JP Morgan / Chase he completed~~ the ~~Officer~~Tribe ~~Development Program~~and ~~focusing~~Sandra onPlatero ~~financial~~to ~~analysis~~serve ~~and~~as ~~credit~~Vice ~~underwriting.~~President ~~Upon completion~~ of the ~~bank’s formal program~~Tribe, ~~Mr. Martinez~~Kenny ~~worked~~Blazer, Pamela ~~with~~Cordova, ~~the~~Gregory ~~institutional~~Mendez ~~trust~~and ~~division~~Randy asBell ~~an investment analyst prior~~ to ~~progressing~~serve toas aMembers ~~portfolio~~of ~~manager in~~ the ~~investment~~Tribal ~~management~~Council, ~~area.~~effective as Inof ~~September~~January ~~2000~~8, Mr 2010. ~~Martinez~~ ~~went~~Peter toD. ~~work~~Kazhe ~~with~~was ~~BOK~~appointed ~~Financial~~to asserve aon ~~Vice President and Sr. Portfolio Manager working with~~ the ~~company’s~~Tribal ~~investment~~council ~~management~~and ~~team~~as ~~managing roughly $1 billion in trust assets. In June~~of ~~2003 Mr.~~January ~~Martinez~~25, ~~started~~2010 anwas ~~investment~~approved ~~advisory~~by ~~venture~~the ~~providing~~Tribal ~~a range of financial advisory services~~council. InAs ~~January 2006, he accepted~~ a ~~position~~result ~~with~~of athe ~~mergers~~elections and ~~acquisitions boutique in~~the ~~Dallas,~~appointment ~~Texas.~~all Inwill ~~this~~serve ~~capacity~~as hemembers ~~performed~~of athe ~~wide~~Inn ~~range~~ of ~~business~~the ~~valuation~~Mountain ~~and~~Gods ~~consultation services~~Resort and ~~finished~~Casino’s ~~his~~(the “Company”) ~~tenure~~Management inBoard a(the ~~deal~~“Board”). ~~making~~As ~~capacity.~~a Inresult ~~October 2008,~~of Mr. ~~Martinez~~Chino’s ~~accepted the~~election ~~position~~as ofthe ~~Administrator~~President ~~with~~ of the ~~Mescalero Apache~~ Tribe. Inhe ~~this~~will ~~role,~~also heserve ~~oversaw~~as the ~~tribe’s~~ ~~governmental~~Chairman ~~and~~of ~~638~~the ~~federal~~Board ~~programs. Additionally, he worked closely with tribal, state,~~ and ~~federal~~Chief ~~governmental~~Executive ~~officials~~Officer ~~as they related to a variety~~ of ~~tribal issues and programs~~the Company. ~~In 1994,~~ Mr. ~~Martinez~~Chino ~~graduated~~will ~~from~~serve ~~New~~in ~~Mexico~~these ~~State~~positions ~~University~~for ~~with~~ a ~~bachelor~~minimum of ~~business~~two ~~administration with a concentration in Finance~~years.

32Listed below are member of the IMG Resort and Casino’s management.


Chair		President Mark R. Chino
Vice Chair		Vice President Sandra Platero
Secretary		Greg Mendez
Treasurer		Frederick Chino, Sr.
Member		Hazel Botella-Spottedbird
Member		Pamela Cordova
Member		Oliver Enjady
Member		Randy Bell
Member		Kenny Blazer
Member		Peter D. Kazhe
Member		Manuel Lujan, Jr.
Member		Miles Ledgerwood
Member		Liz Foster-Anderson, COO
Member		Ben Martinez, CFO

Mark Chino was elected President of the Mescalero Apache Tribe on November 3, 2009. President Chino was inaugurated and began his term on January 8, 2010. The President received his Bachelor of Sciences from New Mexico State University. President Chino held various law enforcement positions with the Bureau of Indian Affairs before retiring in 2004. He was previously elected and served two continuous terms as President of the Mescalero Apache Tribe, from 2004 to 2008.

President Chino holds no outside directorships. As President of the Tribe, he will serve as the Chief Executive Officer (CEO) for the Inn of the Mountain Gods Resort and Casino. President Chino served as CEO during his past terms as President of the Tribe. The President was elected to a two (2) year term which will expire in January of

Mr2012. ~~Martinez’~~ ~~employment~~President ~~contract~~Chino is ~~still~~55 years ~~being~~of ~~negotiated~~age.

OnFor ~~September 3,~~the ~~2009,~~three ~~Board~~months ofended ~~Directors~~December of31, 2009 IMG Resort and Casino ~~resolved~~made bydistributions ~~unanimous consent~~ to ~~change~~ the ~~Company’s~~Tribe ~~fiscal~~of ~~year,~~$2.0 million. Since ~~formerly~~December ~~ending April 30~~31, ~~to a fiscal year end~~2009, ~~effective September 30,~~IMG ~~2009.~~Resort ~~This~~and ~~change~~Casino inhas ~~fiscal~~made ~~year~~distributions ~~end~~to ~~makes~~ the ~~Company’s~~ ~~year-end~~Tribe ~~coincide~~of ~~with the~~$4.0 ~~Mescalero~~million. The ~~Apache~~accumulated ~~Tribe’s~~reserve ~~Fiscal~~is ~~Year End~~$17.0 Amillion ~~transition~~as ~~report~~of ~~covering~~February ~~the~~16, ~~five~~2010. These ~~month~~funds ~~period~~are ~~from~~being ~~May~~held 1,in ~~2009~~a tobank account ~~September~~and ~~30,~~have ~~2009~~not ~~will~~been ~~be filed on Form-10QT~~expended.

~~Since September 1, 2009, IMG Resort and Casino have made distributions to the Tribe of $7.7~~35 ~~million. These funds are being held in a bank account and have not been expended.~~

There is currently a proposal being considered for a joint Tribal Council and Management Board model.

Item 6. Exhibits.

Exhibit No.		Description
31.1		Certification of Principal Executive Officer and Interim-Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.1		Amended and Restated Management Agreement among the Inn of the Mountain Gods Resort and Casino, Casino Apache Travel Center, Ski Apache and WG-IMG, LLC dated as of January 6, 2010. Approved by NIGC January 19, 2010.
32.1		Certification of Principal Executive Officer and Interim-Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

3436

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this ~~quarterly~~three months report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INN OF THE MOUNTAIN GODS RESORT AND CASINO	~~INN OF THE MOUNTAIN GODS RESORT AND CASINO~~
Date: September 14, 2009		By		/s/ Liz Foster Anderson
Date: February 16, 2010	By	/s/ Liz Foster Anderson
		Name:	Liz Foster Anderson	~~Name:~~	~~Liz Foster Anderson~~
		Its:	Chief Operating Officer (Principal Executive Officer)	~~Its:~~	~~Chief Operating Officer (Principal Executive Officer) and Interim Chief Financial Officer (Principal Financial Officer)~~



Date: February 16, 2010	By	/s/ Ben Martinez
		Name:	Ben Martinez
		Its:	Chief Financial Officer (Principal Financial Officer)

INDEX TO EXHIBITS

Exhibit No.		Description
31.1		Certification of Principal Executive Officer and Interim-Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.1		Amended and Restated Management Agreement among the Inn of the Mountain Gods Resort and Casino, Casino Apache Travel Center, Ski Apache and WG-IMG, LLC dated as of January 6, 2010. Approved by NIGC January 19, 2010.
32.1		Certification of Principal Executive Officer and Interim-Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.1		Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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Filing Compare · INN OF THE MOUNTAIN GODS RESORTS & CASINO