10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

For the fiscal year ended April 30, 2008

OR

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

For the transition period from                      to                     

Commission file number 333-113140

INN OF THE MOUNTAIN GODS RESORT AND CASINO

(Exact Name of Registrant as Specified in Its Charter)

Not Applicable	75-3158926
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)
287 Carrizo Canyon Road
Mescalero, New Mexico	88340
(Address of Principal Executive Offices)	(Zip Code)

(505) 464-7000
(Registrant’s Telephone Number, Including Area Code)

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

Title of Each Class	Name of Each Exchange on Which Registered
None	None
Securities registered under Section 12(g) of the Act:
(Title of Class)
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o  No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No þ

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

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
(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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Not applicable

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. Not applicable

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None

TABLE OF CONTENTS

PART I
Item 1. Business	4
Item 1A. Risk Factors	9
Item 1B. Unresolved Staff Comments	13
Item 2. Properties	13
Item 3. Legal Proceedings	13
Item 4. Submission of Matters to a Vote of Security Holders	13
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6. Selected Financial Data	14
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation Operations	15
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	25
Item 8. Financial Statements and Supplementary Data Disclosure	25
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure	25
Item 9A. Controls and Procedures	26
Item 9B. Other Information	26
PART III
Item 10. Directors, Executive Officers and Corporate Governance	26
Item 11. Executive Compensation	28
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	32
Item 13. Certain Relationships and Related Transactions, and Director Independence	32
Item 14. Principal Accounting Fees and Services	33
PART IV
Item 15. Exhibits, Financial Statement Schedules	34
SIGNATURES
INDEX TO EXHIBITS
EX-10.4
EX-12.1
EX-31.1
EX-31.2
EX-32.1

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

FORWARD-LOOKING STATEMENTS

     This Form 10-K includes “forward-looking statements” within the meaning of the federal securities laws. Statements regarding our expected financial condition, results of operations, business, strategies and financing plans under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business” and elsewhere in this Form 10-K are forward-looking statements. In addition, in those and other portions of this Form 10-K, 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-K 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; (h) general local, domestic and global economic conditions; and (i) other factors discussed under “Risk Factors” or elsewhere in this Form 10-K.

     You are urged to consider these factors carefully in evaluating the forward-looking statements contained in this Form 10-K. 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-K are made only as of the date of this Form 10-K. We do not intend, and undertake no obligation, to update these forward-looking statements.

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Item 1. Business

Overview

IMG Resort and Casino

     IMG Resort and Casino, established on April 2, 2003, is a wholly owned enterprise of the Tribe with the exclusive power to conduct and regulate gaming activities on the Tribe’s reservation. We operate New Mexico’s only all-season gaming destination resort on the Tribe’s 725 square mile reservation in south-central New Mexico. We are located in the forests of the Sacramento Mountains and our operations include: a full- service casino, the Travel Center, offering 17,000 square feet of gaming space including 483 slot machines and 10 table games as of April 30, 2008; and a resort hotel and casino on the banks of Lake Mescalero offering 38,000 square feet of gaming space including 981 slot machines and 35 table games as of April 30, 2008; the second largest ski resort in New Mexico; a championship golf course; big-game hunting and various other outdoor recreational activities. We are located approximately 120 miles north of El Paso, Texas and the Mexican border, approximately 200 miles south of Albuquerque, New Mexico and approximately 10 miles west of the resort town of Ruidoso. Ruidoso and its surrounding area offers tourists a variety of year-round activities, including skiing, golfing, hunting, boating, fishing, camping, swimming, horseback riding and cultural events. The neighboring town of Ruidoso Downs features the Ruidoso Downs Race Track and Casino, offering quarter horse and thoroughbred racing throughout the summer months and is home of the world’s richest quarter horse race, the All-American Futurity. White Sands National Monument, which attracts in excess of 500,000 visitors a year, is located approximately 60 miles away from our properties.

     Our casinos and resort hotel are conveniently located off of a heavily traveled four-lane highway, U.S. Highway 70. According to the New Mexico State Highway and Transportation Department, approximately 5.9 million vehicles travel across U.S. Highway 70 each year. We are the only full-service casino operator within our primary market area, encompassing southern New Mexico, including the cities of Ruidoso, Alamogordo, Las Cruces and Roswell and western Texas, including the cities of El Paso, Lubbock and Odessa, and northern Mexico, including Ciudad Juárez.

Our Business Activities

     IMG Resort and Casino was formed by the Tribe on April 2, 2003 to be the holding company for all of the Tribe’s gaming and resort enterprises. Prior to the formation of IMG Resort and Casino, the Tribe operated all of its gaming and resort activities through four separate tribal enterprises: Casino Apache, which owned and operated the Tribe’s original casino, Casino Apache, since the commencement of its operations in 1992; Ski Apache, which owned and operated the Tribe’s ski resort, since the commencement of its operations in 1964; Inn of the Mountain Gods, which owned and operated the Tribe’s resort hotel, the Inn of the Mountain Gods, since the commencement of its operations in 1975; and the Travel Center, which owned and operated the Tribe’s second gaming facility, Casino Apache Travel Center, since the commencement of its operations in April 2003. On April 2, 2003, each of the Tribe’s gaming and resort enterprises — the Travel Center, Casino Apache, Ski Apache and Inn of the Mountain Gods — were contributed to IMG Resort and Casino by the Tribe and are wholly-owned subsidiaries of IMG Resort and Casino.

Gaming

     We currently operate two gaming facilities, the Travel Center and IMG Resort and Casino. The Travel Center, opened on May 21, 2003, is located directly on U.S. Highway 70 and is highly visible to drivers in both directions. As of April 30, 2008, the Travel Center featured 17,000 square feet of gaming space, 483 slot machines and 10 table games, including blackjack and roulette. IMG Resort and Casino opened on March 15, 2005 and is located two miles off of U.S. Highway 70, adjacent to the site of our old casino, Casino Apache. As of April 30, 2008, IMG Resort and Casino featured 38,000 square feet of gaming space, 981 slot machines and 35 table games, including craps, blackjack, roulette, three-card poker and “Let it Ride;” a 250-seat buffet restaurant; a gift shop and approximately 2,200 customer parking spaces.

Resort Amenities

     The original Inn of the Mountain Gods opened in 1975 and quickly established its brand identity across New Mexico, West Texas and other parts of the region as a five-star, all-season resort destination which offered a wide range of amenities and recreational activities. The brand also benefited tremendously from the resort’s natural surroundings and the beauty of Mescalero which is situated in the Sacramento Mountains of New Mexico. These mountains provide a spectacular backdrop for the Inn’s18-hole championship

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golf course, which was designed by Ted Robinson, and create an ideal setting for enjoying skiing, horseback riding, big game hunting, water sports on Lake Mescalero and many other recreational opportunities made available by the Mescalero Apache Tribe.

     The Tribe opened the new and expanded Inn of the Mountain Gods Resort & Casino in March 2005 and was able to build on the 30-year reputation of quality already established by the original facility. The new Inn has received the prestigious four diamond award from AAA in each of its first two years of operations and has been recognized for excellence in convention & meetings facilities, as well as golf. A luxury hotel featuring 273-guest rooms, 40,000 sq. ft. of flexible meeting space, compliment a 38,000 sq ft casino which offers class III “Las Vegas-style gaming.”

Skiing

     We have owned and operated Ski Apache since 1964. Ski Apache has 750-acres of ski area and is the second largest snow ski area (based upon acres of ski area) in the State of New Mexico. Our ski resort is located on U.S. Forest and Tribal land on the 12,003-foot Sierra Blanca Mountain, on the southern tip of the Rocky Mountains, approximately 20 miles from the site of the Resort. The number of annual skier visits ranges from 160,000 to 220,000 in a typical year with average snowfall. At April 30, 2008, Ski Apache featured:

• 11 lifts providing the largest lift capacity in New Mexico (over 16,500 people per hour), which include a four-passenger gondola (the only one in New Mexico), two quad chair lifts, five triple chairs, one double chair lift and two surface lifts;

• a base elevation of 9,600 feet and a vertical drop of 1,900 feet;

• 55 ski trails, of which 20 percent are beginner, 35 percent are intermediate and 45 percent are advanced, as well as Apache Bowl, an expert open bowl ski area;

• a Professional Ski Instructors of America Ski and Snowboarding School; and

• a sport shop with ski rental, offering top quality ski and snowboarding equipment.

     Although Ski Apache typically averages over 15 feet of snowfall each year, Ski Apache features a multi-million dollar snowmaking system, which covers 1,000 feet of vertical drop, trails for all ability levels and the use of 8 of its 11 lifts.

Business Strategy

For the past fiscal year, IMGRC’s management focused on cost-control, internal controls and guest service across each of the Tribe’s hospitality enterprises. Management developed a comprehensive action plan to address each of these areas. That plan was implemented to position the Company appropriately to react to national economic conditions that affected IMGRC throughout the year; as well as adverse weather related events that the region experienced in the second half of the fiscal year. Management also continued to execute a proven business strategy that combined consistency in the delivery of quality in all products and services as well as the cross marketing of all the enterprises amenities. IMGRC also continued to benefit from refinement in the current corporate structure that reduces costs and improves efficiencies through centralized management in the areas of administration, accounting and finance, human resources, engineering and maintenance.

• The Inn of the Mountain Gods Resort & Casino — The Resort continues to be marketed and branded as the best all-season resort destination in the Southwest. The combination of premium quality facilities that are situated in the naturally beautiful mountains of Mescalero, distinguish the Inn from its competition within the region. To further refine the Inn’s brand, consistency in the delivery of quality in all services and amenities has been essential to attracting new guests as well as retaining existing ones. The Resort has used cross marketing opportunities with the enterprise’s other amenities to continue to increase hotel occupancy and attract new customers. The Resort continued to refine its reputation as a quality resort destination. From an operational perspective, containing costs and creating greater efficiencies in operations also contributed to the improvements in quality.

• Casino Apache Travel Center — Casino Apache has developed a very strong local’s customer base which fuels a year-round revenue stream. Additionally, because the facility is located right on Highway 70, revenues are further boosted by more than 8,000 vehicles passing by each day. Mid-week food and gaming promotions are also offered and showcased on the electronic reader board — the grill-type restaurant features larger portion sizes of high-quality at very reasonable prices. A wide variety

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	of slots is offered with a concentration in the lower denominations. In addition, management opened a dollar slot area to expand the gaming floor and removed all wide area participation games from the floor to reduce costs. The table games limits continue to offer lower limits to extend playtime for the guest.
•	Ski Apache — In the prior year (2006-07 ski season), Ski Apache experienced the highest cash flow and operating margin ever generated by Ski Apache. Although the management team has implemented several programs over the course of the last two years improving the operational efficiency of Ski Apache, results for the 2007 — 2008 ski season were adversely affected by the lack of natural snowfall. Skier visits were substantially down as compared to its 5-year average and the intermittent natural snowfall resulted in the operation substantially discounting lift ticket prices throughout the ski season. As a result, of the combination of reduced skier visits and lower ticket prices, Ski Apache experienced a significant revenue decrease during this fiscal year. The management team continues to concentrate on service, maintenance and improved labor utilization to refine operational processes. The cross marketing of Ski Apache with casino operations has to date yielded marginal results but the cross-marketing has worked well with promoting hotel occupancy, restaurant covers, concert ticket sales and other non-gaming recreational activities.
•	Championship Golf — The Ted Robinson-designed championship golf course serves as a critical amenity for the Inn of the Mountain Gods Resort. The golf course was originally opened in 1975 and has developed a reputation for providing a high-quality golf experience in a uniquely beautiful mountain setting. The golf course brand has also been enhanced by serving as the host location for the top two professional tournaments held in the State of New Mexico for the past four years. The Hotel Sales department has also been very successful using the golf course as a cross-marketing tool to attract the conventions and meetings industry.
•	Big Game Hunting — Mescalero Big Game Hunts has been nationally-recognized as one of the top bull elk operations in North America. Co-branding alliance with Christensen Arms, a premium firearms manufacturer, has expanded awareness and boosted recognition not only of the hunts but of the Inn of the Mountain Gods Resort. In particular, the Inn has successfully marketed the hunt program to attract customers from outside of our regional customer base; the hunts are a premium amenity that cannot be duplicated by any competitor within or near our market.

Gaming in New Mexico

Competition

     Our primary market area encompasses southern New Mexico, including the cities of Ruidoso, Alamogordo, Las Cruces and Roswell, western Texas, including the cities of El Paso, Lubbock and Odessa and northern Mexico, including Ciudad Juárez. According to the U.S. Census Bureau and Desarrollo Economico de Ciudad Juárez/INEGI, there are approximately 3.1 million people in our primary market area and 1.8 million adults.

     Currently, we are the only full-service casino operator within our primary market area. We currently face competition in our primary market area from two racinos, Ruidoso Downs, 10 miles away in Ruidoso and Sunland Park Racetrack and Casino, 125 miles away in Sunland Park, New Mexico. Ruidoso Downs offers quarter horse and thoroughbred racing from May through September, as well as a 20,000 square foot casino featuring 300 slot machines and a buffet restaurant. Sunland Park offers quarter horse and thoroughbred racing from mid-November to early-April, a 36,000 square foot casino facility, 700 slot machines and five restaurants. Both of these facilities lack table games and lodging facilities. In addition, we compete with 11 other New Mexico Indian casinos and one racino located in and around Albuquerque and Santa Fe, New Mexico, which is outside of our primary market area plus a racino in Hobbs, NM, which is also outside our primary market area, but impacts our west Texas customers.

     We also compete with other forms of legal gaming in New Mexico, Texas and Northern Mexico, including horse racing, Class II gaming, pari-mutuel wagering, the New Mexico State Lottery, the Texas State Lottery, as well as non-gaming leisure activities. We intend to expand our existing geographic market and increase the percentage of our overnight and larger spending customers who tend to live greater distances from us.

Mescalero Apache Tribe

Tribal Administration

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     The Tribe is a federally recognized Indian tribe located on a 750 square mile reservation in south-central New Mexico and has approximately 4,400 members. The Indian Reorganization Act of 1934 and subsequent federal legislation govern the relationship between the Tribe and the United States government. The Tribe operates under a constitution approved by the United States Secretary of the Interior on March 25, 1936, revised on January 12, 1965, and amended on May 31, 1985.

     In accordance with its Constitution, the Tribe is governed by and enacts laws through ordinances and resolutions of the Mescalero Apache Tribal Council, or the Tribal Council, which is comprised of a President, Vice President and eight Council Members, each of whom is elected by a majority vote of the eligible adult enrolled members of the Tribe. The President is a non-voting member of the Tribal Council and the Vice President only votes if necessary to break a tie. Each member of the Tribal Council serves a two-year term, with the terms of the voting members staggered so that each year four of those eight positions are up for election. The Tribal Council has the power, by ordinance, to establish the principles and policies governing the operation and control of all enterprises of the Tribe. The Tribal President has the power to contract for the Tribe upon authorization from the Tribal Council. The Tribal Executive Committee, or the Executive Committee, has responsibility for oversight of all business activities on behalf of the Tribal Council. The Executive Committee is comprised of the President and Vice President as well as a Secretary and Treasurer. The Secretary and Treasurer are appointed by the President from the present Tribal Council.

Tribal Court System

     The Constitution and Tribal Code provides for the establishment of the tribal court known as the Mescalero Apache Tribal Court, or Tribal Court. The jurisdiction of the Tribal Court extends to all matters, criminal and civil, except where prohibited by the Constitution, laws or treaties of the United States of America, and except as this jurisdiction may be otherwise limited from time to time by ordinance of the Tribal Council. The criminal offenses over which the Tribal Court has jurisdiction may be embodied in a Code of Laws, adopted by ordinance of the Tribal Council, and subject to review by the Secretary of the Interior. The duties and procedures of the Tribal Court are determined by ordinance of the Tribal Council.

     The Tribal Court consists of a chief judge and two associate judges, appointed by the President of the Tribe, with the concurrence of not less than a three-fourths majority vote of the whole membership of the Tribal Council. The Tribal Council also sits as a court of appeals whenever necessary and may hear appeals at any regular or special meeting. The tenure and salary of tribal judges is established by resolution of the Tribal Council.

     A judge of the Tribal Court must be an Indian as defined in the Tribal Code, not less than thirty-five years or more than seventy years of age; and cannot have been convicted of a felony, or, within one year, of a misdemeanor. The Tribal Code defines an “Indian” as someone who possesses at least one-quarter Indian blood, and is a member of any federally recognized tribe, nation, or band of Indians, or is an Eskimo, Aleut, or other Alaskan.

     The Tribe has adopted its own rules of procedure and evidence, which are found in the Tribal Code. In determining cases, a tribal court judge relies on the applicable laws in the following order of precedence:

(a) Tribal Constitution, Tribal Code, ordinances, traditions and customs and (b) federal laws not in conflict with tribal laws and customs.

Mescalero Apache Tribal Gaming Commission

     On August 20, 1999, the Tribe formed the Mescalero Apache Tribal Gaming Commission as a governmental subdivision of the Tribe. The Mescalero Apache Tribal Gaming Commission consists of 4 members, including a Chairman, Vice Chairman and Secretary-Treasurer and Commissioner. The Mescalero Apache Tribal Gaming Commission is vested with the authority to regulate all licenses and gaming activity conducted on tribal lands, including licensing persons, vendors, financial sources and contractors employed by the casino, ensuring compliance with internal control standards established by the National Indian Gaming Commission, or the NIGC, an independent agency within the U.S. Department of the Interior and establishing technical specifications for gaming devices. The Mescalero Apache Tribal Gaming Commission is responsible for carrying out the Tribe’s regulatory responsibilities under federal, state and tribal law and the 2001 Compact.

Government Regulation

General

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     We are subject to federal, state and tribal laws governing commercial relationships with Indians, Indian gaming and the management and financing of casinos owned by an Indian tribe. In addition, we are regulated by federal and state laws applicable to the gaming industry generally and to the distribution of gaming equipment. The following description of the regulatory environment in which Indian gaming takes place and in which we operate our casinos is only a summary and not a complete recitation of all applicable law. Moreover, this particular regulatory environment is more susceptible to changes in public policy considerations than others. We cannot predict how certain provisions will be interpreted from time to time or whether they will remain intact. Changes in these laws could have a material adverse impact on our business and results of operations and our ability to meet our debt service obligations.

Tribal Law and Legal Systems

     Applicability of Federal Law. Federally recognized Indian tribes are independent governments, subordinate to the United States, with sovereign powers, except as those powers may have been limited by treaty or by the U.S. Congress. The power of Indian tribes to enact their own laws to regulate gaming derives from the exercise of tribal sovereignty and is subject to federal law. Indian tribes maintain their own governmental systems and often their own judicial systems. Indian tribes have the right to tax persons and businesses operating on Indian lands, and also have the right to require licenses and to impose other forms of regulations and regulatory fees on persons and businesses operating on their lands.

     Waiver of Sovereign Immunity; Jurisdiction; Exhaustion of Tribal Remedies. Indian tribes enjoy sovereign immunity from unconsented suit similar to that of the states and the United States. To sue an Indian tribe (or an enterprise, agency or instrumentality of an Indian tribe, such as us), the tribe must have effectively waived its sovereign immunity with respect to the matter in dispute. Further, in most commercial disputes with Indian tribes, the jurisdiction of the federal courts, which are courts of limited jurisdiction, may be difficult or impossible to obtain. A commercial dispute is unlikely to present a federal question, and courts have ruled that an Indian tribe as a party is not a citizen of any state for purposes of establishing diversity jurisdiction in the federal courts. The remedies available against an Indian tribe also depend, at least in part, on the rules of comity requiring initial exhaustion of remedies of tribal tribunals and, as to some judicial remedies, the tribe’s consent to jurisdictional provisions contained in the disputed agreements. Under U.S. Supreme Court case law, where a tribal court exists, the remedies in that forum first may have to be exhausted before any dispute arising on or involving the affected tribe’s reservation and to which the tribe, a tribal enterprise such as us or a tribal member is a party, can be properly heard by federal or state courts which would otherwise have jurisdiction. Generally, where a dispute as to the existence of jurisdiction in the tribal forum exists, the tribal court first may need to rule as to the limits of its own jurisdiction, subject to certain limited exceptions enumerated by the U.S. Supreme Court.

The Indian Gaming Regulatory Act of 1988

     Regulatory Authority. The operation of casinos and of all gaming on Indian land is subject to the Indian Gaming Regulatory Act of 1988 (the “IGRA”). IGRA is administered by the NIGC which exercises primary federal regulatory responsibility over Indian gaming. The NIGC has exclusive authority to issue regulations governing tribal gaming activities, approve tribal ordinances for regulating Class II and Class III gaming (as described below), approve management agreements for gaming facilities, and conduct investigations and generally monitor tribal gaming. The Bureau of Indian Affairs, or the BIA, which is a bureau of the Department of the Interior, retains certain responsibilities under IGRA (such as the approval of per capita distribution plans to tribal members and the approval of transfers of lands into trust status for gaming). The BIA also has responsibility to review and approve land leases and other agreements relating to Indian lands. Criminal enforcement is a shared responsibility of the U.S. Department of Justice, the state in which the Tribe is located and the Tribe, in accordance with federal law.

     The NIGC is empowered to impose civil penalties for violations of IGRA. IGRA also provides for federal criminal penalties for illegal gaming on Indian land and for theft from Indian gaming facilities. The NIGC has adopted rules implementing certain provisions of IGRA. These rules govern, among other things, the submission and approval of tribal gaming ordinances or resolutions and require an Indian tribe to have the sole proprietary interest in and responsibility for the conduct of any gaming on its lands. Tribes are required to issue gaming licenses only under articulated standards, conduct or commission financial audits of their gaming enterprises, perform or commission background investigations for primary management officials and key employees and maintain facilities in a manner that adequately protects the environment and the public health and safety. These rules also set out review and reporting procedures for tribal licensing of gaming operation employees.

     Classes of Gaming. IGRA classifies games that may be conducted on Indian lands into three categories. Class I gaming includes social games solely for prizes of minimal value or traditional forms of Indian gaming engaged in by individuals as part of, or in

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connection with, tribal ceremonies or celebrations. Class II gaming includes bingo, pulltabs, lotto, punch boards, non-banked card games, tip jars, instant bingo and other games similar to bingo, if those games are played at the same location as bingo is played. Class III gaming includes all other forms of gaming, such as slot machines, video casino games, banked table games and other commercial gaming, such as sports betting and pari-mutuel wagering.

     Class III gaming is permitted on Indian lands if the conditions applicable to Class II gaming are met and, in addition, the gaming is conducted in conformity with the terms of a tribal-state compact, which is a written agreement between the tribal government and the government of the state within whose boundaries the tribe’s lands lie. IGRA requires Indian tribes to enter into tribal-state compacts in order to conduct Class III gaming.

     Tribal-State Compacts. Tribal-state compacts may include provisions for the allocation of criminal and civil jurisdiction between the state and the Indian tribe necessary for the enforcement of these laws and regulations, taxation by the Indian tribe of the Class III gaming activity in amounts comparable to those amounts assessed by the state for comparable activities, remedies for breach, standards for the operation of the Class III gaming activity and maintenance of the gaming facility, including licensing and any other subjects that are directly related to the operation of gaming activities. While the terms of tribal-state compacts vary from state to state, compacts within one state tend to be substantially similar. Tribal-state compacts usually specify the types of permitted games, establish technical standards for video gaming machines, set maximum and minimum machine payout percentages, entitle the state to inspect casinos, require background investigations and licensing of casino employees and may require the tribe to pay a portion of the state’s expenses for establishing and maintaining regulatory agencies. Some tribal-state compacts are for set terms, while others are for indefinite duration.

     Tribal Ordinances. Under IGRA, except to the extent otherwise provided in a tribal-state compact as described below, Indian tribal governments have primary regulatory authority over Class III gaming on land within a tribe’s jurisdiction. Therefore, a tribe’s gaming operations, and persons engaged in gaming activities, are guided by and subject to the provisions of that tribe’s ordinances and regulations regarding gaming.

     IGRA requires that the NIGC review tribal gaming ordinances and authorizes the NIGC to approve these ordinances only if they meet requirements relating to:

• the ownership, security, personnel background, recordkeeping and auditing of a tribe’s gaming enterprises;

• the use of the revenues from that gaming; and

• the protection of the environment and the public health and safety.

Possible Changes in Federal Law. Several bills have been introduced in Congress that would amend IGRA. While there have been a number of technical amendments to the law, to date there have been no material changes to IGRA. Any amendment of IGRA could change the governmental structure and requirements within which we could conduct gaming, and may have an adverse effect on our business and results of operations or impose additional regulatory or operational burdens.

Employee and Labor Relations

     As of April 30, 2008, we had 1,232 full-time team members, excluding approximately 201 additional seasonal team members who alternate between Ski Apache during the ski season, which typically runs from Thanksgiving to Easter and then return to work at the hotel the other months. We have developed and implemented training programs for our hotel and resort team members and believe that we will be able to hire and train a sufficient number of employees for the operation of the Resort. Our team members are not covered by any collective bargaining agreements. We have good labor relations with our team members, over 43.5% of whom are tribal or tribal affiliates.

Item 1A. Risk Factors

RISK FACTORS

     Several of the matters discussed in this Report contain forward-looking statements that involve risks and uncertainties. Factors associated with the forward-looking statements that could cause actual results to differ from those projected or forecasted in this Report are included in the statements below. In addition to other information contained in this Report, you should carefully consider the following cautionary statements and risk factors. The risks and uncertainties described below are not the only risks and

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uncertainties we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks actually occur, our business, financial condition, and results of operations could suffer. The risks discussed below also include forward-looking statements and our actual results may differ substantially from those discussed in these forward-looking statements.

Risks Relating to Our Business

We have a substantial amount of indebtedness, which could adversely affect our financial condition.

     As of April 30, 2008, we had an aggregate of approximately $208.2 million of indebtedness outstanding, which includes $200.0 million of debt on the notes issued on November 3, 2003. This substantial indebtedness could have important consequences to you and significant effects on our business and future operations. For example, it could:

• make it more difficult for us to satisfy our debt service obligations;

• increase our vulnerability to general adverse economic and industry conditions or a downturn in our business;

• limit our ability to fund future working capital, capital expenditures and other general operating requirements;

• require us to dedicate a substantial portion of our cash flow from operations to service our outstanding indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, and other general operating requirements;

• place us at a competitive disadvantage compared to our competitors that have less debt; and

• limit our ability to borrow additional funds.

     Our indebtedness could result in a material adverse effect on our business, financial condition and results of operations. If we incur additional debt in the future, these adverse consequences could intensify.

Our failure to generate sufficient cash flow from our gaming and other resort operations could adversely affect our ability to meet our debt service obligations.

     Our ability to make payments on and repay or refinance our debt will depend on our ability to generate cash flow from the operations of our gaming and other resort operations. Our ability to generate sufficient cash flow from operations to satisfy our obligations will depend on our future operating performance, which is subject to many economic, competitive, regulatory and other business factors that are beyond our control. If we are not able to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. For the following reasons, among others, these alternatives may not be available to us on reasonable terms or at all, or, if available, they may not be available in amounts adequate to enable us to satisfy our debt service obligations:

• unlike non-governmental businesses, we are prohibited by law from generating cash through an offering of equity securities;

• our ability to incur additional debt is limited by the covenants of the indenture governing the notes; and

• the indenture governing the notes includes covenants which limit our ability to create liens on or sell our assets.

If our cash flow is insufficient and we are unable to raise additional capital, we may not be able meet our debt service obligations.

Restrictive covenants in the indenture governing the notes may limit our ability to expand our operations and capitalize on our business opportunities.

     The indenture governing the notes includes covenants which limit our ability to borrow money, make investments, create liens, sell assets, engage in transactions with affiliates, engage in other businesses and engage in mergers or consolidations. These restrictive covenants may limit our ability to expand our operations and capitalize on business opportunities. If we are unable to expand our operation or otherwise capitalize on our business opportunities, our business, financial condition and results of operations could be

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materially adversely affected and we may not be able to meet our debt service obligations.

We may not be able to realize the benefits of our business strategy.

     The Resort Project is part of our business strategy to develop an integrated resort, increase our market reach and realize operating benefits from business synergies. We may not be able to fully implement this strategy or may not fully realize these anticipated benefits. Implementation of our business strategy could be adversely affected by a number of factors beyond our control, including general or local economic conditions, increased competition or other changes in our industry. In particular, we may not be able to attract a sufficient number of guests, gaming customers and other visitors in order to achieve our performance goals. Furthermore, we may not be successful in our plan to promote our customers’ utilization of our various resort amenities, including our gaming, hotel, entertainment and other amenities as anticipated or to a degree that will allow us to achieve our performance goals. Additionally, our business strategy, intended to capitalize on the spending levels of our patrons, attract customers from new target markets and reduce seasonality, may not achieve its intended results. A failure to effectively implement our business strategy could have a material adverse effect on our business, financial condition, results of operations and our ability to meet our debt service obligations.

Federal, state and Tribal laws and regulations, and our gaming compact, regulate our gaming operations and noncompliance with these laws and regulations by us or the Tribe, as well as changes in these laws and regulations (which are susceptible to changes in public policy) or future interpretations thereof, could have a material adverse effect on our ability to conduct gaming, and thus on our ability to meet our debt service obligations.

     Federal, state and Tribal laws and regulations, and our gaming compact, regulate our gaming operations. For example, various regulatory bodies, including the NIGC, the Mescalero Apache Tribal Gaming Commission and the New Mexico Gaming Control Board have oversight of our gaming operations. In addition, Congress has regulatory authority over Indian affairs and can establish and change the terms upon which Indian tribes may conduct gaming. The operation of all gaming on Indian lands is subject to IGRA.

     The legal and regulatory environment governing our activities, which involve gaming and commercial relations with Indian tribes, is susceptible to changes in public policy regarding these matters. For example, over the past several years, legislation has been introduced in Congress designed to address a myriad of perceived problems with IGRA, including proposed legislation repealing many of the provisions of IGRA and prohibiting the operation of gaming on Indian reservations in states where gaming is not otherwise allowed on a commercial basis. While none of the substantive proposed amendments to IGRA have proceeded out of committee hearings to a vote by either house of the U.S. Congress, we cannot predict the ramifications of future legislative acts. Changes in applicable laws or regulations, or a change in the interpretation of these laws or regulations or our gaming compact with the State of New Mexico could limit or materially affect the types of gaming, if any, that we may offer. Any restrictions with respect to gaming could have a material adverse effect on our business, financial condition, results of operations and our ability to meet our debt service obligations.

We compete with casinos, other forms of gaming and other resort properties. If we are not able to successfully compete, we will not be able to generate sufficient cash flow to meet our debt service obligations.

     Currently, we compete with 15 tribal gaming casinos and non-tribal racinos operated within 200 miles of our location, one of which, Ruidoso Downs, is approximately 10 miles away from us in Ruidoso, and another, Sunland Park Racetrack and Casino, is approximately 125 miles away from us in Sunland Park, New Mexico. Ruidoso Downs offers quarter horse and thoroughbred racing from May through September, as well as a 20,000 square foot casino featuring approximately 300 slot machines and a buffet restaurant. Sunland Park offers quarter horse and thoroughbred racing from mid-November to early-April, a 36,000 square foot casino featuring approximately 700 slot machines and five restaurants. The other 11 tribal gaming casinos and one racino are located in and around Albuquerque and Santa Fe, New Mexico, all of which are outside of our primary market area. We also compete with other forms of legal gaming in New Mexico, Texas and Northern Mexico, including horse racing, Class II gaming, pari-mutuel wagering, the New Mexico State Lottery, the Texas State Lottery, as well as non-gaming leisure activities. We intend to expand our existing geographic market and increase the percentage of our overnight and larger spending customers who tend to live greater distances from us. Many of our competitors in this expanded geographical market have substantially greater resources and name recognition than we do or are in a more convenient location, which is closer to a major population center or transportation hub. If we are unable to compete successfully, our business, financial condition and results of operations could be materially adversely affected and we may not be able to meet our debt service obligations.

We are highly dependent on our surrounding market area. As a result, we face greater risks than a geographically diverse company.

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     We rely primarily on drive-in customers living within our primary market area consisting of southern New Mexico, western Texas and northern Mexico for the majority of our revenues. We expect to increase our market reach, but if our marketing strategy is not successful, our primary customer base will continue to be a predominately local one. Therefore, we are subject to greater risks than more geographically diversified gaming or resort operations. Among others, the following conditions could have a material adverse effect on our results of operations:

• a decline in the economies of our primary market area or a decline in the number of gaming customers from these areas for any reason;

• an increase in competition in our primary market area or the surrounding area;

• inaccessibility due to road construction or closures of primary access routes; and

• natural and other disasters in the surrounding area including forest fires and floods.

     These factors may cause a disruption in our business and as a result have a material adverse effect on our business, financial condition, result of operations and our ability to meet our debt service obligations.

We may face difficulties in recruiting, training and retaining qualified employees.

     The operation of our resort requires us to continuously recruit and retain a substantial number of qualified professionals, employees, executives and managers with gaming, hospitality, management and financial reporting experience. There can be no assurances that we will be able to recruit, train and retain a sufficient number of qualified employees. A failure to be able to recruit and retain qualified personnel could result in management, operating and financial reporting difficulties or affect the experience and enjoyment of our patrons, either of which could have a material adverse effect on our business, financial condition, results of operations or ability to meet our debt service obligations.

The terms of four of the eight voting members of the Tribal Council expire each year and the terms of the Tribe’s President and Vice President expire every two years; changes in the Tribal Council or its policies could affect the Resort or other aspects of our business.

     The Tribe is governed by a ten member Tribal Council, consisting of the President and Vice President of the Tribe and eight voting Tribal Council members. The President is a non-voting member of the Tribal Council and the Tribe’s Vice President only votes in the event of a tie in the voting of the eight voting members of the Tribal Council. Terms of all Tribal Council members (including the President and Vice President of the Tribe) are two years, with members elected on a staggered basis so that four Tribal Council members are elected each year. If there is a significant change in the composition of the Tribal Council, the new Tribal Council may not have the same agenda or goals as the current government, in particular with respect to the Resort. In addition, the Tribal Council acts by majority vote and with respect to any issue or policy, a change in views by one or more members could result in a change in the policy adopted by the Tribal Council. Changes in the Tribal Council or its policies could result in significant changes in our structure or operations or in the Resort, which could adversely affect our business plan or otherwise result in a material adverse effect in our business, financial condition, results of operations or ability to meet our debt service obligations.

Impact of Inflation

     Absent changes in competitive and economic conditions or in specific prices affecting the industry, we do not expect that inflation will have a significant impact on our operations. Changes in specific prices, such as fuel and transportation prices, relative to the general rate of inflation may have a material adverse effect on the hotel and casino industry in general.

Energy and fuel price increases, such as the recent dramatic increases in gasoline prices, may adversely affect our costs of operations and our revenues.

     IMGRC uses a significant amount of electricity, natural gas and other forms of energy. While no shortages of energy have been experienced, substantial increases in the cost of electricity in the United States would negatively affect our results of operations. In addition, energy and fuel price increases in cities that constitute a significant source of customers for IMGRC could result in a decline in disposable income of potential customers, and lead our customers and potential customers to decide not to travel, either of which

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could result in a corresponding decrease in visitation to IMGRC, which would negatively impact our revenues. The extent of this impact is subject to the magnitude and duration of the energy and fuel price increases, which recently have been significant; however, this impact could be material.

A downturn in general economic conditions may adversely affect our results of operations.

     The success of our operations depends to a significant extent upon a number of factors relating to discretionary consumer spending, including economic conditions affecting disposable consumer income such as employment, business conditions, interest rates and taxation. There can be no assurance that consumer spending will not be adversely affected by economic conditions, thereby impacting our growth, financial condition and results of operations. Recent unprecedented increases in the price of gasoline may also affect our customers’ willingness to travel. Further, a recession or downturn in the general economy, or in a region constituting a significant source of customers for IMGRC, could result in fewer customers visiting, or customers spending less at IMGRC, which would adversely affect our results of operations.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

     We do not currently, and will not, own the land on which our gaming and resort enterprises are located, including the IMG Resort and Casino, the Travel Center and a portion of Ski Apache. The U.S. government holds all of the land in trust for the benefit of the Tribe. The use of tribal land is provided to us rent-free. In addition, we have a special use permit from the United States Department of Agriculture, Forest Service for the operation of the remaining portion of Ski Apache. The special use permit expires on December 31, 2014.

Item 3. Legal Proceedings

Legal Proceedings

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

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

Not applicable.

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PART II.

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The Resort has not issued or sold any equity securities.

Item 6. Selected Financial Data

SELECTED HISTORICAL FINANCIAL AND OTHER DATA

     The selected financial data set forth below for each of the five fiscal years ended April 30, 2004, 2005, 2006, 2007 and 2008 have been derived from our audited financial statements. You should read the following financial data in conjunction with the section in this Form 10-K entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with our financial statements and the related notes included in this Form 10-K beginning on page F-1. Our financial statements for the fiscal year ended April 30, 2004 were audited by Grant Thornton LLP. Our financial statements for the years ended April 30, 2005, 2006, 2007 and 2008 were audited by BDO Seidman LLP, an independent registered public accounting firm, and are included in this Form 10-K. (dollars are in thousands)

	Fiscal Year Ended
	April 30,
	2004			2005			2006			2007			2008
Statements of Income Data:
Revenues:
Gaming	$	60,277		$	64,254		$	76,476		$	76,473		$	77,537
Rooms		—			1,168			10,860			13,472			13,475
Food and beverage		5,615			6,369			12,260			13,939			14,953
Recreation and other		16,472			23,013			16,621			23,223			20,577
Gross revenues		82,364			94,804			116,217			127,107			126,542
Less: promotional allowances		1,437			1,770			2,766			2,255			2,105
Net revenues		80,927			93,034			113,451			124,852			124,437
Operating expenses:
Gaming		25,406			25,765			27,179			26,376			26,647
Reversal of accrued fees		(27,136	)		—			—			—			—
Rooms		120			651			5,181			4,658			4,434
Food and beverage		6,587			7,274			15,729			14,215			15,348
Recreation and other		10,702			15,435			12,379			13,862			14,908
Marketing		2,809			2,868			8,920			8,816			10,005
General and administrative		6,229			6,973			15,713			11,192			11,390
Shared Service-Related Parties		4,271			5,544			5,104			5,207			5,571
Pre-opening costs and expenses		3,072			8,324			—			—			—
Depreciation and amortization		4,930			7,270			17,779			18,170			16,061
Loss on disposal of assets		—			—			—			7			64
Total operating expenses		36,990			80,104			107,984			102,503			104,428
Income from operations		43,937			12,930			5,467			22,349			20,009
Interest Income (expense), net of amounts capitalized		(4,450	)		(10,887	)		(26,398	)		(26,362	)		(26,230	)
Other non-operating income		258			97			(337	)		48			47
Net income (loss)	$	39,745		$	2,140			($21,268	)		($3,965	)		($6,174	)
Other Financial Data:
EBITDA (1)	$	49,125		$	20,297		$	22,909		$	40,567		$	36,117
Capital expenditures		107,003			88,661			14,769			472			1,298
Cash provided by (used in) operating activities		38,113			(3,135	)		(1,528	)		10,583			11,297
Cash provided by (used in) financing activities		68,899			95,183			25,218			(8,906	)		(11,953	)
Ratio of Earnings to Fixed Charges (2)		3.4	x		0.5	x		0.2	x		0.9	x		0.8	x

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	As of April 30,
	2004		2005		2006		2007		2008
Property Data (as of end of period except win per day data) (unaudited)
Gross slot win per day	$	134	$	147	$	129	$	131	$	134
Table game win per day		550		646		513		595		601
Number of slot machines		1,180		1,503		1,510		1,501		1,462
Number of table games		38		56		47		46		42
Number of hotel rooms		—		273		273		273		273
Number of restaurant seats		200		803		803		803		803
Gaming square footage		39,600		55,000		55,000		55,000		55,000
Balance Sheet Data:
Cash and cash equivalents	$	15,795	$	13,718	$	16,768	$	16,930	$	14,975
Total assets		316,210		293,694		273,360		235,539		217,944
Total debt and capital lease obligations		201,947		201,528		211,530		208,174		204,639
Total equity (deficit)		59,004		58,143		31,365		4,421		(9,757	)

(1) We define EBITDA as earnings before interest, taxes, depreciation and amortization. We are instrumentalities of a sovereign Indian nation and are not subject to federal or state income tax. Below is a quantitative reconciliation of EBITDA to the most directly comparable GAAP financial performance measure, which is net income:

	Fiscal Year Ended
	April 30,
	2004		2005		2006			2007			2008
Net income (loss)	$	39,745	$	2,140	$	(21,268	)	$	(3,965	)	$	(6,174	)
Interest expense (income), net		4,450		10,887		26,398			26,362			26,230
Depreciation and amortization		4,930		7,270		17,779			18,170			16,061
EBITDA	$	49,125	$	20,297	$	22,909		$	40,567		$	36,117

We caution you that amounts presented in accordance with our definition of EBITDA may not be comparable to similar measures disclosed by other issuers because not all issuers and analysts calculate EBITDA in the same manner. EBITDA is presented in this Form 10-K because management believes it is a useful supplement to income from operations and cash provided by operating activities in understanding cash flows available for debt service, capital expenditures and Tribal distributions. Accordingly, our management utilizes EBITDA along with net income, income from operations and other GAAP measures in evaluating our operations and performance. EBITDA should not be considered as an alternative measure of our net income, income from operations, cash flow or liquidity. EBITDA is not a measurement of financial performance or liquidity in accordance with GAAP. Although we believe EBITDA enhances your understanding of our financial condition and results of operations, this non-GAAP financial measure, when viewed individually, is not necessarily a better indicator of any trend as compared to GAAP financial measures (e.g., income from operations, net revenues, cash provided by operating activities) conventionally computed in accordance with GAAP.

(2) RATIO OF EARNINGS TO FIXED CHARGES

“Earnings” consist of income (loss) from continuing operations including amortization of capitalized interest, before extraordinary items, and fixed charges. “Fixed charges” consist of interest expense, capitalized expenses related to indebtedness, the portion of operating lease expense that represents interest and any preference security dividend requirements of consolidated subsidiaries. The table in Exhibit 12.1 sets forth our calculation of ratio of earnings to fixed charges for the periods indicated.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation

Summary of Past Year’s Activities

     This year’s activities at the IMGRC were centered on providing the guests of the IMGRC’s hospitality enterprises with the superior quality and excellent service that they have come to expect. Management endeavored to provide that high level of service while striving to be more cost efficient in providing that experience. Winter tourism at the IMGRC and in the region in general was adversely affected by the lack of natural snowfall in the second half of the fiscal year. Management made several operational

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adjustments to make the best of economic situation caused by this weather event. A summary of the most notable activities from the past year are highlighted below:

Inn of the Mountain Gods Resort & Casino

• Marketing and Slot Operational Programs

• Enhancing Guest Loyalty Program — The Apache Spirit Club is the guest loyalty program that offers incremental value to the guest for gaming & non-gaming spending. The program is a tiered guest loyalty program in which customers earn points for gaming activity. Points accumulated from gaming activity can be redeemed for all goods and services offered by any of IMGRC’s hospitality enterprises as well as for cash back — the program also offers a 5% discount in all non-gaming outlets. Current efforts are focused on compiling customer spending data resort-wide in order to provide offers and incentives that match the guest’s interests and further maximize revenue per guest.

• Ongoing Direct Marketing Efforts — Direct marketing efforts continue to be refined using greater segmentation to more closely align reinvestment in the player with their earning potential. The scope of offers was also expanded to reach a broader mix of customers to stimulate repeat visitation during off-peak periods. The number of levels for casino offers increased from five tiers to seven tiers to provide more balanced customer reinvestment.

• Aggressive Special Events, Promotions & Concert Schedule — These programs are staged weekly to drive visitation and gaming activity during slower periods and to introduce new clientele to the Resort.

• Refinements in Game Mix — Management continues to make refinements in game mix by reducing wide-area progressive games in favor of participation games with lower hold percentages and smaller participation payment to the machine manufactures.

• Boosting Room Occupancy

• Leisure Marketing — Increases in occupancy from the leisure market segment has been achieved through direct marketing to established guests and prospects, as well as by broad-based advertising at strategic times.

• Daily Yield Management — A broad range of rates is utilized with adjustments being made to the available rate on a daily basis in small increments of $10-$20. Emphasis has been placed on driving occupancy with modest year-over-year increases in the average rate.

• Group Sales — The group sales staff expanded efforts to increase market share as well as improve the capture rate of select groups with greater spending profiles by cross marketing the enterprise’s other recreational activities.

• Enhancing Guest Satisfaction

• Apache Academy Training — All employees were required to attend different classes of mandatory training covering all major aspects of customer service, leadership, culture, and service.

• Anonymous Shoppers Program — An anonymous shopping company was continued to provide detailed accounts of an individual customer’s experience in all areas of the operations; the data collected was utilized for training and developing operational improvements.

• Ongoing Guest Satisfaction Program — A seven-point survey instrument continues to be used to measure satisfaction in all areas of the Resort and on a broad range of issues.

Casino Apache

• Improving Consistency in Products & Services

• The Director of Operations for the Casino Apache Travel Center has, through the onsite monitoring of day-to-day business, been able to enhance service and streamline operation.

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• Slot Mix Refresh — The Slot Management team has eliminated all wide-area progressive games and replaced them with participation games to reduce operational costs.

• Table Games Training — Dealer and supervisory personnel in table games were required to undergo training, auditions and academic testing on game rules and protection measures.

• Promotional & Marketing Programs

• Seniors Program — Mondays are dedicated to values reserved just for seniors — food and beverage and gaming offers reward players for repeat visitation and rated play — cash promotions for slot and table games play compensate players for extended play time.

• Steak & Shrimp Special — This special meal is $7.77 when you earn 10 points from gaming activity or $12.95 without points. It currently is the 5^th best selling item on the menu and is available Tuesday through Friday.

• Tobacco Products — Discount tobacco product distribution was relocated into the main retail sales area inside the Casino Apache Travel Center. This provided for an opportunity for more casino floor space and greater convenience for the customers purchasing the discounted tobacco products. Discount pricing is also offered on premium brand tobacco products to attract repeat visitation to the facility and build loyalty.

Ski Apache

• Natural Snowfall & Operations

• During last year’s ski season, the mountain received below average natural snowfall. This lack of snow discouraged the skier market and drove skier visits down. Therefore, management was forced to operate the ski facility without the average level of revenue; adjustments were made not only to variable costs, but to fixed costs as well to ensure that a profit could be generated.

• Operational Improvements — Labor hours were scheduled to more closely coincide with historical fluctuations in business levels through weekly labor forecasting and daily approvals of hours worked. Service was improved through training and constant reviews by management in all areas of the operations. The Director of Ski Operations continued to reorganize the personal at the Ski facility to better utilize the skills and talents of the current Ski Apache team members.

• Lift Maintenance — The management team has done a superior job in the area of lift maintenance — not only is the work ahead of schedule but the level of detail in documentation was significantly improved above industry standards.

IMGRC Championship Golf

• Event Marketing to Refine the Brand

• Marquis Golf Tournaments — For the past four years, the IMGRC Championship Golf course has been the host location for the two largest and most prestigious tournaments in the State of New Mexico: the Adams Golf Pro Tour Series and the New Mexico Open. These events attract full fields of PGA professionals and also garner regional media coverage in newspaper and radio.

• Green Fee Pricing

• Management implemented a strategy of increases in the green fee pricing structure for this fiscal year. The increased pricing structure and a late opening of the course because of weather conditions caused the golf course to incur a substantial decrease in the number of rounds played throughout the fiscal year. The increase in the green fee did however result in an increase in overall green fee revenue in a year-over-year comparison. This strategy did however

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result in a decrease in the number of golfers; which decrease subsequently adversely affected the revenue in the categories of cart rental and retail sales for the golf course.

Mescalero Big Game Hunts

• Continuation of Key Brand Alliance

• Christensen Firearms Manufacturing — This company is a manufacturer of premium firearms for big game hunting and brings a camera crew once per year to film an actual bull elk hunt out in the field. The coverage also includes footage of the Inn and the other hospitality enterprises. All of this footage is then edited together to create a 30-minute television program for ESPN or the Outdoor Life network; which the show airs multiple times during the year.

Significant Challenges and Accomplishments

The challenges faced by IMGRC over the past year were significant. However, the list of accomplishments over the past fiscal year is extensive and involves each of the individual hospitality enterprises:

• Lack of Natural Snowfall for Ski Apache — The 2007-08 ski season was financially challenging because of lack of natural snowfall for the entire season. This affected both gross revenue and profitably for Ski Apache for the fiscal year. Solid preparations by the ski management team and overall financial management of the ski operations are critical to the financial success of the Company. The challenges experiences by Ski Apache and the general lack of snow tourism affected the entire IMRGC enterprise.

• Changes in the Management Team — The Management team has experienced a number of changes over the course of the fiscal year. The Chief Financial Officer, Treasurer, and number of department directors resigned or were released throughout the fiscal year. The Chief Operating Officer also resigned prior to the end of the fiscal, but has since been replaced. A number of these changes caused operational challenges for the Company and continue to affect all areas of the enterprise.

• Facility Offerings “Out of Sync” with Guest Needs — The Resort opened with multiple amenities that were not properly matched with the needs of the market place. This primarily encompassed restaurant menu engineering, the mix of slots, pricing strategies and product quality. Although management has attempted to correct these problems during the past several years, a number of items have yet to be fully addressed.

• Expense Management — Further refinements were implemented in the areas of labor forecasting, and daily cash management. As a cost containment measure, daily payroll management was also used by management in the third and fourth quarters to significantly reduce operational payroll costs during that period. This resulted in a significant reduction in year-over-year payroll costs during that period.

• AAA Four Diamond Award — The Inn received its 3rd consecutive four diamond award during fiscal year 2008. Only 3% of resorts nation-wide achieve this distinction; only 8 resorts in New Mexico also received this award.

• Meetings & Conventions Magazine — This key industry publication awarded the Inn the prestigious Gold Tee award for excellence in meetings and golf facilities. This recognition also comes from a premium target customer market that represents an accelerated revenue growth opportunity for the Inn.

• El Paso Magazine — This regional publication originates in the Inn’s top customer market and identified IMGRC as the top getaway destination in the region for El Paso residents.

• Six Bond Payments — The Tribe and its hospitality enterprises have made six separate bond interest payments out of cash from operations totaling $72M during the period of November 2005 through May 2008.

Critical Accounting Policies

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     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the recorded amount of assets and liabilities at the date of the financial statements and revenues and expenses during the period. Significant accounting policies employed by us, including the use of estimates and assumptions, are presented in the notes to our consolidated financial statements included elsewhere in this Form 10-K. 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. We believe that estimates related to the following areas involve a high degree of judgment and/or complexity: the liability associated with unredeemed Apache Spirit Club points, the estimated lives of depreciable assets, pension costs, inventory reserves, allowance for doubtful accounts and impairment of long-lived assets. 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. 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 total vouchers recognized by IMG Resort and Casino were approximately $2,767,000, $2,255,000 and $2,105,000 for the years ended April 30, 2006, 2007 and 2008, 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 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’s liability is included in accrued expenses and totaled $1,076,713 at April 30, 2007 and $1,046,957 at April 30, 2008.

     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.

     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, facilities, utility costs and other indirect costs not included in the direct costs of our operating departments.

     Deferred Financing Costs. Debt issuance costs incurred in connection with the issuance of IMG Resort and Casino financing were capitalized and are being amortized using the straight-line method over the stated maturity of the debt, which approximates the effective interest method. Unamortized deferred financing costs totaled approximately $4.4 million as of April 30, 2008.

Impairment of Long-Lived Assets

     Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount

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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

Fiscal Year Ended April 30, 2008 Compared to the Fiscal Year Ended April 30, 2007

     Net Revenues. Net revenues decreased $0.5 million, or (0.4)%, to $124.4 million for the fiscal year ended April 30, 2008 from $124.9 million for the fiscal year ended April 30, 2007. Gaming revenues increased $1.0 million, up 1.4% over the comparable period; food and beverage revenues increased $1.0 million, or 7.3%, over the comparable period; and hotel revenues increased $0.03 million over that of a year ago.

     Gaming. Gaming revenues increased $1.0 million, or 1.3%, to $77.5 million for fiscal year ended April 30, 2008 from $76.5 million for the fiscal year ended April 30, 2007. Slot revenues increased to $72.0 million for the fiscal year ended April 30, 2008 from $71.6 million for the fiscal year ended April 30, 2007. Gross slot win per unit, per day was $134 for the fiscal year ended April 30, 2008 compared to $131 for the fiscal year ended April 30, 2007. Table games revenue remained flat at $10.8 million for the fiscal years ended April 30, 2008 and 2007.

     Hotel. Hotel revenues remained flat at $13.5 million for the fiscal years ended April 30, 2008 and 2007. Occupancy rates averaged 74% over the fiscal years ended April 30, 2008 and 2007, average daily rate was $169 as compared to $175 for the fiscal year ended April 30, 2007 and revenue per available room was $126.

     Food and Beverage. Food and beverage revenues increased $1.1 million, or 7.3%, to $15.0 million for the fiscal year ended April 30, 2008 from $13.9 million for the fiscal year ended April 30, 2007 due to an increase in covers.

     Recreation and Other. Recreation and other revenues decreased $2.6 million, or (11.2)% to $20.6 million for the April 30, 2008 compared to $23.2 million for the April 30, 2007. The decrease is attributable to the low snowfall experienced this season at Ski Apache resort consequently decreasing revenue as contrasted to 2007 when we had average snowfall.

     Promotional Allowances. Promotional allowances were $2.1 million for the fiscal year ended April 30, 2008 compared to $2.3 million for the fiscal year ended April 30, 2007, a decrease of $0.2 million due to a refined marketing plan. This plan expends more in direct player rewards and less in broad based promotion more proportionately to their level of play and de-emphasizes broad based promotional activity, which tends to concentrate returned values to a very limited numbers of patrons.

     Total Operating Expenses. Total operating expenses increased $1.9 million to $104.4 million for the fiscal year ended April 30, 2008 from $102.5 million for the fiscal year ended April 30, 2007. As a percentage of revenues, operating expenses increased by 1.8% of revenue for the fiscal year ended April 30, 2008. The increase in total operating expense was due to increased salaries and wages, air charter services, and cost of goods sold.

     Gaming. Gaming expenses increased $0.2 million to $26.6 million for the fiscal year ended April 30, 2008 from $26.4 million for the fiscal year ended April 30, 2007 due to an increase in revenue sharing fees associated with increased gaming revenue. Gaming expenses as a percentage of gaming revenues decreased 0.2%, from 34.3% for the fiscal year ended April 30, 2008 compared to 34.5% for the fiscal year ended April 30, 2007.

     Hotel. Hotel expenses decreased to $4.4 million for the fiscal year ended April 30, 2008 from $4.7 million for the fiscal year ended April 30, 2007 due to cost containment by management in the areas of labor and supplies expense. Hotel expenses represented 32.6% of hotel revenue for the fiscal year ended April 2008 as compared to 34.8% of hotel revenue for the fiscal year ended April 30, 2007.

     Food and Beverage. Food and beverage expenses increased $1.1 million, or 8%, to $15.3 million for the fiscal year ended April 30, 2008 from $14.2 million for the fiscal year ended April 30, 2007 due to an increase in salaries and wages and cost of goods sold

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related to increased revenue. Food and beverage expenses as a percent of food and beverage revenues remained flat at (102%) for the fiscal years ended April 30, 2008 and 2007. Cost of Good Sold as a percent of revenue increased 2% from 2007 to 2008 and wages increased $0.3 million or 1.3% as a percent of revenue from 2007.

     Recreation and Other. Recreation and other costs increased $1.0 million, or 7.2% to $14.9 million for the fiscal year ended April 30, 2008 from $13.9 million for the fiscal year ended April 30, 2007 due to increases in salaries and wages, repairs and maintenance and cost of goods sold.

     Marketing and Advertising. Marketing and advertising costs increased $1.2 million, or 13.6% to $10.0 million for the fiscal year ended April 30, 2008 from $8.8 million for the fiscal year ended April 30, 2007 due to additions to sales staff, air charter advertising, and air charter operations.

     General and Administrative. General and administrative expenses increased $0.2 million, or 1.8%, to $11.4 million for the fiscal year ended April 30, 2008 from $11.2 million for the fiscal year ended April 30, 2007 to increase costs associated with Sarbanes-Oxley compliance.

     Health Insurance. Health insurance expenses decreased $0.2 million to $2.1 million for the year ended April 30, 2008 from $2.3 million for the year ended April 30, 2007 as the number of enrolled employees decreased.

     Mescalero Apache 401(K). Mescalero Apache 401(K) expenses increased $0.6 million to $0.9 million for year ended April 30, 2008, from $0.3 million for year ended April 30, 2007 because the 401(K) plan began on January 1, 2007. The year ended April 30, 2007 contains four months of the 401(K) plan, as compared to the year ended April 30, 2008, which included twelve months.

     Mescalero Apache Telecom. Mescalero Apache Telecom expenses remained flat at $0.2 million for the years ended April 30, 2008 and 2007.

     Tribal Regulatory Fees. Tribal regulatory fees remained flat at $2.4 million for the year ended April 30, 2008 and 2007.

     Depreciation. Depreciation decreased $2.1 million to $16.1 million for the fiscal year ended April 30, 2008 from $18.2 million for the fiscal year ended April 30, 2007 due to fully depreciated assets.

     Income from Operations. Income from Operations decreased $2.3 million, or 10.3%, to $20.0 million for the fiscal year ended April 30, 2008 from $22.3 million for the fiscal year ended April 30, 2007, as a result of a decrease in the natural snowfall experienced this season at Ski Apache and increased costs associated with the Air Charter service.

     Other Income (Expenses). Other non-operating expenses decreased $0.1 million to $26.2 million for the fiscal year ended April 30, 2008 from $26.3 million for the fiscal year ended April 30, 2007.

     Other income (expenses) is comprised of interest income and other income minus interest expense and other expenses.

Fiscal Year Ended April 30, 2007 Compared to Fiscal Year Ended April 30, 2006

     Net Revenues. Net revenues increased $11.4 million, or 10.0%, to $124.9 million for the fiscal year ended April 30, 2007 from $113.5 million for the fiscal year ended April 30, 2006. Gaming revenues remained flat over the comparable period; food and beverage revenues increased $1.8 million, or 14.7%, over the comparable period; and hotel revenues increased $2.6 million and recreation revenues increased $6.6 million, or 39.8%, over a year ago.

     Gaming. Gaming remained flat at $76.5 million for fiscal year ended April 30, 2007 and 2006. Slot revenues increased to $71.6 million for the fiscal year ended April 30, 2007 from $66.2 million for the fiscal year ended April 30, 2006. Gross slot win per unit, per day was $131 for the fiscal year ended April 30, 2007 compared to $129 for the fiscal year ended April 30, 2006. Table games revenue increased $0.5 million, or 4.9%, to $10.8 million for the fiscal year ended April 30, 2007 from $10.3 million for the fiscal year ended April 30, 2006.

     Hotel. Hotel revenues improved $2.6 million to $13.5 million for the fiscal year ended April 30, 2007 from $10.9 million for the fiscal year ended April 30, 2006, as a result of daily yield management, direct marketing and boosting midweek occupancy.

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Occupancy rates averaged 74% over the fiscal year ended April 30, 2007 an increase of 9%, average daily rate was $175 and revenue per available room was $129.

     Food and Beverage. Food and beverage revenues increased $1.6 million, or 13.0%, to $13.9 million for the fiscal year ended April 30, 2007 from $12.3 million for the fiscal year ended April 30, 2006. The increase is due to covers increases as well as increased skier visits.

     Recreation and Other. Recreation and other revenues increased $6.6 million, or 39.8% to $23.2 million for the April 30, 2007 compared to $16.6 million for the April 30, 2006. The increase is attributable to the average snowfall experienced this season at Ski Apache resort thus increasing revenue as contrasted to 2006 when we had historically low snowfall.

     Promotional Allowances. Promotional allowances were $2.3 million for the fiscal year ended April 30, 2007 compared to $2.8 million for the fiscal year ended April 30, 2006, a decrease of $0.5 million.

     Total Operating Expenses. Total operating expenses decreased $5.5 million to $102.5 million for the fiscal year ended April 30, 2007 from $108.0 million for the fiscal year ended April 30, 2006. As a percentage of revenue, operating expenses decreased by 13.5% of revenue for the fiscal year ended April 30, 2007. The decrease in total operating expense was due to improved cost management in our revenue generating operations and numerous one time charges recognized in the prior year.

     Gaming. Gaming expenses decreased $0.8 million to $26.4 million for the fiscal year ended April 30, 2007 from $27.2 million for the fiscal year ended April 30, 2006. Gaming expenses as a percentage of gaming revenue decreased 1.0%, from 34.5% for the fiscal year ended April 30, 2007 compared to 35.5% for the fiscal year ended April 30, 2006.

     Hotel. Hotel expenses decreased to $4.7 million for the fiscal year ended April 30, 2007 from $5.2 million for the fiscal year ended April 30, 2006. Hotel expenses represented 34.8% in April 2007 as compared to 47.7% of hotel revenues for the fiscal year ended April 30, 2006 due to a decrease in salaries and wages and outside services.

     Food and Beverage. Food and beverage expenses decreased $1.5 million, or (9.6)%, to $14.2 million for the fiscal year ended April 30, 2007 from $15.7 million for the fiscal year ended April 30, 2006. Food and beverage expenses as a percent of food and beverage revenues decreased 26%, from (102%) for the fiscal year ended April 30, 2007 compared to (128%) for the fiscal year ended April 30, 2006. Cost of Good Sold as a percent of revenues dropped 4% from 2006, and 2007 and wages fell $1.1 million or 14.8% as a percent of revenues from 2006.

     Recreation and Other. Recreation and other costs increased $1.5 million, or 12.1% to $13.9 million for the fiscal year ended April 30, 2007 from $12.4 million for the fiscal year ended April 30, 2006. The increase in recreation and other costs was primarily attributable to the average snowfall as well as rising fuel costs.

     Marketing and Advertising. Marketing and advertising costs decreased $0.1 million, or 1.1% to $8.8 million for the fiscal year ended April 30, 2007 from $8.9 million for the fiscal year ended April 30, 2006.

     General and Administrative. General and administrative expenses decreased $4.5 million, or 28.6%, to $11.2 million for the fiscal year ended April 30, 2007 from $15.7 million for the fiscal year ended April 30, 2006 due to one time charges incurred in the prior year.

     The decrease in fiscal 2007 general and administrative costs was due primarily to the 2006’s increased expenses associated with opening the Resort, including an increase of $2.0 million in utilities and general liability insurance, including worker compensation, compensation of $0.6 million, general repairs and maintenance of $0.4 million, IT security software and hardware of $0.3 million, maintenance contracts (2nd year) increase of $0.5 million, bad debt reserve of $0.3 million, office, bank, and credit card fees of $0.4 million and one-time paid time off charges of $1.2 million, executive severance of $0.3 million, penalties and interest costs of $1.4 million and various professional fees of $1.8 million. Actual wages paid in General and Administrative expenses fell $1.1 million from 2006 to 2007.

     Depreciation. Depreciation increased $0.4 million to $18.2 million for the fiscal year ended April 30, 2007 from $17.8 million for the fiscal year ended April 30, 2006.

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     Income from Operations. Income from Operations increased $16.8 million, or 305.59%, to $22.3 million for the fiscal year ended April 30, 2007 from $5.5 million for the fiscal year ended April 30, 2006, as a result of the successful turnaround in all division’s operations.

     Other Income (Expenses). Other non-operating expenses decreased $0.4 million to $26.3 million for the fiscal year ended April 30, 2007 from $26.7 million for the fiscal year ended April 30, 2006.

Other income (expenses) is comprised of interest income and other income minus interest expense and other expenses.

Liquidity and Capital Resources

     As of April 30, 2008 and April 30, 2007, we had cash and cash equivalents of $15.0 million and $16.9 million, respectively. Our principal sources of liquidity for the fiscal year ended April 30, 2008 were cash from operating activities of $11.3 million, offset by approximately $1.3 million used in investing and $12.0 million used in financing activities.

     Cash provided in operating activities was $11.3 million, a $0.7 million improvement over the previous year as a result of improved management of payables.

     Cash used in investing activities for the fiscal year ended April 30, 2008 was $1.3 million. Cash used by financing activities for the fiscal year ended April 30, 2008 was $12.0 million.

     We believe that existing cash balances and operating cash flows and permitted borrowings will provide adequate funds for our working capital needs, planned capital expenditures, including equipment and furnishings for the Resort and debt service requirements for at least the next twelve months. However, 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 or contributions from the Tribe, which sources of funding cannot be assured.

     On January 30, 2008, Standard & Poor’s Ratings Services revised its outlook on Inn of the Mountain Gods Resort and Casino (IMG) to stable from negative. The stable outlook reflects S&P’s expectation that IMG will generate steady revenue with the potential for mid-single-digit growth in the next few quarters, and that management will continue to hold, if not improve, margins in line with recent performance. Rating upside potential is currently unlikely and would necessitate several more quarters of revenue improvement to gain comfort that growth trends are sustainable. If growth trends reverse (possibly related to pressure from a weakening economy), leading to a deterioration of credit measures, the outlook could be revised to negative.

Description of Indebtedness

The Notes

     On November 3, 2003, we issued $200.0 million senior notes, with fixed interest payable at a rate of 12% per annum. Interest on the notes is payable semi-annually on May 15 and November 15. The notes mature on November 15, 2010. As of April 30, 2008 accrued interest payable on the Notes was $11.2 million.

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

Incurrence of Additional Indebtedness

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     In general, we are restricted in connection with the issuance of the 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 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 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 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 April 30, 2008, there is approximately $0.9 million outstanding on the BIA Note.

Credit Facility

     On June 15, 2005, we entered into a $15.0 million credit facility with Key Equipment Finance, a Division of Key Corporate Capital Inc. The five (5) fixed rate loans are fully amortizable over five years and bear an interest rate from 7.55% to 8.18%. Proceeds from the loan were used to fund furniture, fixtures and equipment purchases for the Resort. As of April 30, 2008, approximately $7.2 million remains outstanding.

Off-Balance Sheet Arrangements

     As of April 30, 2008, we have no off-balance sheet arrangements that affect our financial condition, liquidity and results of operation. We have certain contractual obligations including long-term debt, operating leases and employment contracts.

Tabular Disclosure of Contractual Obligations

     The following table sets forth, as of April 30, 2008, our scheduled principal, interest and other contractual annual cash obligations due by us for each of the periods indicated below (Dollars in thousands):

	Payments Due by Period
			Less						More
			Than		1-3		3-5		Than
Contractual Obligations	Total		1 Year		Years		Years		5 Years
Long-Term Debt Obligations	$	208,173	$	3,534	$	204,538	$	101	$	—
Interest		72,776		24,513		48,260		3		—
Employment Contracts		1,551		556		973		22		—
Total	$	282,500	$	28,603	$	253,771	$	126	$	—

     A special use permit was obtained from the United States Department of Agriculture Forest Service for Ski Apache’s use of 80 acres of land in Lincoln National Forest. The permit is dated April 23, 1985, and has a term of 30 years with a yearly fee based on revenue and gross fixed assets. Occupancy fee for the years ended April 30, 2006, 2007 and 2008 totaled approximately $137,200, $92,000 and $55,650 respectively.

Regulation and Taxes

     We are subject to extensive regulation by the Mescalero Apache Tribal Gaming Commission, the NIGC and, to a lesser extent, the New Mexico Gaming Control Board. Changes in applicable laws or regulations could have a significant impact on our operations. We are unincorporated Tribal 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 fiscal years ended April 30, 2006, 2007 or 2008, nor is it anticipated we will be subject to such taxes for the foreseeable future.

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Various efforts have been made in the U.S. Congress over the past several years to enact legislation that would subject the income of tribal business entities, such as us, to federal income tax. Although no such legislation has been enacted, similar legislation could be passed in the future. A change in our non-taxable status could have a material adverse affect on our cash flows from operations.

New Accounting Pronouncements

     In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157 Fair Value Measurements (“SFAS 157”). SFAS 157 provides a new single authoritative definition of fair value and provides enhanced guidance for measuring the fair value of assets and liabilities and requires additional disclosures related to the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 is effective for the Company as of May 1, 2008.

     In February 2008, the FASB issued Staff Position (FSP) FAS 157-2, Effective Date of FASB Statement No. 157, which defers the implementation for the non-recurring nonfinancial assets and liabilities from fiscal years beginning after November 15, 2007 to fiscal years beginning after November 15, 2008. The provisions of SFAS No. 157 will be applied prospectively.

     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.

Item 7A. 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. Our primary exposure to market risk is interest rate risk associated with our short term variable rate debt. As of April 30, 2008, we had no variable rate debt outstanding.

     Management has and will continue to limit our exposure to interest rate risk by maintaining a conservative ratio of fixed rate, long-term debt to total debt such that variable rate exposure is kept at an acceptable level and fixing certain long-term variable rate debt through the use of interest rate swaps or interest rate caps with appropriately matching maturities.

     As of April 30, 2008, we held no derivative instruments.

Item 8. Financial Statements and Supplementary Data

          The financial statements required pursuant to this item are included in Part IV of this report and begin on page F-1. The supplementary financial information required by this item is included in “Item 6. Selected Financial Data.”

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

None.

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Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Evaluation of Disclosure Controls and Procedures

     As of April 30, 2008, the Company evaluated the effectiveness and design and operation of its disclosure controls and procedures. The Company’s disclosure controls and procedures are the controls and other procedures that the Company designed to ensure that it records, processes, summarizes, and reports in a timely manner the information that it must disclose in reports that the Company files with or submits to the Securities and Exchange Commission. Douglas Lentz, the principal executive officer of the Company, and Pamela Gallegos, the principal financial officer, reviewed and participated in this evaluation. Based on this evaluation, the Company made the determination that its disclosure controls were effective.

Report of Management on Internal Control Over Financial Reporting

     The management of the Company is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Internal control over financial reporting is the process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

     There are inherent limitations in the effectiveness of internal control over financial reporting, including the possibility that misstatements may not be prevented or detected. Accordingly, even effective internal controls over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Furthermore, the effectiveness of internal controls can change as circumstances change.

     Management has evaluated the effectiveness of internal control over financial reporting as of April 30, 2008, using criteria described in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on management’s assessment, management concluded that the Company’s internal control over financial reporting was effective as of April 30, 2008.

     This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

     During the Company’s fourth fiscal quarter and since the date of the evaluation noted above, there have not been any significant changes in the Company’s internal controls or in other factors that could significantly affect those controls.

Item 9B. Other Information

None.

PART III.

Item 10. Directors, Executive Officers and Corporate Governance

     The Tribe has established IMG Resort and Casino as an unincorporated enterprise of the Tribe to operate its gaming, hotel, resort and ski businesses. IMG Resort and Casino is governed by a Management Board comprised of between seven to nine members, including: the four members of the Executive Committee of the Tribe (including the President of the Tribe who serves as Chairperson, as well as the Vice President, Secretary and Treasurer of the Tribe); the Chief Operating Officer of IMG Resort and Casino, and at least one, and up to three, independent members. The Management Board designates officers to administer the economic and business affairs of IMG Resort and Casino.

     The following are our current officers and members of the Management Board of IMG Resort and Casino:

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Name	Age		Position
Dr. Carleton Naiche-Palmer		61	Management Board Member (Chairperson), President of the Tribe
Jackie Blaylock		50	Management Board Member, Vice President of the Tribe
Raymond Kirgan		69	Management Board Member, Treasurer of the Tribe
Alfred LaPaz		59	Management Board Member Secretary of the Tribe
Manuel Lujan, Jr.		80	Management Board Member
R. Miles Ledgerwood		53	Management Board Member, Audit Committee Chair
Douglas Lentz		40	Chief Operating Officer of IMG Resort and Casino, Management Board Member
Pamela Gallegos		38	Interim-Chief Financial Officer of IMG Resort and Casino

     There are no family relationships between any Management Board Member and/or any executive officer. All Management Board Members serve for a term of one year commencing in January of each year.

     The Management Board met a total of 11 times during the fiscal year ended April 30, 2008. All members of the Management Board attended more than 90% of the time.

     Dr. Carleton Naiche-Palmer serves as Chairman of the Management Board of the Inn of the Mountain Gods Resort and Casino and President of the Mescalero Apache Tribe beginning January 11, 2008. Mr. Naiche-Palmer’s term as President of the Mescalero Apache Tribe, Chairman of the Tribal Council and Executive Committee expires in January 2010. Prior to his election as President of the Tribe, Mr. Naiche-Palmer was self employed as owner of a legal firm on the Mescalero Apache Reservation. Mr. Naiche-Palmer lived in Albquerque, NM for 27 years where he was employed by several organizations over that span of time. These organizations include: All Indian Pueblo Council, National Indian Council on Aging, American Indian Business and Technologies and Sandia National Laboratories. Mr. Naiche-Palmer holds a Bachelor of Business degree, a Master of Business degree and a Ph. D in Social and Economic Development.

     Jackie Blaylock is the incoming Vice President elect of the Mescalero Apache Tribe with the term January 2008 through January 2010. Prior to his election, Mr. Blaylock has served in many different capacities with the Mescalero Apache Tribe the last 30 years. Mr. Blaylock has been the Utility Director for the tribe the last 5 years. Mr. Blaylock is currently serving on the Board of Directors for the Otero County Electric Cooper as Board Member and Secretary the last 5 years. Mr. Blaylock also currently serves on the Tribal Advisory Committee for the Indian Health Service construction services division as chairman.

     Raymond Kirgan is the Treasurer of the Mescalero Apache Tribal Council and also the Treasurer of the IMG Management Board. Mr. Kirgan first served on the Tribal Council in the 1970s. Most recently he was elected to the Tribal Council in 2004 and was reelected in 2006. He has worked in the area of natural resources for the forestry division and also the Tribe for a period over 40 years.

     Alfred LaPaz has served as a member of the Management Board of IMG Resort and Casino since June 2004. Mr. LaPaz also serves as Secretary of the Tribal Council and as Chairperson of the Programs Committee. Mr. LaPaz’s term on the Tribal Council and Executive Committee expires in January 2007. Since 2000, Mr. LaPaz served as Director of Security at the IMG and now serves with the Office of the Sheriff of Otero County, New Mexico. Mr. LaPaz was employed with the Federal Law Enforcement and retired as Captain after 30 years service.

     Manuel Lujan Jr. has served as an independent member of the Management Board of IMG Resort and Casino since January 2004. Mr. Lujan also currently serves as the Chairman of the board of directors of Laguna Construction Company, which is owned by the Pueblo of Laguna in New Mexico. Mr. Lujan served as U.S. Congressman representing the State of New Mexico from January 1969 to January 1989 and as Secretary of the Interior under the Bush Administration from 1989 to 1993. Since 1993, Mr. Lujan has served as a lobbyist in Washington, D.C. through his company Manuel Lujan Associates, a consulting firm dealing with matters involving federal agencies.

     R. Miles Ledgerwood has served as a member of the Management Board of IMG Resort and Casino since March 2004. Mr. Ledgerwood has also served as President and CEO of Alamogordo Federal Savings and Loan Association since 1983. Mr. Ledgerwood also currently serves as a member of the Board of Directors of Alamogordo Financial Corporation, Alamogordo Federal Savings and Loan Association and Space Age City Service Corporation. Mr. Ledgerwood is the Chairman of the IMG Resort and Casino Audit Committee.

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     Douglas A. Lentz. On June 2, 2008, Mr. Lentz joined IMGRC as the Chief Operating Officer and member of the Management Board. Mr. Lentz has more than 19 years of experience in the gaming and hospitality industry, specializing in the management of large scale, full service Native American owned casinos. Mr. Lentz has been the Chief Executive Officer/General Manager of several tribal gaming operations including Casino Del Sol and Casino of the Sun in Tucson, Arizona, as well as The Santa Ysabel Resort and Casino in Santa Ysabel, CA. His experience also includes the centric role as the Chief Financial Officer at Cliff Castle Casino in Camp Verde, Arizona. Prior to Arizona, Mr. Lentz held various positions at Treasure Bay Casino in Biloxi, Mississippi, Grand Casinos Resorts in Gulfport, Mississippi and The Mirage in Las Vegas, Nevada. He attended the University of Iowa and The University of Nevada, Las Vegas receiving a Bachelors Degree in Hotel Administration from the later in 1990.

     Pamela Gallegos. On August 29, 2007, management appointed Ms. Gallegos as interim Chief Financial Officer for making the certifications required by the Sarbanes-Oxley Act of 2002. Ms. Gallegos was hired as the Company’s Casino Controller in December of 2006 and has served as the Company’s Director of Finance since August 1, 2007. Ms. Gallegos has a master’s degree in Business Administration and Health Care Management. Ms. Gallegos has over 17 years of professional finance and accounting experience, the last 7 years in Native American gaming and hospitality industries with annual gross revenues ranging from $37 million to over $2 billion. Prior to joining IMGRC, Ms. Gallegos was the Corporate Controller and Board Treasurer for the Laguna Development Corporation from 2002 to 2007.

Code of Ethics

     We have adopted a Code of Business Conduct and Ethics applicable to all of our employees, including our Chief Executive Officer, Chief Financial Officer, and all other senior financial executives, and to our directors when acting in their capacity as directors. Our Code of Business Conduct and Ethics is designed to set the standards of business conduct and ethics and to help directors and employees resolve ethical issues. The purpose of our Code of Business Conduct and Ethics is to ensure to the greatest possible extent that our business is conducted in a consistently legal and ethical manner. Employees may submit concerns or complaints regarding audit, accounting, internal controls or other ethical issues on a confidential basis by means of a toll-free telephone call or an anonymous email. We investigate all concerns and complaints. Copies of our Code of Business Conduct and Ethics are available to investors upon written request. Any such request should be sent by mail to Inn of the Mountain Gods Resort and Casino, 287 Carrizo Canyon Road, Mescalero, New Mexico 88340, Attn: Chief Operating Officer or should be made by telephone by calling (505) 464-7000.

     We intend to disclose on our website amendments to, or waivers from, any provision of our Code of Business Conduct and Ethics that apply to our Chief Executive Officer, Chief Financial Officer, and persons performing similar functions and amendments to, or waivers from, any provision which relates to any element of our Code of Business Conduct and Ethics described in Item 406(b) of Regulation S-K.

Committees of the Board

     Audit Committee. On behalf of the Management Board, the Audit Committee is responsible for providing an independent, objective review of our auditing, accounting and financial reporting process, public reports and disclosures, and system of internal controls regarding financial accounting. Currently, R. Miles Ledgerwood serves as the Audit Committee financial expert. The Management Board has determined that Mr. Ledgerwood is independent.

     Compensation Committee. All members of our Management Board performed the responsibilities of the compensation committee, and participated in deliberations and made decisions concerning executive officer compensation during the course of regular board meetings or board activities conducted through unanimous consent board resolutions in lieu of meetings. Executive officers did not deliberate and vote on matters relating to their compensation as our executive officer. None of the members of the Management Board during fiscal year 2008 served on the compensation committee of an entity whose executive officers served on the Management Board of the Company, and no executive officer of the Company during fiscal year 2008 served on the compensation committee or board of any company that employed any member of the Management Board.

     Disclosure Committee. The Disclosure Committee was established in February 2008 and has met a total of two times. There are currently four members of the Disclosure Committee. There is no compensation for being on this committee.

Item 11. Executive Compensation

Executive Compensation

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COMPENSATION DISCUSSION AND ANALYSIS

Compensation Objectives

The Company’s success depends on the expertise, talent, experience and long-term commitment of the Company’s employees, especially its executive officers. The Company’s compensation plan is intended to achieve the following objectives:

• To attract, retain, motivate and reward key employees to drive the successful implementation of the Company’s current and long-term financial and operating goals;

• To establish appropriate incentives for management and employees that are consistent with the Company’s culture and values; and

• To provide an annual compensation program that rewards both Company and individual performance with the proper balance between salary, and performance-based incentives.

Our named executive officers consist of our Chief Operating Officer (our COO) and our Chief Financial Officer (our CFO). Compensation of officers is established after a review of data for executives in similar positions in comparable companies, mostly companies in the hospitality and gaming fields. When reviewing individual compensation levels, the Company considers individual and corporate performance, levels of responsibility, and competitive pay practices. These factors vary from individual to individual and other subjective features are also considered such as the individual’s experience.

Roles in Establishing Executive Officers Compensation

Our executive officers compensation is set by our entire Management Board and not by a compensation committee. To the extent that an executive officer is a member of the Management Board, they recuse themselves from discussion or do not participate in compensation decisions that relate to them. The Management Board relies on input from the COO in connection with the CFO’s position and compensation. The Management Board determines the COO’s position and compensation without the input of any other executive officer. The amount of compensation for each named executive officer reflects their superior management experience and continued high level of performance over a long period of time. Currently, none of our executive officers are entitled to any cash compensation or bonuses above and beyond their base salary.

Elements of Compensation

Base Annual Compensation. The Company believes that the base salary levels of the Company’s executive officers are reasonably related to the base salary levels of executive officers of comparable companies in the gaming and hospitality fields and the geographical region in which the Company is located. The base salary levels were not objectively determined with a formula but instead reflect levels that the Company concluded were appropriate based upon our general experience. The Company believes that the current base salary levels of the Company’s executive officers take into account the unique talents and experience of our executive officers. Base salaries are adjusted annually for cost of living adjustments. Base salaries are reviewed at the end of the contract period and increases in base salary takes into account such factors as individual past performance, changes in responsibilities, and changes in pay levels of companies deemed comparable to us. Currently, Mr. Lentz is paid a base salary of $275,000 per year and Ms. Gallegos is paid a base salary of $176,000 per year.

Severance Benefits. We believe that companies should provide reasonable severance benefits to its executive officers when leaving the Company due to a change in control or without cause. The amount of each executive’s severance is determined by the terms of each of their respective employment agreements. After six months employment with the Company, Mr. Lentz is entitled to six months salary and benefits upon the termination of his employment relationship with the Company. Ms. Gallegos is entitled to one month of severance for every three full months of employment with the Company, with such severance limited to 12 total months.

Other Compensation. Our executive officers are entitled to participate on the same basis as all other employees of IMGRC in all general employee benefit plans and programs. However, our executive officers do not receive any other compensation nor are they entitled to any bonus compensation as part of their employment with the Company.

Retirement Benefits. The executive officers may elect to participate in retirement plan benefits of our 401(K) plan generally available to all of our full time employees. The Company does not make any 401(K) contributions on behalf of the executive officers.

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Pension Benefits. The Company does not have a benefit pension plan.

Deferred Compensation. The Company has neither a non-qualified defined contribution plan nor any other non-qualified deferred compensation plans.

Compensation Committee Report

The Management Board has reviewed and discussed the Compensation Discussion and Analysis with management, and based on the Board’s review and discussions with management, recommends that the Compensation Discussion and Analysis be included in the Company’s annual report on Form 10-K for the year end April 30, 2008.

Report Submitted by:
THE MANAGEMENT BOARD

Dr. Carleton Naiche-Palmer, Chairman
Jackie Blaylock
Raymond Kirgan
Alfred LaPaz
Manuel Lujan, Jr.
R. Miles Ledgerwood
Douglas Lentz

Summary Compensation Table

     The following table sets forth, as to the Chief Operating Officer and Chief Financial Officer during fiscal year 2008 (referred to as the named executive officers), information concerning all compensation paid for services to us in all capacities for the year ended April 30, 2008 indicated below.

							All Other
							Compensation			Total
Name and Principal Position(1)	Year		Salary ($)		Bonus ($)		($)			($)
(a)	(b)		(c)		(d)		(i)			(j)
Brian Parrish (2)		2008	$	350,000						$	350,000
Chief Operating Officer
Pamela Gallegos (3)		2008	$	154,150						$	154,150
Interim-Chief Financial Officer
Karen Braswell (4)		2008	$	79,229			$	120,000	(5)	$	199,228
Former — Chief Financial Officer
Lance Kintz (6)		2008	$	62,654	$	50,000				$	112,654
Former — Chief Financial Officer

(1)	All of our officers receiving compensation in excess of $100,000 during the last fiscal year are listed above. No other officers other than the COO and CFO receive compensation in excess of $100,000.
(2)	Mr. Parrish was our Chief Operating Officer during fiscal year 2008. However, Mr. Parrish resigned from such position effective as of May 30, 2008.
(3)	Ms. Gallegos was hired as our Director of Finance effective as of August 7, 2007. On August 30, 2007, she was appointed the interim Chief Financial Officer.
(4)	Ms. Braswell served as our Chief Financial Officer from August 1, 2007 to August 29, 2007. Prior to August 1st, Ms. Braswell served as our Director of Finance.
(5)	Ms. Braswell earned $120,000 in severance pay for base salary, benefits and allowances for 6 months.
(6)	Mr. Kintz served as our Chief Financial Officer until August 1, 2007.

Compensation Narrative

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The bonus noted in the summary table for Mr. Kintz were specifically paid for completing milestones towards the goal of the completion of certain projects which include, accounting and finance department restructuring, recruiting, and training; establishing efficient, accurate timely forecasting and budget processes; explore refinancing opportunities with investment community and bankers; prepare investment presentations; SEC Form 10-K, 10-Q and 8-K preparation, review and filings; and establish central purchasing, receiving, control of company assets. The determination of project completion was made by a joint review by the COO and general counsel.

DIRECTOR COMPENSATION

									Change in Pension
									Value and
									Non-qualified
							Non-Equity		Deferred
	Fees Earned or Paid						Incentive Plan		Compensation		All Other
	in Cash		Stock Awards		Option Awards		Compensation		Earnings		Compensation
Name	($)		($)		($)		($)		($)		($)
(a)	(b)		(c)		(d)		(e)		(f)		(g)
Dr. Carleton Naiche-Palmer	$	400		—		—		—		—		—
Jackie Blaylock	$	800		—		—		—		—		—
Raymond Kirgan	$	800		—		—		—		—		—
Alfred LaPaz	$	2,000		—		—		—		—		—
Manual Lujan Jr	$	10,458		—		—		—		—		—
Miles Ledgerwood	$	7,213
Mark R. Chino	$	1,400		—		—		—		—		—
Fredrick Chino Sr.	$	1,600		—		—		—		—		—
Fred Peso	$	1,200		—		—		—		—		—

Compensation of the Management Board and Audit Committee

     Members of the Management Board who are officers of the Resort but are not Tribal members do not receive any additional compensation or fees for attending Management Board or Audit Committee meetings. Tribal members serving on the Management Board and Audit Committee receive $200 per meeting. Independent members serving on the Management Board and Audit Committee receive $500 per meeting and an additional $1,000 per quarter.

Employment Agreements

     Pamela Gallegos. On August 1, 2007, the Inn of the Mountain Gods Resort and Ms. Pamela Gallegos entered into an agreement whereby the Company hired Ms. Gallegos as the Director of Finance of the Company, effective as of August 7, 2007. Ms. Gallegos’ employment agreement expires on July 31, 2010 and she will earn an annual base salary of $176,000. Ms. Gallegos is entitled to participate on the same basis as all other employees of IMGRC in all general employee benefit plans and programs. In addition, Ms. Gallegos is entitled to one month of severance for every three full months of employment with the Company, with such severance limited to 12 total months. A copy of Ms. Gallegos’ employment agreement is filed as Exhibit 10.4 to this Annual Report on Form 10-K.

     Douglas Lentz. On June 2, 2008, IMGRC and Mr. Douglas Lentz entered into an agreement whereby the Company hired Mr. Lentz as the Chief Operating Officer of the Company, effective as of June 1, 2008. Mr. Lentz will serve for a term of three years and will earn an annual base salary of $275,000. Mr. Lentz is entitled to participate on the same basis as all other employees of IMGRC in all general employee benefit plans and programs. In addition, once Mr. Lentz has been employed by IMGRC for six months, he is entitled to receive his then-current monthly base salary and benefits for six months upon the termination of the employment relationship be either IMGRC or Mr. Lentz. The details of Mr. Lentz’s employment agreement can be found in the Form 8-K press release filed June 3, 2008 with the Securities and Exchange Commission.

Other Post-Employment Compensation

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     Brian Parrish. On April 2, 2008, Brian Parrish elected to resign from his position as Chief Operating Officer and Management Board member of the Inn of the Mountain Gods Resort and Casino effective May 30, 2008. Mr. Parrish was a Disclosure Committee member, a position from which he also resigned. Mr. Parrish served as a consultant to the Company for the period of May 1, 2008 through June 30, 2008. Such consulting services were on an as needed basis. Mr. Parrish received severance payments in accordance with Section 3.3 of his Employment Agreement.

     Karen Braswell. On August 1, 2007, the Management Board of Inn of the Mountain Gods Resort and Casino appointed Karen Braswell as the Chief Financial Officer of the Company. On August 29, 2007, the Tribal Council of the Mescalero Apache Tribe elected to terminate Mrs. Braswell’s employment with the Company. Pursuant to the Employment Agreement, Mrs. Braswell received base salary, benefits and allowances for 6 months.

     Lance Kintz. On June 28, 2007, the Management Board approved a $50,000 project milestone completion bonus as of July 31, 2007 for Mr. Kintz. Mr. Kintz was replaced as CFO on August 1, 2007.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

None.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Related Party Transaction Approval Policy

     The Board recognizes that related party transactions can present conflicts of interest and questions as to whether the transactions are in the best interests of the Company. Accordingly, effective as of July 18, 2008, the Management Board adopted a written policy for the review, approval and ratification of transactions with related persons. For the purposes of the policy, a “related party transaction” is a transaction or relationship involving a member of the Management Board, executive officer or their immediate family members that is reportable under the SEC’s rules regarding such transactions. The policy requires for the Audit Committee to review and approve all related party transactions, other than transactions involving amounts less than $100,000 in aggregate. As the policy was not adopted until after the end of the fiscal year, only transactions on a going-forward basis will be review and approved pursuant to the policy.

Distributions to the Tribe with Other Payments

     Distributions to the Tribe were $8.0 million in government service payments. We make distributions to the Tribe under the terms of an annual Tribal budget resolution passed at the discretion of the Tribal Council. We intend to continue to make distributions to the Tribe subject to the restrictions set forth in the indenture, which generally provide we can make no distributions unless we meet certain debt leverage tests, other than the following: (a) $5.0 million in aggregate at any one time, (b) $8.0 million a year for government services and (c) amounts to fund a resolution of the Tribe’s dispute with the State of New Mexico regarding the 1997 Compact. IMG Resort and Casino’s reduced government service distribution to the Tribe in 2006 was due to its reduced cash on hand as a result of its not meeting its debt service from operations.

Tribal Taxes

     The Tribal Code provides for the imposition of a gross receipts tax on the sale of food, beverages, retail sales and services and the rental of rooms on the Mescalero Reservation. The rate of the tax is comparable to the cumulative state and local sales or use tax imposed on identical transactions taking place outside the reservation and within the State of New Mexico. This tax applies to sales at our current operations and will apply to sales on future operations. IMG Resort and Casino collects and remits the gross receipts tax to the Tribe on a monthly basis.

     The Tribal Code also provides for the collection of an excise tax on gasoline sold at retail on the Mescalero Reservation. The rate of the tax is equivalent to the same tax imposed by the State of New Mexico on identical transactions taking place outside the reservation and within the State of New Mexico. IMG Resort and Casino collects and remits the excise tax to the Tribe on a monthly basis.

     The Tribal Code also provides for the imposition of a special assessment school tax on the resort enterprises to provide a source of funds to service debt incurred to construct the Tribe’s K-12 School. The rate of the tax, for each month, is equal to the difference

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between $200,000 and all taxes imposed on or collected by and remitted by the resort enterprises to the Tribe for that month. If the total taxes imposed on us by the Tribe for any month is greater than $200,000, then the special assessment tax for that month is zero.

Shared Services and Cost Allocations

     In connection with the issuance of the original notes, IMG Resort and Casino and the Tribe entered into a service and cost allocation agreement, 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 1997 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 and (d) amounts for certain other miscellaneous liabilities. IMG reimburses the Tribe for its direct costs as billed by the third party.

Employee 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 Resort and Casino reimburses the Tribe for its employees’ direct costs for coverage as billed by the third party.

     The Tribe provides employee benefits to IMG Resort and Casino, which reimburses the Tribe for all costs and expenses associated with this insurance. IMG Resort and Casino paid the Tribe approximately $2.0 million, $3.3 million, $3.3 million for the fiscal years ended April 30, 2006, 2007 and 2008.

     The Tribe sponsors a federally compliant 401(k) savings plan, which covers substantially all employees who worked for IMG Resort and Casino for at least 120 days and attained 18 years of age. The company matches employee contribution up to 4%. Qualified employees who have been employed for more than 120 days had the initial waiting period waived. The total amount of match made by IMG Resort and Casino was $856,565 for the year ending April 30, 2008. This plan became effective January 1, 2007. The first payroll deduction and match began on January 12, 2007.

ATM Fees

     IMG Resort and Casino does not receive revenues from the use by our customers of the ATM machines provided at our business locations. Pursuant to agreements with third party ATM providers, the Tribe receives a portion of the transaction fees paid by ATM users. The Tribe will continue to receive payments related to the ATM services provided in our new facilities under similar arrangements, and we will receive no revenue from these services, for the remaining of the current contract which expires December 31, 2008.

Management Board Independence

     The Tribe has established IMG Resort and Casino as an unincorporated enterprise of the Tribe to operate its gaming, hotel, resort and ski businesses. As such, the IMG Resort and Casino is governed by a Management Board comprised of between seven to nine members, including: the four members of the Executive Committee of the Tribe (including the President of the Tribe who serves as Chairperson, as well as the Vice President, Secretary and Treasurer of the Tribe); the Chief Operating Officer of IMG Resort and Casino, and at least one, and up to three, independent members. Currently, the Tribe has designated two individuals, Mr. Lujan Jr. and Mr. Ledgerwood, to serve as the independent members of the Management Board.

Item 14. Principal Accounting Fees and Services

     The following table sets forth the aggregate fees for professional service provided to IMG Resort and Casino for fiscal 2007 and 2008 by BDO Seidman, LLP:

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	Year Ended April 30,				Percentage of Services
	2007		2008		2007			2008
Audit Fees	$	327,473	$	370,000		89	%		88	%
Tax Fees		—		—		—			—
MICS Audit Fees and other		38,480		49,100		11	%		12	%
Total Fees	$	365,953	$	419,100		100.00	%		100.00	%

     “Audit Fees” billed during fiscal 2007 and 2008 were for professional services rendered for the audit of our financial statements quarterly reviews and services rendered in connection with regulatory filings for those fiscal years. “MICS Audit Fees” consists of fees related to agreed upon procedures applied to minimum internal control standards.

     The Audit Committee has adopted a policy for the pre-approval of all audit and non-audit services to be performed for IMG Resort and Casino by its independent auditor. The Audit Committee has considered the role of BDO Seidman, in providing audit and MICS services to IMG Resort and Casino and has concluded that such services are compatible role as IMG Resort and Casino’s independent auditor.

Item 15. Exhibits, Financial Statement Schedules

(a)	(1)	FINANCIAL STATEMENTS — See Index to Consolidated Financial Statements of this Annual Report on Form 10-K.
	(2)	FINANCIAL STATEMENT SCHEDULES — All financial statement schedules have been omitted because they are not applicable or are not required, or because the information required to be set forth therein is included in the Consolidated Financial Statements or Notes thereto.
	(3)	EXHIBITS — See Exhibit Index on pages 36 of this Annual Report on Form 10-K.

(b)	None.
(c)	See Exhibit Index on pages 36 of this Annual Report on Form 10-K.

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Exhibits Index

Exhibit No.	Description
3.1*	Mescalero Apache Tribe Resolutions 03-05, 03-28 and 03-29 establishing and governing the Inn of the Mountain Gods Resort and Casino adopted and approved April 2, 2003, June 15, 2003 and June 15, 2003, respectively.
3.2*	Charter of the Management Board of IMG Resort and Casino.
4.1*	Indenture, dated as of November 3, 2003, among the Mescalero Apache Tribe, Inn of the Mountain Gods Resort and Casino, Casino Apache, Inn of the Mountain Gods, Casino Apache Travel Center, Ski Apache and U.S. Bank National Association, as Trustee, relating to the 12% Senior Notes due 2010 of the Inn of the Mountain Gods Resort and Casino.
4.2*	Form of 12% Senior Note Due 2010 of the Inn of the Mountain Gods Resort and Casino.
4.3*	Registration Rights Agreement, dated as of November 3, 2003, among the Mescalero Apache Tribe, Inn of the Mountain Gods Resort and Casino, Casino Apache, Inn of the Mountain Gods, Casino Apache Travel Center, Ski Apache and Citigroup Global Markets Inc, as the Initial Purchaser.
10.1*	Second Amended Design/Build Construction Contract, by and among Inn of the Mountain Gods Resort and Casino, Centex/Worth Group, LLC, as Design/Builder, and Rider Hunt Levett & Bailey, as Construction Manager, dated as of September 6, 2003, and Change Order No. 9 thereto, dated October 24, 2003.
10.2*	Cash Collateral and Disbursement Agreement, dated as of November 3, 2003, among Inn of the Mountain Gods Resort and Casino, Casino Apache, Inn of the Mountain Gods, Casino Apache Travel Center, Ski Apache, U.S. Bank National Association, as Disbursement Agent, Professional Associates Construction Services, Inc., as Independent Construction Consultant and U.S. Bank National Association, as Trustee.
10.3*	Ski Apache Special Use Permit received from the United States Department of Agriculture, Forest Service dated April 23, 1985.
10.4	Employment Agreement between the Mescalero Apache Tribe and Pamela Gallegos (filed herewith).
10.5**	2001 Compact between the Mescalero Apache Tribe and the State of New Mexico, entered into June 1, 2004.
12.1	Statement of Calculation of Ratio of Earnings to Fixed Charges (filed herewith).
14.1**	Code of Business Conduct and Ethics of Inn of the Mountain Gods Resort and Casino.
14.2**	Code of Ethics for Principal Executive Officer and Senior Financial Officer.
21.1*	Subsidiaries of the Registrant.
24.1	Power of Attorney (Included with Signature Page).
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

*	Incorporated by reference to IMG Resort and Casino’s Registration Statement on Form S-4 filed with the SEC on February 27, 2004 (SEC File No. 333-113140).
**	Incorporated by reference to IMG Resort and Casino’s Annual Report on Form 10-K filed with the SEC on July 29, 2004.

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SIGNATURES

     Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, on the Reservation of the Mescalero Apache Tribe, State of New Mexico, on July 24, 2008.

INN OF THE MOUNTAIN GODS RESORT AND CASINO
By:	/s/ Douglas Lentz
	Douglas Lentz
	Its: Chief Operating Officer (Principal Executive       Officer)

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     Each person whose signature appears below constitutes and appoints Douglas Lentz and Pamela Gallegos and each of them, as his or her true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him or her and his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

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

Signature	Title	Date
/s/ Dr. Carleton Naiche-Palmer	Management Board Member (Chairperson)	July 24, 2008
Dr. Carleton Naiche-Palmer
/s/ Jackie Blaylock	Management Board Member	July 24, 2008
Jackie Blaylock
/s/ Raymond Kirgan	Management Board Member	July 24, 2008
Raymond Kirgan
/s/ Alfred LaPaz	Management Board Member	July 24, 2008
Alfred LaPaz
/s/ Manuel Lujan, Jr.	Management Board Member	July 24, 2008
Manuel Lujan, Jr.
/s/ R. Miles Ledgerwood	Management Board Member	July 24, 2008
R. Miles Ledgerwood
/s/ Douglas Lentz	Chief Operating Officer	July 24, 2008
Douglas Lentz	(Principal Executive Officer)
/s/ Pamela Gallegos	Interim-Chief Financial Officer	July 24, 2008
Pamela Gallegos	(Principal Financial Officer)

37

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES
UNINCORPORATED BUSINESS ENTERPRISES OF THE MESCALERO APACHE TRIBE

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	F-1
Audited Financial Statements:
Consolidated Balance Sheets as of April 30, 2007 and 2008	F-2
Consolidated Statements of Operations for the Years ended April 30, 2006, 2007 and 2008	F-3
Consolidated Statements of Changes in Equity for the Years ended April 30, 2006, 2007 and 2008	F-4
Consolidated Statements of Cash Flows for the Years ended April 30, 2006, 2007 and 2008	F-5
Notes to Consolidated Financial Statements	F-6

38

Report of Independent Registered Public Accounting Firm

Management Board
Inn of the Mountain Gods Resort and Casino and subsidiaries
Mescalero, New Mexico

We have audited the accompanying consolidated balance sheets of Inn of the Mountain Gods Resort and Casino and subsidiaries (the “Company”), unincorporated enterprises of the Mescalero Apache Tribe, as of April 30, 2007 and 2008, and the related statements of operations, changes in equity, and cash flows for each of the three years in the period ended April 30, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, including assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Inn of the Mountain Gods Resort and Casino and subsidiaries as of April 30, 2007 and 2008, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2008, in conformity with accounting principles generally accepted in the United States of America.

Inn of the Mountain Gods Resort and Casino and subsidiaries are unincorporated enterprises of the Mescalero Apache Tribe and are not separate legal entities, These financial statements reflect the financial position of the Inn of the Mountain Gods Resort and Casino and subsidiaries and the results of their operation and their cash flows and do not purport to represent the financial position and activity of the Mescalero Apache Tribe as a whole.

/s/ BDO Seidman, LLP

Los Angeles, California

July 24, 2008

F-1

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
As of April 30,

	2007			2008
Current Assets
Cash and cash equivalents	$	16,929,630		$	14,975,093
Accounts receivable, net of allowance for doubtful accounts		539,368			567,236
Inventories, net of reserves		766,658			1,040,086
Prepaid expenses and other assets		594,478			855,754
Total current assets		18,830,134			17,438,169
Non-Current Assets
Property plant and equipment		298,091,568			299,344,711
Accumulated Depreciation		(87,565,430	)		(103,333,993	)
Property plant and equipment, net		210,526,138			196,010,718
Other Assets		112,500			50,000
Deferred financing costs		6,070,653			4,445,409
Total Assets	$	235,539,425		$	217,944,296
Liabilities and Equity (Deficit)
Current Liabilities
Accounts Payable	$	1,461,913		$	2,093,653
Accrued expenses		3,966,057			3,298,719
Accrued payroll and benefits		2,218,879			2,578,145
Accrued interest		11,200,000			11,200,000
Advanced deposits		438,659			357,648
Current portion of long-term debt		3,659,278			3,534,414
Total current liabilities		22,944,786			23,062,579
Non-Current Liabilities
Long-term debt, net of current portion		208,174,124			204,639,002
Total liabilities		231,118,910			227,701,581
Equity (Deficit)
Contributed Capital		29,652,939			21,648,939
Accumulated deficit		(25,232,424	)		(31,406,224	)
Total equity (Deficit)		4,420,515			(9,757,285	)
Total liabilities and equity (Deficit)	$	235,539,425		$	217,944,296

The accompanying notes are an integral part of these statements.

F-2

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended April 30,

	2006			2007			2008
Revenues:
Gaming	$	76,476,004		$	76,473,428		$	77,536,827
Hotel		10,860,411			13,471,771			13,475,019
Food and Beverage		12,260,170			13,939,008			14,953,253
Recreation and other		16,620,951			23,222,308			20,576,831
Gross Revenue		116,217,536			127,106,515			126,541,930
Less-Promotional Allowances		2,766,644			2,254,707			2,105,256
Net Revenue		113,450,892			124,851,808			124,436,674
Operating Expenses
Gaming		27,179,353			26,376,378			26,646,532
Hotel expenses		5,180,746			4,657,790			4,434,224
Food and beverage		15,728,649			14,215,130			15,348,515
Recreation and other		12,378,385			13,861,765			14,908,202
Marketing		8,919,685			8,815,853			10,004,622
General and administrative		15,712,890			11,192,172			11,389,837
Health Insurance — Medical		2,014,038			2,291,743			2,117,140
Mescalero Apache 401K		—			315,404			856,565
Mescalero Apache Telecom		144,813			199,573			197,040
Tribal Regulatory Fees		2,945,629			2,400,000			2,400,000
Depreciation		17,779,316			18,169,528			16,061,087
Loss on disposal of assets		—			7,439			63,847
Total Operating Expenses		107,983,504			102,502,775			104,427,611
Operating Income		5,467,388			22,349,033			20,009,063
Other Income (Expense)
Interest Income		442,172			286,823			189,391
Interest Expense		(26,840,510	)		(26,648,687	)		(26,419,780	)
Other income (expense)		(336,719	)		48,076			47,526
Total Other Income (expense)		(26,735,057	)		(26,313,788	)		(26,182,863	)
Net Loss	$	(21,267,669	)	$	(3,964,755	)	$	(6,173,800	)

The accompanying notes are an integral part of these statements.

F-3

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Years Ended April 30, 2006, 2007 and 2008

				Retained
	Contributed			Earnings			Total
	Capital			(Deficit)			Equity
Balances, April 30, 2005	$	58,143,350		$	—		$	58,143,350
Distributions to Mescalero Apache Tribe:
Capital Distribution/Operating Transfers		(5,510,254	)		—			(5,510,254	)
Net loss		—			(21,267,669	)		(21,267,669	)
Balances, April 30, 2006		52,633,096			(21,267,669	)		31,365,427
Distributions to Mescalero Apache Tribe:
Capital Distribution/Operating Transfers		(22,980,157	)		—			(22,980,157	)
Net loss		—			(3,964,755	)		(3,964,755	)
Balances, April 30, 2007		29,652,939			(25,232,424	)		4,420,515
Distributions to Mescalero Apache Tribe:
Capital Distribution/Operating Transfers		(8,004,000	)		—			(8,004,000	)
Net Loss		—			(6,173,800	)		(6,173,800	)
Balances, April 30, 2008	$	21,648,939		$	(31,406,224	)	$	(9,757,285	)

The accompanying notes are an integral part of these statements.

F-4

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
For Years Ending April 30,

	2006			2007			2008
Cash flows from operating activities
Net loss	$	(21,267,669	)	$	(3,964,755	)	$	(6,173,800	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		19,404,560			20,417,794			17,664,576
Loss on disposal of fixed assets		—			7,439			63,857
Changes in assets and liabilities:
Accounts receivable, net of allowance		12,056			26,052			(27,868	)
Inventories		619,717			43,131			(273,428	)
Prepaid expenses		487,415			(221,704	)		(261,276	)
Other long-term assets		153,210			(70,497	)		62,500
Accounts payable		(66,837	)		(1,144,757	)		631,740
Accrued expenses, payroll and benefits		(245,318	)		(4,575,408	)		(308,072	)
Deposits and advance payments		(624,895	)		66,189			(81,011	)
Net cash (used in) provided by operating activities		(1,527,761	)		10,583,484			11,297,218
Cash flows from investing activities:
Purchase of property, plant and equipment		(14,769,093	)		(472,204	)		(1,298,349	)
Construction accounts payable		(5,870,860	)		(1,044,426	)		—
Net cash used in investing activities		(20,639,953	)		(1,516,630	)		(1,298,349	)
Cash flows from financing activities:
Restricted cash for construction payments and interest reserve		17,699,152			18,171,534			—
Principal borrowings on long-term debt		15,420,363			—			—
Principal (payments) on long-term debt, net		(2,391,696	)		(4,096,973	)		(3,949,406	)
Distributions to Mescalero Apache Tribe		(5,510,254	)		(22,980,157	)		(8,004,000	)
Net cash provided by (used in) financing activities		25,217,565			(8,905,596	)		(11,953,406	)
Net increase (decrease) in cash and cash equivalents		3,049,851			161,258			(1,954,537	)
Cash and cash equivalents, beginning of year		13,718,521			16,768,372			16,929,630
Cash and cash equivalents, end of year	$	16,768,372		$	16,929,630		$	14,975,093
Supplemental cash flow information:
Cash paid for interest	$	26,840,510		$	25,023,443		$	24,794,536
Non-cash investing and financing activities:
Property, plant and equipment acquired through capital lease	$	223,623		$	1,149,897		$	289,420

The accompanying notes are an integral part of these statements.

F-5

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2006, 2007 and 2008

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

Reporting Entity and Operations

The Inn of the Mountain Gods Resort and Casino (the “IMG Resort and Casino”), an unincorporated enterprise of the Mescalero Apache Tribe (the “Tribe”), was established on April 30, 2003 for the purpose of managing all resort enterprises of the Tribe including activities of IMG Resort and Casino and its wholly owned subsidiaries: Casino Apache, Casino Apache Travel Center, Inn of the Mountain Gods and Ski Apache (collectively the “Resorts”). Effective April 30, 2003, the Tribe contributed the Resorts to the IMG Resort and Casino. Prior to such contribution to IMG Resort and Casino, the Resorts operated as separate, unincorporated enterprises of the Tribe. Due to common control of the Resorts and IMG Resort and Casino, the contribution was accounted for as a reorganization of entities under common control. The Tribe is the sole owner of the IMG Resort and Casino. The IMG Resort and Casino is a separate legal entity from the Tribe and is managed by a separate management board.

Inn of the Mountain Gods (the “Casino”) offers Class III gaming as defined by the Indian Gaming Regulatory Act, on the tribal land in Mescalero, New Mexico. The Casino Apache Travel Center (the “Travel Center”), which opened for business on May 22, 2003, also offers Class III gaming as defined by the Indian Gaming Regulatory Act, on tribal land in Mescalero. The Inn of the Mountain Gods (the “Inn”) operated a 273-room resort hotel located on the Tribe’s reservation in Mescalero. The resort hotel has been demolished as of April 30, 2003 and the construction of a new resort hotel and casino (the “Resort Project”) on the same site was opened for commercial business on March 15, 2005. Ski Apache operates a ski resort within the Tribe’s reservation in Mescalero and on the U.S. Forest Service land. The IMG Resort and Casino’s activities primarily support the development and management efforts related to the new resorts.

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.

Reclassifications

Certain reclassifications have been made in the prior years’ 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, estimated lives of depreciable assets, allowances for doubtful accounts and impairment of long-lived assets. 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 are considered to be cash equivalents.

F-6

Accounts Receivable

Accounts receivable consists primarily of hotel and other non-gaming receivables. The 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.

Property, Plant and Equipment

Property, plant and equipment are presented at historical cost, less accumulated depreciation and amortization. Expenditures for additions, improvements and replacements, including interest incurred during construction of new facilities, are capitalized while maintenance and repairs, which do not improve or extend the service lives of the respective assets, are expensed as incurred. Equipment sold, or otherwise disposed of, is removed from the accounts with gains or losses on disposal recorded in the statements of operations.

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 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 $7,695,897, $6,070,653 and $4,445,409 as of April 30, 2006, 2007 and, 2008, respectively. The amortization related to this deferred financing cost was $1,625,244 for the years ended April 30, 2006, 2007 and 2008.

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.

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 IMG Resort and Casino’s senior notes were approximately $211.5 million at April 30, 2008, based on quoted market prices. The notes are not heavily traded, and price quotes ranged from $109.00 to $87.00 during the fiscal year 2008.

Contributed Capital

F-7

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 401K plan (see Note 7).

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 $150,806 and $250,448 at April 30, 2007 and 2008, 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 recognized by IMG Resort and Casino as a reduction from gross revenue. The total vouchers recognized by IMG Resort and Casino were approximately $2,767,000, $2,255,000 and $2,105,000 for the years ended April 30, 2006, 2007 and 2008, 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 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’s liability is included in accrued expenses and totaled $1,076,713 at April 30, 2007 and $1,046,957 at April 30, 2008.

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.

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

	Year Ended April 30,
	2006		2007		2008
Rooms	$	—	$	1,085,932	$	1,597,405
Food and beverage		773,585		681,735		1,105,412
Other		—		10,671		21,645
	$	773,585	$	1,778,338	$	2,724,462

Marketing

IMG Resort and Casino’s marketing costs to outside parties are expensed as incurred and for the years ended April 30, 2006, 2007 and 2008 were $8.9 million, $8.8 million and $10.0 million, respectively.

Tribal Taxes

The Resorts are subject to tribal taxes as long as the enterprises are not subject to New Mexico Gross Receipts Tax. Ski Apache is subject to New Mexico Gross Receipts Tax. A tribal tax charge of 10.75% of room revenue, 6.75% of food and beverage revenue, and

F-8

6.5% of other revenue is accrued monthly and is payable to the Tribe. The Resorts have recorded approximately $200,000 per month Tribal taxes for 2006, 2007 and 2008.

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, 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

In September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 157 Fair Value Measurements (“SFAS 157”). SFAS 157 provides a new single authoritative definition of fair value and provides enhanced guidance for measuring the fair value of assets and liabilities and requires additional disclosures related to the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. SFAS 157 is effective for the Company as of May 1, 2008. In February 2008, the FASP issued Staff Position (FSP) FAS 157-2. Effective Date of FASB Statement No. 157, which defers the implementation for the non-recurring nonfinancial assets and liabilities from fiscal years beginning after November 15, 2007 to fiscal years beginning after November 15, 2008. The provisions of SFAS No, 157 will be applied prospectively.

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 company is assessing the impact of adopting SFAS 159 and currently do not believe the adoption will 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,

F-9

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. For banquet functions and room revenue, the allowance for bad debt consists of approximately 50% of all receivables in excess of 60 days past due and 100% of all receivables in excess of 90 days past due.

The allowance for doubtful accounts was $48,803 as of April 30, 2007 and $19,513 as of April 30, 2008.

NOTE 3 — INVENTORIES

Inventories consist of the following at April 30, 2007 and 2008:

	April 30, 2007		April 30, 2008
Food and beverage	$	260,503	$	219,709
Golf and pro shop		74,760		113,058
Gift shops, fuel and other		431,395		707,319
Inventories, net of reserves	$	766,658	$	1,040,086

NOTE 4 — PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment is summarized as follows at April 30, 2007 and 2008:

	April 30, 2007			April 30, 2008
Land	$	538,894		$	538,894
Buildings		209,507,247			209,507,247
Lifts and snowmaking equipment		8,421,750			8,421,750
Non-gaming equipment, furniture and other		50,659,100			51,819,539
Gaming equipment		20,864,152			20,869,501
Leasehold and land improvements, lake and golf course		8,072,925			8,072,925
Subtotal		298,064,068			299,229,856
Less accumulated depreciation		(87,565,430	)		(103,333,993	)
Property, plant and equipment, net		210,498,638			195,895,863
Construction in progress (CIP)		27,500			114,855
Net Property, plant and equipment	$	210,526,138		$	196,010,718

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.

IMG Resort and Casino received its final certificate of completion for the construction project on August 17, 2006.

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

In connection with the IMG Resort and Casino’s issuing $200.0 million of its 12% Senior Notes (“Notes”) pursuant to an underlying Indenture (“Indenture”), IMG Resort and Casino entered into a Cash Collateral and Disbursement Agreement dated November 3, 2003 (the “Cash Collateral Agreement”), by and among U.S. Bank National Association, as disbursement agent, securities intermediary and depositary bank, U.S. Bank National Association, as trustee under the Indenture, Professional Associates Construction Services, Inc., a

F-10

California corporation, the Tribe and certain unincorporated entities of the Tribe as guarantors pursuant to a certain Guaranty Agreement (“Guarantee”). Pursuant to the Cash Collateral Agreement, certain amounts were placed in reserve accounts (“Collateral Accounts”) (i) to finance the design, development, construction, equipment and operations of phase II of its two-phase construction project, which was comprised of the Inn of the Mountain Gods Resort and Casino, including a casino, hotel and certain related amenities (the “Project”), (ii) for payment of the first three interest payments due on the Notes, (iii) to fund a Compact Dispute Resolution and, after all funds in the Construction Disbursement Account have been exhausted, to finance completion of the Project, including the furnishing, fixturing and equipping thereof, and (iv) from the other accounts established under the Cash Collateral Agreement for the purposes set forth therein. Following the Projection Completion Date, as set forth and defined in the Cash Collateral Agreement, IMG Resort and Casino submitted to the Disbursement Agent, the Trustee and the Independent Construction Consultant a Final Disbursement Request pertaining to the amounts requested for disbursement, together with all required schedules and certifications. The final disbursement was made from the construction reserve account on or about August 17, 2006 in the amount of $13,881,000 to the Tribe and $2,000,000 to Centex/Worth Group, LLC. The Tribe and IMG Resort and Casino have entered into a Settlement and Assignment Agreement (“Settlement Agreement”) dated July 10, 2006 with Centex/Worth Group, LLC, the Contractor of the Project, and Centex Construction, LLC, the Subcontractor of the Project, whereby the Tribe (through the Final Disbursement Request) paid the Contractor $2,000,000 from the construction reserve account to settle certain claims against various parties, including the Subcontractor. In addition, the Tribe and IMG Resort and Casino assigned various causes of action they had against various parties involved with the construction of the Project to the Contractor.

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

On June 15, 2004, IMG Resort and Casino entered into a $15.0 million credit facility with Key Equipment Finance, a Division of Key Corporate Capital Inc. 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 April 30, 2008, $15.0 million had been drawn against this facility to finance the purchases of furniture, fixtures and equipment. Long-term debt at April 30, 2007 and 2008 is summarized as follows:

	April 30, 2007			April 30, 2008
Senior Notes, bearing interest is at a fixed rate of 12%, maturing in 2010	$	200,000,000		$	200,000,000
Bureau of Indian Affairs, unsecured notes payable with payments of $27,100 per month, including interest at 8.5%, maturing in 2011		1,163,568			929,904
Capital Equipment Loans with Key Equipment, Five (5) year term, interest ranging from 7.55% to 8.18%		10,283,169			7,243,512
Short-Term Capital Leases, 8% imputed interest		386,665			—
Total		211,833,402			208,173,416
Less: Current Portion		(3,659,278	)		(3,534,414	)
Long-Term Portion	$	208,174,124		$	204,639,002

The maturities of long-term debt as of April 30, 2008 are as follows (in thousands):

2009	$	3,534
2010		203,816
2011		722
2012		101
Total	$	208,173

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. 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 for the State of New Mexico Gaming Commission of $225,000.

F-11

On August 29, 1997, the Tribe and the State of New Mexico (the “State”) entered into a Tribal-State Compact (the “Compact”) to govern gaming on the Mescalero Apache Reservation. The terms of the Compact subject the Casino to various regulatory fees and revenues sharing payable to the State. Among the provisions of the Compact are requirements for quarterly revenues sharing payments consisting of 16% of the net win from video gaming and quarterly regulatory fees assessed on the number of gaming facilities, the number of gaming machines and the number of gaming tables and other devices. The Tribe has challenged the legality of these fee arrangements, claiming them to be an illegal tax on Indian gaming under the Indian Gaming Regulatory Act.

On April 20, 2004, the Tribe and the State of New Mexico entered into a settlement agreement which resolved all of their disputes regarding the 1997 Compact. Under the settlement agreement, the State of New Mexico and the Tribe agreed that they would enter into a new gaming compact, the 2001 Compact, and that the Tribe would pay the State of New Mexico $25.0 million in full settlement of all revenue sharing and regulatory fees payable under the 1997 Compact as well as all revenue sharing fees payable under the 2001 Compact through March 2005. On April 20, 2004, the IMG Resort and Casino paid an initial payment of $2.0 million pursuant to the terms of the settlement agreement.

The 2001 Compact provides for a revenue sharing amount equal to 8% of “net win” from gaming machines, payable no later than 25 days after the last day of each calendar quarter and an annual regulatory fee of $100,000, paid in quarterly installments of $25,000 on the first day of each calendar quarter. Pursuant to the terms of the settlement agreement, the IMG Resort and Casino began incurring revenue sharing payments to the State of New Mexico at the rate of 8% of “net win” pursuant to the 2001 Compact in March 2005, with the first revenue sharing payment under the 2001 Compact due in June 2005. In addition, pursuant to the terms of the settlement agreement, the IMG Resort and Casino began incurring regulatory fees, at the rate of $100,000 per year, from the date the approval of the 2001 Compact is published in the Federal Register with the first payment for regulatory fees under the 2001 Compact due on the first day of the first full calendar quarter thereafter. On June 1, 2004, the Tribe and the State of New Mexico entered into the 2001 Compact. On June 22, 2004, the Department of Interior approved the 2001 Compact. The IMG Resort and Casino made the remaining $23.0 million payment required under the settlement agreement in August 2004. As a result of the settlement with the State, expense and the liability for accrued revenue sharing and regulatory fees have been reduced.

NOTE 7 — EMPLOYEE BENEFITS

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 Resort and Casino reimburses the Tribe for its employees’ direct costs for coverage as billed by the third party.

The Tribe sponsors a federally compliant 401(k) savings plan, which covers substantially all employees who worked for IMG Resort and Casino for at least 120 days and attained 18 years of age. The Company matches employee contribution up to 4%. Qualified employees who have been employed for more than 120 days had the initial waiting period waived. The total amount of match made by IMG Resort and Casino was $315,404 for the year ended April 30, 2007 and $856,565 for the year ended April 30, 2008. This plan became effective January 1, 2007. The first payroll deduction and match began on January 12, 2007. The IRS sets the maximum allowed each year for qualified 401(k) plans. The maximum the IRS allows for an employee deferral amount for 2007 and 2008 is under 50 years old, $15,500 and over 50 years old, $20,500.

NOTE 8 — RISK MANAGEMENT

The IMG Resort and Casino manages the exposure to the risk of most losses through various commercial insurance policies. There have been no reductions in insurance coverage. Settlement amounts have not exceeded insurance coverage for 2006, 2007 and 2008, respectively.

The Tribe is self-insured for employee health and accident insurance. The IMG Resort and Casino’s employees are covered by this plan and remit amounts to the Tribe for their share of the self-insurance costs. The total amounts reimbursed to the Tribe were approximately $2,014,038, $3,273,162 and $3,369,825 for 2006, 2007 and 2008, respectively. Loss limits per claim are $100,000. Aggregate loss limit for policy year (currently July through June) is $1,058,000. This amount is in total for all Tribal entities aggregated which includes the IMGR&C components.

The Tribe maintains worker’s compensation insurance coverage under a retrospective rated policy whereby premiums are accrued

F-12

based on the loss experience of the Tribe and its various enterprises. The IMG Resort and Casino’s and the Resorts’ employees are covered under 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, the IMG Resort and Casino and the Resorts has 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 fee for the years ended April 30, 2006, 2007 and 2008 totaled approximately $137,200, $92,000 and $55,650 respective1y.

Employment Agreements

On April 2, 2008, Brian Parrish elected to resign from his position as Chief Operating Officer and Management Board member of the Inn of the Mountain Gods Resort and Casino effective May 30, 2008. Mr. Parrish was a Disclosure Committee member, a position from which he also resigned. Mr. Parrish served as a consultant to the Company for the period of May 1, 2008 through June 30, 2008. Such consulting services were on an as needed basis. Mr. Parrish received severance payments in accordance with Section 3.3 of his Employment Agreement.

On August 1, 2007, the Inn of the Mountain Gods Resort and Ms. Pamela Gallegos entered into an agreement whereby the Company hired Ms. Gallegos as the Director of Finance of the Company, effective as of August 7, 2008. Ms. Gallegos’ employment agreement expires on July 31, 2010 and she will earn an annual base salary of $176,000.

On June 2, 2008, the Inn of the Mountain Gods Resort and Mr. Douglas Lentz entered into an agreement whereby the Company hired Mr. Lentz as the Chief Operating Officer of the Company, effective as of June 1, 2008. Mr. Lentz will serve for a term of three years and will earn an annual base salary of $275,000. Mr. Lentz replaced then Chief Operating Officer, Mr. Brian Parrish.

Aircraft Air Charter Agreement

Effective July 10, 2007, the IMG Resort and Casino entered into an agreement with Vision Airlines, Inc. (“Vision”) to provide aircraft charter services. Vision provided an aircraft, with flight crew, to IMG for round trip transportation of IMGRC’s guests from Houston, Texas to Alamogordo, New Mexico. Vision also provided a 50-seat luxury coach for round trip transportation of IMG guests from Alamogordo, New Mexico airport to the IMG Resort and Casino.

Air charter service commenced on September 5, 2007; and consisted of 104 round trip charter service round trip flights over a 26-week period. IMG Resort and Casino had an option to extend the agreement for an additional twenty-six (26) weeks under the same terms and conditions. Total price of the agreement was $1,268,000.

F-13

However, with the limited natural snowfall that was received at Ski Apache during the first half of the ski season, it was not possible to create sufficient demand for ski packages and other travel incentives and overcome the operational and marketing costs associated with the program. Therefore, after 80 flights, management elected to terminate the program.

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 IMG Resort and Casino uses Mescalero Apache Telecommunications for some of its telecommunications related services. The IMG Resort and Casino paid Mescalero Apache Telecommunications approximately $145,000, $200,000 and $197,000 for the years ended April 30, 2006, 2007 and 2008, respectively, for such services.

Shared Services and Cost Allocations

In connection with the issuance of the original notes, IMG Resort and Casino and the Tribe entered into a service and cost allocation agreement, 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 1997 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 and (d) amounts for certain other miscellaneous liabilities. IMG reimburses the Tribe for its direct costs as billed by the third party.

Employee 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 insurance. IMG Resort and Casino paid the Tribe approximately $2.0 million, $3.3 million and $3.3 million for the fiscal years ended April 30, 2006, 2007 and 2008, respectively.

NOTE 11 — 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. 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.

F-14

SELECTED OPERATING SEGMENT FINANCIAL INFORMATION

$(000s)

	Gaming
	IMG		Travel Ctr		Ski			Non Gaming		Non- Segment			Consolidated
2006
Total Assets	$	—	$	—	$	6,357		$	—	$	267,003		$	273,360
Net Revenue		46,570		29,707		3,527			36,179		(2,532	)		113,451
Operating Income		33,321		23,947		(2,994	)		4,748		(53,555	)		5,467
Depreciation Expense		—		—		776			—		17,003			17,779
Interest Expense		—		—		—			—		(26,841	)		(26,841	)
Interest Income		—		—		—			—		442			442
2007
Total Assets		—		—		5,670			—		229,869			235,539
Net Revenue		46,312		30,086		1,332			40,662		6,460			124,852
Operating Income		36,767		24,357		377			10,234		(49,386	)		22,349
Depreciation Expense		—		—		776			—		17,394			18,170
Interest Expense		—		—		—			—		(26,649	)		(26,649	)
Interest Income		—		—		—			—		287			287
2008
Total Assets		—		—		5,262			—		212,682			217,944
Net Revenue		46,644		30,175		1,088			41,621		4,909			124,437
Operating Income		36,232		24,205		25			10,236		(50,689	)		20,009
Depreciation Expense		—		—		—			—		16,061			16,061
Interest Expense		—		—		—			—		(26,420	)		(26,420	)
Interest Income		—		—		—			—		189			189

NOTE 12 — CONSOLIDATING INFORMATION

In connection with IMG Resort and Casino’s issuance in November 2003 of $200,000,000 of 12% senior notes, IMG Resort and Casino and the Resorts (the “wholly-owned Guarantors”) have, jointly and severally, fully and unconditionally guaranteed the 12% senior notes. These guarantees are secured only until the completion of the Resort Project and thereafter unsecured and subordinated in right of payment to all existing and future indebtedness outstanding and any other indebtedness permitted to be incurred by IMG Resort and Casino under the terms of the indenture agreement for the 12% senior subordinated notes. A final certificate of completion and acceptance has not been issued pending the successful completion of identified incomplete items.

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 12% senior 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 Resorts are wholly owned subsidiaries of IMG Resort and Casino.

The following consolidating information is presented as of and for the years ended April 30, 2008, 2007 and 2006.

F-15

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING BALANCE SHEETS
As of April 30, 2008

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash and cash equivalents	$	11,083,394		$	3,891,699		$	—		$	14,975,093
Accounts receivable		18,446			548,790			—			567,236
Inventories		216,590			823,496			—			1,040,086
Prepaid expenses		682,404			173,350			—			855,754
Total current assets		12,000,834			5,437,335			—			17,438,169
Fixed assets		—			299,344,711			—			299,344,711
Accumulated depreciation		—			(103,333,993	)		—			(103,333,993	)
Net fixed assets		—			196,010,718			—			196,010,718
Non-current assets
Other assets		—			50,000			—			50,000
Deferred financing costs		4,445,409			—			—			4,445,409
Advances to subsidiaries		60,244,217			5,595,376			(65,839,593	)		—
Investment in subsidiaries		144,712,780			—			(144,712,780	)		—
Total assets	$	221,403,240		$	207,093,429		$	(210,552,373	)	$	217,944,296
Accounts payable and other short term liabilities	$	2,093,653		$	—		$	—		$	2,093,653
Accrued expenses		2,449,839			848,880			—			3,298,719
Accrued payroll and benefits		2,578,145			—			—			2,578,145
Accrued interest		11,200,000			—			—			11,200,000
Advanced deposits		—			357,648			—			357,648
Current portion of long-term debt		3,280,869			253,547			—			3,534,416
Total current liabilities		21,602,506			1,460,075			—			23,062,581
Non-current Liabilities
Advances from subsidiaries		5,595,376			60,244,217			(65,839,593	)		—
Long-term debt, net of current portion		203,962,643			676,357			—			204,639,000
Total liabilities		231,160,525			62,380,649			(65,839,593	)		227,701,581
Contributed capital		21,648,939			(6,012,897	)		6,012,897			21,648,939
Retained earnings (accumulated deficit)		(31,406,224	)		150,725,677			(150,725,677	)		(31,406,224	)
Total equity (deficit)		(9,757,285	)		144,712,780			(144,712,780	)		(9,757,285	)
Total liabilities and equity (deficit)	$	221,403,240		$	207,093,429		$	(210,552,373	)	$	217,944,296

F-16

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended April 30, 2008

				Guarantor
	IMGRC			Subsidiaries		Eliminations			Consolidated
Revenues:
Gaming	$	—		$	77,536,827	$	—		$	77,536,827
Hotel		—			13,475,019		—			13,475,019
Food and beverage		—			14,953,253		—			14,953,253
Recreation and other		—			20,576,831		—			20,576,831
Gross revenue		—			126,541,930		—			126,541,930
Less-promotional allowances		44,849			2,060,407		—			2,105,256
Net revenue		(44,849	)		124,481,523		—			124,436,674
Operating expenses:
Gaming		—			26,646,532		—			26,646,532
Hotel expenses		—			4,434,224		—			4,434,224
Food and beverage		—			15,348,515		—			15,348,515
Recreation and other		—			14,908,202		—			14,908,202
Marketing		—			10,004,622		—			10,004,622
General and administrative		7,990,808			3,399,029		—			11,389,837
Health insurance — medical		—			2,117,140		—			2,117,140
401K		—			856,565		—			856,565
Mescalero Apache Telecom		—			197,040		—			197,040
Tribal Regulatory Fees		—			2,400,000		—			2,400,000
Depreciation and amortization		—			16,061,087		—			16,061,087
Loss on disposal of assets		63,847			—		—			63,847
Total operating expenses		8,054,655			96,372,956		—			104,427,611
Operating income (loss)		(8,099,504	)		28,108,567		—			20,009,063
Other income (expense)
Interest income		189,391			—		—			189,391
Interest expense		(26,419,780	)		—		—			(26,419,780	)
Income from subsidiaries		28,108,567			—		(28,108,567	)		—
Other income (expense)		47,526			—		—			47,526
Total other income (expense)		1,925,704			—		(28,108,567	)		(26,182,863	)
Net income (loss)	$	(6,173,800	)	$	28,108,567	$	(28,108,567	)	$	(6,173,800	)

F-17

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended April 30, 2008

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(6,173,800	)	$	28,108,567		$	(28,108,567	)	$	(6,173,800	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,625,244			16,039,332			—			17,664,576
Loss on disposal of fixed assets		—			63,857			—			63,857
Changes in assets and liabilities:
Accounts receivable, net of allowance		(18,446	)		(9,422	)		—			(27,868	)
Inventories		(74,402	)		(199,026	)		—			(273,428	)
Prepaid expenses		(87,926	)		(173,350	)		—			(261,276	)
Other long term assets		50,000			12,500			—			62,500
Accounts payable		631,740			—			—			631,740
Accrued expenses, payroll and benefits		(447,242	)		139,170			—			(308,072	)
Deposits and advanced payments		—			(81,011	)		—			(81,011	)
Net cash provided by (used in) operating activities		(4,494,832	)		43,900,617			(28,108,567	)		11,297,218
Cash flows from investing activities:
Purchase of property, plant and equipment		—			(1,298,349	)		—			(1,298,349	)
Investment in subsidiaries		(28,108,567	)		—			28,108,567			—
Net cash used by investing activities		(28,108,567	)		(1,298,349	)		28,108,567			(1,298,349	)
Cash flows from financing activities:
Advances to (from) affiliates		42,597,824			(42,597,824	)		—			—
Principal payments on long-term debt, net		(3,715,742	)		(233,664	)		—			(3,949,406	)
Distributions to Mescalero Apache Tribe		(8,004,000	)		—			—			(8,004,000	)
Net cash provided by (used in) financing activities		30,878,082			(42,831,488	)		—			(11,953,406	)
Net decrease in cash and cash equivalents		(1,725,317	)		(229,220	)		—			(1,954,537	)
Cash and cash equivalents, beginning of period		12,808,711			4,120,919			—			16,929,630
Cash and cash equivalents, end of period	$	11,083,394		$	3,891,699		$	—		$	14,975,093

F-18

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING BALANCE SHEETS
As of April 30, 2007

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash and cash equivalents	$	12,808,711		$	4,120,919		$	—		$	16,929,630
Accounts receivable, net		—			539,368			—			539,368
Inventories		142,188			624,470			—			766,658
Prepaid expenses		594,478			—			—			594,478
Total current assets		13,545,377			5,284,757			—			18,830,134
Fixed assets		—			298,091,568			—			298,091,568
Accumulated depreciation		—			(87,565,430	)		—			(87,565,430	)
Net fixed assets		—			210,526,138			—			210,526,138
Non-current assets
Other assets		50,000			62,500			—			112,500
Deferred financing costs		6,070,653			—			—			6,070,653
Advances to subsidiaries		127,127,006			30,169,761			(157,296,767	)		—
Investment in subsidiaries		116,604,213			—			(116,604,213	)		—
Total assets	$	263,397,249		$	246,043,156		$	(273,900,980	)	$	235,539,425
Accounts payable and other short term liabilities	$	1,461,913		$	—		$	—		$	1,461,913
Accrued expenses		3,256,347			709,710			—			3,966,057
Accrued payroll and benefits		2,218,879			—			—			2,218,879
Accrued interest		11,200,000			—			—			11,200,000
Advanced deposits		—			438,659			—			438,659
Current portion of long-term debt		3,426,322			232,956			—			3,659,278
Total current liabilities		21,563,461			1,381,325			—			22,944,786
Non-current liabilities
Advances from subsidiaries		30,169,761			127,127,006			(157,296,767	)		—
Long-term debt, net of current portion		207,243,512			930,612			—			208,174,124
Total liabilities		258,976,734			129,438,943			(157,296,767	)		231,118,910
Contributed capital		29,652,939			(6,012,897	)		6,012,897			29,652,939
Retained earnings (accumulated deficit)		(25,232,424	)		122,617,110			(122,617,110	)		(25,232,424	)
Total equity		4,420,515			116,604,213			(116,604,213	)		4,420,515
Total liabilities and equity	$	263,397,249		$	246,043,156		$	(273,900,980	)	$	235,539,425

F-19

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended April 30, 2007

				Guarantor
	IMGRC			Subsidiaries		Eliminations			Consolidated
Revenues:
Gaming	$	—		$	76,473,428	$	—		$	76,473,428
Hotel		—			13,471,771		—			13,471,771
Food and beverage		—			13,939,008		—			13,939,008
Recreation and other		16,257			23,206,051		—			23,222,308
Gross revenue		16,257			127,090,258		—			127,106,515
Less-promotional allowances		3,974			2,250,733		—			2,254,707
Net revenue		12,283			124,839,525		—			124,851,808
Operating expenses
Gaming		75,569			26,300,809		—			26,376,378
Hotel expenses		—			4,657,790		—			4,657,790
Food and beverage		—			14,215,130		—			14,215,130
Recreation and other		—			13,861,765		—			13,861,765
Marketing		—			8,815,853		—			8,815,853
General and administrative		7,757,442			3,434,730		—			11,192,172
Health insurance — medical		—			2,291,743		—			2,291,743
401K		—			315,404		—			315,404
Mescalero Apache Telecom		—			199,573		—			199,573
Tribal Regulatory Fees		—			2,400,000		—			2,400,000
Depreciation and amortization		—			18,169,528		—			18,169,528
Loss on disposal of assets		—			7,439		—			7,439
Total operating expenses		7,833,011			94,669,764		—			102,502,775
Operating income (loss)		(7,820,728	)		30,169,761		—			22,349,033
Other income (expense)
Interest income		286,823			—		—			286,823
Interest expense		(26,648,687	)		—		—			(26,648,687	)
Income from subsidiaries		30,169,761			—		(30,169,761	)		—
Other income (expense)		48,076			—		—			48,076
Total other Income (expense)		3,855,973			—		(30,169,761	)		(26,313,788	)
Net income (loss)	$	(3,964,755	)	$	30,169,761	$	(30,169,761	)	$	(3,964,755	)

F-20

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF CASH FLOWS
Year Ended April 30, 2007

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(3,964,755	)	$	30,169,761		$	(30,169,761	)	$	(3,964,755	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,625,244			18,792,550			—			20,417,794
Loss on disposal of assets		—			7,439			—			7,439
Changes in assets and liabilities:
Restricted cash and cash equivalents		—			—			—			—
Accounts receivable, net of allowance		4,421			21,631			—			26,052
Inventories		(142,188	)		185,319			—			43,131
Prepaid expenses		(259,818	)		38,114			—			(221,704	)
Other long term assets		—			(70,497	)		—			(70,497	)
Accounts payable		(1,144,757	)		—			—			(1,144,757	)
Accrued expenses, payroll and benefits		(5,616,324	)		1,040,916			—			(4,575,408	)
Deposits and advance payments		—			66,189			—			66,189
Net cash provided by (used in) operating activities		(9,498,177	)		50,251,442			(30,169,761	)		10,583,484
Cash flows from investing activities:
Purchase of property, plant and equipment		—			(472,204	)		—			(472,204	)
Construction accounts payable		—			(1,044,426	)		—			(1,044,426	)
Investment in subsidiaries		(41,412,095	)		—			41,412,095			—
Net cash used by investing activities		(41,412,095	)		(1,516,630	)		41,412,095			(1,516,630	)
Cash flows from financing activities:
Cash held from construction payments		18,171,534			—			—			18,171,534
Advances to (from) affiliates		57,710,310			(46,467,976	)		(11,242,334	)		—
Principal payments on long-term debt, net		(293,933	)		(3,803,040	)		—			(4,096,973	)
Distributions to Mescalero Apache Tribe		(22,980,157	)		—			—			(22,980,157	)
Net cash used in (provided by) financing activities		52,607,754			(50,271,016	)		(11,242,334	)		(8,905,596	)
Net (decrease) increase in cash and cash equivalents		1,697,482			(1,536,224	)		—			161,258
Cash and cash equivalents, beginning of period		11,111,229			5,657,143			—			16,768,372
Cash and cash equivalents, end of period	$	12,808,711		$	4,120,919		$	—		$	16,929,630

F-21

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING BALANCE SHEETS
As of April 30, 2006

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash and cash equivalents	$	11,111,229		$	5,657,143		$	—		$	16,768,372
Restricted cash and cash equivalents		18,171,534			—			—			18,171,534
Accounts receivable, net		4,421			560,999			—			565,420
Inventories		—			809,789			—			809,789
Prepaid expenses		334,660			38,114			—			372,774
Total current assets		29,621,844			7,066,045			—			36,687,889
Fixed assets		2,371,311			297,948,825			—			300,320,136
Depreciation		(251,806	)		(71,133,856	)		—			(71,133,856	)
Net fixed assets		2,119,505			226,814,969			—			228,934,474
Non-current Assets
Other assets		50,000			(7,997	)		—			42,003
Deferred financing costs		7,695,897			—			—			7,695,897
Advances to subsidiaries		186,971,842			29,885,898			(216,857,740	)		—
Investment in subsidiaries		75,288,309			—			(75,288,309	)		—
Total assets	$	301,747,397		$	263,758,915		$	(292,146,049	)	$	273,360,263
Accounts payable and other short term liabilities	$	2,606,670		$	—		$	—		$	2,606,670
Construction accounts payable		2,274,874			—			—			2,274,874
Accrued expenses, including payroll and benefits		11,090,735			(330,391	)		—			10,760,344
Accrued interest		11,200,000			—			—			11,200,000
Advanced deposits		815			371,655			—			372,470
Current portion of long-term debt		3,039,808			210,521			—			3,250,329
Total current liabilities		30,212,902			251,785			—			30,464,687
Non-current liabilities
Advances from subsidiaries		29,885,898			186,971,842			(216,857,740	)		—
Long-term debt, net of current portion		210,283,170			1,246,979			—			211,530,149
Total liabilities		270,381,970			188,470,606			(216,857,740	)		241,994,836
Contributed capital		52,633,096			(19,109,994	)		19,109,994			52,633,096
Retained earnings (deficit)		(21,267,669	)		94,398,303			(94,398,303	)		(21,267,669	)
Total equity		31,365,427			75,288,309			(75,288,309	)		31,365,427
Total liabilities and equity	$	301,747,397		$	263,758,915		$	(292,146,049	)	$	273,360,263

F-22

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING STATEMENT OF OPERATIONS
For the Year Ended April 30, 2006

				Guarantor
	IMGRC			Subsidiaries		Eliminations			Consolidated
Revenues:
Gaming	$	—		$	76,476,004	$	—		$	76,476,004
Hotel		—			10,860,411		—			10,860,411
Food and beverage		—			12,260,170		—			12,260,170
Recreation and other		—			16,620,951		—			16,620,951
Gross revenue		—			116,217,536		—			116,217,536
Less-promotional allowances		—			2,766,644		—			2,766,644
Net revenue		—			113,450,892		—			113,450,892
Operating expenses
Gaming		—			27,179,353		—			27,179,353
Hotel expenses		—			5,180,746		—			5,180,746
Food and beverage		—			15,728,649		—			15,728,649
Recreation and other		—			12,378,385		—			12,378,385
Marketing		—			8,919,685		—			8,919,685
General and administrative		7,905,503			7,807,387		—			15,712,890
Health insurance — medical		—			2,014,038		—			2,014,038
Mescalero Apache Telecom		—			144,813		—			144,813
Tribal Regulatory Fees		—			2,945,629		—			2,945,629
Depreciation and amortization		—			17,779,316		—			17,779,316
Total operating expenses		7,905,503			100,078,001		—			107,983,504
Operating income (loss)		(7,905,503	)		13,372,891		—			5,467,388
Other income (expense)
Interest income		442,172			—		—			442,172
Interest expense		(26,840,510	)		—		—			(26,840,510	)
Income from subsidiaries		13,372,891			—		(13,372,891	)		—
Other income (expense)		(336,719	)		—		—			(336,719	)
Total other income (expense)		(13,362,166	)		—		(13,372,891	)		(26,735,057	)
Net income (loss)	$	(21,267,669	)	$	13,372,891	$	(13,372,891	)	$	(21,267,669	)

F-23

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

CONSOLIDATING STATEMENTS OF CASH FLOWS
Year Ended April 30, 2006

				Guarantor
	IMGRC			Subsidiaries			Eliminations			Consolidated
Cash flows from operating activities:
Net income (loss)	$	(21,267,669	)	$	13,372,891		$	(13,372,891	)	$	(21,267,669	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		1,625,244			17,779,316			—			19,404,560
Changes in assets and liabilities:
Accounts receivable, net of allowance		376,446			(364,390	)		—			12,056
Inventories		—			619,717			—			619,717
Prepaid expenses		765,487			(278,072	)		—			487,415
Other long term assets		74,991			78,219			—			153,210
Accounts payable		(66,837	)		—			—			(66,837	)
Accrued expenses, payroll and benefits		4,174,122			(4,419,440	)		—			(245,318	)
Deposits and advance payments		—			(624,895	)		—			(624,895	)
Net cash provided by (used in) operating activities		(14,318,216	)		26,163,346			(13,372,891	)		(1,527,761	)
Cash flows from investing activities:
Purchase of property, plant and equipment		—			(16,160,575	)		1,391,482			(14,769,093	)
Construction accounts payable		(5,870,860	)		—			—			(5,870,860	)
Investment in subsidiaries		(13,372,891	)		—			13,372,891			—
Net cash used by investing activities		(19,243,751	)		(16,160,575	)		14,764,373			(20,639,953	)
Cash flows from financing activities:
Cash held from construction payments		17,699,152			—			—			17,699,152
Advances to (from) affiliates		18,859,985			(17,468,503	)		(1,391,482	)		—
Principal borrowings on long-term debt		15,420,363			—			—			15,420,363
Principal payments on long-term debt, net		(2,321,009	)		(70,687	)		—			(2,391,696	)
Distributions to Mescalero Apache Tribe		(5,510,254	)		—			—			(5,510,254	)
Net cash used by (provided by) financing activities		44,148,237			(17,539,190	)		(1,391,482	)		25,217,565
Net (decrease) increase in cash and cash equivalents		10,586,270			(7,536,419	)		—			3,049,851
Cash and cash equivalents, beginning of period		524,959			13,193,562			—			13,718,521
Cash and cash equivalents, end of period	$	11,111,229		$	5,657,143		$	—		$	16,768,372

F-24

INDEX TO EXHIBITS

Exhibit No.	Description
3.1*	Mescalero Apache Tribe Resolutions 03-05, 03-28 and 03-29 establishing and governing the Inn of the Mountain Gods Resort and Casino adopted and approved April 2, 2003, June 15, 2003 and June 15, 2003, respectively.
3.2*	Charter of the Management Board of IMG Resort and Casino.
4.1*	Indenture, dated as of November 3, 2003, among the Mescalero Apache Tribe, Inn of the Mountain Gods Resort and Casino, Casino Apache, Inn of the Mountain Gods, Casino Apache Travel Center, Ski Apache and U.S. Bank National Association, as Trustee, relating to the 12% Senior Notes due 2010 of the Inn of the Mountain Gods Resort and Casino.
4.2*	Form of 12% Senior Note Due 2010 of the Inn of the Mountain Gods Resort and Casino.
4.3*	Registration Rights Agreement, dated as of November 3, 2003, among the Mescalero Apache Tribe, Inn of the Mountain Gods Resort and Casino, Casino Apache, Inn of the Mountain Gods, Casino Apache Travel Center, Ski Apache and Citigroup Global Markets Inc, as the Initial Purchaser.
10.1*	Second Amended Design/Build Construction Contract, by and among Inn of the Mountain Gods Resort and Casino, Centex/Worth Group, LLC, as Design/Builder, and Rider Hunt Levett & Bailey, as Construction Manager, dated as of September 6, 2003, and Change Order No. 9 thereto, dated October 24, 2003.
10.2*	Cash Collateral and Disbursement Agreement, dated as of November 3, 2003, among Inn of the Mountain Gods Resort and Casino, Casino Apache, Inn of the Mountain Gods, Casino Apache Travel Center, Ski Apache, U.S. Bank National Association, as Disbursement Agent, Professional Associates Construction Services, Inc., as Independent Construction Consultant and U.S. Bank National Association, as Trustee.
10.3*	Ski Apache Special Use Permit received from the United States Department of Agriculture, Forest Service dated April 23, 1985.
10.4	Employment Agreement between the Mescalero Apache Tribe and Pamela Gallegos (filed herewith).
10.5**	2001 Compact between the Mescalero Apache Tribe and the State of New Mexico, entered into June 1, 2004.
12.1	Statement of Calculation of Ratio of Earnings to Fixed Charges (filed herewith).
14.1**	Code of Business Conduct and Ethics of Inn of the Mountain Gods Resort and Casino.
14.2**	Code of Ethics for Principal Executive Officer and Senior Financial Officer.
21.1*	Subsidiaries of the Registrant.
24.1	Power of Attorney (Included with Signature Page).
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

*	Incorporated by reference to IMG Resort and Casino’s Registration Statement on Form S-4 filed with the SEC on February 27, 2004 (SEC File No. 333-113140).
**	Incorporated by reference to IMG Resort and Casino’s Annual Report on Form 10-K filed with the SEC on July 29, 2004.

EX-10.4

Exhibit 10.4

REVISED EXECUTIVE EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”), including the attached Exhibit “A,” is entered into between the Inn of the Mountain Gods Resort and Casino, a Mescalero Apache Tribal enterprise, having offices at 287 Carrizo Canyon Road, Mescalero, New Mexico 88340 (“Employer”), and Pamela Gallegos, an individual currently residing at (“Employee”), to be effective as of 7^th day of August, 2007 (the “Effective Date”).

WITNESSETH

     WHEREAS, Employer desires to employ Employee in the position set forth on Exhibit “A” and under the terms and conditions set forth in this Employment Agreement.

     WHEREAS, Employee is willing to accept employment with Employer under the terms and conditions set forth in this Employment Agreement; and

     NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, Employer and Employee agree as follows:

ARTICLE 1: EMPLOYMENT AND DUTIES:

     1.1 Employer agrees to employ Employee, and Employee agrees to be employed by Employer, beginning as of the Effective Date and continuing until the date set forth on Exhibit “A” (the “Term”), subject to the terms and conditions of this Agreement.

     1.2 Employee initially shall be employed in the position set forth on Exhibit “A.” Employer may subsequently assign Employee to a different position or modify Employee’s duties and responsibilities; provided however, in the event Employer substantially reduces the duties or responsibilities of Employee, Employee may elect to terminate this Agreement pursuant to Article 3 below. Employee agrees to serve in the assigned position and to perform diligently and to the best of Employee’s abilities the duties and services appertaining to such position as determined by Employer, as well as such additional or different duties and services appropriate to such position which Employee from time to time may be reasonably directed to perform by Employer. Employee shall at all times comply with and be subject to such policies and procedures as Employer may establish from time to time.

     1.3 Employee shall, during the period of Employee’s employment by Employer, devote Employee’s full business time, energy, and best efforts to the business and affairs of Employer and its Enterprises or other entities. Employee may not engage, directly or indirectly, in any other business, investment, or activity that interferes with Employee’s performance of Employee’s duties hereunder, is contrary to the interests of Employer, or requires any significant portion of Employee’s business time.

     1.4 In connection with Employee’s employment by Employer, Employer shall endeavor to provide Employee access to such information pertaining to the business and services of Employer as is appropriate for Employee’s employment responsibilities. Employer also shall

endeavor to provide to Employee the opportunity to develop business relationships with those of Employer’s clients and potential clients that are appropriate for Employee’s employment responsibilities.

     1.5 Employee acknowledges and agrees that at all times during the employment relationship Employee owes fiduciary duties to Employer, including but not limited to the fiduciary duties of the highest loyalty, fidelity and allegiance to act at all times in the best interests of the Employer, to make full disclosure to Employer of all information that pertains to Employer’s business and interests, to do no act which would injure Employer’s business, its interests, or its reputation, and to refrain from using for Employee’s own benefit or for the benefit of others any information or opportunities pertaining to Employer’s business or interests that are entrusted to Employee or that Employee learned while employed by Employer. Employee acknowledges and agrees that upon termination of the employment relationship, Employee shall continue to refrain from using for Employee’s own benefit or the benefit of others any information or opportunities pertaining to Employer’s business or interests that were entrusted to Employee during the employment relationship or that Employee learned while employed by Employer. Employee agrees that while employed by Employer and thereafter Employee shall not knowingly take any action that interferes with the internal relationships between Employer and its employees or representatives or interferes with the external relationships between Employer and third parties.

     1.6 It is agreed that any direct or indirect interest in, connection with, or benefit from any outside activities, particularly commercial activities, which interest might in any way adversely affect Employer or any of its Enterprises or other entities, involves a possible conflict of interest. In keeping with Employee’s fiduciary duties to Employer, Employee agrees that during the employment relationship Employee shall not knowingly become involved in a conflict of interest with Employer or its affiliates, or upon discovery thereof, allow such a conflict to continue. Moreover, Employee agrees that Employee shall disclose to Employer’s Chairperson or the Chief Operating Officer should such duty be so delegated, same herein referred to as “Chairperson” any facts that might involve such a conflict of interest that has not been approved by Employer’s Chairperson. Employer and Employee recognize that it is impossible to provide an exhaustive list of actions or interests that constitute a “conflict of interest.” Moreover, Employer and Employee recognize there are many borderline situations. In some instances, full disclosure of facts by the Employee to Employer’s Chairperson or the Chief Operating Officer should such duty be so delegated, may be all that is necessary to enable Employer or its affiliates to protect its interests. In others, if no improper motivation appears to exist and the interests of Employer or its affiliates have not suffered, prompt elimination of the outside interest will suffice. In still others, it may be necessary for Employer to terminate the employment relationship. Employer and Employee agree that Employer’s determination as to whether a conflict of interest exists shall be conclusive. Employer reserves the right to take such action as, in its judgment, will end the conflict.

     1.7 Employee understands and acknowledges that the terms and conditions of this Agreement constitute confidential information. Employee shall keep confidential the terms of this Agreement and shall not disclose this confidential information to anyone other than as required by law. Employee acknowledges and understands that disclosure of the terms of this

Agreement constitutes a material breach of this Agreement and could subject Employee to disciplinary action, including without limitation, termination of employment.

ARTICLE 2: COMPENSATION AND BENEFITS:

     2.1 Employee’s monthly base salary during the Term shall be not less than the amount set forth under the heading “Monthly Base Salary” on Exhibit “A,” subject to increase at the sole discretion of the Employer, provided however, that Employee shall receive an annual cost of living increase based on the percentage specified by Employer for all of Employer’s employees or a mutually agreeable federal governmental index, which shall be paid in accordance with Employer’s standard payroll practice. Any calculation to be made under this Agreement with respect to Employee’s Monthly Base Salary shall be made using the then current Monthly Base Salary in effect at the time of the event for which such calculation is made.

     2.2 While employed by Employer, Employee shall be allowed to participate, on the same basis generally as other employees of Employer, in all general employee benefit plans and programs, including improvements or modifications of the same, which on the effective date or thereafter are made available by Employer to all or substantially all of Employer’s employees. Such benefits, plans, and programs may include, without limitation, paid vacation, paid sick leave, paid holidays, and medical, health, and dental care, life insurance, disability protection, and pension plans. Nothing in this Agreement is to be construed or interpreted to provide greater rights, participation, coverage, or benefits under such benefit plans or programs than provided to similarly situated employees pursuant to the terms and conditions of such benefit plans and programs.

     2.3 While employed by Employer, Employee shall be entitled to reimbursement for all reasonable expenses, including travel and entertainment, incurred by Employee in the performance of Employee’s duties. Where time allows, any such request for expenditure shall be approved in advance by the Chief Operating Officer. Employee will maintain records and written receipts as required by the Employer’s policy and reasonably requested by the Employer to substantiate such expenses.

     2.4 Employer shall not by reason of this Article 2 be obligated to institute, maintain, or refrain from changing, amending, or discontinuing, any such incentive compensation or employee benefit program or plan, so long as such actions are similarly applicable to covered employees generally. Moreover, unless specifically provided for in a written plan document adopted by the Management Board of the Inn of the Mountain Gods Resort and Casino, none of the benefits or arrangements described in this Article 2 shall be secured or funded in any way, and each shall instead constitute an unfunded and unsecured promise to pay money in the future exclusively from the general assets of Employer.

     2.5 Employer may withhold from any compensation, benefits, or amounts payable under this Agreement all federal, state, or other taxes as may be required pursuant to any law or governmental regulation or ruling.

ARTICLE 3: TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH TERMINATION:

     3.1 Notwithstanding any other provisions of this Agreement, Employer shall have the right to terminate Employee’s employment under this Agreement at any time prior to the expiration of the Term for any of the following reasons:

     (i) For “cause” upon the determination by the Employer’s Chairperson that “cause” exists for the termination of the employment relationship. As used in this Section 3.1 (i), the term “cause” shall mean [a] Employee’s gross negligence or willful misconduct in the performance of the duties and services required of Employee pursuant to this Agreement; [b] Employee has been convicted of a felony; [c] Employee has willfully refused without proper legal reason to perform the duties and responsibilities required of Employee under this Agreement which remains uncorrected for thirty (30) days following written notice to Employee by Employer of such breach; [d] Employee’s involvement in a conflict of interest as referenced in Section 1.6 for which Employer makes a determination to terminate the employment of Employee which remains uncorrected for thirty (30) days following written notice to Employee by Employer of such breach; [e] Employee has willfully engaged in conduct that Employee knows or should know is materially injurious to Employer or any of its respective Enterprises or other entities; [f] Employee’s material breach of any material provision of this Agreement or Tribal policy which remains uncorrected for thirty (30) days following written notice to Employee by Employer of such breach; [g] Employee violates the Indian Gaming Regulatory Act or other applicable United States law as proscribed by Section 5.1; or [h] Employee no longer has a valid Mescalero Apache Tribal Gaming Commission Gaming License. It is expressly acknowledged and agreed that the decision as to whether “cause” exists for termination of the employment relationship by Employer is delegated to the Employer’s Chairperson for determination. If Employee disagrees with the decision reached by Employer’s Chairperson, the dispute will be limited to whether Employer’s Chairperson reached the decision in good faith;

     (ii) for any other reason whatsoever, with or without cause, in the sole discretion of the Chairperson of Employer;

     (iii) upon Employee’s death; or

     (iv) upon Employee’s becoming disabled so the Employee is permanently and totally unable to perform Employee’s duties for Employer as a result of any medically determinable physical or mental impairment as supported by a written medical opinion to the foregoing effect by a physician selected by Employer.

The termination of Employee’s employment prior to the expiration of the Term shall constitute a severance and shall be subject to the terms of Section 3.3 below.

     3.2 Notwithstanding any other provisions of this Agreement except Section 8.6, Employee shall have the right to terminate the employment relationship under this Agreement at any time prior to the expiration of the Term of employment of the following reasons:

(i)	a material breach by Employer of any material provision of this Agreement which remains uncorrected for thirty (30) days following written notice by Employee of such breach to Employer. Any such termination shall be subject to the provisions of Section 3.3 below.
(ii)	for any other reason whatsoever, in the sole discretion of Employee.

     3.3 Upon termination of the employment relationship by either Employer or Employee prior to the expiration of the Term, in consideration of the Employees continued obligations hereunder, after such termination (including without limitation Employee’s under Article 6, 7 and Section 8.2) to receive the then current monthly base salary, benefits, allowance continuation as set forth in Exhibit A as follows:

(i)	Severance shall be calculated at the rate of one month of severance for each full three (3) months of employment under the terms of this agreement or any other prior agreement or Executive Employment Agreement previously executed between Employer and Employee.
(ii)	Same should be paid at the time of normal preparation and issuance of payroll checks, and same shall be reduced by standard deductions taken from such severance payments.
(iii)	Such severance under the provisions of this section shall be limited to a total of twelve (12) months of severance.
(iv)	Such severance payment shall terminate should employee violate the provisions of Article 7 (post employment non-competition obligations) or Section 8.2 (under miscellaneous). Such termination of severance for any such violation shall be upon giving notice to Employee that such severance is being stopped and no further payment will be made pursuant to the provisions of this Section.

     3.4 Upon termination of the employment relationship as a result of Employee’s death, Employee’s heirs, administrators, or legatees shall be entitled to Employee’s pro rata salary through the date of such termination.

     3.5 In all cases, the compensation and benefits payable to Employee under this Agreement upon termination of the employment relationship shall be offset against any amounts to which Employee may otherwise be entitled under any and all severance plans, and policies of Employer.

     3.6 Termination of the employment relationship does not terminate those obligations imposed by this Agreement that are continuing obligations, including, without limitation, Employee’s obligations under Articles 6 ,7 and Section 8.2.

     3.7 This Agreement governs the rights and obligations of Employer and Employee with respect to Employee’s salary and other perquisites of employment.

ARTICLE 4: CONTINUATION OF EMPLOYMENT BEYOND TERM; TERMINATION AND EFFECTS OF TERMINATION:

     4.1 Should Employee remain employed by Employer beyond the expiration of the Term specified on Exhibit “A,” such employment shall convert to an at will employment for a month to month period with same terminable at anytime by either Employee or Employer for any reason whatsoever, with or without cause. During such month to month employment, severance benefits payable under Section 3.3 above, shall continue to accrue. Other than the severance provisions under Section 3.3. above such termination of the employment relationship by either Employer or Employee for any reason whatsoever, shall terminate all benefits and rights to Employee except those provided by the severance package as referred to above.

ARTICLE 5: MESCALERO APACHE TRIBE LAWS, MESCALERO APACHE TRIBAL GAMING COMMISSION REGULATIONS AND UNITED STATES INDIAN GAMING REGULATORY ACT AND OTHER LAWS:

     5.1. Employee shall at all times comply with applicable Mescalero Apache Tribal laws, Mescalero Apache Tribal Gaming Commission regulations and United States laws applicable to Employee’s actions on behalf of Employer, including specifically, without limitation, the Tribal Gaming Ordinance and the United States Indian Gaming Regulatory Act, generally codified in 25 USC 2701 (“IGRA”), as the IGRA may hereafter be amended, and/or its successor statutes. If Employee pleads guilty to or nolo contendere or admits civil or criminal liability under the IGRA or other applicable United States law, or if a court finds that Employee has personal civil or criminal liability under the IGRA or other applicable United States law, or if a court finds that Employee committed an action resulting in any Mescalero Apache Tribal Resort Enterprise or other Tribal Enterprise or entity having civil or criminal liability or responsibility under the IGRA or other applicable United States law with knowledge of the activities giving rise to such liability or knowledge of facts from which Employee should have reasonably inferred the activities giving rise to liability had occurred or were likely to occur, such action or finding shall constitute “cause” for termination under this Agreement unless Employer’s highest applicable level of Employer’s management determines that the actions found to be in violation of the IGRA, or other applicable United States law were taken in good faith and in compliance with all applicable policies of Employer.

ARTICLE 6: OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS:

     6.1 All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed or acquired by Employee, individually or in conjunction with others, during Employee’s employment by Employer (whether during business hours or otherwise and whether on Employer’s premises or otherwise) which relate to

Employer’s business, products or services (including, without limitation, all such information relating to corporate opportunities, research, financial and sales data, pricing and trading terms, evaluations, opinions, interpretations, acquisition prospects, the identity of customers or their requirements, the identity of key contacts within the customer’s organizations or within the organization of acquisition prospects, or marketing and merchandising techniques, prospective names, and marks) shall be disclosed to Employer and are and shall be the sole and exclusive property of Employer. Moreover, all drawings, memoranda, notes, records, files, correspondence, drawings, manuals, models, specifications, computer programs, maps and all other writings or materials of any type embodying any of such information, ideas, concepts, improvements, discoveries, and inventions are and shall be the sole and exclusive property of Employer.

     6.2 Employee acknowledges that the business of Employer, its Enterprises and other entities is highly competitive and that their strategies, methods, books, records, and documents, their technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning their customers and business affiliates, all comprise confidential business information and trade secrets which are valuable, special, and unique assets which Employer, its Enterprises and other entities use in their business to obtain a competitive advantage over their competitors. Employee further acknowledges that protection of such confidential business information and trade secrets against unauthorized disclosure and use is of critical importance to Employer, its Enterprises and other entities in maintaining their competitive position. Employee hereby agrees that Employee will not, at any time during or after his employment by Employer, make any unauthorized disclosure of any confidential business information or trade secrets of Employer, its subsidiaries and other entities, or make any use thereof, except in the carrying out of his or her employment responsibilities hereunder. Employer its Enterprises and other entities shall be third party beneficiaries of Employee’s obligations under this Section. As a result of Employee’s employment by Employer, Employee may also from time to time have access to, or knowledge of, confidential business information or trade secrets of third parties, such as customers, suppliers, partners, joint ventures, and the like, of Employer, its subsidiaries and other entities. Employee also agrees to preserve and protect the confidentiality of such third party confidential information and trade secrets to the same extent, and on the same basis, as Employer’s confidential business information and trade secrets. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article 6 by Employee, and Employer shall be entitled to enforce the provisions of this Article 6 by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article 6, but shall be in addition to all remedies available at law or in equity to Employer, including the recovery of damages from Employee and his or her agents involved in such breach.

     6.3 All written materials, records, and other documents made by, or coming into the possession of, Employee during the period of Employee’s employment by Employer which contain or disclose confidential business information or trade secrets of Employer, its Enterprises and other entities shall be and remain the property of Employer, its Enterprises and other entities, as the case may be. Upon termination of Employee’s employment by Employer, for any reason, Employee promptly shall deliver the same, and all copies thereof, to Employer.

     6.4 If, during Employee’s employment by Employer, Employee creates any original work of authorship fixed in any tangible medium of expression which is the subject matter of copyright (such as videotapes, written presentations on acquisitions, computer programs, drawings, maps, architectural renditions, models, manuals, brochures, or the like) relating to Employer’s business, products, or services, whether such work is created solely by Employee or jointly with others (whether during business hours or otherwise and whether on Employer’s premises or otherwise), Employee shall disclose such work to Employer. Employer shall be deemed the author of such work if the work is prepared by Employee in the scope of his employment; or, if the work is not prepared by Employee within the scope of his employment but is specially ordered by Employer as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, or as an instructional text, then the work shall be considered to be work made for hire and Employer shall be the author of the work. If such work is neither prepared by the Employee within the scope of his employment nor a work specially ordered and is deemed to be a work made for hire, then Employee hereby agrees to assign, and by these presents does assign, to Employer all of Employee’s worldwide right, title, and interest in and to such work and all rights of copyright therein.

     6.5 During the period of Employee’s employment by Employer and thereafter, Employee shall assist Employer and its nominee, at any time, in the protection of Employer’s worldwide right, title, and interest in and to information, ideas, concepts, improvements, discoveries, and inventions, and its copyrighted works, including without limitation, the execution of all formal assignment documents requested by Employer or its nominee and the execution of all lawful oaths and applications for applications for patents and registration of copyright in the United States and foreign countries.

ARTICLE 7: POST-EMPLOYMENT NON-COMPETITION OBLIGATIONS:

     7.1 As part of the consideration for the compensation and benefits to be paid to Employee hereunder, in keeping with Employee’s duties as a fiduciary and in order to protect Employer’s interests in the confidential information of Employer and the business relationships developed by Employee with the clients and potential clients of Employer, and as an additional incentive for Employer to enter into this Agreement, Employer and Employee agree to the non-competition provisions of this Article 7. Employee agrees that during the period of Employee’s non-competition obligations hereunder, Employee will not, directly or indirectly work for Employee or for others, in Otero County, Lincoln County, Chaves County and Dona Ana County, New Mexico:

     (i) engage in any business competitive with the business conducted by Employer;

     (ii) render advice or services to, or otherwise assist, any other person, association, or entity who is engaged, directly or indirectly, in any business competitive with the business conducted by Employer;

     (iii) induce any employee of Employer, its Enterprises and other entities to terminate his or her employment with Employer, its Enterprises and other entities, or

hire or assist in the hiring of any such employee by person, association, or entity not affiliated with Employer.

These non-competition obligations shall extend during the term of this agreement and for twelve (12) months after termination or expiration whichever should occur last.

     7.2 Employee understands that the foregoing restrictions may limit his ability to engage in certain businesses during the period provided for above, but acknowledges that Employee will receive sufficiently high remuneration and other benefits (e.g., the right to receive compensation under Section 3.3 upon termination) under this Agreement to justify such restriction. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article 7 by Employee, and Employer shall be entitled to enforce the provisions of this Article 7 by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article 7, but shall be in addition to all remedies available at law or in equity to Employer, including, without limitation, the recovery of damages from Employee and his or her agents involved in such breach.

     7.3 It is expressly understood and agreed that Employer and Employee consider the restrictions contained in this Article 7 to be reasonable and necessary to protect the proprietary information of Employer. Nevertheless, if any of the aforesaid restrictions are found by a court having jurisdiction to be unreasonable, or overly broad as to geographic area or time, or otherwise unenforceable, the parties intend for the restrictions therein set forth to be modified by such courts so as to be reasonable and enforceable and, as so modified by the court, to be fully enforced.

ARTICLE 8: MISCELLANEOUS:

     8.1 For purposes of this Agreement the term “Employer” shall include the Inn of the Mountain Gods Resort and Casino, Ski Apache, Casino Apache Travel Center and any other Enterprise or entity of the Inn of the Mountain Gods Resort and Casino.

     8.2 Employee shall refrain, both during the employment relationship and after the employment relationship terminates, from publishing any oral or written statements about Employer, its Enterprises and other entities, or any of such entities’ officers, employees, agents or representatives that are slanderous, libelous, or defamatory; or that disclose private or confidential information about Employer, its Enterprises and other entities, or any of such entities’ business affairs, officers, employees, agents, or representatives; or that constitute an intrusion into the seclusion or private lives of Employer, its Enterprises and other entities, or such entities’ officers, employees, agents, or representatives; or that give rise to unreasonable publicity about the private lives of Employer, its Enterprises and other entities, or any of such entities’ officers, employees, agents, or representatives; or that place Employer, its Enterprises and other entities, or any of such entities’ or its officers, employees, agents, or representatives in a false light before the public; or that constitute a misappropriation of the name or likeness of Employer, its Enterprises and other entities, or any of such entities’ or its officers, employees, agents, or representatives. A violation or threatened violation of this prohibition may be enjoined

by the courts. The rights afforded the Employer under this provision are in addition to any and all rights and remedies otherwise afforded by law.

     8.3 For purposes of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Employer:
Chief Operating Officer	F. Randolph Burroughs, Esq.
Inn of the Mountain Gods Resort and Casino and	Burroughs and Rhodes
287 Carrizo Canyon Road	906 Virginia Ave.
Mescalero, New Mexico 88340	Alamogordo, New Mexico 88310

If to Employee, to the address shown on the first page hereof.

Either Employer or Employee may furnish a change of address to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

     8.4 This Agreement shall be governed in all respects by the laws of the Mescalero Apache Tribe, excluding any conflict-of-law rule or principle that might refer the construction of the Agreement to the federal courts of the United States.

     8.5 No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

     8.6 If a dispute arises out of or related to this Agreement, other than a dispute regarding Employee’s obligations under Article 6, or Article 7, and if the dispute cannot be settled through direct discussions, then Employer and Employee agree to first endeavor to settle the dispute in an amicable manner by mediation, before having recourse to any other proceeding or forum.

     8.7 Each of Employer and Employee is a citizen of the United States of America. Employer’s principal place of business is in Mescalero, Otero County, New Mexico. This Agreement was negotiated and signed in Mescalero, New Mexico. This Agreement shall be performed in Mescalero, New Mexico. Any litigation that may be brought by either Employer or Employee involving the enforcement of this Agreement or the rights, duties, or obligations of this Agreement, shall be brought exclusively in the Tribal court sitting in Mescalero, Qtero County, New Mexico, or federal courts having jurisdiction over the Mescalero Apache Tribe.

     8.8 It is a desire and intent of the parties that the terms, provisions, covenants, and remedies contained in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, provision, covenant, or remedy of this Agreement or the application thereof to

any person, association, or entity or circumstances shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such term, provision, covenant, or remedy shall be construed in a manner so as to permit its enforceability under the applicable law to the fullest extent permitted by law. In any case, the remaining provisions of this Agreement or the application thereof to any person, association, or entity or circumstances other than those to which they have been held invalid or unenforceable, shall remain in full force and effect.

     8.9 This Agreement shall be binding upon and inure to the benefit of Employer and any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of Employer by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee’s rights and obligations under Agreement hereof are personal and such rights, benefits, and obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred, whether by operation of law or otherwise, without the prior written consent of Employer.

     8.10 There may exist other agreements between Employer and Employee relating to the employment relationship between them, e.g., the agreement with respect to company policies contained in Employer’s Policy booklet and agreements with respect to benefit plans and health insurance. This Agreement replaces and merges previous agreements and discussions pertaining to the following subject matters covered herein: the nature of Employee’s employment relationship with Employer and the term and termination of such relationship. This Agreement constitutes the entire agreement of the parties with regard to such subject matters, and contains all of the covenants, promises, representations, warranties, and agreements between the parties with respect such subject matters. Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party with respect to such subject matters, which is not embodied herein, and that no agreement, statement, or promise relating to the employment of Employee by Employer that is not contained in this Agreement shall be valid or binding. Any modification of this Agreement will be effective only if it is in writing and signed by each party whose rights hereunder are affected thereby, provided that any such modification must be authorized or approved by Employer’s Chief Operating Officer.

     IN WITNESS WHEREOF, Employer and Employee have duly executed this Agreement in multiple originals to be effective on the date first stated above.

INN OF THE MOUNTAIN GODS
RESORT AND CASINO

By:	/s/ Brian D. Parrish	By:	/s/ Pamela Gallegos
	Brian D. Parrish, Chief Operating Officer		Pamela Gallegos, Employee

This 29^th day of April, 2008

REVISED
EXHIBIT “A” TO
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN THE
INN OF THE MOUNTAIN GODS RESORT AND CASINO
AND
PAMELA GALLEGOS

Employee Name:	Pamela Gallegos
Term:	Effective 1st day of August, 2007 through 31st day of July, 2010.
Position:	Director of Finance
Location:	Mescalero, New Mexico
Reporting Relationship:	To Chief Operating Officer or any person so designated by the Chief Operating Officer.
Monthly Base Salary:	$14,667.46 (Fourteen Thousand Six Hundred and Sixty-Seven Dollars and 46/100).
Employee Benefits:	Employee, spouse and eligible dependents will be eligible for immediate coverage for medical, dental and vision benefits to the extent permitted by the Plan Document.
Severance:	As set forth in Article 3.

By:	/s/ Brian D. Parrish	By:	/s/ Pamela Gallegos
	Brian D. Parrish, Chief Operating Officer		Pamela Gallegos

This 29^th day of April, 2008

EX-12.1

Exhibit 12.1

STATEMENT OF CALCULATION OF
RATIO OF EARNINGS TO FIXED CHARGES
(000’s)

For the purpose of calculating the ratio of earnings to fixed charges, “earnings” represent income before income taxes plus fixed charges. “Fixed charges” consist of (a) interest expensed and capitalized; (b) amortized premiums, discounts and capitalized expenses related to indebtedness; (c) an estimate of the interest within rental expenses; and (d) preference security dividend requirements of consolidated subsidiaries.

	Fiscal Year Ended
	April 30,
	2004			2005			2006			2007			2008
Earnings:
Earnings before Fixed Charges	$	39,745		$	2,140		$	(21,268	)	$	(3,965	)	$	(6,178	)
Fixed Charges
Interest Expense (Inc Amortization of Debt Costs)		5,252			11,544			26,841			26,649			26,420
Less Capitalized Interest		7,900			14,300			—			—			—
Estimated Interest within Rental Expenses		43			45			26			—			—
Total Fixed Charges		13,195			25,889			26,867			26,649			26,420
Amortization of Capitalized Interest		—			—			699			699			703
Less Capitalized Interest		(7,900	)		(14,300	)		—			—			—
Total		(7,900	)		(14,300	)		699			699			703
Total Earnings		45,040			13,729			6,298			23,383			20,945
Fixed Charges		13,195			25,889			26,867			26,649			26,420
Ratio of Earnings to Fixed Charges		3.4	x		0.5	x		0.2	x		0.9	x		0.8	x

EX-31.1

Exhibit 31.1

Certification of
Principal Executive Officer of
Inn of the Mountain Gods Resort and Casino

I, Douglas Lentz, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Inn of the Mountain Gods Resort and Casino;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this annual report based on such evaluation; and
c)	Disclosed in this annual report, any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 24, 2008

/s/ Douglas Lentz
By:	Douglas Lentz
Title:	Principal Executive Officer

EX-31.2

Exhibit 31.2

Certification of
Principal Financial Officer of
Inn of the Mountain Gods Resort and Casino

I, Pamela Gallegos, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Inn of the Mountain Gods Resort and Casino;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this annual report based on such evaluation; and
c)	Disclosed in this annual report, any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: July 24, 2008

/s/ Pamela Gallegos
By:	Pamela Gallegos
Title:	Principal Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code), each of the undersigned officers of Inn of the Mountain Gods Resort and Casino (the “Company”) does hereby certify with respect to the Annual Report of the Company on Form 10-K for the period ended April 30, 2008 (the “Report”) that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 24, 2008	By:	/s/ Douglas Lentz
		Douglas Lentz
		Principal Executive Officer
Dated: July 24, 2008	By:	/s/ Pamela Gallegos
		Pamela Gallegos
		Principal Financial Officer

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.