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The following is an excerpt from a 10-K SEC Filing, filed by INN OF THE MOUNTAIN GODS RESORTS & CASINO on 7/29/2004.
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INN OF THE MOUNTAIN GODS RESORTS & CASINO - 10-K - 20040729 - PART_I

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: two full- service casinos offering 39,600 square feet of gaming space including 1,180 slot machines and 38 table games as of April 30, 2004; a new resort hotel and casino on the banks of Lake Mescalero (currently under construction); 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.

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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 Juarez.

THE PROJECT

We are currently engaged in a two-phase construction project, which we refer to as the Project. We successfully completed Phase I of the Project, construction of our new Casino Apache Travel Center in May 2003, at a cost of $16.0 million. We are currently constructing Phase II of the Project, the Inn of the Mountain Gods Resort and Casino, or the Resort. We have entered into a fixed price contract for the Phase II construction costs and expect to complete the Resort in April 2005 at a cost of $171.3 million.

Management believes the Project will position us as the "Southwest's Best All-Season Resort" by expanding and modernizing our gaming and hotel facilities to meet customer demand and address the limitations of our existing casino, Casino Apache, and our old hotel, the Inn of the Mountain Gods. Casino Apache currently operates at capacity on weekends, holidays and during promotional events even though it was originally designed as a two-floor convention space and not a high-traffic casino. Casino Apache is also affected by poor ventilation and limited parking and gaming space. Although it was opened in 1975 as a luxury resort hotel, by 2002 the Inn of the Mountain Gods hotel was an aging and dated facility that required significant modernization to serve the needs of our customers. These capacity and design issues have limited our ability to attract additional gaming and resort customers from both within and beyond our primary market area. Nevertheless, our gaming revenues have continued to grow, experiencing a compound annual growth rate of approximately 15.0% from our fiscal year ended April 30, 2000 through April 30, 2004.

PHASE I -- TRAVEL CENTER

In May 2003, we successfully completed Phase I of the Project, construction of the Travel Center, on time and on budget. The Travel Center targets locals and casual day-trip visitors and complements our gaming operations at Casino Apache. The Tribe funded the entire construction cost of the Travel Center with equity contributions to us from cash on hand. The 14-acre Travel Center, which includes a 30,000 square foot main building, is located on U.S. Highway 70, and at April 30, 2004 featured:

o 17,000 square feet of gaming space including 502 slot machines and 13 table games, including blackjack and roulette;

o two video poker bars -- a 12-seat circular bar located in the center of the facility, which features video poker at all 12 seats, and an 11-seat full-service bar, which features video poker at five seats;

o "Smokey-B's Grill," a 2,300 square foot, 135-seat casual dining restaurant;

o a 2,500 square foot convenience store, which carries food, candy, hot and cold beverages and travel and sundry items;

o an 800 square foot tax-free smoke shop, which offers a variety of brand-name carton cigarettes at discounted prices;

o a Conoco-branded fuel station with 12 gasoline and eight diesel pumping stations;

o a 2,000 square foot shower and laundry facility;

o 700 on-site parking spaces, including a separate parking area for semi-trucks, with over 24 over-sized spaces; and

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o shuttle service to Casino Apache.

PHASE II -- INN OF THE MOUNTAIN GODS RESORT AND CASINO

In January 2003, we demolished the existing Inn of the Mountain Gods hotel and began Phase II of the Project, construction of the new Resort on the site of the old hotel. Construction of the Resort has been designed to minimize disruption of our existing Casino Apache operations, which has been and will remain open during the construction period. We expect to complete the Resort in April 2005.

We intend to fund the construction of the Resort from proceeds of the sale of the 12% Senior Notes issued on November 3, 2003, or the notes, cash on hand, equity contributions from the Tribe, operating cash flows and permitted equipment financing. We have approximately $69.9 million of construction and equipment costs remaining to be paid to complete the Resort. As of April 30, 2004, we had approximately $34.5 in a construction disbursement account to pay for the remaining costs of the Resort. We intend to fund the remaining $35.4 million from operating cash flow and permitted indebtedness.

Upon completion of the Resort, Casino Apache will be relocated into the Resort. The Resort is designed to be a premier gaming resort destination hotel and casino, targeting the mature, affluent gaming and entertainment patron, as well as middle market clientele. The casino will offer higher table gaming and slot machine limits and a broader mix of table games than the Travel Center. Key design elements include:

CASINO - Situated on the main level, adjacent to the Grand Hall, the 38,000 square foot casino will be easily accessible from all resort amenities via the connecting public concourse encircling the Resort Entry Plaza. All gaming activities will be located on a single level with good sight lines, varying ceiling heights and machine layouts to create an interesting and comfortable feel. Initially, the casino is expected to operate with 1,000 slot machines (and capacity for 1,500 machines) and 34 table games.

HOTEL - We have designed the 273-room hotel with the size of the rooms and quality of furnishings comparable to first-class, full-service, chains such as Westin, Marriot or Hyatt. The hotel structure will vary between four and eight stories in height, depending upon the location along the hotel corridor, and will allow for easy traveling distance to and from the casino and events center. Our over-sized deluxe guest rooms will be either 480 square feet or 610 square feet and our suites will be 1,200 square feet (with the ability to connect to a 480 square foot deluxe guest room, providing a total of 1,680 square feet in that configuration). In-room amenities will include high-speed Internet access, coffee makers, ironing boards and irons, mini-bars, toiletries, free and pay-per-view movies and other standard and premium channels. All rooms feature a balcony view of Lake Mescalero and either Sierra Blanca Mountain or the forest-lined golf course. The hotel will also feature an indoor swimming pool and fitness center including a yoga and aerobics workout area, steam and sauna facilities for both men and women and a family locker area.

The hotel will also feature various food and beverage venues including a 150-seat indoor/outdoor casual and fine dining restaurant; a 250-seat buffet style restaurant; a 100-seat sports bar, a 75-seat night club featuring live entertainment and dancing and a "quiet" lounge featuring an oversized fireplace.

EVENTS CENTER - Guests will access the main entrance of the 37,000 square foot events center from the Grand Hall and connecting corridor. The events center will accommodate a wide variety of activities, including entertainment and sports events, such as concerts, comedy shows and boxing, as well as trade shows and exhibitions.

RESORT ENTRY PLAZA AND GRAND HALL - The "Resort Entry Plaza" will make use of a centralized circular driveway entrance, with easy access to the casino, hotel, events center and parking. Ample parking will be available for our customers and employees in our 1,700 space underground parking structure and 500 spaces of surface parking. The design is intended to route guests to their destination while ensuring that all amenities are highly visible. The design also provides each element of the resort - casino, hotel and events center - with its own separate entrance, but still ties together the entire facility.

The "Grand Hall" is designed as a central atrium space from which guests can access all resort amenities. The space will connect the casino to the southwest, the hotel along the lake to the north, and the events center to the southeast. The Grand Hall will offer panoramic views of Lake Mescalero, the "Lakefront Walk" and Sierra Blanca

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Mountain. Several dining and retail areas will be conveniently located off the Grand Hall as well as the hotel lobby and guest elevators. A curvilinear dual-staircase leads to the fine dining and patio areas below.

DESIGN AND CONSTRUCTION TEAM

The following is a brief description of the design and construction professionals we have selected to assist in the development of the Resort:

CENTEX/WORTHGROUP, LLC - We have retained Centex/WorthGroup, LLC to design and construct the Resort. Centex/WorthGroup is a joint venture comprised of WorthGroup Architects, L.P., who designed the Resort, as well as the Bellagio, Hard Rock Hotel & Casino and Mandalay Bay, in Las Vegas, and Centex Construction Company, Inc., who will construct the Resort. Centex has extensive experience in the resort and hospitality sector, with clients including Harrah's Casino in Las Vegas, Atlantis Paradise Island Resort and Casino in the Bahamas and Disney's All Star Resort in Lake Buena Vista, Florida. The Tribe has a successful working history with Centex/WorthGroup, who successfully designed, built and opened the Travel Center on time and within budget in May 2003. In addition, the Tribe previously selected Centex to build its new K-12 school in Mescalero, which also opened on schedule and within budget in May 2002, and has won three national awards in the construction and design/build fields.

RIDER HUNT LEVETT & BAILEY - We have retained Rider Hunt Levett & Bailey to provide project management services, budgeting services and ongoing schedule management for construction of the Resort. Rider Hunt has extensive experience in managing the design and construction of casinos including Chukchansi Gold Resort & Casino, Pechanga Entertainment Center, Excalibur Las Vegas Resort Hotel and Casino, Hard Rock Hotel and Casino and Silver Legacy Resort Casino.

PROFESSIONAL ASSOCIATES CONSTRUCTION SERVICES - Professional Associates Construction Services, Inc. of Orange, California has been retained as an independent construction consultant on behalf of the holders of the notes. The conditions under the cash collateral and disbursements agreement generally provide that funds will be disbursed only if Professional Associates certify to the disbursement agent that there is sufficient available funds to complete the Resort in accordance with the budget. Professional Associates has acted as construction consultant in connection with the construction of Chukchansi Gold Resort & Casino, Pechanga Entertainment Center, Barona Casino and Station Casino's Green Valley Ranch Resort.

CONSTRUCTION CONTRACT

We have entered into a fixed price design and build contract, which we refer to as the Fixed Price Contract, for approximately $135.2 million with Centex/WorthGroup, LLC for the cost associated with the design and construction of the Resort. Centex/WorthGroup is responsible for achieving substantial completion of the Resort by February 28, 2005, with final completion within 60 days thereafter. As of April 30, 2004, we had paid approximately $96.2 million to Centex/WorthGroup under the Fixed Price Contract, leaving approximately $39.0 million remaining under the agreement. Neither we nor the Tribe can provide you with any assurance that the Resort will be completed within budgeted costs.

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 had been operating 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.

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GAMING

We currently operate two gaming facilities, the Travel Center and Casino Apache. 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. Casino Apache, opened in 1992, is located two miles off of U.S. Highway 70, adjacent to the future site of the Resort. As of April 30, 2004, Casino Apache featured 22,600 square feet of gaming space, 678 slot machines and 25 table games, including craps, blackjack, roulette, three-card poker and "Let it Ride;" a 100-seat buffet restaurant; a gift shop and approximately 400 customer parking spaces.

Our gaming operations have experienced continued growth since fiscal 2000. Gaming revenues have increased from $35.4 million for the twelve months ended April 30, 2000 to $60.3 million for the twelve months ended April 30, 2004, a compound annual growth rate of 15.0%. In May 2003, we opened the Travel Center with approximately 500 slot machines, comprised of approximately 200 slot machines moved from Casino Apache and approximately 300 new slot machines. Upon completion of the Resort, the current space at Casino Apache will be converted into child care center for guests and employees, which we will refer to as "Camp Mescalero."

RESORT AMENITIES

Since opening the original 118-room hotel as a five-star resort facility in 1975, we have built a strong reputation as a leading destination resort in our region. Our cool mountain climate and resort amenities typically attract capacity crowds from May through September. Our resort amenities include our championship golf course, rated the 35th "Best Golf Resort" in the country in 2002 by Golf Week(TM), a golf pro shop, big game hunts, shooting ranges, horseback riding, boating, fishing and a casual dining restaurant and bar. During construction, we have been and will continue to operate substantially all of our resort amenities. In addition, we have instituted a partnership with more than a dozen local hotels to provide our regular lodging patrons with accommodations throughout this period.

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. Approximately 200,000 skiers, primarily from New Mexico, Texas, Arizona and Mexico, visited Ski Apache during each of our last three ski seasons, which typically run from Thanksgiving to Easter. At April 30, 2004, Ski Apache featured:

o 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;

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

o 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;

o a Professional Ski Instructors of America ski and snowboarding school; and

o 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

We are the only full-service casino operator offering both slot machines and table games within our primary market area, which 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

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Ciudad Juarez. Our primary feeder markets include cities over 200 miles away. We have identified this market based on information we have obtained from our approximately 90,000 member customer loyalty program, the Apache Spirit Club. We believe that our facilities will continue to be attractive to these customers because of our location. Within our primary market area we are the closest gaming facility to offer both slot machines and table games and we are the closest resort destination offering all-season amenities, including skiing and championship golf.

Upon completion of the Project, we believe we will be able to increase penetration within our existing primary market and expand our market to include a greater number of customers from New Mexico, Mexico, Texas, Oklahoma, Colorado, Arizona, and California. In connection with the Project, we also intend to implement a comprehensive business and marketing strategy to enhance operations at our facilities. Key measures include:

o CROSS MARKET OUR RESORT FACILITIES - Cross market all of our resort facilities to increase market penetration and expand our market by highlighting our diverse range of attractive all-season activities;

o INTEGRATE MANAGEMENT - Further expand our management team and consolidate our management structure across our resort enterprises, which were formerly operated as separate businesses, to drive greater operating efficiencies and economies of scale for our resort enterprises as a whole;

o BROADEN CUSTOMER BASE - Offer different gaming and slot machine limits, mixes of table games, and non-gaming amenities across our casino and new resort to broaden our customer base;

o IMPLEMENT PREMIUM PRICING - Capitalize on our new resort facilities, including luxury accommodations, to implement premium pricing to target a more affluent customer base;

o SHOULDER AND OFF-PEAK MARKETING - Create targeted promotions to achieve higher utilization during shoulder and off-peak periods; and

o EXPAND CUSTOMER LOYALTY PROGRAM - Continue to expand the Apache Spirit Club across all of our resort facilities, to recognize gaming and non-gaming spending habits and create individually targeted promotions for our customers. We have increased memberships in the Apache Spirit Club by approximately 61.0% from March 2003 through April 2004.

The 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 if we experience changes in general or local economic conditions, increased competition, other changes in our industry, or our plan to promote our customers' utilization of our various resort amenities, including our gaming, hotel, entertainment and other amenities does not achieve its intended results.

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GAMING IN NEW MEXICO

OBJECT OMITTED

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 Juarez. According to the U.S. Census Bureau and Desarrollo Economico de Ciudad Juarez/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.

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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. Upon completion of the Project, 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. We will begin to compete more directly for regional overnight and national customers with casinos and resorts located in other parts of the country.

MESCALERO APACHE TRIBE

TRIBAL ADMINISTRATION

The Tribe is a federally recognized Indian tribe located on a 750 square mile reservation in south-central New Mexico and has approximately 4,100 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, both of whom are appointed by the President.

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.

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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

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 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,

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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 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 I gaming on Indian lands is within the exclusive jurisdiction of the Indian tribes and is not subject to IGRA. Class II gaming is permitted on Indian lands if:

o the state in which the Indian lands lie permits that gaming for any purpose by any person, organization or entity;

o the gaming is not otherwise specifically prohibited on Indian lands by federal law;

o the gaming is conducted in accordance with a tribal ordinance or resolution which has been approved by the NIGC;

o an Indian tribe has sole proprietary interest and responsibility for the conduct of the gaming;

o the primary management officials and key employees are tribally licensed; and

o several other requirements are met.

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.

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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:

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

o the use of the revenues from that gaming; and

o 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, 2004, we had 990 full-time team members, excluding approximately 400 additional full-time team members which will be hired during the ski season at Ski Apache, which typically runs from Thanksgiving to Easter. We expect to hire approximately 350 additional full-time team members in connection with the opening of the Resort. 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 casino upon completion of the Project. Our team members are not covered by any collective bargaining agreements. We believe our labor relations with our team members are good.

WEBSITE AVAILABILITY OF OUR REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

We maintain a website with the address www.innofthemountaingods.com. We are not including the information contained on our website as a part of, or incorporating it by reference into, this annual report on Form 10-K. We intend to make available free of charge through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after we electronically file that material with, or furnish such material to, the Securities and Exchange Commission.

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, Casino Apache, 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

SETTLEMENT OF COMPACT DISPUTE

In 1997, the Tribe entered into the 1997 Compact with the State of New Mexico, which permits Class III gaming on the Tribe's reservation pursuant to IGRA. In the State of New Mexico, the execution of an Indian gaming compact is conditioned upon execution of a revenue sharing agreement providing for limited exclusivity of gaming activities to the tribal entity in exchange for an agreement to make quarterly revenue sharing payments to the State.

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At the time the 1997 Compact was entered into by the Tribe, this revenue sharing agreement provided for a revenue sharing fee equal to 16% of the Tribe's "net win" from gaming. We have accrued as a liability on our financial statements the full 16% revenue sharing and other regulatory fees claimed by the State of New Mexico pursuant to the 1997 Compact, which at April 30, 2004 amounted to $47.5 million prior to the compact settlement.

The Tribe, along with other tribes and pueblos who entered into the 1997 Compact disputed the legality of the State of New Mexico's imposition of revenue sharing fees and regulatory fees pursuant to the 1997 Compact. In 1998, The Tribe initiated an arbitration to assert that the regulatory and revenue sharing payments were void and illegal under IGRA. On February 14, 2000, the State of New Mexico filed Petition No. 26,194, in the Supreme Court of New Mexico seeking an order prohibiting the arbitrators in the arbitration from examining whether or not the regulatory and revenue sharing payments were valid. On June 13, 2000 the State of New Mexico filed an action, CIV 00-851BB/LFG, against the Tribe seeking that Court's determination that the revenue sharing payments are legal under IGRA. The Tribe made no payments under the 1997 Compact.

In 2001, all of the New Mexico gaming tribes and pueblos (other than the Tribe and the Pueblo of Pojoaque) settled the dispute regarding the 1997 Compact and entered into a new gaming compact with the State of New Mexico, the 2001 Compact. On April 20, 2004, the Tribe and the State of New Mexico entered into a settlement agreement which resolved their disputes regarding the 1997 Compact. Under the settlement agreement, the State of New Mexico and the Tribe agreed that the Tribe would pay the State of New Mexico $25.0 million and that they would enter into the 2001 Compact. On April 20, 2004, we paid an initial payment of $2.0 million pursuant to the terms of the settlement agreement.

The settlement agreement with the State of New Mexico provides that the $25.0 million payment settles 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. 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, we will begin accruing 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 our first revenue sharing payment under the 2001 Compact due in July 2005. In addition, pursuant to the terms of the settlement agreement, we will begin accruing 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 our 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 July 22, 2004, the Department of Interior approved the 2001 Compact. We will make the remaining $23.0 million payment required under the settlement agreement within ten business days after the Department of Interior publishes notice in the Federal Register of the affirmative approval of the 2001 Compact.

OTHER MATTERS

In addition to the matter described above, 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.

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.

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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, 2000, 2001, 2002, 2003 and 2004, 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 each of the fiscal years ended April 30, 2000, 2001, 2002, 2003 and 2004 were audited by Grant Thornton LLP and are included in this Form 10-K.

                                                           FISCAL YEAR ENDED
                                                               APRIL 30,
                                          ---------------------------------------------------
                                          2000          2001       2002       2003       2004
                                          ----          ----       ----       ----       ----
                                                       (DOLLARS IN THOUSANDS)
STATEMENTS OF INCOME DATA:
Revenues:
 Gaming..................               $35,399      $39,655    $41,845    $46,942    $60,277
 Food and beverage.......                 4,607        5,152      5,287      4,894      5,615
 Rooms...................                 4,682        4,777      4,608      3,394       --
 Recreation and other....                 6,391       11,713     11,229     11,953     16,472
                                          -----       ------     ------     ------     ------
Gross revenues...........                51,079       61,297     62,969     67,183     82,364
 Less: promotional allowances               266          408        783        931      1,437
                                          -----       ------     ------     ------     ------
Net revenues.............               $50,813      $60,889    $62,186    $66,252    $80,927
                                          -----       ------     ------     ------     ------
Operating expenses:
 Gaming..................                14,595       17,512     17,962     19,458     25,406
 Reversal of accrued fees                  --           --         --          --     (27,136)
 Food and beverage.......                 6,398        5,310      5,067      4,955      6,587
 Rooms...................                 2,002        2,517      2,219      1,552        120
 Recreation and other....                 4,067        5,335      5,333      5,757     10,702
 General and administrative               8,695        6,529      5,672      6,500      9,038
 Intercompany allocations
  and charges............                  --           --        2,726      3,182      4,270
 Pre-opening costs and expenses            --           --         --        1,390      3,072
 Depreciation and amortization            3,441        4,077      3,916      9,213      4,930
                                          -----        -----      -----      -----      -----
 Total operating expenses                39,198       41,280     42,807     52,008     36,989
                                          -----       ------     ------     ------     ------
Income from operations...                11,615       19,609     19,379     14,244     43,937
Interest income..........                    82        1,545        289        190        802
Interest expense, net of amounts
 capitalized.............                  --           (497)      (196)       --      (5,252)
Other non-operating income                  297          198         75        171        258
                                          -----       ------     ------     ------     ------
Net income...............               $11,994      $20,855    $19,546    $14,605    $39,745
                                        =======      =======    =======    =======    =======

OTHER FINANCIAL DATA:
EBITDA(1)................               $15,353      $23,884    $23,370    $23,628    $48,869
Capital expenditures.....                   982          928      1,633     30,699    107,003
Cash provided by operating
 activities..............                 5,302       26,614     57,783     32,021     38,113

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                                                            AS OF APRIL 30,
                                                            ---------------
                                            2000          2001      2002      2003       2004
                                            ----          ----      ----      ----       ----
                                             (DOLLARS IN THOUSANDS, EXCEPT PROPERTY DATA)

PROPERTY DATA (AS OF END OF PERIOD
EXCEPT WIN PER DAY DATA,
UNAUDITED):
Gross slot win per day.....             $    104      $    125   $   134  $    155   $    134
Table game win per day.....             $    520      $    550   $   505  $    632   $    550
Number of slot machines....                  898           827       839       803      1,180
Number of table games......                   25            25        25        25         38
Number of hotel rooms......                  252           252       252        --         --
Number of restaurant seats.                  450           450       450       200        200
Gaming square footage......               22,600        22,600    22,600    22,600     39,600

BALANCE SHEET DATA:
Cash and cash equivalents..             $ 11,921      $ 15,188   $21,810  $  9,332   $ 15,795
Total assets...............               86,002        74,438    82,506    96,595    316,210
Total debt and capital lease
 obligations...............                7,247         2,729     2,104     7,453    201,947
Total equity...............               35,696        37,609     6,098     1,159     59,004

----------
(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,
                                             ------------------------------------------------
                                             2000         2001      2002      2003      2004
                                            ------       ------    ------    ------    ------
                                                         (DOLLARS IN THOUSANDS)
Net income................                 $11,994      $20,855   $19,546   $14,605    $39,745
 Interest expense (income), net                (82)      (1,048)      (92)     (190)     4,450
 Depreciation and amortization               3,441        4,077     3,916     9,213      4,930
                                           -------      -------   -------   -------    -------
EBITDA....................                 $15,353      $23,884   $23,370   $23,628    $48,869

We caution you that amounts presented in accordance with our definition of EBITDA may not be comparable to similar measures disclosed by other issues 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.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

OVERVIEW

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

GAMING. Our gaming activities are authorized by IGRA, our gaming compact with the State of New Mexico and a Tribal gaming ordinance. As of April 30, 2004, we had 39,600-square feet of combined gaming space featuring 1,180 slot machines and 38 table games between our facilities at Casino Apache, opened in 1992, and the Travel Center, opened in May 2003.

FOOD AND BEVERAGE. Our current food and beverage operations consist primarily of casual dining fare, including: a 100-seat casual restaurant adjacent to Casino Apache; a 100-seat buffet-style restaurant in Casino Apache; a 135-seat casual dining restaurant in the Travel Center; two video poker bars in the Travel Center; and two bars in Casino Apache. Until we demolished the Inn in January 2003, we also operated a 250-seat fine dining restaurant located in the Inn.

ROOMS. Until we demolished the Inn in January 2003, our room operations included 252 rooms at the Inn. During the construction period, we have continued to maintain a minimal operations staff to service our "Tower" building that is primarily used for office space.

RECREATION AND OTHER. Our all-season recreational operations include a 750-acre, 55-trail ski resort, the second largest in New Mexico, an 18-hole championship golf course, seasonal big-game hunts, a shooting range, horseback riding, boating and fishing. Our ski resort is typically open from Thanksgiving until Easter, while our golf course generally operates from March through October. Our retail outlets include a gift shop, golf and pro shop, ski shop, a 2,500-square foot convenience store, an 800-square foot smoke shop, a Conoco-branded fuel station with 12 gasoline and eight diesel pumping stations and laundry and shower facilities.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the recorded amount of assets and liabilities at the date of the financial statements and revenues and expenses during the period. Significant accounting policies employed by us, including the use of estimates and assumptions, are presented in the notes to our consolidated financial statements included elsewhere in this Form 10-K. 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 and pension costs. Actual results could differ from those estimates.

REVENUE RECOGNITION. In accordance with gaming industry practice, we recognize gaming revenues as the net win from gaming activities, which is the difference between gaming wins and losses. Gaming revenues are net of accruals for anticipated payouts of progressive slot jackpots and table games. These anticipated jackpot payments are reflected as current liabilities on our balance sheets. Net slot win represents all amounts played in the slot machines reduced by both (1) the winnings paid out and (2) all amounts we deposit into slot machines to ensure there are a sufficient number of coins to pay out the winnings. 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. We reward our customers with "points" based on the volume of their gaming activity through our customer loyalty program, the Apache Spirit Club. These points are redeemable for player reward services or merchandise. Points are accrued and reflected as current liabilities on our consolidated balance sheets.

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We determine the adequacy of these accruals by periodically evaluating the historical experience and projected trends related to these accruals. If such information indicates that the accruals are overstated or understated, we will adjust the assumptions utilized in the methodologies and reduce or provide for additional accruals as appropriate.

CLASSIFICATION OF DEPARTMENTAL COSTS. Gaming direct costs are comprised of all costs of the Resort's gaming operations, including labor costs for casino-based personnel (including personnel supporting the food and beverage operations located in the casinos), facilities rent, occupancy costs, supply costs, certain marketing, advertising and promotional expenses (including costs of operating our players' club) and other direct operating costs of the casinos. Food and beverage direct costs are comprised of all costs of the Resort's food and beverage operations, including labor costs for personnel employed by the Resort's restaurants and other food outlets (but not including personnel supporting the food and beverage operations located in the casinos), facilities rent, occupancy costs, supply costs for all food and beverages served in the casinos or sold in the Resort's restaurants and other food outlets and other direct operating costs of the food and beverage operations. Recreation and other expenses include direct labor and operating expenses related to the activities. General and administrative direct costs are comprised of administrative expense at our headquarters, including the salaries of corporate officers, rent, accounting, finance, legal and other professional expense and occupancy costs and other indirect costs not included in the direct costs of our operating departments.

DISPOSAL OF LONG-LIVED ASSETS. On May 1, 2002, we adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," or SFAS 144, which provides for the treatment of the disposal of long-lived assets. SFAS 144 provides that 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. In January 2003, we demolished a substantial portion of the Inn to allow for the construction of the Resort. As a result of the demolition, the adoption of SFAS 144 for the fiscal year ended April 30, 2003 had the effect of increasing depreciation in fiscal 2003 by $5.4 million.

DEFERRED FINANCING COSTS. Debt issuance costs incurred in connection with the issuance of the Resort Project financing are capitalized and 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 approximately $11,029,493 as of April 30, 2004.

DISAGREEMENTS WITH THE STATE OF NEW MEXICO. The Tribe challenged the legality of the revenue sharing prescribed by the 1997 Compact, claiming them to be an illegal tax on Indian gaming under the IGRA. The Tribe invoked its right to seek a resolution of the disagreements through the arbitration process provided for in the 1997 Compact and no revenue sharing or regulatory fees were remitted to the State. As of April 30, 2004, we accrued approximately $38.1 million for the revenue sharing and $8.8 million for the regulatory fees for the full amount of the state claimed obligation on our consolidated balance sheet. The accrued revenue sharing and regulatory fees are included as a gaming expense. As of April 30, 2004, we set aside in restricted accounts with respect to these accruals approximately $38.0 million for the revenue sharing fees and approximately $700,000 for regulatory fees.

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On April 20, 2004, the Tribe settled with the State of New Mexico all of its obligations under the 1997 Compact. Under the settlement agreement, the State of New Mexico and the Tribe agreed that the Tribe would pay the State of New Mexico $25.0 million and enter into a new compact, which we refer to as the 2001 Compact. On April 20, 2004, we paid an initial payment of $2.0 million pursuant to the terms of the settlement agreement. The settlement agreement provides that the $25.0 million payment settles 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. 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, we will begin accruing 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 our first revenue sharing payment under the 2001 Compact due in July 2005. In addition, pursuant to the terms of the settlement agreement, we will begin accruing 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 our 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 July 22, 2004 the Department of Interior approved the 2001 Compact. We will make the remaining $23.0 million payment required under the settlement agreement within ten business days after the Department of Interior publishes notice in the Federal Register of the affirmative approval of the 2001 Compact.

As of April 30, 2004, we had approximately $38.7 million ($35.7 million in the construction reserve account and $3.0 million in another restricted account) reserved to pay for the $47.5 million we accrued as a liability on our financial statements for revenue sharing fees and other regulatory fees under the 1997 Compact. We will provide the $25.0 million settlement amount from funds in the construction reserve account. Upon payment of the $25.0 million settlement amount, approximately $10.7 million (the difference between the $35.7 million deposited in the construction reserve account to settle the 1997 Compact dispute and the settlement amount of $25.0 million) will be transferred from the construction reserve account to the construction disbursement account. In addition, upon payment of the $25.0 million settlement amount, the additional $3.0 million we have reserved to pay for our accrued liability relating to the 1997 Compact, currently held in a restricted account, will become unrestricted cash. The settlement with the State of New Mexico will have no effect on our cash flows and will be reflected in operating costs and expenses as a settlement of revenue sharing and regulatory fees in the consolidated statements of income and regulatory fees paid in advance through 2005 will be recorded as a prepaid expense in the consolidated balance sheets.

The terms of the 2001 Compact are substantially similar to the terms of the 1997 Compact and revenue sharing agreement, except for the following material differences:

o revenue sharing fees under the 2001 Compact are 8% of "net win" from gaming, rather than 16% as provided by the 1997 Compact;

o regulatory fees under the 2001 Compact are $100,000 per year, while the 1997 Compact requires quarterly regulatory fees (subject to an annual increase of 5% beginning on January 1, 1999) of $6,250 per gaming facility, $300 per gaming machine and $750 per gaming table;

o the 2001 Compact expires June 30, 2015, while the 1997 Compact expires on August 29, 2006, subject to an automatic one year extension; and

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o insurance coverage required by the 2001 Compact to insure the Tribe, IMG and its employees and agents from claims against liability for bodily injury and property damages by a visitor is required to be at least $50 million, while the 1997 Compact requires $10.0 million of such coverage.

RESULTS OF OPERATIONS

FISCAL YEAR ENDED APRIL 30, 2004 COMPARED TO FISCAL YEAR ENDED APRIL 30, 2003

NET REVENUES. Net revenues increased $14.6 million, or 22.0%, to $80.9 million for the fiscal year ended April 30, 2004 from $66.3 million for the fiscal year ended April 30, 2003. The increase was due to an increase in gaming revenues offset by a decrease in room revenue and a decrease in food and beverage revenue due to the closure of the Inn in January 2003. Player reward redemptions are included in gross revenues but are deducted as a promotional allowance to arrive at net revenues.

GAMING. Gaming revenues increased $13.4 million, or 28.6%, to $60.3 million for the fiscal year ended April 30, 2004 from $46.9 million at the fiscal year ended April 30, 2003. Slot revenues led the increase, growing to $52.7 million for the fiscal year ended April 30, 2004 from $41.2 million for the fiscal year ended April 30, 2003, an increase of $11.5 million, or 27.9%. Gross slot win per unit was $134 for the fiscal year 2004 compared to $155 for the fiscal year 2002; in this period the weighted average number of units increased by 552, or 87.9%. Table games revenue increased $1.8 million, or 31.0%, to $7.6 million for the fiscal year ended April 30, 2004 from $5.8 million for the fiscal year ended April 30, 2003. The increase was the result of the increase in the table game drop of $11.7 million, or 40.9%, to $40.3 million for the fiscal year ended April 30, 2004 from $28.6 million for the fiscal year ended April 30, 2003, combined with a reduction in hold percentage to 18.7% for the fiscal year ended April 30, 2004 from 20.2% for the fiscal year ended April 30, 2003.

FOOD AND BEVERAGE. Food and beverage revenues increased $.7 million, or 14.3%, to $5.6 million for the fiscal year ended April 30, 2004 from $4.9 million for the fiscal year ended April 30, 2003. While there was a loss of revenue due to the closing of the restaurants located at the Inn in January 2003, this loss was offset by the opening of Smokey B's, our casual dining restaurant at the Travel Center in May 2003.

ROOMS. Room revenues decreased $3.4 million, or 100%, for the fiscal year ended April 30, 2004 due to the closure of the Inn in January 2003.

RECREATION AND OTHER. Recreation and other revenues increased $4.5 million, or 37.5%, to $16.5 million for the fiscal year ended April 30, 2004 from $12.0 million for the fiscal year ended April 30, 2003. The increase was due to the opening of our Travel Center in May 2003, which resulted in increased revenues from the convenience store, smoke shop, and gasoline and diesel sales located at the facility.

PROMOTIONAL ALLOWANCES. Promotional allowances increased $0.5 million, or 55.6%, to $1.4 million for the fiscal year ended April 30, 2004 from $0.9 million for the fiscal year ended April 30, 2003. The increase in gaming revenues and the opening of the Travel Center have resulted in an increase in promotional allowances.

TOTAL OPERATING EXPENSES. Total operating expenses decreased $15.0 million, or 28.8%, to $37.0 million for the fiscal year ended April 30, 2004 from $52.0 million for the fiscal year ended April 30, 2003. The decrease was primarily due to the reversal of previously recorded revenue sharing and State regulatory fees as a result of the settlement of the Compact dispute offset by an increase in our gaming and pre-opening expenses associated with the opening of the Travel Center in May 2003.

GAMING. Gaming expenses increased $5.9 million, or 30.3%, to $25.4 million for the fiscal year ended April 30, 2004 from $19.5 million for the fiscal year ended April 30, 2003. The increase was primarily due to the addition of team members at the Travel Center which opened in May 2003.

FOOD AND BEVERAGE. Food and beverage expenses increased $1.6 million or 32.0%, to $6.6 million for the fiscal year ended April 30, 2004 from $5.0 million for the fiscal year ended April 30, 2003, primarily due to the addition of food and beverage team members at the Travel Center coupled with an increase in the cost of sales due to increased food covers.

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ROOMS. Costs and expenses associated with hotel rooms decreased $1.5 million, or 93.8%, to $0.1 for the fiscal year ended April 30, 2004 from $1.6 million for the fiscal year ended April 30, 2003, primarily due to a reassignment of team members as a result of closure of the Inn in January 2003.

RECREATION AND OTHER. Recreation and other costs increased $4.9 million, or 84.5%, to $10.7 million for the fiscal year ended April 30, 2004 from $5.8 million for the fiscal year ended April 30, 2003. The increase was primarily attributable to the addition of new team members at the Travel Center and increased cost of sales and related expenses for the convenience store, smoke shop, refueling center and laundry and shower facilities.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased $2.5 million, or 38.5%, to $9.0 million for the fiscal year ended April 30, 2004 from $6.5 million for the fiscal year ended April 30, 2003. The increase was primarily due to an increase in expenses due to the addition of executive staff in response to the needs of our new resort complex and increased reporting requirements associated with the issuance of the Notes as well as an increase in marketing, advertising and promotional activities. This increase in expenses was partially offset by a reduction in utilities and other expenses related to the closure of the Inn in January 2003.

PRE-OPENING COSTS AND EXPENSES. Pre-opening expenses were $3.1 million for the fiscal year ended April 30, 2004 compared to $1.4 million for the fiscal year ended April 30, 2003, and consisted principally of personnel costs, training costs and payroll costs for retaining the former employees of the Inn. Pre-opening costs and expenses are expensed as incurred.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization decreased $4.3 million to $4.9 million for the fiscal year ended April 30, 2004 from $9.2 million for the fiscal year ended April 30, 2003. The decrease was primarily the result of the demolition of the Inn in January 2003.

OPERATING INCOME. Operating income increased $29.7 million, or 209.2%, to $43.9 million for the fiscal year ended April 30, 2004 from $14.2 million for the fiscal year ended April 30, 2003. The increase in operating income was primarily due to the reversal of previously recorded revenue sharing and State regulatory fees as a result of the settlement of the Compact dispute offset by an increase in our gaming and pre-opening expenses associated with the opening of the Travel Center in May 2003.

OTHER INCOME (EXPENSES). Other income (expenses) increased $4.6 million to $(4.2) million for the fiscal year ended April 30, 2004 from $0.4 million for the fiscal year ended April 30, 2003. The increase was primarily due to interest expense, net of amounts capitalized, in an amount equal to $5.3 million during the period. Other income (expenses) is comprised of interest income and other income minus interest expense and other expense.

FISCAL YEAR ENDED APRIL 30, 2003 COMPARED TO FISCAL YEAR ENDED APRIL 30, 2002

NET REVENUES. Net revenues increased $4.1 million, or 6.5%, to $66.3 million for the fiscal year ended April 30, 2003 from $62.2 million for the fiscal year ended April 30, 2002. The increase was due to an increase in gaming revenues offset by a decrease in room revenue and a decrease in food and beverage revenue due to the closure of the Inn in January 2003. Player reward redemptions are included in gross revenues but are deducted as a promotional allowance to arrive at net revenues.

GAMING. Gaming revenues increased $5.1 million, or 12.2%, to $46.9 million for the fiscal year ended April 30, 2003 from $41.8 million at the fiscal year ended April 30, 2002. Slot revenues led the increase, growing to $41.2 million for the fiscal year ended April 30, 2003 from $37.2 million for the fiscal year ended April 30, 2002, an increase of $4.0 million, or 10.6%. Gross slot win per unit was $155 for the fiscal year 2003 compared to $134 for the fiscal year 2002; in this period the weighted average number of units decreased by 36, or 4.5%. Table games revenue increased $1.2 million, or 25.0%, to $5.8 million for the fiscal year ended April 30, 2003 from $4.6 million for the fiscal year ended April 30, 2002. The increase was the result of the increase in hold percentage to 20.2% for the fiscal year ended April 30, 2003 from 17.4% for the fiscal year ended April 30, 2002, combined with the table game drop increase of $2.2 million, or 8.0%, to $28.6 million for the fiscal year ended April 30, 2003 from $26.5 million for the fiscal year ended April 30, 2002.

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FOOD AND BEVERAGE. Food and beverage revenues decreased $0.4 million, or 7.4%, to $4.9 million for the fiscal year ended April 30, 2003 from $5.3 million for the fiscal year ended April 30, 2002. The decrease was primarily due to the closure of our 250-seat fine dining restaurant at the Inn in January 2003. Our food and beverage outlets turned 522,306 covers with average revenue per cover of $9.37 for the fiscal year ended April 30, 2003 compared to 562,321 covers with average revenue per cover of $9.40 at the fiscal year ended April 30, 2002.

ROOMS. Room revenues decreased $1.2 million, or 26.3%, for the fiscal year ended April 30, 2003 to $3.4 million from $4.6 million for the fiscal year ended April 30, 2002, due to the closure of the Inn in January 2003.

RECREATION AND OTHER. Recreation and other revenues increased $0.8 million, or 6.5%, to $12.0 million for the fiscal year ended April 30, 2003 from $11.2 million for the fiscal year ended April 30, 2002. The increase was attributable to an increase in ski revenue due to better snow and ski conditions offset by a decrease in sales at golf and other retail outlets in connection with the closure of the Inn in January 2003.

PROMOTIONAL ALLOWANCES. Promotional allowances increased $0.1 million, or 18.8%, to $0.9 million for the fiscal year ended April 30, 2003 from $0.8 million for the fiscal year ended April 30, 2002. The increase was consistent with our marketing strategy to increase the utilization of our rewards programs to our frequent gaming guests.

TOTAL OPERATING EXPENSES. Total operating expenses increased $9.2 million, or 21.5%, to $52.0 million for the fiscal year ended April 30, 2003 from $42.8 million for the fiscal year ended April 30, 2002. The increase was primarily due to an increase in depreciation expenses relating to the demolition of the Inn in January 2003, as well as an increase in our gaming and pre-opening expenses associated with the opening of the Travel Center in May 2003.

GAMING. Gaming expenses increased $1.6 million, or 8.7%, to $20.8 million for the fiscal year ended April 30, 2003 from $19.2 million for the fiscal year ended April 30, 2002. The increase was primarily due to the addition of team members at Casino Apache, as well as an increase in accrued revenue sharing and regulatory fees due to higher net slot win.

FOOD AND BEVERAGE. Food and beverage expenses remained constant at $5.3 million for the fiscal year ended April 30, 2003 and the fiscal year ended April 30, 2002. There was no change in expenses despite the closure of our fine dining restaurant as a result of variations in the cost of food and team member related expenses.

ROOMS. Costs and expenses associated with hotel rooms decreased $0.6 million, or 26.1%, to $1.6 for the fiscal year ended April 30, 2003 from $2.2 million for the fiscal year ended April 30, 2002, primarily due to a reassignment of team members as a result of closure of the Inn in January 2003.

RECREATION AND OTHER. Recreation and other costs increased $0.5 million, or 9.0%, to $6.0 million for the fiscal year ended April 30, 2003 from $5.5 million for the fiscal year ended April 30, 2002 primarily due to increased labor, maintenance and other costs and expenses associated with increased usage at Ski Apache during the period.

GENERAL AND ADMINISTRATIVE. General and administrative expenses increased $1.0 million, or 14.8%, to $7.7 million for the fiscal year ended April 30, 2003 from $6.7 million for the fiscal year ended April 30, 2002. The increase was a result of increased insurance and utility costs at Casino Apache and Ski Apache and payments to the U.S. Forest Service relating to higher utilization at Ski Apache.

PRE-OPENING COSTS AND EXPENSES. Pre-opening expenses were $1.4 million for the fiscal year ended April 30, 2003 and consisted principally of personnel costs, training costs and payroll costs for retaining the former employees of the Inn. Pre-opening costs and expenses are expensed as incurred.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased $5.3 million to $9.2 million for the fiscal year ended April 30, 2003 from $3.9 million for the fiscal year ended April 30, 2002. The increase was primarily the result of the demolition of the Inn in January 2003.

OPERATING INCOME. Operating income decreased $5.2 million, or 26.5%, to $14.2 million for the fiscal year ended April 30, 2003 from $19.4 million for the fiscal year ended April 30, 2002. The decrease in operating income

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was primarily due to an increase in depreciation expense because of the demolition of the Inn and, to a lesser extent, pre-opening costs and to the other revenue and expense variations previously noted.

OTHER INCOME (EXPENSES). Other income (expenses) increased $0.2 million, or 115.3%, to $0.4 million for the fiscal year ended April 30, 2003 from $0.2 million for the fiscal year ended April 30, 2002. The increase was primarily due to the capitalization of interest expense in an amount equal to $0.2 million during the period. Other income (expenses) is comprised of interest income and other income minus interest expense and other expense.

LIQUIDITY AND CAPITAL RESOURCES

As of April 30, 2004 and 2003, we had cash and cash equivalents (net of amounts in restricted accounts) of $15.8 million and $9.3 million, respectively. Our principal sources of liquidity for fiscal years 2004 and 2003 consisted of cash flows from operating activities, which was $38.1 million for the fiscal year ended April 30, 2004 compared to $32.0 million for the fiscal year ended April 30, 2003. The $6.1 million increase included net income of $39.7 million in net income with increases in interest payable of $12.0 million offset by a reduction of accrued revenue sharing and regulatory fees of $16.8 million and an increase in prepaid revenue sharing fees as a result of the Compact settlement. Cash flows from operating activities were $57.8 million for the fiscal year ended April 30, 2002. Under the terms of the indenture pursuant to which are notes were issued, we are required to "sweep" excess cash above the established thresholds from our operating accounts to restricted accounts on a monthly basis. Of the $15.8 million in cash held by us in unrestricted accounts at April 30, 2004, $6.3 million was deposited in restricted accounts subsequent to year end pursuant to these requirements.

Cash used in investing activities for fiscal year 2004 was $100.5 million and primarily relates to construction costs for the Project. Cash used in investing activities for fiscal year 2003 was $23.5 primarily relates to construction costs for the Travel Center. Cash used in investing activities for fiscal year 2002 was $1.6 million and was primarily related to the routine acquisition of property, plant and equipment, including the purchase of $1.0 million of new ski resort equipment at Ski Apache.

Cash provided from financing activities was $68.9 million for the fiscal year ended April 30, 2004 compared to $20.9 million used by financing activities for the fiscal year ended April 30, 2003. The $89.8 million increase in cash provided from financing activities is primarily due to the issuance of $200.0 million in senior notes offset by $10.5 million in deferred financing costs, $4.7 million in debt payments, and $151.6 million of cash held for use in paying construction expenditures for the construction project. Cash used from financing activities for fiscal year 2003 was $21.0 million and primarily related to distributions and payments to the Tribe offset by equity contributions to fund the Travel Center and other costs related to the Project. Cash used from financing activities in fiscal year 2002 was $49.5 million and primarily related to distributions and payments to the Tribe.

In April 2003, we entered into a revolving credit facility with Citicorp North America, Inc., due December 31, 2003 to fund construction of the Project. Use of proceeds from the credit facility is limited to construction related expenditures for the Project. We repaid all amounts borrowed under the credit facility with a portion of the proceeds from the offering of the original notes and retired the credit facility upon its repayment.

Construction of the Resort, which began in January 2003, is expected to be completed in April 2005. As of April 30, 2004, we paid $96.2 million designing, developing, constructing, equipping and opening the Resort. We expect to incur an additional $39.0 million to complete the Project during fiscal 2005 (the Resort is expected to be completed by the April 2005). At April 30, 2004 we had balances in restricted accounts in the aggregate amount of $133.3, of which $25.0 million will be used to fund our settlement of our compact dispute with the State of New Mexico, $36.4 million will be available for the first three interest payments on the notes and $71.9 of which will be available for completion of the Project and construction contingencies. Additional funds needed to complete the Project are expected to be provided by funds from operations and equipment financing (permitted by the indenture). Capital expenditures in fiscal year 2005, other than those related to the Project, are not expected to be significant.

We believe that existing cash balances, operating cash flows and proceeds from our recent high yield offering, or the offering, as well as contemplated equipment leasing lines (permitted by the indenture) will provide adequate funds for completion of construction of the Resort, our working capital needs, planned capital expenditures, including the new resort equipment and furnishings, settlement of our compact dispute with the State of New Mexico and debt service requirements for the foreseeable future. However, our ability to fund our operations, make planned capital expenditures, make scheduled payments and refinance our indebtedness depends on our future operating performance and cash flow, which, in turn, are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control. Additionally, as a result of the offering, our

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ability to incur additional indebtedness is limited under the terms of the indenture governing the 12% Senior Notes due 2010, or the notes.

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. The notes are secured until completion of the Resort, by first priority security interests in the following accounts:

o an interest reserve account, which was funded at the time the notes were sold with approximately $36.4 million, which, together with interest earned thereon, will be used to make the first three (3) interest payments on the notes. As of April 30, 2004, the balance in the interest reserve account is $36.6 million;

o a construction disbursement account, which was funded at the time the notes were sold with approximately $94.3 million and will be used to fund completion of the Resort. As of April 30, 2004, the balance in the construction disbursement account was $34.5 million;

o a construction reserve account, which was funded at the time the notes were sold approximately $53.6 million and will be used to (i) fund contingencies related to the construction of the Resort and (ii) fund a resolution of the Tribe's disagreement relating to the 1997 Compact. As of April 30, 2004, the balance in the construction reserve account was $53.8 million; and

o a construction retainage account. As of April 30, 2004, the balance the construction retainage accounts was $7.5 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. Casino Apache, Inn of the Mountain Gods, Casino Apache Travel Center and Ski Apache are guarantors of the notes.

GENERAL INDEBTEDNESS

The Tribe, for the benefit of the Inn, 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. The Inn has been making payments of approximately $27,000 on the BIA Note each month. As of April 30, 2004, there is approximately $1.5 million outstanding on the BIA Note.

In addition, as of April 30, 2004, we have approximately $.2 million of equipment financing of unsecured debt with Kronos Incorporated.

CREDIT FACILITY

On June 15, 2004, we entered into a $15.0 million credit facility with Key Equipment Finance, a Division of Key Corporate Capital Inc., one of the nation's largest financial services firms. The fixed rate loan is fully amortizable over five years and bears an interest rate indexed off the 3-year Treasury Interest Rate Swaps. Proceeds from the loan will be used to fund furniture, fixtures and equipment for the Project.

OFF-BALANCE SHEET ARRANGEMENTS

As of April 30, 2004, 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.

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TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

The following table sets forth, as of April 30, 2004, 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 THAN    1-3       3-5    MORE THAN
           CONTRACTUAL OBLIGATIONS    TOTAL     1 YEAR     YEARS     YEARS    5 YEARS
          ------------------------   -------  ---------    ------    -----    --------
          Long-Term Debt             $201,946      $252      $430     $508    $200,756
                                     --------      ----      ----     ----    --------
          Obligations............
          Purchase Obligations (1)         39        39      ----     ----        ----
          Total..................    $201,985      $291      $430     $508    $200,756
                                     ========      ====      ====     ====    ========
----------
     (1)  Amounts remaining to be paid pursuant to the $135.2 million fixed
          price design and build contract with Centex/Worthgroup for
          construction of the Resort Project.

In addition, under a settlement agreement entered into with the State of New Mexico on April 20, 2004, we are obligated to pay $25.0 million on behalf of the Tribe with respect to its settlement of its dispute with the State of New Mexico with respect to the 1997 Compact. This settlement payment is intended to be funded out of the construction reserve account provided for by the indenture.

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.

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, 2002, 2003 or 2004 , nor is it anticipated we will be subject to such taxes for the foreseeable future. Various efforts have been made in the U.S. Congress over the past several years to enact legislation that would subject the income of tribal business entities, such as us, to federal income tax. Although no such legislation has been enacted, similar legislation could be passed in the future. A change in our non-taxable status could have a material adverse affect on our cash flows from operations.

NEW ACCOUNTING PRONOUNCEMENTS

On April 30, 2002, the FASB issued Statement of Financial Accounting Standards No. 145, or SFAS 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." In rescinding FASB Statement No. 4, "Reporting Gains and Losses from Extinguishment of Debt," and FASB Statement 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements," SFAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. However, pursuant to SFAS 145, an entity would not be prohibited from classifying such gains and losses as extraordinary items so long as they meet the criteria in paragraph 20 of Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations, Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently

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Occurring Events and Transactions." The adoption of this standard has no impact on our consolidated financial statements.

In November 2002, the FASB issued FASB Interpretation No. 45, or FIN 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also clarifies (for guarantees issued after January 1, 2003) that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligations undertaken in issuing the guarantee. At April 30, 2004, we do not have any outstanding guarantees and accordingly, the adoption of FIN 45 did not have any impact on our financial position, results of operations or cash flows.

In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46, or FIN 46, "Consolidation of Variable Interest Entities." This interpretation addresses the requirements for business enterprises to consolidate related entities in which they are determined to be the primary economic beneficiary as a result of their variable economic interests, and is intended to provide guidance in judging multiple economic interests in an entity and in determining the primary beneficiary. The interpretation outlines disclosure requirements for variable interest entities created after January 31, 2003. We have reviewed the interpretations related to our major relationships and overall economic interests with other companies consisting of related parties and other suppliers to determine the extent of its variable economic interest in these parties. The adoption of this standard has no impact on our consolidated financial statements.

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 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, 2004, we had an aggregate of approximately $202.7 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:

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

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

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

o 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, the Project and other general operating requirements;

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

o limit our ability to borrow additional funds.

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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:

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

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

o 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.

WE MAY NOT BE ABLE TO GENERATE ENOUGH CASH FLOW TO COMPLETE THE RESORT.

In May 2003, we successfully completed Phase I of the Project, construction of the Travel Center, at a cost of $16.0 million. In January 2003, we began construction of Phase II of the Project, construction of the Resort, and expect to complete construction of the Resort in April 2005 at a cost of $171.3 million. We expect the remaining cost of designing, developing, constructing, equipping and operating the Resort to be approximately $69.9 million, comprised of $39.0 million of remaining construction costs and $30.9 million of furniture, fixtures and equipment and pre-opening costs. As of April 30, 2004, we had approximately $34.5 in a construction disbursement account to pay for the remaining costs of the Resort. We will need approximately $35.4 of cash flow from operations and permitted indebtedness to complete the Resort.

We cannot assure you that we will be able to generate the required amount of cash from our operations. If we are not able to generate enough cash to pay for the Project, or if we cannot meet our budget, we will need to find additional sources of funds to pay for the Resort. We may not be able to raise any additional funds that are required on terms acceptable to us, if at all. Further, if we incur additional debt to cover the cost of the Resort, risks related to our substantial indebtedness could intensify. If we cannot generate enough cash or find alternative sources of funding to complete the Resort, 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.

CONSTRUCTION OF THE RESORT IS SUBJECT TO CONTINGENCIES ASSOCIATED WITH CONSTRUCTION AND FAILURE TO COMPLETE THE RESORT ON TIME OR ON BUDGET COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS AND OUR ABILITY TO MEET OUR DEBT SERVICE OBLIGATIONS.

Construction projects such as the Resort are subject to significant development and construction risks, any of which could cause unanticipated cost increases and delays. These include, among others, the following:

o shortages of energy, material and skilled labor;

o weather interference or delays;

o engineering problems;

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o environmental problems;

o changes in the scope of the Resort or to the plans or specifications;

o labor disputes and work stoppages;

o fire, earthquake, flood and other natural disasters or acts of war or terrorism; and

o geological, construction, excavation and equipment problems.

If we cannot meet our construction schedule, we may need to devote additional resources to construction of the Resort, which could increase costs and divert management time and attention away from our existing operations and could cause our business to suffer. If we cannot complete the Resort on budget or on time, 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.

OUR OPERATIONS AT CASINO APACHE COULD BE ADVERSELY AFFECTED DURING CONSTRUCTION OF THE RESORT.

Although we have planned the construction of the Resort to minimize disruptions to Casino Apache, the construction may disrupt its business. We are highly dependent upon Casino Apache's cash flow. If the construction of the Resort disrupts Casino Apache's business, we may lose customers and our business, financial condition and results of operations could be materially adversely affected and 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 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 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

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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 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. Upon completion of the Project, 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. We will begin to compete more directly for regional overnight and national customers with casinos and resorts located in other parts of the country. 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.

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. After we complete the Project, 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:

o 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;

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

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

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

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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.

OUR BUSINESS IS SUBJECT TO CONTINGENCIES BEYOND OUR CONTROL, INCLUDING THE AFTERMATH OF TERRORIST ACTS AND WARS, WHICH MAY SIGNIFICANTLY AND ADVERSELY AFFECT OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND ABILITY TO MEET OUR DEBT SERVICE OBLIGATIONS.

After completion of the Project, we hope to attract customers from beyond our primary market who will have to travel by air to our property. The recent war with Iraq, the terrorist attacks of September 11, 2001, the United States' ongoing military campaign against terrorism, and continued violence, conflicts and instability in other areas of the world have created many economic and political uncertainties, some of which may affect our ability to attract customers outside our current primary market as well as our operations and profitability. The potential short-term and long-term effects that these and similar other situations and events may have for our customers, our primary and secondary markets and the U.S. economy in general are uncertain. These and similar other future events could have a significant impact on the number of customers visiting the Travel Center and the Resort and, as a result, may have a material adverse effect on our business, financial condition, results of operations and 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.

WE DO NOT HAVE A HISTORY OF OPERATING ON AS LARGE OF A SCALE AS CONTEMPLATED BY THE PROJECT.

As a result of the Project, our business operations will be significantly expanded in size and diversity. Our gaming space will grow by more than 32,000 square feet (including the addition of a second casino location) and our gaming positions by approximately 700 slot machines and 22 table games. In addition, we will have significantly expanded restaurant, lounge and bar operations, a fuel station and a number of additional retail facilities. The expansion of our resort operations places a significant demand on our management resources which may affect our ability to effectively manage our growth. These increased demands on our management could distract them from the operation of our business, which could have a material adverse effect on our business, financial condition, results of operations and ability to meet our debt service obligations.

A CHANGE IN OUR CURRENT NON-TAXABLE STATUS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR CASH FLOW AND OUR ABILITY TO FULFILL OUR DEBT SERVICE OBLIGATIONS.

Based on current interpretations of federal and state tax laws, we are not a taxable entity for federal and state income tax purposes. If these interpretations are reversed or modified, or if the applicable tax law changes in this regard, our cash flow and ability fulfill our debt service obligations may be adversely affected.

Efforts have been made in Congress over the past several years to tax the income of tribal business enterprises. These have included a House of Representatives bill that would have taxed gaming income earned by Indian tribes as business income subject to corporate tax rates. Although that legislation has not been enacted, similar legislation could be enacted in the future. Any future legislation permitting the taxation of the Tribe or our businesses could have a material adverse effect on our business, financial condition, results of operations or ability to meet our debt service obligations.

AS A RESULT OF THE PROJECT, THE OFFERING AND THE EXCHANGE OFFER, WE HAVE RECENTLY EXPANDED OUR FINANCE STAFF, CONSOLIDATED OUR FINANCIAL REPORTING SYSTEMS AND HAVE BECOME AN SEC REPORTING ENTITY FOR THE FIRST TIME.

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Historically, our financial management and reporting functions have been conducted by separate staffs at each of our business enterprises and our financial reports were consolidated from the separate reporting units. This resulted in delays in preparing our consolidated financial statements and did not provide us with the advantages attendant to a consolidated financial reporting system. In connection with the Project, we have consolidated the financial reporting system for each of our business enterprises into one financial reporting system managed by a single finance group.

In addition to consolidating our financial reporting systems, we have recently expanded our finance staff to prepare for our obligations to file annual, quarterly and other periodic reports under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In December 2003, we hired a financial consultant, who in March 2004 became our Director of Finance (our principal accounting officer), in September 2003, we hired a new Chief Financial Officer (our principal financial officer), in August 2003 we hired a new Controller and in July 2003 we hired a new financial analyst. We may face challenges in connection with integrating these additional personnel into our financial reporting system.

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 PROJECT 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. The terms of four of the voting members of the Tribal Council expire in January 2005. 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 Project. 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 Project, 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.

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. The Resort's primary exposure to market risk is interest rate risk associated with our sort term debt. At October 31, 2003 we had $19 million of variable rate debt tied to LIBOR; therefore, our interest rate on our credit facility will change as LIBOR changes. Based on our $19 million of outstanding short term debt at October 31, 2003, a hypothetical 100 basis point (1.0%) increase in LIBOR would result in an annual interest expense increase of approximately $190,000. However, this debt was repaid from proceeds of the offering of the original notes on November 3, 2003.

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, 2004, the Resort held no derivative instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our Consolidated Financial Statements and notes thereto appear on pages F-3 through F-31.

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

None.

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ITEM 9A. CONTROLS AND PROCEDURES.

As of the end of the period covered by this annual report, we conducted an evaluation, under the supervision and with the participation of IMG Resort and Casino's management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level and designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls or our internal controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within IMG Resort and Casino have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer, along with the other members of management, evaluate our disclosure controls and procedures as of the end of the period covered by our reports filed pursuant to the Exchange Act. Our Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures are effective in alerting the Chief Executive Officer and Chief Financial Officer on a timely basis to material information relating to IMG Resort and Casino and its consolidated subsidiaries required to be included in our periodic and other filings with the Commission.

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

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:

       NAME            AGE                        POSITION
-----------------     ----   -----------------------------
Mark Chino.......      50    Management Board  Member (Chairperson),
                             President of the Tribe
Ferris Palmer....      51    Management Board Member,
                             Vice President of the Tribe
Alfred LaPaz.....      56    Management Board Member,
                             Treasurer of the Tribe
Glenda Brusuelas.      49    Management Board Member,
                             Secretary of the Tribe


                               30

Manuel Lujan, Jr.      76    Management Board Member
R. Miles Ledgerwood    49    Management Board Member
Michael French...      49    Management Board Member,
                             Chief Operating Officer of IMG Resort and Casino
Richard Williams.      59    Chief Financial Officer of IMG Resort and Casino
Brian Parrish....      42    Director of Marketing of IMG Resort and Casino
Wayne Marks......      58    Director of Finance of IMG Resort and Casino

There are no family relationships between any Management Board Member and/or any executive officer.

MARK CHINO has served as Chairperson of the Management Board of IMG Resort and Casino and President of the Tribe since January 2004. Mr. Chino's term on the Tribal Council and Executive Committee expires in January 2006. Prior to his election as President of the Tribe, Mr. Chino was employed by the Bureau of Indian Affairs for nearly 30 years, serving as a Police Officer, Lead Police Officer (Sergeant) and Supervisory Police Officer (Lieutenant) from 1975 to 1988, and then as a Criminal Investigator from 1988 to 2004. Mr. Chino received a Bachelor of Police Science degree from New Mexico State University in 1977.

FERRIS PALMER has served as a member of the Management Board of IMG Resort and Casino since July 2003 and Vice President of the Tribe since January 2002. Mr. Palmer was re-elected as Vice President of the Tribe in the 2003 election. Mr. Palmer's term on the Tribal Council and Executive Committee expires in January 2006. Mr. Palmer served as Tribal Administrator, responsible for overseeing the day-to-day operations of the Tribe, the tribal enterprises and all other tribal activities, from 1998 through early 2000, when he left to head up Mescalero Hardware and Lumber, a start-up operation. Mr. Palmer's term on the Tribal Council and the Executive Committee expires in January 2006.

ALFRED LAPAZ has served as a member of the Management Board of IMG Resort and Casino since June 2004. Mr. LaPaz also serves as Treasurer 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 2005. Since 2000, Mr. LaPaz has been employed by IMG Resort and Casino as Director of Security. Prior to his experience at IMG Resort and Casino, Mr. LaPaz was employed with the Federal Law Enforcement and retired as Captain after 30 years of service.

GLENDA BRUSUELAS has served as a member of the Management Board of IMG Resort and Casino since January 2004. Ms. Brusuelas was elected as Secretary of the Tribe and Chairperson of the Tribal Community Services Committee in January 2004. Ms. Brusuelas' term on the Tribal Council and Executive Committee expires in January 2005. Since 2001, Ms. Brusuelas has been employed by Mescalero Apache Telecom (a business enterprise of the Tribe) as a customer service representative. From 1977 to 2001, Ms. Brusuelas was employed by the Tribe in several areas including the judicial system (as a court clerk) and the educational system (in various capacities, including as secretary to the superintendent, financial secretary and cultural secretary).

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.

MICHAEL FRENCH has served as a member of the Management Board of IMG Resort and Casino since November 2003 and as its Chief Operating Officer since December 2002. Mr. French has over 30 years of experience in the hotel and gaming industry, most recently at the Venetian Resort Hotel Casino in Las Vegas, Nevada, where he was Senior Vice President of Operations from 1998 to 2002. Prior to his experience at the Venetian, from 1995 to 1998, Mr. French was Senior Vice President of Hotel Operations at Caesars Palace in Las Vegas. Mr. French also served as Managing Director of the Loews Anatole Hotel in Dallas, Texas and as Vice President/General Manager of the Peabody Hotel in Orlando, Florida. In 1989, Mr. French was awarded Orlando's Up and Comer's Award, given to

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executives under the age of 35 for his accomplishments at the Peabody Hotel. Mr. French received his certification from the American Hotel and Lodging Association as a Certified Hotel Administrator in 1988.

RICHARD WILLIAMS has served as Chief Financial Officer of IMG Resort and Casino since September 2003. Mr. Williams has over 30 years of financial management experience in public and private companies, and has significant experience in the casino and development industries, most recently as Chief Financial Officer at the East Valley Tourist Development Authority, an instrumentality of the Cabazon Band of Mission Indians near Palm Springs, California, from July 2002 to September 2003. Mr. Williams also served as Chief Financial Officer of the Cabazon Tribe from September 2001 to June 2002. Prior to his experiences at the Cabazon Tribe and the Authority, from 1996 to 2001, Mr. Williams was Senior Vice President of Finance for Herbalife International, Inc. and The Irvine Company from 1985 to 1995. Mr. Williams also served as Vice President and Controller at Caesars World, Inc., Wickes Companies, Inc. and Trusthouse Forte, Inc., and as an Adjunct Professor of Finance for the Executive M.B.A. Program of the University of Southern California, or USC, Chairman of the Board of Advisors for USC's School of Accounting and member of the Real Estate Committee of the AICPA. Mr. Williams is a certified public accountant.

BRIAN PARRISH has served as the Director of Marketing of IMG Resort and Casino since January 2003. Mr. Parrish has over 15 years of marketing experience, recently at the Venetian Resort Hotel Casino in Las Vegas, Nevada, where he was Vice President of Marketing from 2000 to 2002. Prior to his experience at the Venetian, Mr. Parrish served as Vice President of Hotel Operations and Regional Marketing of the Boyd Gaming Corporation from 1999 to 2000 and as Regional Vice President of Marketing from 1997 to 1999. Mr. Parrish also served as Director of Casino Marketing for the Flamingo Hilton in Las Vegas, Nevada from 1993 to 1995. Mr. Parrish also worked in the U.S. Defense Intelligence Industry from 1983 to 1988.

WAYNE MARKS has served as Director of Finance of IMG Resort and Casino since March 2004. Previously, Mr. Marks served as a Financial Consultant of IMG Resort and Casino from December 2003 to March 2004. Mr. Marks has over 35 years of financial management and consulting experience in public and private companies, and has significant experience in the casino and financial services industries, most recently as Director of Finance at the East Valley Tourist Development Authority (Fantasy Springs Resort and Casino), an instrumentality of the Cabazon Band of Mission Indians near Palm Springs, California, from January 2000 to December 2003. Prior to his experiences at the Authority, Mr. Marks was General Manager of Fiesta Slots and Bingo in Lima, Peru from July 1997 to December 1999 and served as Chief Financial Officer of sureBET Casino, Inc. the parent company of Fiesta Slots and Bingo. Mr. Marks also worked and held senior financial positions in the Federal Farm Credit System for 18 years.

AUDIT COMMITTEE FINANCIAL EXPERT

On behalf of the 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.

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, Principal Accounting 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) 464-6595.

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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, Principal Accounting 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.

ITEM 11. EXECUTIVE COMPENSATION.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth, as to the Chief Operating Officer and as to each of the other four most highly compensated executive officers whose compensation exceeded $100,000 during fiscal 2004 (referred to as the named executive officers), information concerning all compensation paid for services to us in all capacities for each of the three years ended April 30 indicated below.

                             ANNUAL COMPENSATION                   LONG-TERM COMPENSATION
                             -------------------                   -----------------------
NAME AND PRINCIPAL                                                 AWARDS              PAYOUTS
POSITION(1)
                                                  OTHER     RESTRICTED SECURITIES
                                                  ANNUAL       STOCK    UNDERLYING   LTIP      ALL OTHER
                       YEAR  SALARY    BONUS   COMPENSATION   AWARD(S) OPTIONS/SARS PAYOUTS  COMPENSATION
                       ----  ------   ------   ------------ ---------- ------------ -------  -------------
Michael French,
  Chief Operating
Officer(2)..........   2004  $250,000 $23,238    $ 36,000(3) $    --  $      --    $   --      $    --
                       2003  $107,958 $  --      $ 15,000(4) $    --  $      --    $   --      $    --
                       2002  $  --    $  --      $     --    $    --  $      --    $   --      $    --
Richard Williams,
  Chief Financial
  Officer(5).......    2004  $121,667 $50,000(6) $ 16,000(7) $    --  $      --    $   --      $    --
                       2003  $  --    $  --      $     --    $    --  $      --    $   --      $    --
                       2002  $  --    $  --      $     --    $    --  $      --    $   --      $    --

Brian Parrish,
  Director of
  Marketing(8)......   2004  $175,072 $  --      $     --    $    --  $      --    $   --      $    --
                       2003  $ 72,947 $19,500    $     --    $    --  $      --    $   --      $    --
                       2002  $  --    $  --      $     --    $    --  $      --    $   --      $    --

----------
(1)  Other than as set forth below, none of our other officers received
     compensation in excess of $100,000 during the last fiscal year. Wayne
     Marks, our Director of Finance, was hired in December 2003 and receives an
     annual salary of $120,000.

(2)  Michael French was hired on December 5, 2002 and receives an annual salary
     of $250,000 and certain other compensation.

(3)  Consists of a housing allowance of $3,000 per month, calculated from May
     2003 to April 2004.

(4)  Consists of a housing allowance of $3,000 per month, calculated from
     December 2002 to April 2003.

(5)  Richard Williams, our Chief Financial Officer, was hired in September 2003
     and receives an annual salary of $200,000 and certain other compensation.

(6)  Consists of a signing bonus.

(7)  Consists of a housing allowance of $2,000 per month, calculated from
     September 2003 to April 2004.

(8)  Brian Parrish was hired on December 12, 2002 and receives an annual salary
     of $175,072 and certain other compensation.

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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

MICHAEL FRENCH. Pursuant to an employment agreement dated December 5, 2002, Mr. French provides services to the IMG Resort and Casino as its Chief Operating Officer - Resort Operations until April 30, 2008. The agreement provides that either Mr. French or the Tribe may terminate the agreement for any reason whatsoever. If either Mr. French or the Tribe terminates the agreement involuntarily, the Tribe is obligated to pay Mr. French the then current monthly base salary, benefits and allowance continuation for a period of six months or until Mr. French has secured employment with another employer. The Tribe is not required to pay any compensation if Mr. French terminates the agreement voluntarily. Mr. French receives an annual salary of $250,000, as well as a housing allowance and a bonus based on one-quarter of one percent (.25%) of the adjusted net profits of the Tribe's resort operations.

RICHARD WILLIAMS. Pursuant to an employment agreement dated September 22, 2003, Mr. Williams provides services to the IMG Resort and Casino as its Chief Financial Officer until April 30, 2006. The agreement provides that either Mr. Williams or the Tribe may terminate the agreement for any reason whatsoever. If either Mr. Williams or the Tribe terminates the agreement involuntarily, the Tribe is obligated to pay Mr. Williams the then current monthly base salary, benefits and allowance continuation for a period of six months or until Mr. Williams has secured employment with another employer. The Tribe is not required to pay any compensation if Mr. Williams terminates the agreement voluntarily. Mr. Williams receives an annual salary of $200,000, as well as a signing bonus, housing allowance and a bonus equal to the greater of $25,000 per year or one-quarter of one percent (.25%) of the adjusted net profits of the Tribe's resort operations.

BRIAN PARRISH. Pursuant to an employment agreement dated December 2002, Mr. Parrish provides services to the IMG Resort and Casino as its Director of Marketing until April 30, 2008. The agreement provides that either Mr. Parrish or the Tribe may terminate the agreement for any reason whatsoever. If either Mr. Parrish or the Tribe terminates the agreement involuntarily, the Tribe is obligated to pay Mr. Parrish the then current monthly base salary, benefits and allowance continuation for a period of six months or until Mr. Parrish has secured employment with another employer. The Tribe is not required to pay any compensation if Mr. Parrish terminates the agreement voluntarily. Mr. Parrish receives an annual salary of $175,072, as well as a bonus based on one-quarter of one percent (.25%) of the adjusted net profits of the Tribe's resort operations.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

None.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

DISTRIBUTIONS TO THE TRIBE WITH OTHER PAYMENTS

Distributions to the Tribe were $19.7 million, $40.6 and $13.2 million for the fiscal years ended April 30, 2002, 2003 and 2004, respectively. 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

34

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.

The Tribe provides health insurance 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 $0.9 million, $0.4 million and $0.5 million for the fiscal years ended April 30, 2002, 2003 and 2004, respectively.

The Tribe provides pension benefits to IMG Resort and Casino. No contributions have been made to the Tribe for any period through October 2003. Beginning in November 2003, IMG Resort and Casino began making payments equal to our pro-rata share of the Tribe's periodic pension cost. The pro-rata periodic pension cost related to IMG Resort and Casino has been $1.9 million, $1.3 million and $1.3 million for the fiscal years ended April 30, 2002, 2003 and 2004, respectively.

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 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; (iv) payroll processing; and (v) 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.

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.

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.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following table sets forth the aggregate fees billed to IMG Resort and Casino for fiscal 2004 and 2003 by Grant Thornton LLP:

                                                                      PERCENTAGE
                             YEAR ENDED APRIL 30,                    OF SERVICES
                           2004               2003             2004              2003
                           ----               ----             ----              ----
Audit Fees               $307,241           $208,207          93.23%            30.77%
Audit-Related Fees         22,293            468,397           6.77%            69.23%
All Other Fees                --                 --              --                --
                         --------           ---------        ---------         ---------
Total Fees               $329,534           $676,604           100%              100%
                         ========           =========        =========         =========

"Audit Fees" billed during fiscal 2004 and 2003 were for professional services rendered for the audit of our financial statements. "Audit-Related Fees" were for services related to accounting consultation and review of documents filed with the Securities and Exchange Commission. "All Other Fees" consist of fees for products and services other than the services reported above.

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 Grant Thornton LLP in providing audit and audit-related services to IMG Resort and Casino and has concluded that such services are compatible with Grant Thornton LLP's role as IMG Resort and Casino's independent auditor.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(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 36-37 of this Annual Report on Form 10-K.

(b) None.

(c) See Exhibit Index on pages 36-37 of this Annual Report on Form 10-K.

(d) None.

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, July 15, 2003 and July 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


                                       36

                         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/WorthGroup, 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 dated December 5, 2002, between the Mescalero
                         Apache Tribe and Michael French.
         10.5*           Employment Agreement dated September 22, 2003, between the Mescalero
                         Apache Tribe and Richard Williams.
         10.6            Employment Agreement dated December 12, 2002 between
                         the Mescalero Apache Tribe and Brian Parrish (filed
                         herewith).
         10.7            2001 Compact between the Mescalero Apache Tribe and the State of New
                         Mexico, entered into June 1, 2004 (filed herewith).
         12.1            Statement regarding Computation of Ratios (filed herewith).
         14.1            Code of Business Conduct and Ethics of Inn of the Mountain Gods Resort
                         and Casino  (filed herewith)
         14.2            Code of Ethics for Principal Executive Officer and Senior Financial
                         Officer (filed herewith)
         21.1*           Subsidiaries of the Registrant.
         23.1            Consents of Experts and Counsel (filed herewith).
         24.1            Power of Attorney (Included with Signature Page)
         24.2            Power of Attorney (filed herewith).
         31.1            Certification of Michael French, Principal Executive Officer, pursuant
                         to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
         31.2            Certification of Richard Williams, Principal Financial Officer, pursuant
                         to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934.
         32.1            Certification of Michael French, Principal Financial Officer and Richard
                         Williams, Principal Financial Officer, pursuant to 18 U.S.C. Section 1350,
                         as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

*    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 Amendment No. 1 to
     Registration Statement on Form S-4 filed with the SEC on April 22, 2004
     (SEC File No. 333-113140).

37

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 29, 2004.

INN OF THE MOUNTAIN GODS RESORT AND CASINO

By /s/ Michael French
   ---------------------------------
       Michael French
Its:   Chief Operating Officer and
       Management Board Member

Each person whose signature appears below constitutes and appoints Michael French and Richard Williams, and each of them, as his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and his 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 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/ Mark Chino                 Management Board Member (Chairperson)    July 29, 2004
     ----------------------
         Mark Chino


     /s/ Ferris Palmer*                    Management Board Member           July 29, 2004
     ----------------------
         Ferris Palmer


     /s/ Alfred LaPaz                      Management Board Member           July 29, 2004
     ----------------------
         Alfred LaPaz


     /s/ Glenda Brusuelas                  Management Board Member           July 29, 2004
     ----------------------
         Glenda Brusuelas


     /s/ Manuel Lujan, Jr.                 Management Board Member           July 29, 2004
     ----------------------
         Manuel Lujan, Jr.


     /s/ R. Miles Ledgerwood               Management Board Member           July 29, 2004
     ----------------------
         R. Miles Ledgerwood

                                   Chief Operating Officer and Management    July 29, 2004
     /s/ Michael French                         Board Member
     ----------------------
         Michael French                   (Chief Executive Officer)


     /s/ Richard Williams                  Chief Financial Officer           July 29, 2004
     ----------------------
         Richard Williams


     /s/ Wayne Marks                         Director of Finance             July 29, 2004
     ----------------------
         Wayne Marks                     (Chief Accounting Officer)





*By /s/ Michael French
    -----------------------
        Michael French
        Attorney-in-Fact


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-2
Audited Financial Statements
  Consolidated Balance Sheets as of April 30, 2003 and
     2004.............................................     F-3
  Consolidated Statements of Income for the Years ended
     April 30, 2002, 2003 and 2004....................     F-4
  Consolidated Statements of Changes in Equity for the
     Years ended April 30, 2002, 2003 and 2004........     F-5
  Consolidated Statements of Cash Flows for the Years
     ended April 30, 2002, 2003 and 2004..............     F-6
  Notes to Consolidated Financial Statements..........     F-7

F-1

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 the Inn of the Mountain Gods Resort and Casino and subsidiaries, an unincorporated enterprise of the Mescalero Apache Tribe, as of April 30, 2003 and 2004 and the related consolidated statements of income, changes in equity, and cash flows for each of the three years in the period ended April 30, 2004. These financial statements are the responsibility of the Inn of the Mountain Gods Resort and Casino and subsidiaries management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 the Inn of the Mountain Gods Resort and Casino and subsidiaries, as of April 30, 2003 and 2004 and the results of their operations and their cash flows for the each of the three years in the period ended April 30, 2004, in conformity with accounting principles generally accepted in the United States of America.

Albuquerque, New Mexico
June 25, 2004

F-2

           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                    APRIL 30,
                                                                 2003             2004
                                                             -----------      -----------
                  ASSETS

CURRENT ASSETS:
  Cash and cash equivalents                                 $ 9,331,922      $ 15,794,943

  Restricted cash and cash equivalents                          475,249       133,297,243

  Accounts receivable, net                                      175,662            32,566

  Inventories                                                   855,529           968,585

  Prepaid expenses                                              288,999           462,054

  Prepaid revenue sharing fees                                     -            4,218,673

  Deferred financing cost, net                                  100,000         1,625,244
                                                             -----------      -----------
     Total current assets                                    11,227,361       156,399,308

NON CURRENT ASSETS:

   Property, plant and equipment, net                        48,256,640       150,329,503

   Long term deferred financing cost, net                          -            9,404,249

   Other long term assets                                        16,000            76,912
                                                             -----------      -----------
     Total assets                                          $ 59,500,001       316,209,972

                 LIABILITIES AND EQUITY

CURRENT LIABILITIES:

  Accounts payable and other short-term liabilities        $  1,410,471           612,873

  Construction in progress accounts payable                   7,155,922        13,609,367

  Accrued expenses                                            1,750,238         5,322,061

  Accrued revenue sharing and regulatory fees                39,821,082        23,000,000

  Accrued interest                                                             12,048,378

  Deposits and advance payments                                 749,508           667,100

  Current portion of long-term debt                           5,765,427           252,053
                                                             -----------      -----------
     Total current liabilities                               56,652,648        55,511,832

NON CURRENT LIABILITIES:

   Long-term debt, net of current portion                     1,688,032       201,694,541
                                                             -----------      -----------
     Total liabilities                                       58,340,680       257,206,373
                                                             -----------      -----------
COMMITMENTS AND CONTINGENCIES (Note 10)

EQUITY:

  Contributed capital                                        24,844,077        56,113,676

  Retained earnings (deficit)                               (23,684,756)        2,889,923
                                                             -----------      -----------
      Total equity                                            1,159,321        59,003,599

      Total liabilities and equity                         $ 59,500,001       316,209,972
                                                             ===========      ============

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 INCOME

YEARS ENDED APRIL 30,

                                                  2002              2003              2004
Revenues:                                   -------------     --------------    ---------------
  Gaming                                   $ 41,845,471       $ 46,942,180       $   60,277,052

  Food and beverage                           5,287,497          4,893,997            5,614,672

  Rooms                                       4,608,418          3,394,434                -

  Recreation and other                       11,228,444         11,952,860           16,471,890
                                            -------------     --------------    ---------------
  Gross revenue                              62,969,830         67,183,471           82,363,614

  Less - promotional allowances                 783,634            931,160            1,437,129
                                            -------------     --------------    ---------------
     Net revenue                             62,186,196         66,252,311           80,926,485
                                            -------------     --------------    ---------------
Operating costs and expenses:

  Gaming                                     17,962,606         19,457,655           25,405,661

  Reversal of accrued fees                                                          (27,136,255)

  Food and beverage                           5,067,579          4,955,537            6,587,472

  Rooms                                       2,129,502          1,552,133              119,722

  Recreation and other                        5,333,865          5,757,452           10,701,499

  General and administrative                  5,671,552          6,500,909            9,037,815

  Pension (allocated by related party)        1,331,088          1,631,828            1,886,333

  Gaming regulatory commission
    fees (charged by related party)             720,271            750,821            1,193,011

  Insurance (allocated by related party)        549,000            647,000              902,621

  Telecommunication (charged by related
    party)                                      126,200            152,200              289,182

  Pre-opening costs and expenses                   -             1,389,967            3,071,982

  Depreciation and amortization               3,915,779          9,213,224            4,930,236
                                            -------------     --------------    ---------------
     Total operating expenses                42,807,442         52,008,726           36,989,279
                                            -------------     --------------    ---------------

Income from operations                       19,378,754         14,243,585           43,937,206

Other income (expenses):
  Interest income                               288,521            190,120              801,266
  Interest expense, net of amounts
   capitalized                                 (196,022)              -              (5,251,687)
  Other income                                   75,202            170,984              258,098
                                            -------------     --------------    ---------------
     Total other income (expenses)              167,701            361,104           (4,192,323)
                                            -------------     --------------    ---------------
     Net income                            $ 19,546,455      $  14,604,689        $  39,744,883
                                            =============     ==============    ===============

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 CHANGES IN EQUITY

YEARS ENDED APRIL 30,

                                                                     Retained
                                                    Contributed      Earnings          Total
                                                      Capital        (Deficit)        Equity
                                                  --------------   --------------  -------------
Balances, April 30, 2001                          $ 35,143,163     $ 2,466,013      $ 37,609,176

Contributed capital from Mescalero Apache Tribe:
  Forgiveness of allocated pension cost              1,331,088             -           1,331,088
Distributions to Mescalero Apache Tribe:
  State revenue sharing fee accrual transfer       (32,648,152)            -         (32,648,152)
  Operating transfers                                     -        (19,740,211)      (19,740,211)
Net income                                                -         19,546,455        19,546,455
                                                  --------------   --------------  -------------
Balances, April 30, 2002                             3,826,099       2,272,257         6,098,356
                                                  --------------   --------------  -------------

Contributed capital from Mescalero Apache Tribe:
  Construction of the Resort                        14,389,215             -          14,389,215
  Forgiveness of due from Inn                        9,443,716             -           9,443,716
  Forgiveness of allocated pension cost              1,631,828             -           1,631,828
Distributions to Mescalero Apache Tribe:
  State revenue sharing fee accrual transfer        (4,446,781)            -          (4,446,781)
  Forgiveness of due to Casino                            -        (13,405,098)      (13,405,098)
  Forgiveness of due to Ski                               -         (1,193,833)       (1,193,833)
  Operating transfers                                     -        (25,962,771)      (25,962,771)
Net income                                                -         14,604,689        14,604,689
                                                  --------------   --------------  -------------
Balances, April 30, 2003                            24,844,077     (23,684,756)        1,159,321
                                                  --------------   --------------  -------------

Contributed capital from Mescalero Apache Tribe:
  Construction of the Resort                        29,960,298             -          29,960,298
  Forgiveness of allocated pension cost              1,309,301             -           1,309,301
Distributions to Mescalero Apache Tribe:
  Operating transfers                                     -        (13,170,204)      (13,170,204)
Net income                                                -         39,744,883        39,744,883
                                                  --------------   --------------  -------------
Balances, April 30, 2004                           $56,113,676     $ 2,889,923     $  59,003,599
                                                  ==============   ==============  =============

The accompanying notes are an integral part of these statements.

F-5

           INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                              YEARS ENDED APRIL 30,

                                                       2002            2003             2004
                                                  ------------    -------------    ---------------
Cash flows from operating activities:
    Net income                                    $ 19,546,455    $  14,604,689     $  39,744,883
    Adjustments to reconcile net income to net
      cash provided by operating activities:
      Depreciation and amortization                  3,915,779        9,213,224         4,930,236
      Gain on sale of property, plant and
        equipment                                          -            (13,741)                -
      Changes in assets and liabilities:
         Restricted cash and cash equivalents       26,824,075         (114,304)          (58,265)
         Accounts receivable, net of allowance          17,666          (58,908)          143,096
         Inventories                                  (108,182)        (267,736)         (113,056)
         Prepaid revenue sharing fees                      -                 -         (4,218,673)
         Prepaid expenses                               52,144          (77,586)         (173,056)
         Interest receivable                           451,506               -                  -
         Other long-term assets                            -             (1,000)          (60,911)
         Accounts payable                             (110,885)         583,895          (797,598)
         Accrued expenses                               (5,619)         454,795         3,571,823
         Accrued revenue sharing and regulatory
          fees                                       7,231,531        7,717,219       (16,821,082)
         Accrued interest payable                                                      12,048,378
         Deposits and advance payments                 (31,198)         (20,034)          (82,408)
                                                  ------------    -------------    ---------------
         Net cash provided in operating activities  57,783,272       32,020,513        38,113,367

Cash flows from investing activities:
    Purchase of property, plant and equipment       (1,633,352)     (23,578,641)     (100,549,654)
    Proceeds from sale of property, plant and
      equipment                                             -            35,198
    Net cash used in investing activities           (1,633,352)     (23,543,443)     (100,549,654)

Cash flows from financing activities:
    Deferred financing costs                                -          (100,000)      (10,929,493)
    Cash held for construction payments                     -                -       (132,763,729)
    Cash proceeds from the issuance of notes                -                -        200,000,000
    Advances from Mescalero Apache Tribe, net        2,153,606       (6,660,807)               -
    Borrowings on revolving line-of-credit                  -         5,000,000                -
    Principal borrowings (payments) on long-term
      debt, net                                       (625,024)         349,764        (5,506,865)
    Distributions to Mescalero Apache Tribe        (52,388,363)     (45,008,483)      (13,170,204)
    Contributions from Mescalero Apache Tribe        1,331,088       25,464,759        31,269,599
                                                  ------------    -------------    ---------------
Net cash (used by) provided by financing
   activities                                      (49,528,693)     (20,954,767)       68,899,308
                                                  ------------    -------------    ---------------
Net increase (decrease) in cash and cash
   equivalents                                       6,621,227      (12,477,697)        6,463,021

Cash and cash equivalents, beginning of year        15,188,392       21,809,619         9,331,922
                                                  ------------    -------------    ---------------

Cash and cash equivalents, end of year            $ 21,809,619     $  9,331,922      $ 15,794,943
                                                  ============    =============    ===============
Supplemental cash flow information:

    Cash paid for interest                        $    196,681     $    173,407      $     60,115
                                                  ============    =============    ===============
Non-cash investing and financing activities:

    Distributions to Mescalero Apache Tribe       $         -      $  1,193,833      $ 38,981,173
                                                  ============    =============    ===============
Property, plant and equipment acquired through
    increase of payables, net                     $         -      $  7,155,922      $  6,453,445
                                                  ============    =============    ===============

Contributions from Mescalero Apache Tribe         $  1,331,088     $  7,820,274      $  1,309,301
                                                  ============    =============    ===============

The accompanying notes are an integral part of these statements.

F-6

INN OF THE MOUNTAIN GODS RESORT AND CASINO AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2002, 2003 AND 2004

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.

Casino Apache (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 253-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 is in process and is scheduled for completion in the fourth quarter of fiscal year 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.

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

F-7

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

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 and the estimated lives of depreciable assets and pension cost. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

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

RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash and cash equivalents includes cash on deposit with financial institutions in demand accounts, savings accounts and short-term certificates of deposit that are subject to withdrawal restrictions (see Note 3).

ACCOUNTS RECEIVABLE

Accounts receivable consists primarily of hotel and other non-gaming receivables. The Resort 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 collectibility of these receivables could be affected by future business or economic trends.

INVENTORIES

Inventories consist of food and beverage items, livestock and stables, 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. Casino and Ski Apache inventories are determined using the first-in, first-out method. The Inn's inventories are determined using the average cost method.

DEFERRED FINANCING COSTS

Debt issuance costs incurred in connection with the issuance of the Project financing are capitalized and 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 $100,000 as of April 30, 2003 and $11,029,493 as of April 30, 2004. The accumulated amortization related to this deferred financing cost was $0 and $791,812 as of April 30, 2003 and 2004, respectively.

F-8

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

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. Interest incurred during the construction period is capitalized at the borrowing rate for the related loan and is amortized over the life of the related asset. Equipment sold, or otherwise disposed of, is removed from the accounts with gains or losses on disposal recorded in the statements of income.

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

Non-gamingequipment, 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 - 50 years

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 during the year ended April 30, 2003, the Inn demolished a substantial portion of the existing hotel building and began construction of a new resort hotel and casino facility. Under the provisions of Statement of Accounting Standards No. 144 ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS ("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. As a result of the demolition of the hotel, the adoption of SFAS 144 for the year ended April 30, 2003 resulted in an impairment of the demolished portion of the Inn's hotel related property, plant and equipment of approximately $5,391,000, which was recorded as depreciation expense in the accompanying consolidated statements of income during fiscal 2003 (see Note 5).

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses, bank financing facilities and capital lease obligations approximate fair value. The fair market value of the IMG Resort and Casino's senior notes was $216,000 at April 30, 2004, based on quoted market prices.

F-9

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

CONTRIBUTED CAPITAL

Contributed capital represents contributions from the Tribe and consists of
(i) cash to fund certain construction and development of the Resort Project, (ii) forgiveness of debt from the Inn to the Tribe and (iii) allocated pension costs related to the Mescalero Apache Tribe Defined Benefit Plan (see Note 8).

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 current liabilities in the accompanying consolidated balance sheets.

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

The Casino periodically rewards rooms and other promotions, including Apache Spirit Club points and gift certificates, to their customers. The retail value of these promotional allowances are recognized by the Casino as a reduction from gross revenue. The total promotional allowances recognized by the Casino were approximately $784,000, $931,000 and $1,437,000 for the years ended April 30, 2002, 2003 and 2004, 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 players club points liability is included in accrued expenses and totaled approximately $131,000 and $380,000 at April 30, 2003 and 2004, respectively.

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. The resorts adopted EITF 00-14 on April 30, 2001. The 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 PREPRODUCTS OR SERVICES TO BE DELIVERED IN THE FUTURE. On October 1, 2001, the Resorts 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 Resorts offer cash equivalent rewards in certain circumstances and has reflected approximately $623,000, $837,000 and $1,288,000 for the fiscal years ended April 30, 2002, 2003 and 2004, respectively, in the promotional allowance as an offset to gaming revenues for these incentives.

F-10

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

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

                                           Year Ended April 30,
                                    2002          2003           2004
                                -----------    -----------   -----------

Rooms  $                        $   226,181    $   175,133   $        -
Food and beverage                    31,428        231,131        40,475
Other                                19,970         17,617        22,169
                                -----------    -----------   -----------
                                $   277,579    $   423,881   $    62,644
                                ===========    ===========   ===========

COMPENSATED ABSENCES

Compensated absences are included in accrued expenses. The personnel policies allow the workforce to accrue annual leave as follows:

o One week of annual leave after one year of employment.
o Two weeks of annual leave after two years of employment.
o Three weeks of annual leave after three years of employment.
o Four weeks of annual leave after fifteen years of employment.

Except for personnel at Ski Apache, annual leave may be accumulated by all personnel up to a maximum of 120 hours or 160 hours for fifteen-year employees. Any annual leave accrued above these limits is forfeited. Due to the seasonality of the Ski Apache's business, Ski Apache's policy requires all accrued annual leave to be taken by the end of the Tribe's fiscal year-end, or it is forfeited. Personnel may be compensated for accrued annual leave only upon termination.

Sick leave is accrued at 2.1 hours per pay period after 90 days of employment and 3.1 hours after three years of employment. Personnel are not compensated for accrued sick leave on termination. Accordingly, the compensated absence accrual does not include a provision for sick leave.

PRE-OPENING COSTS AND EXPENSES

Pre-opening costs and expenses consist principally of direct incremental personnel costs, training costs and payroll costs for retaining the employees of the Inn during the fiscal year 2003 construction period. In accordance with the American Institute of Certified Public Accountants' Statement of Position 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES, pre-opening costs and expenses are expensed as incurred.

ADVERTISING COSTS

The IMG Resort and Casino's advertising costs are expensed as incurred and are included as general and administrative expenses in the accompanying consolidated statements of income. Advertising costs for the years ended April 30, 2002, 2003 and 2004 were approximately $615,000, $696,000 and $1,426,000, respectively.

F-11

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)

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 6.5% of other revenue is accrued monthly and is payable to the Tribe. The Tribe uses these funds to reimburse the Inn for advertising costs. The Resorts have recorded approximately $- and $200,000 for tax payable to the Tribe as of April 30, 2003 and 2004. The amounts are recorded as an accrued expense in the accompanying consolidated balance sheets. The Tribe re-classified approximately $2,553,000 of tax payable from the Inn to equity contribution to the Inn as of April 30, 2003 to reflect the forgiveness of the tax payable.

INCOME TAXES

As an unincorporated enterprise of the Tribe, the IMG Resort and Casino and the Resorts are exempt from federal and state income taxes.

NEW ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("SFAS 145"). The key provision of SFAS 145, which may affect IMG Resort and Casino and the Resorts, rescinds the existing rule that all gains or losses from the extinguishments of debt should be classified as extraordinary items. Instead, such gains and losses must be analyzed to determine if they meet the criteria for extraordinary item classification based on the event being both unusual and infrequent. Prior period gains and losses must be analyzed to determine if they meet the criteria to be classified as extraordinary items. If they fail the criteria, prior period gains and losses must be reclassified. IMG Resort and Casino and the Resorts adopted SFAS 145 on May 1, 2003 and they did not have a material impact on the consolidated financial position, results of operations or cash flows.

In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of Others." FIN 45 elaborates on the disclosures to be made by the guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued. It also requires that a guarantor recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The initial recognition and measurement provisions of this interpretation are applicable on a prospective basis to guarantees issued or modified after December 31, 2002; while the provisions of the disclosure requirements are effective for financial statements of interim or annual reports ending after December 15, 2002. At April 30, 2004, the IMG Resort and Casino had no indirect guarantees outstanding. The IMG Resort and Casino has adopted FIN 45, which has no material effect on the consolidated financial statements.

NOTE 2 - ALLOWANCE FOR DOUBTFUL ACCOUNTS

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

F-12

The allowance for doubtful accounts and bad debt expense is as follows at April 30:

                                                  2003           2004
                                               -----------   -----------

Allowance, beginning of year                   $     3,448   $     3,448
Bad debt expense                                    16,548            -
Write-offs                                         (16,548)           -
                                               -----------   -----------
Allowance, end of year                         $     3,448   $     3,448
                                               ===========   ===========

NOTE 3 - RESTRICTED CASH AND CASH EQUIVALENTS

Restricted cash consists of the Compulsive Gambler Fund and various funds held for the construction project. The balances were $475,249 and $133,297,243 at April 30, 2003 and 2004, respectively.

NOTE 4 - INVENTORIES

Inventories consist of the following at April 30:

                                                   2003           2004
                                                -----------   -----------

Food and beverage                               $   263,066   $   219,628
Golf and pro shop                                   121,925       132,936
Gift shops, fuel and other                          470,538       616,021
                                                -----------   -----------
  Total inventories                             $   855,529   $   968,585
                                                ===========   ===========

F-13

NOTE 5 - PROPERTY, PLANT AND EQUIPMENT, NET

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

                                                                    2003           2004
                                                                 -----------   -----------
Land                                                             $   538,894   $   538,894
Buildings, lifts and snowmaking equipment                         25,702,414    39,287,564
Non-gaming equipment, furniture and other                         20,772,051    25,498,837
Gaming equipment                                                   7,250,967    11,370,236
Leasehold and land improvements, lake and golf course              5,541,108     6,480,058
                                                                 -----------   -----------
    Subtotal                                                      59,805,434    83,175,589

Less accumulated depreciation and amortization                    41,396,363    46,281,098
                                                                 -----------   -----------
    Property, plant and equipment, net                            18,409,071    36,894,491

Construction in progress                                          29,847,569   113,435,012
                                                                 ------------- -----------
                                                                 $48,256,640  $150,329,503
                                                                 ============= ============

The IMG Resort and Casino capitalized $168,000 and $7,892,314 of interest cost related to construction of the Travel Center and Resort Project during fiscal years 2003 and 2004, respectively.

NOTE 6 - LONG-TERM DEBT

On November 3, 2003, IMG Resort and Casino issued $200.0 million of its 12% Senior Notes (the "Notes"). IMG Resort and Casino is using the proceeds of these notes to pay, in part, construction cost of the Resort Project, to repay a $19.0 million revolving credit agreement with Citicorp North America, Inc. and to pay the costs of the offering. 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 at 101% of the principal amount thereof, plus accrued and unpaid interest, if any. The Notes are guaranteed by the Resorts.

Until completion of the resort project, the Notes and guarantees are secured by a first priority security interest in certain collateral accounts and bank accounts of IMG Resort and the guarantors, which had an aggregate balance of approximately $133 million at April 30, 2004. The Notes will, after completion of the resort project, be the general unsecured obligations of IMG Resort and Casino and will rank equal in rights of payment to all of its existing future and senior unsecured obligations and senior in right of payment to any obligations that are by their terms subordinated to the Notes and are effectively subordinated to its secured obligations to the extent of the assets securing those obligations.

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

F-14

NOTE 6 - LONG-TERM DEBT (CONTINUED)

Long-term debt is summarized as of April 30 as follows:

                                                                   2003           2004
                                                                ------------  ------------
Senior Notes, bearing interest at a fixed
rate of 12%, maturing in 2010                                    $      -    $ 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.                              $ 1,861,650 $   1,744,651

Citicorp North America Inc., revolving
credit agreement of $50 million, bearing
interest at the 12 month LIBOR (2.42% as
of April 30, 2003) plus 1%, maturing on
December 31, 2003.                                                 5,000,000            -

Various notes payable with payments ranging
from $3,603 to $21,900 per month, plus accrued
interest ranging from 4.25% to 10%, maturing between
2001 and 2004.                                                       591,809       201,943
                                                                ------------  ------------
                                                                   7,453,459   201,946,594

Less current portion                                               5,765,427       252,053
                                                                ------------  ------------
Long-term portion                                                $ 1,688,032 $ 201,694,541
                                                                ============  ============

The maturities of long-term debt as of April 30, 2004 are as follows:

Year Ending April 30:
          2005                                                                 $   252,053
          2006                                                                     205,667
          2007                                                                     223,847
          2008                                                                     243,633
          2009                                                                     265,519
          Thereafter                                                            200,755,875
                                                                               -------------
                                                                               $201,946,594
                                                                               =============

Total interest costs were $196,022, $167,968 and $13,144,001 for the year ended April 30, 2002, 2003 and 2004, respectively, of which $167,968 and $7,892,314 was capitalized as of April 30, 2003 and 2004, respectively.

NOTE 7 - GAMING REVENUES SHARING AND REGULATORY FEES

The Tribe regulates the Resort'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. The Casino also pays a federal regulatory fee. All tribal and federal regulatory fees have been paid when due.

F-15

NOTE 7 - GAMING REVENUES SHARING AND REGULATORY FEES (CONTINUED)

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, we 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, we will begin 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 our first revenue sharing payment under the 2001 Compact due in July 2005. In addition, pursuant to the terms of the settlement agreement, we will begin 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 our 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 July 22, 2004, the Department of Interior approved the 2001 Compact. We will make the remaining $23.0 million payment required under the settlement agreement within ten business days after the Department of Interior publishes notice in the Federal Register of the affirmative approval of the 2001 Compact. As a result of the settlement with the State, expense and the liability for accrued revenue sharing and regulatory fees has been reduced by $27,136,255 for the year ended and as of April 30, 2004.

NOTE 8 - DEFINED BENEFIT PENSION PLAN

IMG Resort and Casino and the Resorts participate in the Mescalero Apache Tribe Defined Benefit Plan (the "Plan"), a single-employer defined benefit pension plan that covers substantially all full-time employees of the Tribe. Individuals who provide services to IMG Resort and Casino and the Resorts are employees of the Tribe and participate in the Plan. The Tribe is the Plan sponsor and handles all administration and funding of the Plan. The Tribe reserves the right to amend any or all provisions of the Plan. Changes to Plan provisions and contribution requirements must be approved by the Tribal Council. The Plan provides retirement, disability and death benefits to plan members and beneficiaries.

The Tribe, upon advice from legal counsel, has determined that the Plan is a "governmental plan" as described in Section 414(d) of the Internal Revenue Code ("IRC"). As such, the Plan is exempt from many of the requirements placed on qualified plans, including (but not limited to) the reporting and disclosure requirements of ERISA, coverage under the Pension Benefit Guaranty Corporation ("PBGC") and the minimum and maximum funding requirements of IRC Sections 412 and 404.

No separately prepared financial statements of the plan are available.

F-16

NOTE 8 - DEFINED BENEFIT PENSION PLAN (CONTINUED)

EFFECTIVE DATE AND PLAN YEAR

The Plan was established effective January 1, 1976, with the latest plan restatement effective January 1, 1998. The Plan year end is December 31, while IMG Resort and Casino and the Resort's fiscal year ends April 30 and the Tribe's fiscal year ends September 30.

ELIGIBILITY

Each employee is eligible to become a participant in the plan on January 1st or July 1st immediately following completion of one year of service in which the employee completes at least 1,000 hours of service.

SERVICE

Service credited for benefit and vesting purposes is defined as the number of the plan years in which the employee completes at least 1,000 hours of service, subject to certain break in service rules. Service prior to the 1976 plan year shall be based on continuous service, with a full year credited for each year in which the participant was employed for at least one hour.

COMPENSATION

Compensation for a plan purposes is defined as W-2 compensation paid to an employee by the employer. A participant's annual compensation for plan purposes is limited consistent with Internal Revenue Code Section 401(a)(17).

NORMAL RETIREMENT

CONDITION

The normal retirement date is the January 1 coincident with or next following the participant's 65th birthday.

NOTE 8 - DEFINED BENEFIT PENSION PLAN (CONTINUED)

BENEFIT

The normal retirement benefit, 1/12th of which is payable monthly for the life of the participant, is equal to the sum of the following:

o 1.20% of average earnings multiplied by the participant's years of benefit service limited to 30 years, plus
o .65% of average earnings in excess of $9,996, multiplied by the participant's years of benefit service not in excess of 30 years.

"Average earnings" is the average annual compensation of a participant for the five consecutive plan years that produce the highest average.

ACCRUED BENEFIT

The accrued benefit is the monthly benefit with payments beginning at normal retirement, which has been earned due to compensation and benefit service as of any determination date. The accrued benefit is payable for the life of the participant and is computed in the same manner as for normal retirement, using the participant's average earnings and benefit service as of the date of determination.

F-17

NOTE 8 - DEFINED BENEFIT PENSION PLAN (CONTINUED)

LATE RETIREMENT

CONDITION

A participant may choose to postpone their retirement beyond their normal retirement date, in which event no benefit shall be payable until actual retirement.

BENEFIT

The participant's benefit, commencing on the January 1 following the actual date of retirement, shall be greater of the actuarial equivalent of the benefit the participant would have received at their normal retirement date, and the benefit computed using the participant's compensation and the benefit service earned after the normal retirement date.

DISABILITY RETIREMENT

CONDITION

If a participant becomes totally and permanently disabled, as demonstrated by the receipt of Social Security benefits, the employee will be entitled to receive a disability retirement benefit.

BENEFIT

The participant shall receive the single sum actuarial equivalent value of their accrued benefit determined as of the January 1 following the participant's termination of employment due to disability.

DEATH BEFORE RETIREMENT

CONDITION

In the event of death of a participant after becoming eligible for a vested benefit under the Plan, and while either (i) actively employed by the employer, or (ii) on deferred vested status but prior to receiving any retirement benefits, a death benefit shall be payable to the participant's named beneficiary.

F-18

NOTE 8 - DEFINED BENEFIT PENSION PLAN (CONTINUED)

BENEFIT

The death benefit shall be the single sum actuarial equivalent of the participants accrued benefit determined as of the participant's date of death.

MINIMUM DEATH BENEFIT

A monthly benefit is payable on the first day of the calendar month following the participant's date of death or the earliest date the participant could have elected benefit payments to commence, whichever is later, and continuing for the lifetime of the surviving spouse. The benefit is determined as 50% of the benefit the participant would have received if the participant had terminated employment the day before his death (or on his actual date of termination if earlier), had lived to the benefit commencement date, and elected an immediate joint and 50% to survivor benefit. The value of any other death benefit provided under the Plan shall be reduced by the value of this surviving spouse benefit.

TERMINATION OF EMPLOYMENT

CONDITION

If a participant terminates employment after completing 3 or more years of vesting service, participant is entitled to a deferred vested benefit with payment commencing on their normal retirement date.

F-19

NOTE 8 - DEFINED BENEFIT PENSION PLAN (CONTINUED)

BENEFIT

The amount of the benefit is calculated as the product of a vesting percentage and the accrued benefit determined as of the participant's date of termination. The vesting percentage is determined from the following table:

  Years of Vesting            Vesting
      Service                Percentage
---------------------       -------------

Less than 3                        0%
3                                 20
4                                 40
5                                 60
6                                 80
7 or more                        100

If employment is otherwise terminated before retirement, no benefits are provided under the Plan.

ACTUARIAL EQUIVALENCE

Actuarial equivalent values shall be computed based on the 1971 Individual Annuitant Mortality Table, male rates offset 2 years, with a pre-retirement interest rate of 5.5% and a post-retirement interest rate of 5%. For lump sum amounts only, the PBGC interest rates in effect as of the first date of the Plan year in which the calculation is made are used if a higher benefit results. Notwithstanding the foregoing, if a lump sum amount is greater than $25,000, the lump sum shall be determined using 120% of the PBGC rates in effect as of the first day of the plan year in which the calculation is made, but shall be no less than $25,000.

PLAN EXPENSES

All expenses of the Plan are paid by the Tribe. Allocated pension expenses totaled $1,331,088, $1,631,828 and $1,886,333, for the years ended April 30, 2002, 2003 and 2004, respectively. Until September 2003, such costs were not required to be reimbursed to the Tribe and therefore have been accounted for as contributed capital.

CONTRIBUTIONS TO THE PLAN

Upon retirement, the Tribe contributes actuarially determined amounts to fund retirement benefits. No contributions by participating employees are required.

FUNDING POLICY

The Plan provides that Guaranteed Retirement Annuity Contracts (guaranteed interest contracts) are purchased to provide retirement benefits to participants. Funding to purchase contracts is based upon actuarially determined deposits made by the Tribe.

F-20

NOTE 8 - DEFINED BENEFIT PENSION PLAN (CONTINUED)

Although the Tribe has determined that it is not subject to Internal Revenue Code Section ("IRC") 412 regarding funding, the annual funding according to the latest actuarial valuation at January 1, 2000, was based on this criteria. The contribution rate is based on a pay-as-you-go basis and, therefore, there is no set contract contribution rate. No contributions have been made by the Tribe, or billed to any of the enterprises, for any year ended through 2003.

The Plan requires an actuarial valuation every three years. The latest full actuarial valuation was performed as of January 1, 2000 and was updated with current assumptions by the actuary as of January 1, 2001, 2002 and 2003. Census data from the January 1, 2000 actuarial valuation was used for these projections. Liabilities were then projected to the end of each disclosure year, taking into account additional liabilities for new participants based on the liability for participants first considered in the 2000 actuarial valuation. Since actual census data was not used in valuation for period from December 31, 2000 through January 1, 2003, actual cost and liability may significantly differ from the amounts projected and disclosed below.

The Tribe has the ability to request reimbursement for costs related to the periodic pension cost from IMG Resort and Casino and the Resorts if it should choose to do so; however, no such requests have been made. The Tribe has also represented that a request for reimbursement of such costs would not be made in the future related to prior years.

FUNDING STATUS AND PROGRESS

The amount shown below as the "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits adjusted for the effects of projected salary increases estimated to be payable in the future as a result of employee service to date. The measure is intended to help users assess the funding status of the Plan on a going-concern basis, and to assess progress made in accumulating sufficient assets to pay benefits when due. The measure is the actuarial present value of credited projected benefits and is independent of the funding method used to determine contributions to the Plan. The amounts may be significantly different up on the next full actuarial valuation.

The Plan's funded status as of January 1 consist of:

                                                  2002          2003
                                              ------------- -------------

Actuarial present value of accumulated
 plan benefits:
     Vested                                  $ 14,050,989   $ 18,318,552
     Nonvested                                  1,394,597      2,069,634
                                              ------------- -------------
                                              $ 15,445,586  $ 20,388,186
                                              ============= =============

                                                  2002          2003
                                              ------------- -------------
 Accrued pension costs:
    Projected benefit obligation              $(20,852,106) $ (26,893,541)
    Plan assets at fair value                    1,882,774      1,434,904
                                              ------------- -------------
      Funded status                            (18,969,332)   (25,458,637)
    Unrecognized net loss                        8,224,899     11,200,615
                                              ------------- -------------
        Accrued pension cost                  $(10,744,433) $ (14,258,022)
                                              ============= =============

F-21

NOTE 8 - DEFINED BENEFIT PENSION PLAN (CONTINUED)

                                                2002          2003
                                            ------------- -------------
The net pension expense consists of:
  Service cost                              $  1,563,881   $ 1,776,505
  Interest cost                                1,256,082     1,503,361
  Expected return on plan assets                (188,960)     (141,334)
  Amortization of net loss                       297,271       375,057
                                            ------------- -------------

   Periodic pension cost                    $  2,928,274   $ 3,513,589
                                            ============= =============
  Pension cost allocated to IMG Resort
   and Casino                               $  1,331,088   $ 1,631,829
                                            ============= =============

Under the terms of an agreement with the Tribe executed in 2003, the Resort pays a fixed amount of 9.75% of salaries and wages as a fixed contribution to the retirement plan. The total pension expense under this agreement for the fiscal year ended April 30, 2004 was $1,886,333.

Significant assumptions used in the January 1, 2002 and 2003 valuation are as follows: the weighted average discount rates used in determining the actuarial present value of accumulated plan benefits were 7.25%, 6.75%, respectively; the rate of compensation increase used to measure the projected benefit obligation was 3% for both years; the weighted average expected long-term rate of return on plan assets was 8% for both years.

NOTE 9 - 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 2002, 2003 and 2004, 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 amount reimbursed to the Tribe were approximately $549,000, $647,000 and $902,000 for 2002, 2003 and 2004, respectively.

The Tribe maintains worker's compensation insurance coverage under a retrospective rated policy whereby premiums are accrued 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 have not provided an estimate for losses that may result in premium adjustments at the end of the coverage period.

NOTE 10 - 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.

F-22

NOTE 10 - COMMITMENTS AND CONTINGENCIES (CONTINUED)

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 a quarterly occupancy fee based on revenue and gross fixed assets. Occupancy fee for the years ended April 30, 2002, 2003 and 2004 totaled approximately $111,800, $121,000 and $130,000, respective1y.

CONSTRUCTION AGREEMENT

In February 2002, the Tribe entered into a construction agreement for the development of the Travel Center and the new Hotel and Casino on behalf of the IMG Resort and Casino. Estimated construction cost is approximately $149,720,000 and as of April 30, 2004, IMG Resort and Casino had outstanding construction commitments of approximately $39.0 million.

NOTE 11 - 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 its telecommunications related services. The IMG Resort and Casino paid Mescalero Apache Telecommunications approximately $126,200, $152,200 and $289,000 for the years ended April 30, 2002, 2003 and 2004, respectively, for such services.

In addition to the amounts due to the Casino from the Tribe in connection with revenues sharing and regulatory fees (see Note 7), there were no amounts due to the Tribe from the Resorts at April 30, 2003 and 2004. The Tribe reclassified $6,890,716 due from the Resorts as an equity contribution and $1,193,833 due to Ski Apache from the Tribe as an equity distribution as of April 30, 2003, in connection with the reorganization (see Note 1).

F-23

NOTE 12 - OPERATING SEGMENTS

The IMG Resort and Casino has five operating segments. Gaming, Hotel, Ski , Resort Management and Travel Center. The Gaming segment information includes the activities of the Casino. The Hotel segment information includes the activities of the Inn, hunting, golf, fishing and horseback riding. The Ski Apache segment includes the activities of Ski Apache. Resort/Holding Company Operations includes the activities of the IMG Resort and Casino and the pre-opening activities of the Casino and the Inn. The Travel Center which opened in May 2003 includes the pre-opening activities. These operating segments represent distinct business activities, which are managed separately.

                                                                Resort/      Travel
                                                               Holding       Center
2002               Gaming             Hotel         Ski           Co.       Operations
                 Operations         Operations   Operations   Operations                 Eliminations        Total
            -------------------     ----------   ----------   ----------    ----------   -------------     ----------
Net revenue    $42,644,693        $19,112,047    $9,429,456   $      -      $     -      $ (9,000,000)    $ 62,186,196

Income from
operations       8,777,733          7,952,473     2,648,548          -            -               -         19,378,754

Segment assets  60,944,479         20,248,720    15,489,333          -            -       (14,176,098)      82,506,434

F-24

NOTE 12 - OPERATING SEGMENTS (CONTINUED)

                                                                Resort/
                                                               Holding       Travel
2003               Gaming             Hotel         Ski           Co.        Center
                 Operations         Operations   Operations   Operations    Operations   Eliminations        Total
            -------------------     ----------   ----------   ----------    ----------   -------------     -------------
Net revenue  $  47,636,772          $13,261,039  $10,604,500  $      -      $      -    $  (5,250,000)     $ 66,252,311


Income from
operations      13,056,515           (1,682,758)   2,932,412         -        (62,584)            -          14,243,585

Segment
assets           4,829,867           10,882,615   14,032,654   29,814,295          -          (59,430)       59,500,001

                                                                Resort/
                                                               Holding       Travel
2004               Gaming             Hotel         Ski           Co.        Center
                 Operations         Operations   Operations   Operations    Operations   Eliminations        Total
            -------------------     ----------   ----------   ----------    ----------   -------------     -------------
Net revenue     $33,136,364         $  2,146,082   $8,138,252   $   (750,941)   $ 38,256,728  $       -      $ 80,926,485

Income (loss)
from operations  36,176,134           (1,254,844)   1,371,554    (12,327,251)     19,971,613          -        43,937,206

Segment
assets           16,903,688            8,985,424    13,506,463   299,476,501      30,830,402  (53,492,506)    316,209,972

NOTE 13 - SUBSEQUENT EVENTS

On June 15, 2004, we entered into a $15.0 million credit facility with Key Equipment Finance, a Division of Key Corporate Capital Inc., one of the nation's largest financial services firms. The fixed rate loan is fully amortizable over five years and bears an interest rate indexed off the 3-year Treasury Interest Rate Swaps. Proceeds from the loan will be used to fund furniture, fixtures and equipment for the Project.

NOTE 14 - 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.

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.

F-25

NOTE 14 - CONSOLIDATING INFORMATION (CONTINUED)

The Resorts are wholly owned subsidiaries of IMG Resort and Casino. IMG Resort and Casino was established on April 2, 2003 for the purpose of managing the Resorts. The following consolidating information is presented as of and for the year ended April 30, 2004 and 2003 as the IMG Resort and Casino did not exist prior to April 2, 2003 (see Note 1).

CONSOLIDATING BALANCE SHEETS

AS OF APRIL 30, 2004

                                                           Guarantor
                                               IMGRC      Subsidiaries  Eliminations  Consolidated
                                          -------------   ------------- ------------  ------------
Cash and cash equivalents                 $        -      $ 15,794,943  $        -   $  15,794,943

Restricted cash and cash equivalents       132,763,729         533,514           -     133,297,243

Accounts receivable, net                           -            32,566           -          32,566

Inventories                                      4,869         963,716           -         968,585

Prepaid Revenue Sharing                            -         4,218,673           -       4,218,673

Prepaid other                                   55,805         406,249           -         462,054

Deferred financing cost, net                 1,625,244             -             -       1,625,244

Total current assets                       134,449,647      21,949,661           -     156,399,308

 Advances to Affilates                      12,869,591      10,982,198   (23,851,790)           -

Property, plant and equipment, net         113,112,297      37,217,206           -     150,329,503

Long-term deferred financing expenses, net   9,404,249             -             -       9,404,249

Other long-term assets                             -            76,912           -          76,912

Investment in subsidiaries                  29,640,717             -     (29,640,717)           -
                                          --------------  -------------  ------------- -------------
 Total Assets                             $299,476,501    $ 70,225,977  $(53,492,507) $316,209,972
                                          ==============  =============  ============= =============

Accounts Payable and other short term
  liabilities                             $        -      $    612,873  $        -    $    612,873

Construction in progress acounts
  payable                                   13,609,367            -              -      13,609,367

Accrued expenses                               977,306       4,342,424          2,331    5,322,061

Accrued revenue sharing and regulatory
  fees                                             -        23,000,000           -      23,000,000
Accrued interest
                                            12,000,000          48,378           -      12,048,378

Deposits and advance payments                      -           667,100           -         667,100

Current portion of long-term debt                  -           252,053           -         252,053
                                          --------------  -------------  ------------- -------------
       Total current liabilities            26,586,673      28,922,828          2,331   55,511,832

Advances from affiliates                    13,886,229       9,967,892    (23,854,121)         -

Long-term debt, net of current portion     200,000,000       1,694,541           -     201,694,541
                                          --------------  -------------  ------------- -------------
Total liabilities                          240,472,902      40,585,258    (23,851,790) 257,206,371

  Contributed Capital                       56,113,676      20,166,161     20,166,161)  56,113,676

  Current Year Net income (Loss)            39,744,883      56,404,793    (56,404,793)  39,744,883

 Retained equity                           (36,854,960)    (46,930,237)    46,930,237  (36,854,960)
                                           ------------   ------------   ------------- --------------
 Total equity                               59,003,599      29,640,717    (29,640,717)  59,003,599
                                           -----------    ------------   ------------  --------------
Total liabilities and equity               299,476,501      70,225,975    (53,492,507) 316,209,970
                                           ===========    ============   ============  ==============

F-26

CONSOLIDATING STATEMENTS OF INCOME

YEAR ENDED APRIL 30, 2004

                                                           Guarantor
                                               IMGRC      Subsidiaries  Eliminations  Consolidated
                                          -------------   ------------- ------------  -------------
Revenues:
    Gaming                                 $       -      $ 60,277,052  $       -     $  60,277,052
    Food and Beverage                          5,691         5,608,982          -         5,614,672
    Rooms                                          -                -           -                -
    Recreation and other                          70        16,471,820          -        16,471,890
                                          -------------   ------------- ------------  -------------
      Gross Revenue                            5,761        82,357,854          -        82,363,614

Less - Promotional Allowances                756,701           680,428          -         1,437,129
      Net Revenue                           (750,940)       81,677,426          -        80,926,485

Operating Expenses
    Gaming                                 2,157,633        23,248,028          -        25,405,661
    Reversal of accrued fees                       -       (27,136,255)         -       (27,136,255)
    Food and Beverage                        704,864         5,882,608          -         6,587,472
    Rooms                                          -           119,722          -           119,722
    Recreation and other                     471,800        10,229,699          -        10,701,499
    General and administrative             5,866,274         3,171,541          -         9,037,815
    Insurance                                157,333           745,288          -           902,621
    Pension                                  410,231         1,476,102          -         1,886,333
    Tribal Regulatory                        505,032           687,979          -         1,193,011
    Mescalero Phone                           40,006           249,176          -           289,182
    Pre-opening                            1,263,138         1,808,844          -         3,071,982
    Depreciation                                   -         4,930,236          -         4,930,236
                                          -------------   ------------- ------------  -------------
      Total Operating Expenses            11,576,311        25,412,968          -        36,989,279
                                          -------------   ------------- ------------  -------------

Operating Income                         (12,327,251)       56,264,458          -        43,937,206

Other Income (Expense)
    Interest Income                          767,698            33,567          -           801,266
    Interest Expense                      (5,100,317)         (151,370)         -        (5,251,687)
    Income from subsidiaries              56,404,753                 -   (56,404,753)            -
    Other Income                                  -            258,098          -           258,098
                                          -------------   ------------- ------------  -------------
       Total Other Income (Expense)       52,072,134           140,295   (56,404,753)    (4,192,323)
                                          -------------   ------------- ------------  -------------
       Net Income                       $ 39,744,883      $ 56,404,753  $(56,404,753)  $ 39,744,883
                                          =============   ============= ============  ==============

F-27

                     CONSOLIDATING STATEMENTS OF CASH FLOWS

                            YEAR ENDED APRIL 30, 2004

                                                                    Guarantor
                                                       IMGRC       Subsidiaries    Eliminations   Consolidated
Cash flows from operating activities:
  Net income                                        $39,744,883    $56,404,753    $(56,404,753)   $39,744,833
  Adjustments to reconcile net income to net
     cash provided by operating activities:
     Depreciation and amortization                            -      4,930,236               -      4,930,236
     Gain on sale of property, plant and equipment                                                          -
  Changes in assets and liabilities:
     Restricted cash and cash equivalents                     -        (58,265)              -        (58,265)
     Accounts receivable, net of allowance               75,635         67,461               -        143,096
     Inventories                                         (4,869)      (108,187)              -       (113,056)
     Prepaid revenue sharing fees                         4,448     (4,223,121)              -     (4,218,673)
     Prepaid expenses                                         -       (173,056)              -       (173,056)
     Other long term assets                                   -        (60,911)              -        (60,911)
     Accounts payable                                         -       (797,598)              -       (797,598)
     Accrued expenses                                         -      3,571,823               -      3,571,823
     Accrued revenue sharing and regulatory fees              -    (16,821,082)              -    (16,821,082)
     Accrued interest payable                        12,000,000         48,378               -     12,048,378
     Deposits and advance payments                            -        (82,408)              -        (82,408)
                                                    ------------   ------------    ------------   ------------
       Net cash provided by operating
         activities                                  51,820,097     42,698,023     (56,404,753)    38,113,367
                                                    ------------   ------------    ------------   ------------

Cash flows from investing activities:
  Investment in subsidiaries                        (56,404,753)             -      56,404,753              -
  Purchase of property, plant and equipment        (101,301,951)       752,297               -    (100,549,654)
                                                    ------------   ------------    ------------   ------------
      Net cash used by investing activities        (157,706,704)       752,297      56,404,753    (100,549,654)
                                                    ------------   ------------    ------------   ------------
Cash flows from financing activities:
  Deferred financing costs                          (10,929,493)             -               -     (10,929,493)
  Cash held for construction payments              (132,763,729)             -               -    (132,763,729)
  Cash proceeds from the issuance of notes          200,000,000              -               -     200,000,000
  Principal borrowings (payments) on
     long-term debt, net                                      -     (5,506,865)              -      (5,506,865)
  Distributions to Mescalero Apache Tribe                     -    (13,170,204)              -     (13,170,204)
  Contributions from Mescalero Apache Tribe          49,568,542    (18,298,943)              -      31,269,599
                                                    ------------   ------------    ------------   ------------
      Net cash used by (provided by)
       financing activities                         105,875,320    (36,976,012)              -      68,899,308
                                                    ------------   ------------    ------------   ------------
Net increase (decrease) in cash and cash
 equivalents                                            (11,287)     6,474,308               -       6,463,021
                                                    ------------   ------------    ------------   ------------
Cash and cash equivalents, beginning of year             11,287      9,320,635               -       9,331,922
                                                    ------------   ------------    ------------   ------------
Cash and cash equivalents, end of year             $          -    $15,794,943     $         -     $15,794,943
                                                    ============   ============    ============   ============

Supplemental cash flow information:
     Cash paid for interest                        $     60,115    $         -     $         -     $    60,115
                                                    ============   ============    ============   ============
Non-cash investing and financing activities:
     Distributions to Mescalero Apache Tribe       $          -    $38,981,173     $         -     $38,981,173
                                                    ============   ============    ============   ============
Property, plant and equipment acquired through
  increase of payables, net                        $          -    $ 6,453,445     $         -     $ 6,453,445
                                                    ============   ============    ============   ============
     Contribution from Mescalero Apache Tribe      $    328,618    $   980,683     $         -     $ 1,309,301
                                                    ============   ============    ============   ============

F-28

CONSOLIDATING BALANCE SHEETS

AS OF APRIL 30, 2003

                                                                  Guarantor
                                                     IMGRC       Subsidiaries   Eliminations    Consolidated
                                                  -----------    ------------   -------------   ------------
                    ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                       $   29,221     $ 9,302,701    $         -    $  9,331,922

  Restricted cash and cash equivalents                     -         475,249              -         475,249

  Accounts receivable                                      -         175,662              -         175,662

  Inventories                                        208,466         647,063              -         855,529

  Prepaid expenses                                    15,785         273,214              -         288,999

  Deferred financing costs                           100,000               -              -         100,000
                                                  -----------    ------------   -------------   ------------
     Total current assets                            353,472      10,873,889              -      11,227,361

NON CURRENT ASSETS:
  Liquor license                                           -          16,000              -          16,000

  Property, plant and equipment, net              29,460,823      18,795,817              -      48,256,640

INVESTMENT IN SUBSIDIARIES                       (15,782,894)             -      15,782,894              -
                                                  -----------    ------------   -------------   ------------

     Total assets                                 $14,031,401     29,685,706    $15,782,894     $59,500,001
                                                  ===========    ============   =============   ============

LIABILITIES AND EQUITY

                              CURRENT LIABILITIES:
  Accounts payable and other short term
   liabilities                                    $        -     $ 1,410,471    $         -     $ 1,410,471

  Construction in Progress Accounts Payable        7,155,922              -               -       7,155,922

  Accrued expenses                                   136,062       1,614,176              -       1,750,238

  Accrued revenue sharing and regulatory fees             -       39,821,082              -      39,821,082

  Deposits and advance payments                           -          749,508              -         749,508

  Current portion of long-term debt                5,580,096         185,331              -       5,765,427
                                                  -----------    ------------   -------------   ------------
     Total current liabilities                    12,872,080      43,780,568              -      56,652,648

NON CURRENT LIABILITIES:

Long-term debt, net of current portion                     -       1,688,032              -       1,688,032
                                                  -----------    ------------   -------------   ------------
Total long-term debt                                       -       1,688,032              -       1,688,032

     Total liabilities                            12,872,080      45,468,600              -      58,340,680

EQUITY:
  Contributed capital                             24,844,077       7,901,862     (7,901,862)     24,844,077

  Retained deficit                               (23,684,756)    (23,684,756)    23,684,756     (23,684,756)
                                                  -----------    ------------   -------------   ------------
     Total equity                                  1,159,321     (15,782,894)    15,782,894       1,159,321
                                                  -----------    ------------   -------------   ------------

     Total liabilities and equity                $14,031,401     $29,685,706     $15,782,894    $59,500,001
                                                  ===========    ============   =============   ============

F-29

                                 CONSOLIDATING STATEMENTS OF INCOME

                                      YEAR ENDED APRIL 30, 2003


                                              IMGRC        Subsidiaries    Eliminations  Consolidated
                                           ------------    ------------    -----------   -------------
Revenues:
  Gaming                                   $         -     $46,942,180     $        -     $46,942,180
  Food and beverage                                  -       4,893,997              -       4,893,997
  Rooms                                              -       3,394,434              -       3,394,434
  Recreation and other                               -      11,952,860              -      11,952,860
                                           ------------    ------------    -----------   -------------
     Gross revenues                                  -      67,183,471              -      67,183,471
     Less - promotional allowances                   -         931,160              -         931,160
                                           ------------    ------------    -----------   -------------
       Net revenue                                   -      66,252,311              -      66,252,311
                                           ------------    ------------    -----------   -------------

Operating costs and expenses:
  Gaming                                             -      19,457,655              -      19,457,655
  Food and beverage                                  -       4,955,537              -       4,955,537
  Rooms                                              -       1,552,133              -       1,552,133
  Recreation and other                               -       5,757,452              -       5,757,452
  General and administrative                         -       6,500,909              -       6,500,909
  Pension Cost                                       -       1,631,828              -       1,631,828
  Gaming and regulatory commission fees              -         750,821              -         750,821
  Self insurance costs allocated from                -         647,000              -         647,000
    the Tribe
  Mescalero Apache Telecommunication                 -         152,200              -         152,200
  Pre-opening costs and expenses                     -       1,389,967              -       1,389,967
  Depreciation and amortization                      -       9,213,224              -       9,213,224
                                           ------------    ------------    -----------   -------------
     Total operating expenses                        -      52,008,726              -      52,008,726
                                           ------------    ------------    -----------   -------------

Income from operations                               -      14,243,585              -      14,243,585
                                           ------------    ------------    -----------   -------------
Other income:
  Interest income                                    -         190,120              -         190,120
  Other income                                       -         170,984              -         170,984
                                           ------------    ------------    -----------   -------------
     Total other income                              -         361,104              -         361,104
                                           ------------    ------------    -----------   -------------
     Net Income                            $         -     $14,605,689     $        -     $14,604,689
                                           ============    ============    ===========   =============

F-30

                     CONSOLIDATING STATEMENTS OF CASH FLOWS

                            YEAR ENDED APRIL 30, 2003

                                                                    Guarantor
                                                        IMGRC      Subsidiaries    Eliminations   Consolidated
                                                    ------------   ------------    ------------   ------------
Cash flows from operating activities:
  Net income                                        $         -    $14,604,689     $        -     $14,604,689
  Adjustments to reconcile net income to
   net cash provided by operating activities:
     Depreciation and amortization                            -      9,213,224              -       9,213,224
     Gain on sale of property, plant and
       equipment                                              -       (13,741)              -        (13,741)
  Changes in assets and liabilities:
     Restricted cash and cash equivalents                     -      (114,304)              -       (114,304)
     Accounts receivable, net of allowance                    -       (58,908)              -        (58,908)
     Inventories                                      (208,466)       (59,270)              -       (267,736)
     Prepaid expenses                                  (15,785)       (61,801)              -        (77,586)
     Liquor license                                           -        (1,000)                        (1,000)
     Accounts payable                                         -        583,895              -         583,895
     Accrued expenses                                   136,062        318,733              -         454,795
     Accrued revenue sharing and regulatory fees              -      7,717,219              -       7,717,219
     Deposits and advance payments                            -        (20,034)             -         (20,034)
                                                    ------------   ------------    ------------   ------------
       Net cash provided by operating                  (88,189)     32,108,702              -      32,020,513
                                                    ============   ============    ============   ============
Cash flows from investing activities:
  Investment in subsidiaries                         15,782,894              -     (15,782,894)             -
  Purchase of property, plant and equipment         (29,460,823)    (1,273,740)             -     (30,734,563)
  Construction in progress accounts payable           7,155,922              -              -       7,155,922
  Proceeds from sale of property, plant and
   equipment                                                  -         35,198              -          35,198
                                                    ------------   ------------    ------------   ------------
      Net cash used by investing activities         (6,522,007)    (1,238,542)     (15,782,894)   (23,543,443)
                                                    ============   ============    ============   ============
Cash flows from financing activities:
  Deferred financing costs                            (100,000)             -               -        (100,000)
  Advances from Mescalero Apache Tribe                            (11,107,588)              -     (11,107,588)
  Borrowings on revolving line of credit             5,000,000              -               -       5,000,000
  Principal borrowings (payments) on
   long-term debt, net                                 580,096       (230,332)              -         349,764
  Distributions to Mescalero Apache Tribe                    -    (40,561,702)              -     (40,561,702)
  Contributions from Mescalero Apache Tribe          1,159,321      8,522,544       15,782,894     25,464,759
                                                    ------------   ------------    ------------   ------------
       Net cash used by financing activities         6,639,417    (43,377,078)      15,782,894    (20,954,767)
                                                    ============   ============    ============   ============
Net (decrease) increase in cash and cash
 equivalents                                            29,221    (12,506,918)              -     (12,477,697)

Cash and cash equivalents, beginning of year                 -     21,809,619               -      21,809,619
                                                    ------------   ------------    ------------   ------------
Cash and cash equivalents, end of year              $   29,221    $ 9,302,701      $        -     $ 9,331,922
                                                    ============   ============    ============   ============
Supplemental cash flow information:
     Cash paid for interest                         $    5,439    $   167,968      $        -     $   173,407
                                                    ============   ============    ============   ============

Non-cash financing activities:
     Distributions to Mescalero Apache Tribe        $        -    $ 1,193,833      $        -     $  1,193,833
                                                    ============   ============    ============   ============
     Contribution from Mescalero Apache Tribe       $        -    $ 7,820,274      $              $  7,820,274
                                                    ============   ============    ============   ============

F-31

EXECUTIVE EMPLOYMENT AGREEMENT

This Employment Agreement ("Agreement"), including the attached Exhibit "A," is entered into between the Mescalero Apache Tribe, a federally-recognized Indian tribe, having offices at 101 Central Avenue, Mescalero, New Mexico 88340 ("Employer"), and Brian D. Parrish, an individual currently residing at 2712 Willow Basket Lane, Las Vegas, Nevada 89135 ("Employee"), to be effective as of December 12, 2002 (the "Effective Date").

WTTNESSETH

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 under Section 3.2
(ii) and said termination shall constitute an Involuntary Termination for purposes of Section 3.5. 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' 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

1

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 President any facts that might involve such a conflict of interest that has not been approved by Employer's President. 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 President 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.

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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. 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 Mescalero Apache Tribal Council, 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:

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(i) For "cause" upon the determination by the Employer's President 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 President for determination. If Employee disagrees with the decision reached by Employer's President, the dispute will be limited to whether Employer's President reached the decision in good faith;

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

(iii) upon Employee's death; or

(iv) upon Employee's becoming disabled so as 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 by Employer prior to the expiration of the Term shall constitute a "Termination for Cause" if made pursuant to Section
3.1 (i); the effect of such termination is specified in Section 3.4. The termination of Employee's employment by Employer prior to the expiration of the Term shall constitute an "Involuntary Termination" if made pursuant to Section
3.1 (ii); the effect of such termination is specified in Section 3.5. The effect of the employment relationship being terminated pursuant to Section 3.1 (iii) as a result of Employee's death is specified in Section 3.6. The effect of the employment relationship being terminated pursuant to Section 3.1 (iv) as a result of the Employee becoming incapacitated is specified in Section 3.7.

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 for any of the following reasons:

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(i) a material breach by Employer of any material provision of this Agreement which remains unconnected for thirty (30) days following written notice of such breach by Employee to Employer; or

(ii) for any other reason whatsoever, in the sole discretion of Employee.

The termination of Employee's employment by Employee prior to the expiration of the Term shall constitute an "Involuntary Termination" if made pursuant to
Section 3.2 (i); the effect of such termination is specified in Section 3.5. The termination of Employee's employment by Employee prior to the expiration of the Term shall constitute a "Voluntary Termination" if made pursuant to Section 3.2
(ii); the effect of such termination is specified in Section 3.3.

3.3 Upon a "Voluntary Termination" of the employment relationship by Employee prior to expiration of the Term, all future compensation to which Employee is entitled and all future benefits for which Employee is eligible shall cease and terminate as of the date of termination. Employee shall be entitled to pro rata salary through the date of such termination, but Employee shall not be entitled to any individual bonuses or individual incentive compensation not yet paid at the date of such termination.

3.4 If Employee's employment hereunder shall be terminated by Employer for Cause as defined in paragraph 3.1 prior to expiration of the Term, all future compensation to which Employee is entitled and all future benefits for which Employee is eligible shall cease and terminate as of the date of termination. Employee shall be entitled to pro rata salary through the date of such termination, but Employee shall not be entitled to any individual bonuses or individual incentive compensation not yet paid at the date of such termination.

3.5 Upon an Involuntary Termination of the employment relationship by either Employer or Employee prior to the expiration of the Term, Employee shall be entitled, in consideration of Employee's continuing obligations hereunder after such termination (including, without limitation, Employee's non-competition obligations), to receive the then current Monthly Base Salary, benefits and allowance continuation as set forth in Exhibit "A" for a period of six months or until employee has secured employment with another employer. Employee shall not be under any duty or obligation to seek or accept other employment following Involuntary Termination and the amounts due Employee hereunder shall not be reduced or suspended if Employee accepts subsequent employment. Employee's rights under this
Section 3.5 are Employee's sole and exclusive rights against Employer, its Enterprises or their entities of the Employer, and Employer's sole and exclusive liability to Employee under this Agreement, in contract, tort, or otherwise, for any Involuntary Termination of the employment relationship. Employee covenants not to sue or lodge any claim, demand or cause of action against Employer for any sums for Involuntary Termination other than those sums specified in this Section 3.5. If Employee breaches this covenant, Employer shall be entitled to recover from Employee all sums expended by Employer (including costs and attorneys fees) in connection with such suit, claim, demand or cause of action.

3.6 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, but Employee's heirs, administrators, or legatees shall not

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be entitled to any individual bonuses or individual incentive compensation not yet paid to Employee at the date of such termination.

3.7 Upon termination of the employment relationship as a result of Employee's incapacity, Employee shall be entitled to his or her pro rata salary through the date of such termination, but Employee shall not be entitled to any individual bonuses or individual incentive compensation not yet paid to Employee at the date of such termination.

3.8 Notwithstanding any provision herein to the contrary, upon a termination of Employee's employment under any of the circumstances described in Sections 3.5, 3.6 or 3.7 above, Employee shall be entitled to receive a pro-rata annual bonus payment through the date of such termination of employment.

3.9 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.

3.10 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 and 7.

3.11 This Agreement governs the rights and obligations of Employer and Employee with respect to Employee's salary, bonuses, 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 a month-to-month relationship terminable at any time by either Employer or Employee for any reason whatsoever, with or without cause. Upon such termination of the employment relationship by either Employer or Employee for any reason whatsoever, all future compensation to which Employee is entitled and all future benefits for which Employee is eligible shall cease and terminate. Employee shall be entitled to pro rata salary through the date of such termination, but Employee shall not be entitled to any individual bonuses or individual incentive compensation not yet paid at the date of such termination.

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

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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 or her employment by Employer, make any unauthorized disclosure of any confidential business information or

7

trade secrets of Employer, its Enterprises 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 venturers, and the like, of Employer, its Enterprises 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 or her employment; or, if the work is not prepared by Employee within the scope of his or her 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 or her 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.

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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

[PAGE 10 MISSING]

ARTICLE 8: MISCELLANEOUS:

8.1 For purposes of this Agreement the terms "Enterprise" or "entities" means an entity who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Mescalero Apache Tribe.

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 Mescalero Apache Tribal entities 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:
Mescalero Apache Tribe                      and   Quinlan, Bloom & Doughty
101 Central Avenue                                First National Bank Center
Mescalero, New Mexico 88340                       Alamogordo, New Mexico 88310
Attention: Office of the Tribal President         Attention: Gregory Quinlan

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.

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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, Otero 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

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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 President.

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

MESCALERO APACHE TRIBE                            BRIAN D. PARRISH



--------------------------------                  -----------------------------
By: Sara Misque, President                        By: Brian D. Parrish

This ____ day of December 2002

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                                   EXHIBIT "A"
                                 EXHIBIT "A" TO
                         EXECUTIVE EMPLOYMENT AGREEMENT
                                   BETWEEN THE
                             MESCALERO APACHE TRIBE
                              AND BRIAN D. PARRISH

EMPLOYEE NAME:                        Brian D. Parrish

TERM:                                 Effective December 12, 2002 through April 30,2008

POSITION:                             Director of Marketing

LOCATION:                             Mescalero, New Mexico

REPORTING RELATIONSHIP:               As designated by Tribal President

MONTHLY BASE SALARY:                  Fourteen thousand five hundred eighty three and 34/100
                                      Dollars ($14,583.34)

BONUS:                                An incentive salary equal to one-quarter of one percent
                                      (.25%) of the adjusted net profits (hereinafter defined)
                                      of the Employer's Resort operations, herein defined as
                                      the Inn of the Mountain Gods Resort and Casino, Casino
                                      Apache Travel Center and Ski Apache Enterprises,
                                      beginning with the Employer's year end for Fiscal year
                                      2003 and each fiscal year thereafter during the term of
                                      this Agreement. "Adjusted net profit" shall be the net
                                      income of the Employer's Resort operations prior to any
                                      distributions to the Mescalero Apache Tribe or any
                                      Enterprise or other entity of the Mescalero Apache Tribe;
                                      after any reserve or payment of any revenue sharing,
                                      regulatory fees or other reserve or payments to the State
                                      of New Mexico; and after any reserve for capital
                                      improvements, determined in accordance with generally
                                      accepted accounting practices by the Employer's
                                      independent accounting firm and adjusted to exclude:

                                              (i) any incentive salary payments
                                      paid pursuant to this Agreement;

                                              (ii) any extraordinary gains or
                                      losses (including, but not limited to,
                                      gains or losses on disposition of assets);

                                              (iii) any refund or deficiency of
                                      any regulatory or related fees paid in a
                                      prior year; and

                                              (iv) any provision for regulatory
                                      or related fees


                                   EXHIBIT "A'

                                      made in prior years which
                                      is subsequently determined to be
                                      unnecessary.

                                              The determination of the adjusted
                                      net profits made by the independent
                                      accounting firm employed by the Employer
                                      shall be final and binding upon Employee
                                      and Employer.

                                              The incentive salary payment shall
                                      be made within thirty (30) days after the
                                      Employer's independent accounting firm has
                                      concluded its audit. If the final audit is
                                      not prepared within ninety (90) days after
                                      the end of the fiscal year, then Employer
                                      shall make a preliminary payment equal to
                                      fifty percent (50%) of the amount due
                                      based upon the adjusted net profits
                                      preliminarily determined by the
                                      independent accounting firm, subject to
                                      payment of the balance, if any, promptly
                                      following completion of the audit by the
                                      Employer's independent accounting firm.
                                      The maximum incentive salary payable for
                                      any one year shall not exceed fifty
                                      percent (50%) of the then applicable base
                                      salary of Employee.

                                      Employer and Employee agree to negotiate
                                      Employee's bonus opportunity for each
                                      subsequent fiscal year no later than
                                      September 1st of each applicable fiscal
                                      year.

HOUSING ALLOWANCE:                    Employer will provide to Employee a monthly housing
                                      allowance of two thousand and 00/100 dollars ($2,000) per
                                      month.

EMPLOYEE BENEFITS:                    Employee, spouse and eligible dependents will be eligible
                                      for immediate coverage or medical, dental and vision
                                      benefits to the extent permitted by the Plan Document.



------------------------------          --------------------------------------
By: Sara Misquez, President                       By: Brian D. Parris

This day of December 2002


PROPOSED TRIBAL-STATE CLASS HI GAMING COMPACT
2001 LEGISLATURE

INDIAN GAMING COMPACT

INTRODUCTION

The State of New Mexico ("State") is a sovereign State of the United States of America, having been admitted to the Union pursuant to the Act of June 20,1910, 36 Statutes at Large 557, Chapter 310, and is authorized by its constitution to enter into contracts and agreements, including this Compact, with the Tribe;

The Tribe ____________ ("Tribe") is a sovereign federally recognized Indian tribe and its governing body has authorized the officials of the Tribe to enter into contracts and agreements of every description, including this Compact, with the State;

The Congress of the United States has enacted the Indian Gaming Regulatory Act of 1988,25 U.S.C. ss. ss. 2701-2721 (hereinafter "IGRA"), which permits Indian tribes to conduct Class m Gaming on Indian Lands pursuant to a tribal-state compact entered into for that purpose;

The 1999 State legislature has enacted SB 737, as 1999 N.M. Laws, ch. 252, known as the "Compact Negotiation Act," creating a process whereby the State and the Tribe have engaged in negotiations leading to this Compact, with review by a joint legislative committee, and with final approval by a majority vote in each house of the legislature;

The Tribe owns or controls Indian Lands and by Ordinance has adopted rules and regulations governing Class III games played and related activities at any Gaming Facility; The State and the Tribe, in recognition of the sovereign rights of each party and in a spirit of cooperation to promote the best interests of the citizens of the State and the members of the Tribe, have engaged in good faith negotiations recognizing and respecting the interests of each party and have agreed to this Compact.

NOW, THEREFORE, the State and the Tribe agree as follows:

TERMS AND CONDITIONS SECTION

SECTION 1. PURPOSE AND OBJECTIVES.

The purpose and objectives of the State and the Tribe in making this Compact are as follows:

A. To evidence the good will and cooperative spirit between the State and the Tribe;

B. To continue the development of an effective government-to-government relationship between the State and the Tribe;

C. To provide for the regulation of Class 111 Gaming on Indian Lands as required by the IGRA;

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D. To fulfill the purpose and intent of the IGRA by providing for tribal gaming as a means of generating tribal revenues, thereby promoting tribal economic development, tribal self-sufficiency, and strong tribal government;

E. To provide revenues to fund tribal government operations or programs, to provide for the general welfare of the tribal members and for other purposes allowed under the IGRA;

F. To provide for the effective regulation of Class III Gaming in which the Tribe shall have the sole proprietary interest and be the primary beneficiary; and

G. To address the State's interest in the establishment, by the Tribe, of rules and procedures for ensuring that Class III Gaming is conducted fairly and honestly by the owners, operators, employees and patrons of any Class III Gaming enterprise on Indian Lands.

H. To settle and resolve certain disputes that have arisen between the Tribe and the State under the provisions of the Predecessor Agreements.

SECTION 2. Definitions.

For purposes of this Compact, the following definitions pertain:

A. "Class III Gaming" means all forms of gaming as defined in 25 U.S.C. ss. 2703(8), and 25 C.F.R. ss. 502.4.

B. "Compact" means this compact between the State and the Tribe.

C. "Gaming Employee" means a person connected directly with the conduct of Class III Gaming, or handling the proceeds thereof or handling any Gaming Machine; but "Gaming Employee" does not include:

1. Bartenders, cocktail servers or other persons engaged solely in preparing or serving food or beverages;

2. Secretarial or janitorial personnel;

3. Stage, sound and light technicians; or

4. Other nongaming personnel.

D. "Gaming Enterprise" means the tribal entity created and designated by the Tribe as having authority to conduct Class m Gaming pursuant to this Compact.

E. "Gaming Facility" means the buildings or structures in which Class III Gaming is conducted on Indian Lands.

F. "Gaming Machine" means a mechanical, electromechanical or electronic contrivance or machine that, upon insertion of a coin, token or similar object, or upon payment of any consideration, is available to play or operate a game, whether the payoff is made automatically from the Gaming Machine or in any other manner.

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G. "Indian Lands" means:

1. all lands within the exterior boundaries of the Tribe's reservation and its confirmed grants from prior sovereigns; or

2. any other lands title to which is either held in trust by the United States for the exclusive benefit of the Tribe or a member thereof or is held by the Tribe or a member thereof subject to restrictions against alienation imposed by the United States, and over which the Tribe exercises jurisdiction and governmental authority, but not including any land within the boundaries of a municipality that is outside of the boundaries of the Tribe's reservation or confirmed Spanish grant, as those boundaries existed on October 17,1988-

H. "Key Employee" means that term as defined in 25 CFR Section 502.14.

I. "Management Contract" means a contract within the meaning of 25 U.S.C. ss.ss. 2710(d)(9) and 2711.

J. "Management Contractor" means any person or entity that has entered into a Management Contract with the Tribe.

K. "Ordinance" means the gaming ordinance and any amendments thereto adopted by the Tribal Council of the Tribe.

L. "Predecessor Agreements" means the tribal-state class III gaming compact and the accompanying revenue sharing agreement entered into between the Tribe and the State pursuant to 1997 Laws, ch. 190, ss.ss. 1,2.

M. "Primary Management Official" means that term as defined in 25 CFR
Section 502.19.

N. "State" means the State of New Mexico.

O. "State Gaining Representative" means that person designated by the gaming control board pursuant to the Gaming Control Act [60-2E-1 to 60-2E-60 NMSA 1978] who will be responsible for actions of the State set out in the Compact. The State Legislature may enact legislation to establish an agency of the State to perform the duties of the State Gaming Representative.

P. "Tribal Gaming Agency" means the tribal governmental agency which will be identified to the State Gaming Representative as the agency responsible for actions of the Tribe set out in the Compact. It will be the single contact with the State and may be relied upon as such by the State.

Q. "Tribe" means any Indian Tribe, Nation or Pueblo located within the State of New Mexico entering into this Compact as provided for herein.

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SECTION 3. Authorized Class III Gaming.

The Tribe may conduct, only on Indian Lands, subject to all of the terms and conditions of this Compact, any or all forms of Class III Gaming. `

Subject to the foregoing, the Tribe shall establish, in its discretion, by tribal law, such limitations as it deems appropriate on the number and type of Class HI Gaming conducted, the location of Class III Gaming on Indian Lands, the hours and days of operation, and betting and pot limits, applicable to such gaming.

SECTION 4. Conduct of Class in Gaming.

A. Tribal Gaming Agency. The Tribal Gaming Agency will assure that the Tribe will:

1. operate all Class III Gaming pursuant to this Compact, tribal law, the IGRA and other applicable Federal law;

2. provide for the physical safety of patrons in any Gaming Facility;

3. provide for the physical safety of personnel employed by the Gaming Enterprise;

4. provide for the physical safeguarding of assets transported to and from the Gaming Facility and cashier's cage department;

5. provide for the protection of the property of the patrons and the Gaming Enterprise from illegal activity;

6. participate in licensing of primary management officials and key employees of a Class m Gaming Enterprise;

7. detain persons who may be involved in illegal acts for the purpose of notifying law enforcement authorities; and

8. record and investigate any and all unusual occurrences related to Class III Gaming within the Gaming Facility.

B. Regulations- Without affecting the generality of the foregoing, the Tribe shall adopt laws:

1. prohibiting participation in any Class III Gaming by any person under the age of twenty-one (21);

2. prohibiting the employment of any person as a Gaming Employee who is under the age of twenty-one (21) or who has not been licensed in accordance with the applicable requirements of federal and tribal law;

3. requiring the Tribe to take all necessary action to impose on its gaming operation standards and requirements equivalent to or more stringent than those contained in the

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federal Fair Labor Standards Act of 1938, the federal Occupational Safety and Health Act of 1970, and any other federal laws generally applicable to Indian tribes relating to wages, hours of work and conditions of work, and the regulations issued thereunder;

4. requiring that on any construction project involving any Gaming Facility or related structure that is funded in whole or in part by federal funds, all workers will be paid wages meeting or exceeding the standards established for New Mexico under the federal Davis-Bacon Act;

5. prohibiting the Tribe, the Gaming Enterprise and a Management Contractor from discriminating in the employment of persons to work for the gaming Enterprise or in the Gaming Facility on the grounds of race, color, national origin, gender, sexual orientation, age or handicap, provided, however, that nothing herein shall be interpreted to prevent the Tribe from granting preference in employment actions to tribal members or other Indians in accordance with established tribal laws and policies;

6. providing to all employees of a gaming establishment employment benefits, including, at a minimum, sick leave, life insurance, paid annual leave and medical and dental insurance as well as providing unemployment insurance and workers' compensation insurance through participation in programs offering benefits at least as favorable as those provided by comparable state programs;

7. providing a grievance process for an employee in cases of disciplinary or punitive action taken against an employee that includes a process for appeals to persons of greater authority than the immediate supervisor of the employee;

8. permitting State Department of Environment inspectors to inspect Gaming Facilities' food service operations during normal Gaming Facility business hours to assure that standards and requirements equivalent to the State's Food Service Sanitation Act [Chapter 25, Article 1 NMSA 1978] are maintained;

9. prohibiting a gaming enterprise from cashing any paycheck or any type of government assistance check, including Social Security, TANF, pension and other similar checks, for any patron;

10. prohibiting a gaming enterprise from extending credit by accepting IOUs or markers from its patrons;

11. requiring that the Gaming Enterprise post on each Gaming Machine the odds of a player achieving a winning outcome from the games available on that Gaming Machine;

12. requiring that automatic teller machines on Gaming Facility premises be programmed so that the machines will not accept cards issued by the State to TANF recipients for access to TANF benefits;

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13. providing that each electronic or electromechanical gaming device in use at the Gaming Facility must pay out a mathematically demonstrable percentage of all amounts wagered, which must not be less than eighty percent (80%);

14. providing that all gaming machines on the premises of the Gaming Facility will be connected to a central computerized reporting and auditing system on the Gaming Facility premises, which shall collect on a continual basis the activity of each Gaming Machine in use at the Gaming Facility, and that by no later than ninety days after this Compact takes effect, the wager and payout data of each machine, once it is fed into the Gaming Enterprise's central computer, may be accessed electronically by the State Gaming Representative by a dedicated telecommunications connection, on a "read-only" basis, upon entry of appropriate security codes; but provided that in no event shall the State Gaming Representative be able to alter or affect the operation of any Gaming Machine or other device on the premises of the Gaming Facility, or the data provided to the central computer, and provided further that the system for electronic access to the machine wager and payout data collected by the Gaming Enterprise's central computer shall be constructed and installed at the State's cost, and shall be designed in conjunction with Gaming Enterprise technical staff so as to preserve the integrity of the system and the data contained therein, to minimize any possibility of unauthorized access to the system or tampering with the data, and to minimize any access by the State Gaming Representative to information other than machine wager and payout data residing in the central reporting and auditing system;

15. enacting provisions that:

(a) prohibit an employee of the Gaming Enterprise from selling, serving, giving or delivering an alcoholic beverage to an intoxicated person or from procuring or aiding in the procurement of any alcoholic beverage for an intoxicated person at the Gaming Facility;

(b) require Gaming Enterprise employees that dispense, sell, serve or deliver alcoholic beverages to attend Alcohol Server Education Classes similar to those classes provided for in the New Mexico Liquor Control Act; and

(c) require the Gaming Enterprise to purchase and maintain a liquor liability insurance policy that will provide, at a minimum, personal injury coverage of one million dollars (51,000,000) per incident and two million dollars ($2,000,000) aggregate per policy year;

16. prohibiting alcoholic beverages from being sold, served, delivered or consumed in that part of a Gaming Facility where gaming is allowed;

17. requiring the gaming enterprise to spend an amount that is no less than one-quarter of one percent (.25%) of its net win as that term is defined herein annually to fund or support programs for the treatment and assistance of compulsive gamblers in New Mexico or who patronize New Mexico gaming facilities, and for the prevention of compulsive gambling in New Mexico; and requiring that a substantial portion of such funds be distributed to an organization that has expertise in and provides counseling, intervention or other services for

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compulsive gamblers in New Mexico, and whose services are available to all persons without regard to race or tribal membership;

18. governing any Management Contract regarding its Class III Gaming activity so that it conforms to the requirements of tribal law and the IGRA and the regulations issued thereunder;

19. prohibiting the operation of any Class III Gaming for at least four (4) consecutive hours daily, Mondays through Thursdays (except federal holidays);

20. prohibiting a Tribal Gaming Enterprise and the Tribe from providing, allowing, contracting to provide or arranging to provide alcoholic beverages for no charge or at reduced prices, or from providing, allowing, contracting to provide or arranging to provide food or lodging for no charge or at nominal prices, at a Gaming Facility or lodging facility as an incentive or enticement for patrons to game; and

21. requiring the Tribe, the Tribal Gaming Enterprise or a Management Contractor to report to the secretary of state, in the same manner and at the same times as are required of political committees under the provisions of the State's Campaign Reporting Act (NMSA 1978 ss.ss. 1-19-25 through 1-19-36) any and all contributions, whether directly or through an agent, representative or employee, of any moneys derived from revenue from the Gaming Enterprise, or of anything of value acquired with that revenue, to a candidate, political committee or person holding an office elected or to be elected at an election covered by the State's Campaign Reporting Act and provided that in the event any report required to be made hereunder is not made within the time specified herein, or is false or incomplete in any respect, the Tribe shall be liable to pay to the secretary of state a penalty in the amount of fifty dollars ($50.00) for each working day after the day on which the report was due until the day on which the complete or true report is filed, up to a maximum of five thousand dollars ($5000), except that with respect to the report due on the Friday before an election the penalty shall be five hundred dollars ($500) for the first working day after the due date and fifty dollars ($50.00) per working day thereafter, up to a maximum of five thousand dollars ($5000).

The Tribal Gaming Agency will provide true copies of all tribal laws and regulations affecting Class HI Gaming conducted under the provisions of this Compact to the State Gaming Representative within thirty (30) days after the effective date of this Compact, and will provide true copies of any amendments thereto or additional laws or regulations affecting gaming within thirty (30) days after their enactment or approval, if any.

C. Audit and Financial Statements. The Tribal Gaming Agency shall require all books and records relating to Class III Gaming to be maintained in accordance with generally accepted accounting principles. All such books and records shall be retained for a period of at least five (5) years from the date of creation, as required by 25 C.F.R. ss. 571.7(c). Not less than annually, the Tribal Gaming Agency shall require an audit and a certified financial statement covering all financial activities of the gaming enterprise by an independent certified public accountant licensed by the State. The financial statement shall be prepared in accordance with generally accepted accounting principles and shall be submitted to the Tribal Gaming Agency within one hundred twenty (120) days of the close of die Tribe's fiscal year. Copies of the

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financial statement and the audit shall be furnished to the State Gaming Representative and the state treasurer by the Tribal Gaming Agency within one hundred twenty days of the agency's receipt of the documents, but such documents shall be subject to the provisions of ss. 4(E)(3) of this Compact. The Tribe will maintain the following records for not less than five (5) years:

1. revenues, expenses, assets, liabilities and equity for each Gaming Enterprise;

2. daily cash transactions for each Class m Gaming activity at each Gaming Facility, including but not limited to transactions relating to each gaming table bank, game dropbox and gaming room bank;

3. all markers, IOUs, returned checks, hold checks or other similar credit instruments;

4. individual and statistical game records, except for card games, to reflect statistical drop and statistical win; for electronic, computer, or other technologically assisted games, analytic reports which show the total amount of cash wagered and the total amount of prizes won;

5. contracts, correspondence and other transaction documents relating to all vendors and contractors;

6. records of all tribal gaming enforcement activities;

7. audits prepared by or on behalf of the Tribe; and

8. personnel information on all Class III Gaming employees or agents, including rotation sheets, hours worked, employee profiles and background checks.

D. Violations. The agents of the Tribal Gaming Agency shall have unrestricted access to the Gaming Facility during all hours of Class III Gaming activity, and shall have immediate and unrestricted access to any and all areas of the Gaming Facility for the purpose of ensuring compliance with the provisions of this Compact and the Ordinance. The agents shall report immediately to the Tribal Gaming Agency any suspected violation of this Compact, the Ordinance, or regulations of the Tribal Gaming Agency by the gaming enterprise, Management Contractor, or any person, whether or not associated with Class til Gaming.

E. State Gaming Representative.

1. Upon written request by the State to the Tribe, the Tribe will provide information on primary management officials, key employees and suppliers, sufficient to allow the State to conduct its own background investigations, as it may deem necessary, so that it may make an independent determination as to the suitability of such individuals, consistent with the standards set forth in Section 5 of this Compact. The Tribe shall consider any information or recomm0endations provided to it by the State as to any such person or entity, but the Tribe shall have the final say with respect to the hiring or licensing of any such person or entity.

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2. Notwithstanding that the Tribe has the primary responsibility to administer and enforce the regulatory requirements of this Compact, the Tribal Gaming Agency will certify annually to the State Gaming Representative that the Tribal Gaming Agency has met its obligations under this Compact. Additionally, the State Gaming Representative shall have the right to inspect a Gaming Facility, Class III Gaming activity, and all records relating to Class III Gaming of the Tribe, subject to the following conditions:

(a) with respect to public areas of a Gaming Facility, at any time without prior notice during normal Gaming Facility business hours;

(b) with respect to private areas of a Gaming Facility not accessible to the public, at any time during normal Gaming Enterprise business hours, immediately after notifying the Tribal Gaming Agency and Gaming Enterprise of his or her presence on the premises and presenting proper identification, and requesting access to the non-public areas of the Gaming Facility. The Tribe, in its sole discretion, may require an employee of the Gaming Enterprise or the Tribal Gaming Agency to accompany the State Gaming Representative at all times that the State Gaming Representative is on the premises of a Gaming Facility, but if the Tribe imposes such a requirement, the Tribe shall require such an employee of the Gaming Enterprise or the Tribal Gaming Agency to be available at all times for such purpose;

(c) with respect to inspection and copying of all management records relating to Class III Gaming, at any time without prior notice between the hours of 9:00 a.m. and 4:00 p.m. Monday through Friday, excluding official holidays. The reasonable costs of copying will be borne by the State; and

(d) whenever the State Gaming Representative, or his designee, enters the premises of the Gaming Facility for any such inspection, such Representative, or designee, shall identify himself to security or supervisory personnel of the Gaming Enterprise.

The State Gaming Representative may contract with private persons, firms or other entities for the purpose of performing certain of his functions, but the State Gaming Representative will be the single contact with the Tribe and may be relied upon as such by the Tribe.

3.

(a) Any information, documents or communications provided to the State Gaming Representative, his agents or contractors, or to any other official, agency or entity of the State (all of which are collectively hereinafter referred to as "the State entities") by the Tribe, the Tribal Gaming Agency or the Gaming Enterprise, or prepared from information obtained from the Tribe, the Tribal Gaming Agency or the Gaming Enterprise, under the provisions of this Compact or under the provisions of the Predecessor Agreements, are confidential. Any State entity that has received any information, documents or communications from the Tribe, the Tribal Gaming Agency or the Gaming Enterprise: i) may release or disclose the same only with the prior written consent of the Tribe or pursuant to a lawful court order after timely notice of the proceeding has been given to the Tribe; ii) shall maintain all such information, documents and communications in a secure place accessible only to authorized officials and employees of the State entity that has received the same; and iii) shall adopt

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procedures and regulations to protect the confidentiality of the information, documents and communications provided by the Tribe, Tribal Gaming Agency or Gaming Enterprise.

(b) These prohibitions shall not be construed to prohibit:

i) the furnishing of any information to a law enforcement or regulatory agency of the Federal Government;

ii) the State from making known the names of persons, firms, or corporations conducting Class III Gaming pursuant to the terms of this Compact, locations at which such activities arc conducted, or the dates on which such activities are conducted;

iii) publishing the terms of this Compact;

iv) disclosing information as necessary to audit, investigate, prosecute or arbitrate violations of this Compact or other applicable laws or to defend suits against the State; and

v) complying with subpoenas or court orders issued by courts of competent jurisdiction.

(c) Notwithstanding the foregoing, the Tribe agrees that:

i) the following documents and information may be released by a State entity to the public: the Tribe's gaming ordinance and regulations of the Tribal Gaming Agency; official rulings of the Tribal Gaming Agency in matters not subject to a confidentiality order imposed by the Agency; other information and documents of the Tribal Gaming Agency or the Gaming Enterprise ordinarily available to the public; quarterly Met Win figures used as the basis for computation of the Tribe's revenue sharing payment under the provisions of Section 11 of this Compact; and correspondence between the Tribe or a tribal entity and a State entity, unless such correspondence is specifically labeled "Confidential;"

ii) a State entity may release to the public aggregate figures compiled by totaling comparable figures from the annual financial statements of all of the New Mexico gaming tribes; and

iii) the report of the annual audit of the Gaming Enterprise that is provided by the Tribe to the State Gaming Representative shall be available to the public to the same extent that similar information that is required to be provided to the State by non-Indian gaming entities is available to the public, pursuant to the provisions of applicable law and the policies and regulations of the Gaming Control Board, at the time the request for the report of the annual audit is made.

4. To the fullest extent allowed by State law, the Tribe shall have the right to inspect State records concerning all Class HI Gaming conducted by the Tribe; the Tribe shall have the right to copy such State records, with the Tribe bearing the reasonable cost of copying.

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5. The Tribe shall reimburse the State for the costs the State incurs in carrying out any functions authorized by the terms of this Compact. The Tribe and the State agree that to require the State to keep track of and account to the Tribe for all such costs would be unreasonably burdensome, and that a fair estimate of the State's costs of such activity as of the date on which this Compact takes effect is one hundred thousand dollars ($100,000) per year, and that those costs will increase over time. The Tribe therefore agrees to pay the State the sum of one hundred thousand dollars ($100,000) per year as reimbursement of the State's costs of regulation, which amount shall increase by three percent (3%) each year, beginning as of January 1 of the first calendar year after this Compact has been in effect for at least twelve (12) months, in quarterly payments of one-fourth of the annual amount due each, in advance, beginning with the first day of the first full calendar quarter after this Compact takes effect, and on the first day of each quarter thereafter, for as long as this Compact remains in effect. The Tribe and the State further agree that such amount fairly reflects the State's costs of regulation during the period of time that the Predecessor Agreements were in effect, and that the Tribe should pay the State that amount for such period, but no more. The Tribe therefore agrees that with its first quarterly payment due to the State under the provisions of this Paragraph, it will also pay to the State an amount equal to the number of full calendar quarters that the Predecessor Agreements were in effect, times twenty-five thousand dollars (525,000). less the total amount that the Tribe actually paid to the State during such period under the provisions of Section 4{E)(5) of the compact portion of the Predecessor Agreements. If the amount thus determined is a negative number, such amount shall be credited against the payments due to the State under the provisions of this Paragraph until the Tribe has recouped such amount in full, but in such case the Tribe shall nevertheless provide to the State, on or before the due date for each quarterly payment, a statement of the amount of the overpayment still to be recouped, and the amount credited for the current payment.

6. In the event the State believes that the Tribe is not administering and enforcing the regulatory requirements set forth herein, it may invoke the procedures set forth in Section 7 of this Compact.

F. The Tribe shall comply with all applicable provisions of the Bank Secrecy Act, P.L. 91-508, October 26, 1970, 31 U.S.C. ss.ss. 5311-5314, and all reporting requirements of the Internal Revenue Service.

SECTION 5. Licensing Requirements.

A. License Required. The Gaming Facility operator! but not including the Tribe, including its principals, primary management officials, and key employees, the Management Contractor and its principals, primary management officials, and key employees (if the Tribe hires a Management Contractor); any person, corporation, or other entity that has supplied or proposes to supply any gaming device to the Tribe or the Management Contractor; and any person, corporation or other entity providing gaming services within or without a Gaming Facility, shall apply for and receive a license from the Tribal Gaming Agency before participating in any way in the operation or conduct of any Class III Gaming on Indian Lands. The Tribal Gaming Agency shall comply fully with the requirements of this Section and of the Indian Gaming Regulatory Act, especially at 25 U.S.C. ss.ss. 2710-2711, and the regulations issued thereunder at 25 C.F.R. Parts 550-559, as well as the requirements of the Tribe's gaming

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ordinance and any regulations issued thereunder, in processing license applications and issuing licenses.

B. License Application. Each applicant for a license shall file with the Tribal Gaming Agency a written application in the form prescribed by the Tribal Gaming Agency, along with the applicant's fingerprint card, current photograph and the fee required by the Tribal Gaming Agency.

C. Background Investigations. Upon receipt of a completed application and required fee for licensing, the Tribal Gaming Agency shall conduct or cause to be conducted a background investigation to ensure that the applicant is qualified for licensing.

D. Provision of Information to State Gaming Representative. Whenever the Tribal Gaming Agency is required by federal or tribal law or regulations to provide to the National Indian Gaming Commission ("the Commission") any information, document or notice relating to the licensing of any key employee or primary management official of the Gaming Enterprise, a copy of such information, document or notice shall also be provided to the State Gaming Representative. The State Gaming Representative shall be entitled to the same right to request additional information concerning an applicant licensee, to comment on the proposed licensing of any applicant licensee, and to supply the Tribal Gaming Agency with additional information concerning any applicant licensee, as is enjoyed by the Commission.

SECTION 6. Providers of Class HI Gaming Equipment or Devices or Supplies.

A. Within thirty (30) days after the effective date of this Compact, if it has not already done so, the Tribal Gaming Agency will adopt standards for any and all Class III Gaming equipment, devices or supplies to be used in any Gaming Facility, which standards shall be at least as strict as the comparable standards applicable to Class III Gaming equipment, devices or supplies within the State of Nevada. Any and all Class III Gaming equipment, devices or supplies used by the Tribe shall meet or exceed the standards thereby adopted.

B. Prior to entering into any future lease or purchase agreement for Class III Gaming equipment, devices or supplies, the Tribe shall obtain sufficient information and identification from the proposed seller or lessor and all persons holding any direct or indirect financial interest in the lessor or the lease/purchase agreement to permit the Tribe to license those persons in accordance with applicable federal and tribal law,

C. The seller, lessor, manufacturer or distributor shall provide, assemble and install all Class III Gaming equipment, devices or supplies in a manner approved and licensed by the Tribe.

SECTION 7. Dispute Resolution.

A. In the event either party believes that the other parry has failed to comply with or has otherwise breached any provision of this Compact, such party may invoke the following procedure:

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1. The party asserting noncompliance shall serve written notice on the other party. The notice shall identify the specific Compact provision believed to have been violated and shall specify the factual and legal basis for the allegation of noncompliance. The notice shall specifically identify the date, time and nature of the alleged noncompliance.

2. In the event an allegation by the complaining party is not resolved to the satisfaction of such party within twenty (20) days after service of the notice set forth in Paragraph A(l) of this section, the complaining party may serve upon the other party a notice to cease conduct of the particular game(s) or activities alleged by the complaining party to be in noncompliance. Upon receipt of such notice, the responding party may elect to stop the game(s) or activities specified in the notice or invoke arbitration and continue the game(s) or activities pending the results of arbitration. The responding parry shall act upon one of the foregoing options within ten (10) days of receipt of notice from the complaining party, unless the parties agree to a longer period, but if the responding party takes neither action within such period the complaining party may invoke arbitration by written notice to the responding parry within ten (10) days of the end of such period.

3. The arbitrators shall be attorneys who are licensed members in good standing of the State Bar of New Mexico or of the bar of another state. The State will select one arbitrator, the Tribe a second arbitrator, and the two so chosen shall select a third arbitrator. If the third arbitrator is not chosen in this manner within ten (10) days after the second arbitrator is selected, the third arbitrator will be chosen by the American Arbitration Association. The arbitrators thereby selected shall permit the parties to engage in reasonable discovery, and shall establish other procedures to ensure a full, fair and expeditious hearing on the matters at issue. The arbitrators shall determine, after hearing from each party, hether the arbitration proceeding or any portions thereof shall be closed to the public, but in the absence of such determination the proceedings shall be open to the public. The arbitrators shall make determinations as to each issue presented by the parties, but the arbitrators shall have no authority to determine any question as to the validity or effectiveness of this Compact or of any provision hereof.

4. All parties shall bear their own costs of arbitration and attorneys' fees.

5. The results of arbitration shall be final and binding, and shall be enforceable by an action for injunctive or mandatory injunctive relief against the State and the Tribe in any court of competent jurisdiction. For purposes of any such action, the State and the Tribe acknowledge that any action or failure to act on the part of any agent or employee of the State or the Tribe, contrary to a decision of the arbitrators in an arbitration proceeding conducted under the provisions of this section, occurring after such decision, shall be wholly unauthorized and ultra vires acts, not protected by the sovereign immunity of the State or the Tribe.

B. Nothing in Subsection 7(A) shall be construed to waive, limit or restrict any remedy that is otherwise available to either party to enforce or resolve disputes concerning the provisions of this Compact. Nothing in this
Section shall be deemed a waiver of the Tribe's sovereign immunity. Nothing in this Section shall be deemed a waiver of the State's sovereign

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SECTION 8. Protection of Visitors.

A. Policy Concerning Protection of Visitors. The safety and protection of visitors to a Gaming Facility is a priority of the Tribe, and it is the purpose of this Section to assure that any such persons who suffer bodily injury or property damage proximately caused by the conduct of the Gaming Enterprise have an effective remedy for obtaining fair and just compensation. To that end, in this Section, and subject to its terms, the Tribe agrees to carry insurance that covers such injury or loss, agrees to a limited waiver of its immunity from suit, and agrees to proceed either in binding arbitration proceedings or in a court of competent jurisdiction, at the visitor's election, with respect to claims for bodily injury or property damage proximately caused by the conduct of the Gaming Enterprise. For purposes of this Section, any such claim may be brought in state district court, including claims arising on tribal land, unless it is finally determined by a state or federal court that IGRA does not permit the shifting of jurisdiction over visitors' personal injury suits to state court,

B. Insurance Coverage for Claims Required. The Gaming Enterprise shall maintain in effect policies of liability insurance insuring the Tribe, its agents and employees against claims, demands or liability for bodily injury and property damages by a visitor arising from an occurrence described in Paragraph A of this Section. The policies shall provide bodily injury and property damage coverage in an amount of at least fifty million dollars ($50,000,000) per occurrence and fifty million dollars ($50,000,000) annual aggregate. The Tribe shall provide the State Gaming Representative annually a certificate of insurance showing that the Tribe, its agents and employees are insured to the required extent and in the circumstances described in this Section.

C. Limitation on Time to Bring Claim. Claims brought pursuant to the provisions of this section must be commenced by filing an action in court or a demand for arbitration within three years of the date the claim accrues.

D. Specific Waiver of Immunity and Choice of Law. The Tribe, by entering into this Compact and agreeing to the provisions of this section, waives its defense of sovereign immunity in connection with any claims for compensatory damages for bodily injury or property damage up to the amount of fifty million dollars ($50,000,000) per occurrence asserted as provided in this section. This is a limited waiver and does not waive the Tribe's immunity from suit for any other purpose. The Tribe shall ensure that a policy of insurance that it acquires to fulfill the requirements of this section shall include a provision under which the insurer agrees not to assert the defense of sovereign immunity on behalf of the insured, up to the limits of liability set forth in this Paragraph. The Tribe agrees that in any claim brought under the provisions of this Section, New Mexico law shall govern the substantive rights of the claimant, and shall be applied, as applicable, by the forum in which the claim is heard, except that the tribal court may but shall not be required to apply New Mexico law to a claim brought by a member of the Tribe.

E. Election by Visitor. A visitor having a claim described in this section may pursue that claim in any court of competent jurisdiction, or in binding arbitration. The visitor shall make a written election that is final and binding upon the visitor.

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F. Arbitration. Arbitration pursuant to an election by a visitor as provided in Subsection E of this section shall be conducted as follows:

1. the visitor shall submit a written demand for arbitration to the Gaming Enterprise, by certified mail, return receipt requested;

2. the visitor and the Gaming Enterprise shall each designate an arbitrator within thirty (30) days of receipt of the demand, and the two arbitrators shall select a third arbitrator, but in the event the two arbitrators cannot agree on the selection of the third arbitrator within thirty (30) days of their appointment, they shall apply to the American Arbitration Association to appoint the third arbitrator;

3. the arbitration panel shall permit the parties to engage in reasonable discovery, and shall establish other procedures to ensure a full, fair and expeditious hearing on the claim; and die award of the arbitration panel shall be final and binding, and may be enforced in a court of competent jurisdiction.

G. Increase in Liability Limits. As of the fifth anniversary of this Compact, and at five-year intervals thereafter, the liability insurance coverage requirements set forth in Paragraph B of this Section, and the limit on the Tribe's waiver of sovereign immunity set forth in Paragraph D of this Section, shall be increased by a percentage equal to the percentage increase in the CPI-U published by the Bureau of Labor Statistics of the United States Department of Labor, for the same period, rounded to the nearest one hundred thousand dollars ($100,000).

H. Public Health and Safety. The Tribe shall establish for its Gaining Facility health, safety and construction standards that are at least as stringent as the current editions of the National Electrical Code, the Uniform Building Code, the Uniform Mechanical Code, the Uniform Fire Code and the Uniform Plumbing Code, and any and all Gaming Facilities or additions thereto constructed by the Tribe hereafter shall be constructed and all facilities shall be maintained so as to comply with such standards. Inspections will be conducted with respect to these standards at least annually. If the State Gaming Representative requests sufficiently in advance of an annual inspection, the State Gaming Representative may be present during such inspection. The Tribe agrees to correct any deficiencies noted in such inspections within a time agreed upon between the State and Tribe. The Tribal Gaming Agency will provide copies of such inspection reports to the State Gaming Representative, if requested to do so in writing.

SECTION 9. Conditions for Execution; Effective Date.

A. The parties acknowledge that they have been engaged in litigation, captioned STATE OF NEW MEXICO V. JICARILLA APACHE TRIBE, ET AL, No. 00-0851 (D.N.M.) (the "Lawsuit"), that was initiated by the State in United States District Court on June 13, 2000, in which the State seeks an injunction against the Tribe's conduct of Class III gaming under the Predecessor Agreements unless the Tribe pays the State the full amount that the State claims it is owed under the revenue sharing provision of the Predecessor Agreements. The Tribe disputes the validity of such provision of the Predecessor Agreements, but the parties have agreed to settle the dispute addressed in the Lawsuit, and have agreed to enter into this new Compact.

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B. This Compact may not be executed by the Governor of the State unless and until it has been executed by the appropriate representative of the Tribe, and until the State Attorney General has certified to the Governor in writing that the Tribe and the State have negotiated a complete settlement of the issues in dispute in the Lawsuit (except that such settlement shall be contingent upon this Compact going into effect under the provisions of IGRA) and that the Tribe has either paid in full the amount agreed to by the terms of the settlement, into die registry of the federal court, or has entered into a binding and fully enforceable agreement for the payment of such amount that is acceptable to the Attorney General. Upon receiving such certification, the Governor shall execute the Compact and forward it to the Secretary of the Interior for approval. Upon the Secretary's affirmative approval of this Compact, as set forth in Paragraph C of this Section, such sum, plus interest, shall be immediately paid into the State General Fund. In the event the Secretary fails to affirmatively approve this Compact, such sum, plus interest, shall be immediately repaid to the Tribe.

C. This Compact shall take effect upon publication of notice in the Federal Register of its approval by the Secretary of the Interior, or of the Secretary's failure to act on it within 45 days from the date on which it was submitted to him; provided, however, that notwithstanding its taking effect, the parties expressly agree that the provisions of this Compact shall remain suspended, and shall confer no rights or obligations on either party, and that the terms and provisions of the Predecessor Agreements shall remain fully in force and effect, subject to the Tribe's and the State's claims in the Lawsuit, unless and until the Secretary shall have affirmatively approved this Compact, pursuant to 25 U S C. ss. 27I0(d)(8)(A).

D. Upon the publication of notice of the Secretary's affirmative approval of this Compact in the Federal Register, the Predecessor Agreements shall be and become null and void, and of no further effect, and any and all actions as between the Tribe and the State arising out of the Predecessor Agreements, including dispute resolution proceedings, shall thereafter be dismissed with prejudice with no relief to either party, and the terms and provisions of this Compact shall go into full force and effect, fully supplanting and replacing the Predecessor Agreements.

SECTION 10. Criminal Jurisdiction.

A. The Tribe and the State acknowledge that under the provisions of ss. 23 of the IGRA, especially that portion codified at 18 U.S.C. ss. 1166(d), jurisdiction to prosecute violations of State gambling laws made applicable by that section to Indian country is vested exclusively within the United States, unless the Tribe and the State agree in a compact entered into pursuant to the IGRA to transfer such jurisdiction to the State.

B. The Tribe and the State hereby agree that, in the event of any violation of any State gambling law on Indian Lands or any other crime against the Gaming Enterprise or any employee thereof or that occurs on the premises of the Tribal Gaming Facility, that is committed by any person who is not a member of the Tribe, the State shall have and may exercise jurisdiction, concurrent with that of the United States, to prosecute such person, under its laws and in its courts.

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C. Immediately upon becoming aware of any such suspected crime by a nonmember of the Tribe the Gaming Enterprise or the Tribal Gaming Agency shall notify the state attorney general and the district attorney for the district in which the Gaming Facility is located, supplying all particulars available to the tribal entity at the time. The Tribe agrees that its law enforcement and gaming agencies shall perform such additional investigation or take such other steps in furtherance of the investigation and prosecution of the violation as the district attorney may reasonably request, and otherwise cooperate fully with the district attorney and any state law enforcement agencies with respect to the matter, but once notice of a suspected violation has been given to the district attorney, the matter shall be deemed to be under the jurisdiction of the State; provided, however, that in the event of emergency circumstances involving a possible violation, the Tribe and its constituent agencies shall have the discretion to act as they see fit, and to call upon such other agencies or entities as they deem reasonable or necessary, in order to protect against any immediate threat to lives or property. The State may, in its discretion, refer the matter to federal authorities, but it shall notify the Tribal Gaming Agency upon doing so.

D. The State agrees that no less frequently than annually it will provide the Tribal Gaming Agency with a written report of the status and disposition of each matter referred to it under the provisions of this section since the last report or that was still pending at the time of the last report. In the event the district attorney to whom a matter is referred under the provisions of this section decides not to prosecute such matter, the district attorney shall promptly notify the Tribal Gaming Agency of such decision in writing. The Tribal Gaming Agency may in that event ask the attorney general of the state to pursue the matter.

E. The district attorney for the district in which the Gaming Facility is situated may decline to accept referrals of cases under the provisions of this section unless and until the Tribe has entered into a Memorandum of Understanding with the office of the district attorney to which Memorandum of Understanding the United States Attorney for the District of New Mexico may also be a party addressing such matters as the specific procedures by which cases are to be referred, participation of the Tribal Gaming Agency and tribal law enforcement personnel in the investigation and prosecution of any such case, payments by the Tribe to the office of the district attorney to defray the costs of handling cases referred under the provisions of this section, and related matters.

SECTION 11. Revenue Sharing.

A. Consideration. The Tribe shall pay to the State a portion of its Class III Gaming revenues identified in and under procedures of this Section, in return for which the State agrees that the Tribe has the exclusive right within the State to conduct all types of Class III Gaming described in this Compact, with the sole exception of the use of Gaming Machines, which the State may permit on a limited basis for racetracks and for veterans1 and fraternal organizations as such organizations are described in 1997 Laws ch. 190, ss.5(FF).

B. Revenue to State. The parties agree that, after the effective date hereof, the Tribe shall make the quarterly payments provided for in Paragraph C of this Section. Each payment shall be made to the State Treasurer for deposit into the General Fund of the State .

C. Calculation of Payment Amounts.

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1. As used in this Compact, "Net Win" means the total amount wagered in Class III Gaming at a Gaming Facility, on all Gaming Machines less :

(a) the amount paid out in prizes, including the cost to the Tribe of noncash prizes, won on Gaming Machines;

(b) the amount paid to the State by the Tribe under the provisions of Section 4(E)(5) of this Compact; and

(c) the sum of two hundred seventy-five thousand dollars ($275,000) per year as an amount representing tribal regulatory costs, which amount shall increase by three percent (3%) each year beginning on the first day of January occurring after the Compact has been in effect for at least twelve months.

(d) The amount payable by the Tribe to the State shall be an amount equal to eight percent (8%) of the Net Win, except that if the total Net Win in a calendar year is less than twelve million dollars ($12,000,000), the amount payable by the Tribe shall be an amount equal to three percent (3%) of the first four million dollars ($4,000,000) of Net Win, and eight percent (8%) of the rest of the Net Win for the year.

(e) Payments due pursuant to these terms shall be paid quarterly, no later than twenty-five (25) days after the last day of each calendar quarter, and shall be based upon the Net Win during the preceding quarter. If the Tribe reasonably believes that the total Net Win for the calendar year will be less than twelve million dollars ($12,000,000), it may base its payment on the first four million dollars ($4,000,000) on the lower rate as set forth in paragraph
(C)(2) of this Section, but if the Net Win exceeds twelve million dollars ($12,000,000) during the calendar year, the Tribe shall pay the additional amount due on the first four million dollars ($4,000,000), plus interest as provided in this paragraph, with its next quarterly payment. In the event the Tribe makes its quarterly payments based on the rate of eight percent (8%), and its Net Win for the calendar year totals less than twelve million dollars ($12,000,000), the Tribe may deduct the overpayment from its payment for the final quarter of the year. Any payment or any portion thereof that is not made within ten (10) days of the due date shall accrue interest at the rate often percent (10%) per annum, from the original due date until paid. The Tribe shall accompany any payment to the State with a detailed breakdown of the particular obligation to which such payment applies, and the basis for the calculation of such payment.

D. Limitations.

1. The Tribe's obligation to make the payments provided for in Paragraphs B and C of this Section shall apply and continue only so long as this Compact remains in effect; and provided that that obligation shall terminate altogether in the event the State:

(a) passes, amends, or repeals any law, or takes any other action, that would directly or indirectly attempt to restrict, or has the effect of restricting, the scope or extent of Indian gaming;

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(b) licenses, permits or otherwise allows any person or entity other than licensed horse racetracks and veterans and fraternal organizations as described in 1997 Laws, ch. 190, ss.5(FF) to operate Gaming Machines;

(c) licenses, permits or otherwise allows any non-Indian person or entity to engage in any other form of Class in gaming other than a state-sponsored lottery, pari-mutuel betting on horse racing and bicycle racing, operation of Gaming Machines, and limited fundraising by non-profit organizations.

2. The parties agree that the State's allowance of the following forms of Class III Gaming, subject to the limitations expressly set forth herein, shall not be considered an expansion of nontribal Class III gaming for purposes of this agreement, and shall have no effect on the Tribe's obligation to make the payments provided for in Paragraphs B and C of this Section:

(a) the operation of a State lottery;

(b) the operation of Gaming Machines by any fraternal or veterans organization as described in 1997 Laws ch. 190, ss. 5(FF) but only for the benefit of such organization's members;

(c) limited fundraising activities conducted by nonprofit tax exempt organizations ;

(d) the conduct by licensed horse racetracks and bicycle tracks of parimutuel betting on races at such tracks, and on simulcast races at other tracks elsewhere in the country; and

(e) the operation by a licensed horse racetrack of Gaming Machines on days on which live or simulcast horse racing occurs.

E. Third-Party Beneficiaries. The provisions of this Section are not intended to create any third-party beneficiaries and are entered into solely for the benefit of the Tribe and the State.

SECTION 12. Duration; Termination for Non-Payment.

A. This Compact shall have a term commencing on the date on which it goes into full force and effect as provided in Section 9, and ending at midnight on June 30, 2015.

B. Notwithstanding the provisions of Paragraph A of this Section, if the Tribe fails to comply with any of its payment obligations to the State under Sections 4(E)(5), 9(B) or 11 of this Compact, and persists in such failure for a period of thirty (30) days after receipt, by certified mail, of a Notice of Noncompliance sent by the State Gaming Representative, which Notice shall specify the amount due and the provision of the Compact under which such payment is required, this Compact, and the conduct of Class III Gaming by the Tribe hereunder, shall terminate automatically as of the end of the thirty (30)-day period, unless within such thirty (30)-day period the Tribe shall have invoked arbitration on a matter of fact as provided in Section 7(A)(2)

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of this Compact, and simultaneously shall have placed into escrow, in an institution that is unaffiliated with either the Tribe or the State, a sum of money equal to the amount claimed due by the State. In the event the Tribe invokes arbitration, this Compact and the Tribe's right to conduct Class III gaming shall terminate automatically at the end of the thirtieth (30th) day after the entry of a final, nonappealable decision by the arbitrators or by a court having jurisdiction of the dispute, unless the Tribe has paid the full amount determined by the arbitrators or by such court to be due the State, if any. The Tribe shall not be entitled to avoid any pre-existing contractual obligations accruing to third parries under this Compact solely by virtue of the termination of the Compact.

SECTION 13. Notice to Parties.

Unless otherwise indicated, all notices, payments, requests, reports, information or demand that any party hereto may desire or may be required to give to the other party hereto, shall be in writing and shall be personally delivered or sent by first-class mail sent to the other party at the address provided in writing by the other parry. Every notice, payment, request, report, information or demand so given shall be deemed effective upon receipt or, if mailed, upon receipt or the expiration of the third day following the day of mailing, whichever occurs first, except that any notice of change of address shall be effective only upon receipt by the party to whom said notice is addressed.

SECTION 14. Entire Agreement.

This Compact is the entire agreement between the parties and supersedes all prior agreements, whether written or oral, with respect to the subject matter hereof. Neither this Compact nor any provision herein may be changed, waived, discharged or terminated orally, but only by an instrument, in writing, signed by the Tribe and the State and approved by the Secretary of the Interior. This Compact shall not be amended without the express approval of the Tribe, the Governor of the State and the State Legislature, as provided in the Compact Negotiation Act.

SECTION 15. Filing of Compact with State Records Center.

Upon the effective date of this Compact, a copy shall be filed by the Governor with the New Mexico Records Center. Any subsequent amendment or modification of this Compact shall be filed with the New Mexico Records Center.

SECTION 16. Counterparts.

This Compact may be executed by the parties in any number of separate counterparts with the same effect as if the signatures were upon the same instrument. All such counterparts shall together constitute one and the same document.

SECTION 17. Severability.

Should any provision of this Compact be found to be invalid or unenforceable by any court, such determination shall have no effect upon the validity or enforceability of any other portion of this Compact, and all such other portions shall continue in mil force and effect, except

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that this provision shall not apply to Sections 4, 5,6, 9 and 11 hereof, or to any portions thereof, which the parties agree are nonseverable.

[SIGNATURE LINES]

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INN OF THE MOUNTAIN GODS RESORT AND CASINO

CODE OF BUSINESS CONDUCT AND ETHICS


TABLE OF CONTENTS

FORWARD................................................................. i

INTRODUCTION.............................................................1

COMPLIANCE WITH LAWS.....................................................3

CONFLICTS OF INTEREST....................................................3
     DOING BUSINESS WITH FAMILY MEMBERS..................................4
     OWNERSHIP IN OTHER BUSINESSES.......................................4
     SERVICE ON BOARDS...................................................5
     OUTSIDE EMPLOYMENT..................................................5
     BUSINESS OPPORTUNITIES..............................................6

GIFTS AND ENTERTAINMENT..................................................6
     ACCEPTING GIFTS AND ENTERTAINMENT...................................6
     GIVING GIFTS AND ENTERTAINING.......................................7

FAIR DEALING.............................................................7

SECURITIES LAWS AND INSIDER TRADING......................................7

RESPONDING TO INQUIRIES FROM THE PRESS AND OTHERS........................9

POLITICAL ACTIVITY.......................................................9

SAFEGUARDING CORPORATE ASSETS............................................9

EMPLOYMENT OPPORTUNITY..................................................10

HEALTH, SAFETY AND THE ENVIRONMENT......................................10

ACCURACY OF COMPANY RECORDS.............................................11

RECORD RETENTION........................................................12

ADMINISTRATION OF THE CODE..............................................13

ASKING FOR HELP AND REPORTING CONCERNS..................................14

NOTE: THIS CODE AND RELATED POLICIES ARE CURRENT AS OF __________, 2004. IN ADOPTING AND PUBLISHING THESE GUIDELINES, YOU SHOULD NOTE THAT (1) IN SOME RESPECTS OUR POLICIES MAY EXCEED MINIMUM LEGAL REQUIREMENTS OR INDUSTRY PRACTICE, AND (2) NOTHING CONTAINED IN THIS CODE SHOULD BE CONSTRUED AS A BINDING DEFINITION OR INTERPRETATION OF A LEGAL REQUIREMENT OR INDUSTRY PRACTICE.

To obtain additional copies of this Code, you may contact [THE HUMAN RESOURCES DEPARTMENT] or access it from the web at http://________________.


FORWARD

To all employees:

Our company is founded on our commitment to the highest ethical principles and standards. We value honesty and integrity above all else. Upholding these commitments is essential to our continued success.

The law and the ethical principles and standards that comprise this Code of Conduct must guide our actions. The Code is, of course, broadly stated. Its guidelines are not intended to be a complete listing of detailed instructions for every conceivable situation. Instead, it is intended to help you develop a working knowledge of the laws and regulations that affect your job.

Adhering to this Code is essential. I have taken the time to study it carefully and I encourage you to do the same. I have also signed a statement confirming that I have read this Code carefully, and I expect you to do the same by signing the confirmation form that appears on the final page.

Ultimately, our most valuable asset is our reputation. Complying with the principles and standards contained in this Code is the starting point for protecting and enhancing that reputation. Thank you for your commitment!

MICHAEL FRENCH
CHIEF OPERATING OFFICER

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INTRODUCTION

All of our employees, officers and members of our Management Board must read and use this Code of Conduct to ensure that each business decision follows our commitment to the highest ethical standards and the law. Adherence to this Code and to our other official policies is essential to maintaining and furthering our reputation for fair and ethical practices among our customers, investors, employees and communities.

It is the responsibility of every one of us to comply with all applicable laws and regulations and all provisions of this Code and the related policies and procedures. Each of us must report any violations of the law or this Code. Failure to report such violations and failure to follow the provisions of this Code may have serious legal consequences and will be disciplined by the company. Discipline may include termination of your employment.

This Code summarizes certain laws and the ethical policies that apply to all of our employees, officers and directors. Several provisions in this Code refer to more detailed policies that either (1) concern more complex company policies or legal provisions or (2) apply to select groups of individuals within our company. If these detailed policies are applicable to you, it is important that you read, understand, and be able to comply with them. If you have questions as to whether any detailed policies apply to you, contact your immediate supervisor or [____________], our compliance officer.

Situations that involve ethics, values and violations of certain laws are often very complex. No single code of conduct can cover every business situation that you will encounter. Consequently, we have implemented the compliance procedures outlined in the sections of this Code entitled "ADMINISTRATION OF THE CODE" and "ASKING FOR HELP AND REPORTING CONCERNS." The thrust of our procedures is WHEN IN DOUBT, ASK. If you do not understand a provision of this Code, are confused as to what actions you should take in a given situation, or wish to report a violation of the law or this Code, you should follow those compliance procedures. Those procedures will generally direct you to talk to either your immediate supervisor or our compliance officer. We believe that there are few situations that cannot be resolved if you discuss them with your immediate supervisor or our compliance officer in an open and honest manner. In the event that a situation arises that you cannot resolve through discussion with your immediate supervisor, we have a process in place to ensure you can communicate your situation and get a resolution from the appropriate level of management. Please refer to the section entitled "ASKING FOR HELP AND REPORTING CONCERNS."

After reading this Code, you should:

o Have a thorough knowledge of the Code's terms and provisions.

o Be able to recognize situations that present legal or ethical dilemmas.

o Be able to deal effectively with questionable situations in conformity with this Code.

In order to accomplish these goals, we recommend that you take the following steps:

o Read the entire Code of conduct thoroughly.

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o If there are references to more detailed policies that are not contained in this Code, obtain and read those policies if they apply to you.

o Think about how the provisions of this Code apply to your job, and consider how you might handle situations to avoid illegal, improper, or unethical actions.

o If you have questions, ask your immediate supervisor or our compliance officer.

When you are faced with a situation and you are not clear as to what action you should take, ask yourself the following questions:

o Is the action legal?

o Does the action comply with this Code?

o How will your decision affect others, including our customers, investors, employees and the community?

o How will your decision look to others? If your action is legal but can result in the appearance of wrongdoing, consider taking alternative steps.

o How would you feel if your decision were made public? Could the decision be honestly explained and defended?

o Have you contacted your immediate supervisor or our compliance officer regarding the action?

To reiterate, WHEN IN DOUBT, ASK.

PLEASE NOTE THAT THIS CODE IS NOT AN EMPLOYMENT CONTRACT AND DOES NOT MODIFY THE EMPLOYMENT RELATIONSHIP BETWEEN US AND YOU. WE DO NOT CREATE ANY CONTRACTUAL OR LEGAL RIGHTS OR GUARANTEES BY ISSUING THESE POLICIES, AND WE RESERVE THE RIGHT TO AMEND, ALTER AND TERMINATE POLICIES AT ANY TIME AND FOR ANY REASON.

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COMPLIANCE WITH LAWS

First and foremost, our policy is to behave in an ethical manner and comply with all laws, rules and government regulations that apply to our business. Although we address several important legal topics in this Code, we cannot anticipate every possible situation or cover every topic in detail. It is your responsibility to know and follow the law and conduct yourself in an ethical manner. It is also your responsibility to report any violations of the law or this Code. You may report such violations by following the compliance procedures contained in the section of the Code entitled "ASKING FOR HELP AND REPORTING CONCERNS."

CONFLICTS OF INTEREST

All of us must be able to perform our duties and exercise judgment on behalf of our company without influence or impairment, or the appearance of influence or impairment, due to any activity, interest or relationship that arises outside of work. Put more simply, when our loyalty to our company is affected by actual or potential benefit or influence from an outside source, a conflict of interest exists. We should all be aware of any potential influences that impact or appear to impact our loyalty to our company. In general, you should avoid situations where your personal interests conflict, or appear to conflict, with those of our company.

Any time you believe a conflict of interest may exist, you must disclose the potential conflict of interest to your immediate supervisor or our compliance officer. Any activity that is approved, despite the actual or apparent conflict, must be documented. Except for our executive officers, a potential conflict of interest involving an officer with the title of [MANAGER] and above must be approved by our compliance officer. A potential conflict of interest involving an executive officer or a member of our Management Board must be approved by our Management Board unless it also constitutes a "related party transaction" under the rules and regulation of the Securities and Exchange Commission. If a potential conflict of interest involving an executive officer or a member of our Management Board also constitutes a "related party transaction," the transaction must be approved by the audit committee of our Management Board.

It is not possible to describe every conflict of interest, but some situations that could cause a conflict of interest include:

o Doing business with family members

o Having a financial interest in another company with whom we do business

o Taking a second job

o Managing your own business

o Serving as a director of another business

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o Being a leader in some organizations

o Diverting a business opportunity from our company to another company

DOING BUSINESS WITH FAMILY MEMBERS

A conflict of interest may arise if family members work for a supplier, customer or other third party with whom we do business. It also may be a conflict if a family member has a significant financial interest in a supplier, customer or other third party with whom we do business. A "significant financial interest" is defined below. Before doing business on our behalf with an organization in which a family member works or has a significant financial interest, an employee must disclose the situation to his or her immediate supervisor, or our compliance officer, and discuss it with them. Document the approval if it is granted. If the only interest you have in a customer or supplier is because a family member works there, then you do not need to disclose the relationship or obtain prior approval unless you deal with the customer or supplier.

"Family members" include your:

o Spouse o Brothers or sisters

o Parents o In-laws

o Children o Life partner

Employing relatives or close friends who report directly to you may also be a conflict of interest. Although our company encourages employees to refer candidates for job openings, employees who may influence a hiring decision must avoid giving an unfair advantage to anyone with whom they have a personal relationship. In particular, supervisors should not hire relatives or attempt to influence any decisions about the employment or advancement of people related to or otherwise close to them, unless they have disclosed the relationship to their immediate supervisor or our compliance officer who has approved the decision.

OWNERSHIP IN OTHER BUSINESSES

Our investments can cause a conflict of interest. In general, you should not own, directly or indirectly, a significant financial interest in any company that does business with us or seeks to do business with us. You also should not own a significant financial interest in any of our competitors.

Two tests determine if a "significant financial interest" exists:

o You or a family member owns more than 3% of the outstanding stock of a business or you or a family member has or shares discretionary authority with respect to the decisions made by that business, or

o The investment represents more than 5% of your total assets or of your family member's total assets.

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If you or a family member has a significant financial interest in a company with whom we do business or propose to do business, that interest must be approved by your immediate supervisor or our compliance officer prior to the transaction.

Notwithstanding the foregoing, non-employee members of our Management Board and their family members may have significant financial interests in or be affiliates of suppliers, customers, competitors and third parties with whom we do business or propose to do business. However, a member of our Management Board must:

o disclose any such relationship promptly after the director becomes aware of it,

o remove himself or herself from any Management Board activity that directly impacts the relationship between our company and any such company with respect to which the director has a significant financial interest or is an affiliate, and

o obtain prior approval of the Management Board or its designated committee for any transaction of which the member is aware between our company and any such company.

SERVICE ON BOARDS

Serving as a director of another corporation may create a conflict of interest. Being a director or serving on a standing committee of some organizations, including government agencies, also may create a conflict.

Before accepting an appointment to the board or a committee of any organization whose interests may conflict with our company's interests, you must discuss it with our compliance officer and obtain his approval. This rule does not apply to non-employee member of the Management Board of our company.

OUTSIDE EMPLOYMENT

Sometimes our employees desire to take additional part-time jobs or do other work after hours, such as consulting or other fee-earning services. This kind of work does not in and of itself violate our Code. However, the second job must be strictly separated from your job with us, and must not interfere with your ability to devote the time and effort needed to fulfill your duties to us as our employee. You cannot engage in any outside activity that causes competition with us or provides assistance to our competitors or other parties (such as suppliers) with whom we regularly do business. You should avoid outside activities that embarrass or discredit us. Outside work may never be done on company time and must not involve the use of our supplies or equipment. Additionally, you should not attempt to sell services or products from your second job to us.

Before engaging in a second line of work, you should disclose your plans to your immediate supervisor to confirm that the proposed activity is not contrary to our best interests. You may also contact our Human Resources Department for more information about our policies concerning outside employment.

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BUSINESS OPPORTUNITIES

Business opportunities relating to the kinds of products and services we usually sell or the activities we typically pursue that arise during the course of your employment or through the use of our property or information belong to us. Similarly, other business opportunities that fit into our strategic plans or satisfy our commercial objectives that arise under similar conditions also belong to us. You may not direct these kinds of business opportunities to our competitors, to other third parties or to other businesses that you own or are affiliated with.

LOANS

Unlawful extensions of credit by our company in the form of personal loans to our executive officers and directors are prohibited. All other loans by our company to, or guarantees by our company of obligations of, officers with the title of [MANAGER] or above must be made in accordance with established company policies approved by our Management Board or its designated committee.

GIFTS AND ENTERTAINMENT

We are dedicated to treating fairly and impartially all persons and firms with whom we do business. Therefore, our employees must not give or receive gifts, entertainment or gratuities that could influence or be perceived to influence business decisions. Misunderstandings can usually be avoided by conduct that makes clear that our company conducts business on an ethical basis and will not seek or grant special considerations.

ACCEPTING GIFTS AND ENTERTAINMENT

You should never solicit a gift or favor from those with whom we do business. You may not accept gifts of cash or cash equivalents.

You may accept novelty or promotional items or modest gifts related to commonly recognized occasions, such as a promotion, holiday, wedding or retirement, if:

o this happens only occasionally

o the gift was not solicited

o disclosure of the gift would not embarrass our company or the people involved

o the value of the gift is under $100

You may accept an occasional invitation to a sporting activity, entertainment or meal if

o there is a valid business purpose involved

o this happens only occasionally

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o the activity is of reasonable value and not lavish

A representative of the giver's company must be present at the event. If you are asked to attend an overnight event, you must obtain prior approval from your immediate supervisor or our compliance officer.

GIVING GIFTS AND ENTERTAINING

Gifts of nominal value (under $100) and reasonable entertainment for customers, potential customers and other third parties with whom we do business are permitted. However, any gift or entertainment must

o support our company's legitimate business interests

o be reasonable and customary, not lavish or extravagant

o not embarrass our company or the recipient if publicly disclosed

Under no circumstances can any bribe, kickback, or illegal payment or gift of cash or cash equivalents be made

If you are not sure whether a specific gift or entertainment is permissible, contact your immediate supervisor or our compliance officer.

FAIR DEALING

We have built a reputation as a trustworthy and ethical member of our community and our industry. We are committed to maintaining the highest levels of integrity and fairness within our company. When we fail to negotiate, perform or market in good faith, we may seriously damage our reputation and lose the loyalty of our customers. You must conduct business honestly and fairly and not take unfair advantage of anyone through any misrepresentation of material facts, manipulation, concealment, abuse of privileged information, fraud or other unfair business practice.

SECURITIES LAWS AND INSIDER TRADING

Because we are a public company, we are subject to a number of laws concerning the purchase and sale of our publicly traded securities. Regardless of your position with us, if you are aware of what is known as "material inside information" regarding our company, business, affairs or prospects, you may not disclose that information to anyone outside our company, and you are not allowed to buy or sell our publicly-traded securities until the material inside information is known not only by individuals within our company, but also by the general public. The improper use of material inside information is known as insider trading. Insider trading is a criminal offense and is strictly prohibited.

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"Material inside information" is any information concerning us that is not available to the general public and which an investor would likely consider to be important in making a decision whether to buy, sell or hold our securities. A good rule of thumb to determine whether information about us is material inside information is whether or not the release of that information to the public would have an effect on the price of our publicly traded securities. Examples of material inside information include information concerning financial performance and estimates, changes in previously released financial performance estimates, slot machine or table game win statistics, hold percentages, a major contract, major projects and expansions (or contractions) of our operations and major changes in our management. Material inside information is no longer deemed "inside" information once it is publicly disclosed and the market has had sufficient time to absorb the information. Examples of effective public disclosure are the filing of such inside information with the Securities and Exchange Commission, or the printing of such information in THE WALL STREET JOURNAL or other publications of general circulation, in each case giving the investing public a fair amount of time to absorb and understand our disclosures.

In addition to being prohibited from buying or selling our publicly-traded securities when you are in possession of material inside information, you are also prohibited from disclosing such information to anyone else (including friends and family members) in order to enable them to trade on the information. In addition, if you acquire material inside information about another company due to your relationship with us, you may not buy or sell that other company's stock or other securities until such information is publicly disclosed and sufficiently disseminated into the marketplace.

The following are general guidelines to help you comply with our insider trading policy:

o Do not share material inside information with people within our company whose jobs do not require them to have the information.

o Do not disclose any non-public information, material or otherwise, concerning our company to anyone outside our company unless required as part of your duties and the person receiving the information has a reason to know the information for company business purposes.

o If you have material inside information regarding us, or regarding any other publicly traded company that you obtained from your employment or relationship with us, you must not buy or sell, or advise anyone else to buy or sell, our securities or that other company's securities, until such information is publicly disclosed and sufficiently disseminated into the marketplace.

Penalties for trading on or communicating material inside information are severe. If you are found guilty of an insider trading violation, you can be subject to civil and even criminal liability. In addition to being illegal, we believe that insider trading is unethical and will be dealt with firmly, which may include terminating your employment with us and reporting violations to appropriate authorities.

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If you have any questions concerning the securities laws or about our policies with regard to those laws, or regarding the correct ethical and legal action to take in a situation involving material inside information, please contact your immediate supervisor or our compliance officer.

RESPONDING TO INQUIRIES FROM THE PRESS AND OTHERS

Our company is subject to laws that govern the timing of our disclosures of material information to the public and others. Only certain designated employees may discuss our company with the news media, securities analysts and investors. All inquiries from outsiders regarding financial or other information about our company should be referred to our Chief Financial Officer.

POLITICAL ACTIVITY

We will fully comply with all political contribution laws. Our funds may not be used for contributions of any kind to any political party or committee or to any candidate or holder of any government position (Tribal, federal, state or local) unless such contribution is permitted by law and complies with our company policy. Please contact our compliance officer to determine whether a specific company contribution is permitted.

It is against our policy for you to lobby our other employees on behalf of a political candidate during the work day. It is also against our policy to reimburse an employee for any political contributions or expenditures. Outside normal office hours, you are free to participate in political campaigns on behalf of candidates or issues of your choosing, as well as make personal political contributions.

SAFEGUARDING CORPORATE ASSETS

We have a responsibility to protect company assets entrusted to us from loss, theft, misuse and waste. Company assets and funds may be used only for business purposes and may never be used for illegal purposes. [INCIDENTAL PERSONAL USE OF TELEPHONES, FAX MACHINES, COPY MACHINES, PERSONAL COMPUTERS, E-MAIL AND SIMILAR EQUIPMENT IS GENERALLY ALLOWED IF IT IS OCCASIONAL, THERE IS NO SIGNIFICANT ADDED COST TO US, IT DOES NOT INTERFERE WITH YOUR WORK RESPONSIBILITIES AND IS NOT RELATED TO AN ILLEGAL ACTIVITY OR OUTSIDE BUSINESS.] If you become aware of theft, waste or misuse of our assets or funds or have any questions about your proper use of them, you should speak immediately with your immediate supervisor.

It is also important that you protect the confidentiality of company information. Confidential or proprietary information includes all information that is not generally known to the public and is helpful to the company, or would be helpful to competitors. Proprietary

9

information should be marked accordingly, kept secure and access limited to those who have a need to know in order to do their jobs.

Our business relations are built on trust, and our customers and suppliers count on that trust. If you learn information from them that is not otherwise public, you should keep that information confidential also.

We must all be sensitive to the impact of comments made over the Internet through public forums such as chat rooms and bulletin boards. In such forums, you may not post any information about the company including comments about our products, performance of our publicly traded securities, operational strategies, financial results, customers or competitors, even in response to a false statement or question. This applies whether you are at work or away from the office. Our company owns all e-mail messages that are sent from or received through the company's systems. We may monitor your messages and may be required to disclose them in the case of litigation or governmental inquiry.

EMPLOYMENT OPPORTUNITY

We will give preference to members of the Tribe and then to other Native Americans with regard to hiring and promotion whenever possible. When this is not possible, we will endeavor to hire, train and promote all qualified applicants into all job classifications without regard to race, religion, gender, age, sexual orientation, national origin, veterans status, disability or medical condition, and all other categories protected by federal discrimination laws. Further, we will utilize valid requirements to make all employment and promotion decisions. For more information concerning our employment policies, you should refer to our Team Member Handbook.

HEALTH, SAFETY AND THE ENVIRONMENT

We are committed to providing safe and healthy working conditions by following all occupational health and safety laws governing our activities.

We believe that management and each and every employee have a shared responsibility in the promotion of health and safety in the workplace. You should follow all safety laws and regulations, as well as company safety policies and procedures. You should immediately report any accident, injury or unsafe equipment, practices or conditions.

[OUR FULL HEALTH AND SAFETY POLICY IS AVAILABLE FROM THE HUMAN RESOURCES

DEPARTMENT.]

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You also have an obligation to carry out company activities in ways that preserve and promote a clean, safe, and healthy environment. You must strictly comply with the letter and spirit of applicable environmental laws and the public policies they represent.

The consequences of failing to adhere to environmental laws and policies can be serious. Our company, as well as individuals, may be liable not only for the costs of cleaning up pollution, but also for significant civil and criminal penalties. You should make every effort to prevent violations from occurring and report any violations to your immediate supervisor or our compliance officer.

ACCURACY OF COMPANY RECORDS

All information you record or report on our behalf, whether for our purposes or for third parties, must be done accurately and honestly. All of our records (including accounts and financial statements) must be maintained in reasonable and appropriate detail, must be kept in a timely fashion, and must appropriately reflect our transactions. Falsifying records or keeping unrecorded funds and assets is a severe offense and may result in prosecution or loss of employment. When a payment is made, it can only be used for the purpose spelled out in the supporting document.

Information derived from our records is provided to our investors as well as government agencies. Thus, our accounting records must conform not only to our internal control and disclosure procedures but also to generally accepted accounting principles and other laws and regulations, such as those of the Internal Revenue Service and the Securities and Exchange Commission. Our public communications and the reports we file with the Securities and Exchange Commission and other government agencies should contain information that is full, fair, accurate, timely and understandable in light of the circumstances surrounding disclosure.

Our auditing functions help ensure that our financial books, records and accounts are accurate. Therefore, you should provide our accounting department, audit committee and independent public accountants with all pertinent information that they may request. We encourage open lines of communication with our audit committee, accountants and auditors and require that all our personnel cooperate with them to the maximum extent possible. It is unlawful for you to fraudulently influence, induce, coerce, manipulate or mislead our independent public accountants for the purpose of making our financial statements misleading.

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If you are unsure about the accounting treatment of a transaction or believe that a transaction has been improperly recorded or you otherwise have a concern or complaint regarding an accounting matter, our internal accounting controls, or an audit matter, you should confer with your immediate supervisor, the financial reporting employee associated with your business unit or our Chief Financial Officer, or you may submit your concern, on an anonymous basis, to the audit committee of our Management Board through a [HOTLINE], e-mail or regular mail:

[HOTLINE:            ____________]

E-mail:              [AuditCommittee@imgresort.com]

Regular Mail:        Audit Committee
                     Inn of the Mountain Gods Resort and Casino
                     P.O. Box 269
                     Mescalero, New Mexico 88340

Our full policy regarding the submission of complaints regarding accounting matters is available from the [HUMAN RESOURCES DEPARTMENT.]

RECORD RETENTION

Our records should be retained or discarded in accordance with our record retention policies and all applicable laws and regulations. From time to time we are involved in legal proceedings that may require us to make some of our records available to third parties. Our legal counsel will assist us in releasing appropriate information to third parties and provide you (or your immediate supervisor) with specific instructions. It is a crime to alter, destroy, modify or conceal documentation or other objects that are relevant to a government investigation or otherwise obstruct, influence or impede an official proceeding. The law applies equally to all of our records, including formal reports as well as informal data such as e-mail, expense reports and internal memos. If the existence of a subpoena or a pending government investigation is known or reported to you, you should immediately contact your immediate supervisor or our compliance officer and you must retain all records that may pertain to the investigation or be responsive to the subpoena. For further information, you should refer to our Document Retention Policy, which is available from our compliance officer.

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ADMINISTRATION OF THE CODE

DISTRIBUTION

All of the members of our Management Board and all of our officers and employees will receive a copy of this Code when they join our company. Updates of the Code will be distributed to all such persons.

ROLE OF SUPERVISORS AND OFFICERS

Supervisors and officers have important roles under this Code and are expected to demonstrate their personal commitment to this Code by fostering a workplace environment that promotes compliance with the Code and by ensuring that employees under their supervision participate in our company's compliance training programs.

REPORTING VIOLATIONS

All employees are obliged to report violations of this Code or the law and to cooperate in any investigations into such violations. We prefer that you give your identity when reporting violations, to allow the company to contact you in the event further information is needed to pursue an investigation, and your identity will be maintained in confidence to the extent practicable under the circumstances and consistent with enforcing this Code. However, you may anonymously report violations.

INVESTIGATIONS

We will initiate a prompt investigation following any credible indication that a breach of law or this Code may have occurred. We will also initiate appropriate corrective action as we deem necessary, which may include notifying appropriate authorities.

DISCIPLINARY ACTION

If you violate any provision of this Code, you may be subject to disciplinary action, up to and including discharge. Please be aware that we may seek civil remedies from you and if your violation results in monetary loss to us, you may be required to reimburse us for that loss. If you are involved in a violation, the fact that you reported the violation, together with the degree of cooperation displayed by you and whether the violation is intentional or unintentional, will be given consideration in our investigation and any resulting disciplinary action.

NO RETALIATION

We will not retaliate against anyone who, in good faith, notifies us of a possible violation of law or this Code, nor will we tolerate any harassment or intimidation of any employee who reports a suspected violation. In addition, there are federal "whistleblower" laws that are designed to protect employees from discrimination or harassment for providing information to us or governmental authorities, under certain circumstances, with respect to certain laws such as

13

those governing workplace safety, the environment, securities fraud and federal law relating to fraud against shareholders.

APPROVALS

Approvals required under this Code should be documented.

WAIVERS

Any request for a waiver of this Code must be submitted in writing to our compliance officer who has authority to decide whether to grant a waiver. However, a waiver of any provision of this Code for a director or an executive officer must be approved by our Management Board or its designated committee and will be promptly disclosed to the extent required by law or regulation.

CERTIFICATIONS

All new employees must sign a certificate confirming that they have read and understand this Code. We will also require an annual certification of compliance with the Code by all officers with the title of [MANAGER] or above. However, failure to read the Code or sign a confirmation certificate does not excuse you from complying with this Code.

ASKING FOR HELP AND REPORTING CONCERNS

We take this Code seriously and consider its enforcement to be among our highest priorities, but we also acknowledge that it is sometimes difficult to know right from wrong. That's why we encourage open communication. WHEN IN DOUBT, ASK. Whenever you have a question or concern, are unsure about what the appropriate course of action is, or if you believe that a violation of the law or this Code has occurred:

o You should talk with your immediate supervisor. He or she may have the information you need, or may be able to refer the matter to an appropriate source, including legal counsel as circumstances warrant.

o If you are uncomfortable talking with your immediate supervisor, you may also contact any manager in our company with whom you feel comfortable, any executive officer, the Human Resources Department or our compliance officer.

o In addition, if you have concerns or complaints about accounting or audit matters or our internal accounting controls, you may confer with your immediate supervisor, the controller associated with your business unit or our Chief Financial Officer, or you may submit your concern or complaint, on an anonymous basis, to the audit committee of our Management Board by calling the toll free number _____________.

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o In addition, you may submit your concern or complaint, on an anonymous basis, to the audit committee of our Management Board by calling the toll free number _____________ or by sending an anonymous e-mail to_________________. Calls and e-mails to the anonymous tip hotline go to an independent third party who transcribes your comments and forwards them to the audit committee of the Management Board. Anonymity is assured.

INN OF THE MOUNTAIN GODS RESORT AND CASINO

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HELPFUL PHONE NUMBERS

Compliance Officer                          ______________       (505) ___________

Chief Operating Officer                     Michael French       (505) 464-7777

Chief Financial Officer                     Richard Williams     (505) 464-7705

[Human Resources]                           ______________       (505) ___________

Anonymous Tip Hotline*
(for accounting and audit matters only)     ______________

Anonymous Tip E-Mail Address*               [AuditCommittee@imgresort.com]
(for accounting and audit matters only)

*CALLS AND EMAILS TO ANONYMOUS TIP HOTLINE AND EMAIL ADDRESS GO TO AN INDEPENDENT THIRD PARTY WHO TRANSCRIBES YOUR COMMENTS AND FORWARDS THEM TO THE AUDIT COMMITTEE OF THE MANAGEMENT BOARD. ANONYMITY IS ASSURED.

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CONFIRMATION CERTIFICATE

I have been provided with a copy of the Code of Business Conduct and Ethics of Inn of the Mountain Gods Resort and Casino. I acknowledge that I have read the Code and understand my responsibilities under it. I further acknowledge that I should follow the compliance procedures described in the Code if I have any questions or concerns.

Employee Signature:
Print Employee Name:

Date:

INN OF THE MOUNTAIN GODS RESORT AND CASINO

CODE OF ETHICS FOR PRINCIPAL EXECUTIVE OFFICER
AND SENIOR FINANCIAL OFFICERS

The honesty, integrity and sound judgment of Inn of the Mountain Gods Resort and Casino and its subsidiaries ("IMG") is fundamental to its reputation and success. Therefore, IMG expects the highest order of ethical conduct and integrity from its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, including, IMG's Chief Operating Officer, Chief Financial Officer, Director of Finance, Director of Marketing and Director of Casino Operations. IMG's Business Code of Conduct applies to all officers, directors, employees and independent contractors of IMG. In addition to being bound by the Business Code of Conduct's provisions, including provisions about ethical conduct, conflicts of interest and compliance with law, IMG has adopted the following Code of Ethics specifically for its principal executive officer and senior financial officers. All employees covered by this Code of Ethics will:

o provide full, fair, accurate, timely and understandable disclosure in reports and documents that IMG files with, or submits to the Securities and Exchange Commission (the "SEC") and in other public communications made by IMG;

o act with honesty and integrity, including the ethical handling of actual or apparent conflicts of interest in their personal and professional relationships;

o comply with rules and regulations of federal, state, provincial and local governments, and other appropriate private and public regulatory agencies;

o promote the prompt internal reporting of violations of this Code of Ethics and any information you may have concerning (a) significant deficiencies in the design or operation of internal controls that could adversely affect IMG's ability to record, process, summarize and report financial data, or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in IMG's financial reporting, disclosures or internal controls to the chairman of IMG's audit committee and to the appropriate person designated in IMG's Business Code of Conduct;

o respect the confidentiality of information acquired in the course of one's work except when authorized or otherwise legally obligated to disclose;

o act in good faith, responsibly, with due care, competence and diligence, without misrepresenting material facts; and

o promote ethical and honest behavior within IMG.


Any violation of this Code of Ethics will be subject to appropriate discipline, up to and including dismissal from IMG and prosecution under the law. The Management Board of IMG shall have the sole and absolute discretionary authority to approve any deviation or waiver from this Code of Ethics. Any change in, or waiver from, and the grounds for such change or waiver of this Code of Ethics shall be promptly disclosed through a filing with the SEC on a Form 8-K.

It is IMG's intention that this Code of Ethics be its written code of ethics under Section 406 of the Sarbanes-Oxley Act of 2002 complying with the standards set forth in the SEC's Regulation S-K Item 406.


CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our reports dated June 25, 2004, accompanying the consolidated financial statements and schedules incorporated by reference in the Annual Report of Inn of the Mountain Gods Resort and Casino on Form 10-K for the year ended April 30, 2004. We hereby consent to the incorporation by reference of said reports in the Registration Statements of Inn of the Mountain Gods Resort and Casino on Forms S-4 (File No. 333-113140, effective June 10, 2004).

/s/ Grant Thornton LLP
--------------------------
Grant Thornton LLP
Albuquerque, New Mexico
July 29, 2004


POWER OF ATTORNEY

Know all by these present, that the undersigned hereby constitutes and appoints each of Michael French and Richard Williams, signing singly, the undersigned's true and lawful attorney-in-fact to:

(1) execute for and on behalf of the undersigned, in the undersigned's capacity as an officer and/or director, or principal executive officer, principal financial officer or principal accounting officer, of Inn of the Mountain Gods Resort and Casino (the "COMPANY"), the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2004 (the "FORM 10-K"), in accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "ACT"), and the rules thereunder;

(2) do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute the Form 10-K, complete and execute any amendment or amendments thereto, and timely file such form with the U.S. Securities and Exchange Commission and any stock exchange or similar authority; and

(3) take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion.

The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this power of attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is the Company assuming, any of the undersigned's responsibilities to comply with Section 13 or 15(d) of the Act.

This Power of Attorney shall remain in full force and effect until it is earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 14 day of July, 2004.

/s/ FERRIS PALMER
----------------------------
    FERRIS PALMER

FERRIS PALMER
PRINT NAME

Exhibit 31.1

Certification of
Principal Executive Officer of

Inn of the Mountain Gods Resort and Casino

I, Michael French, 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-14 and 15d-14) 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

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 data; 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.

Date:  July 29, 2004



 /s/  Michael French
-------------------------------------
By:     Michael French
Title:  Principal Executive Officer

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Exhibit 31.2

Certification of
Principal Financial Officer of

Inn of the Mountain Gods Resort and Casino

I, Richard Williams, 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-14 and 15d-14) 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

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 data; 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.

Date:  July 29, 2004




 /s/ Richard Williams
--------------------------------------
By:     Richard Williams
Title:  Principal Financial Officer

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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, 2004 (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 29, 2004                        By: /s/ Michael French
                                            -----------------------------------
                                            Michael French
                                            Chief Executive Officer



Dated: July 29, 2004                        By: /s/ Richard Williams
                                            ------------------------------------
                                            Richard Williams
                                            Chief 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.

BROKERAGE PARTNERS