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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


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                                   FORM 10-QSB
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                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     For fiscal quarter ended July 31, 1998

                         Commission File Number: 0-24846

                          COLORADO CASINO RESORTS, INC.
             (Exact name of Registrant as specified in its Charter)


             Texas                                         84-1303693
(State or other jurisdiction of                           (IRS Employer
incorporation or organization)                          Identification No.)

                              304 South 8th Street
                                    Suite 201
                           Colorado Springs, CO 80905
                                 (719) 635-7047
          (Address, including zip code, and telephone number, including
            area code, of Registrant's principal executive offices)


      SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:
                         Common Stock, $0.001 Par Value
                                (Title of Class)
--------------------------------------------------------------------------------

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common  stock as of the latest  practicable  date:  38,665,632  shares of common
stock, $0.001 par value per share.


                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None.


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<PAGE>

<TABLE>
<CAPTION>
                  COLORADO CASINO RESORTS, INC. & SUBSIDIARIES

                                      INDEX



<S>           <C>                                                                                       <C> 
Part I.       Financial Information
              Item 1.      Financial Statements (unaudited)

                           Consolidated Balance Sheets as of July 31, 1998..............................  3

                           Consolidated Statement of Operations for the Quarter and Nine Months Ended
                               July 31, 1998 and July 31, 1997 .........................................  4

                           Consolidated Statements of Cash Flows for the Nine Months Ended
                               July 31, 1998 and July 31, 1997..........................................  5

                           Notes to Consolidated Financial Statements...................................  6

              Item 2.      Management's Discussion and Analysis of Financial Condition
                               as well as Future Plans..................................................  7


Part II.      Other Information

              Item 1.      Legal Proceedings............................................................  13
              Item 2.      Changes in Securities........................................................  13
              Item 3.      Defaults upon Senior Securities..............................................  13
              Item 4.      Submission of Matters to a Vote of Security Holders..........................  13
              Item 5.      Other Information............................................................  13
              Item 6.      Exhibits and Reports.........................................................  13

              Signatures................................................................................  14

</TABLE>

                   SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-QSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.  Such statements
refer to events that could occur in the future or may be  identified  by the use
of words such as "intend," "plan," "believe,"  "anticipate,"  correlative words,
and other  expressions  indicating  that future  events are  contemplated.  Such
statements are subject to inherent risks and  uncertainties,  and actual results
could differ materially from those projected in the  forward-looking  statements
as a result of certain of the risk factors set forth  following and elsewhere in
this Quarterly Report on Form 10-QSB.

--------------------------------------------------------------------------------

<PAGE>
Colorado Casino Resorts, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (Unaudited)

                                   ASSETS                    July 31,      October 31,
                                                              1998            1997
                                                          ------------   -------------
<S>                                                       <C>             <C>         
CURRENT ASSETS
Cash & cash equivalents ...............................   $  1,696,976    $  1,962,486
Inventory .............................................        131,081         182,641
Other .................................................        446,578         567,678
                                                                          ------------
                                                                          ------------
   TOTAL CURRENT ASSETS ...............................      2,274,635       2,712,805
                                                          ------------    ------------

PROPERTY, PLANT & EQUIPMENT
Land ..................................................     16,106,628      16,106,628
Building and improvements .............................     23,644,286      23,637,572
Furniture, fixtures & equipment .......................     12,431,080       8,520,407
Accumulated depreciation & amortization ...............     (4,873,012)     (3,259,534)
                                                          ------------    ------------
   TOTAL PROPERTY, PLANT & EQUIPMENT ..................     47,308,982      45,005,073
                                                          ------------    ------------

OTHER ASSETS ..........................................        483,324         657,976
                                                          ------------    ------------

   TOTAL ASSETS .......................................   $ 50,066,941    $ 48,375,854
                                                          ============    ============


                     LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accrued expenses ......................................      2,430,492       1,827,187
Accrued interest payable, related party ...............      1,221,559         506,593
Due to officers .......................................           --            62,745
Current portion, long-term debt .......................      3,248,431       1,220,964
Current portion, capital lease obligations ............        517,608         630,425
                                                          ------------    ------------
   TOTAL CURRENT LIABILITIES ..........................     13,768,090       4,247,914
                                                          ------------    ------------

CONVERTIBLE DEBENTURE, RELATED PARTY ..................      5,425,528       5,516,988
LONG-TERM DEBT, RELATED PARTY .........................      7,825,083       7,879,324
LONG-TERM DEBT ........................................     24,919,775      20,851,322
OBLIGATION UNDER CAPITAL LEASE ........................      1,207,752       2,065,010

                                                          ------------    ------------
   TOTAL LIABILITIES ..................................     46,796,228      40,560,558
                                                          ------------    ------------

STOCKHOLDERS' EQUITY

Common stock, $0.001 par value, 100,000,000
    shares authorized, 38,665,632 and 38,665,632
    issued and outstanding, respectively ..............         38,666          38,666

Paid-in capital .......................................     15,777,125      15,777,125
Retained earnings (accumulated deficit) ...............    (12,545,078)     (8,000,496)
                                                          ------------    ------------
   TOTAL STOCKHOLDERS' EQUITY .........................      3,270,713       7,815,296
                                                          ------------    ------------

   TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ...........   $ 50,066,941    $ 48,375,854
                                                          ============    ============
</TABLE>

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

                                      -3-
<PAGE>
Colorado Casino Resorts, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)

                                             Nine Months       Quarter      Nine Months        Quarter
                                               Ended            Ended          Ended            Ended
                                              July 31,         July 31,       July 31,         July 31,
                                               1998             1998           1997             1997
                                           -----------       ---------      ----------       ---------
<S>                                         <C>              <C>            <C>              <C>      
OPERATING REVENUE
   Casino .............................     12,953,011       4,955,845      13,785,817       5,913,089
   Hotel and gift shop ................      1,677,149         771,244       1,784,651         821,816
   Restaurant and bars ................      1,566,947         663,228       1,338,968         589,747
   Other ..............................        415,087         208,116          31,902          31,902
                                          ------------    ------------    ------------    ------------
      TOTAL OPERATING REVENUE .........     16,612,194       6,598,433      16,941,338       7,356,554
                                          ------------    ------------    ------------    ------------

OPERATING EXPENSES
   Casino .............................      6,035,558       2,034,051       6,237,799       2,438,581
   Hotel and gift shop ................        801,270         271,863       1,024,888         365,612
   Restaurant and bars ................      2,070,939         780,556       2,075,647         907,339
   Marketing/General and administrative      6,311,067       3,009,537       5,340,735       1,982,162
   Depreciation and amortization ......      1,613,478         516,704       2,071,787         781,252
                                          ------------    ------------    ------------    ------------
      TOTAL OPERATING EXPENSE .........     16,832,312       6,612,711      16,750,856       6,474,946
                                          ------------    ------------    ------------    ------------

INCOME (LOSS) FROM OPERATIONS .........       (220,118)        (14,278)        190,482         881,608
                                          ------------    ------------    ------------    ------------

NONOPERATING INCOME (EXPENSE)
   Interest expense ...................      4,324,465       2,068,203       3,867,576       1,250,913
                                          ------------    ------------    ------------    ------------

INCOME (LOSS) BEFORE INCOME TAXES .....     (4,544,583)     (2,082,481)     (3,677,094)       (369,305)
                                          ------------    ------------    ------------    ------------

INCOME TAXES ..........................           --              --              --              --
                                          ------------    ------------    ------------    ------------

NET LOSS ..............................   $ (4,544,583)   $ (2,082,481)   $ (3,677,094)   $   (369,305)
                                          ============    ============    ============    ============

NET LOSS PER SHARE ....................   $    (0.1175)   $    (0.0539)   $    (0.1003)   $    (0.0101)
                                          ============    ============    ============    ============

WEIGHTED AVERAGE NUMBER
       OF SHARES OUTSTANDING ..........     38,666,000      38,666,000      36,668,000      36,668,000
                                          ------------    ------------    ------------    ------------

</TABLE>



                     [THIS SECTION INTENTIONALLY LEFT BLANK]


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

                                      -4-
<PAGE>
Colorado Casino Resorts, Inc.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)

                                                             Nine Months Ended Nine Months Ended
                                                                   July 31,       July 31,
                                                                    1998           1997
                                                               ------------    ------------
<S>                                                            <C>             <C>          
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ...................................................   $ (4,544,583)   $ (3,677,094)
Noncash items
      Depreciation and amortization ........................      1,613,478       2,071,787
      Amortization of debt issue costs .....................        593,675         369,500
(Increase) decrease in:
      Inventory ............................................         51,560          59,248
      Other current assets .................................        121,100         324,417
      Other assets .........................................       (419,023)       (578,097)
(Decrease) increase in:
      Accrued expenses .....................................        603,305        (537,381)
      Interest payable, related party ......................        714,966         340,014
                                                               ------------    ------------
            Net cash provided (used) by operating activities     (1,265,522)     (1,627,606)
                                                               ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of land, building and equipment ...................     (3,917,387)     (1,609,038)
                                                               ------------    ------------
            Net cash provided (used) by investing activities     (3,917,387)     (1,609,038)
                                                               ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Advances (Repayments) from (to) officers ...................        (62,745)        383,691
Borrowings, long-term debt and capital leases ..............     16,792,873       3,432,714
Repayments, long-term debt and capital leases ..............    (11,667,028)       (397,596)
Repayments, long-term debt, related party ..................       (145,701)           --
                                                               ------------    ------------
            Net cash provided (used) by financing activities      4,917,399       3,418,809
                                                               ------------    ------------

INCREASE (DECREASE) IN CASH AND EQUIVALENTS ................       (265,510)        182,165
                                                               ------------    ------------
CASH AND EQUIVALENTS, BEGINNING ............................      1,962,486       2,828,994
                                                               ------------    ------------

CASH AND EQUIVALENTS, ENDING ...............................   $  1,696,976    $  3,011,159
                                                               ============    ============
</TABLE>


                     [THIS SECTION INTENTIONALLY LEFT BLANK]



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

                                      -5-
<PAGE>


                  COLORADO CASINO RESORTS, INC. & SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note A:       Summary of Significant Accounting Policies

The  Company's  accounting  policies  are  outlined  in  the  audited  financial
statements  included  with the Company's  most recent 10KSB.  There have been no
changes in accounting principles or practices in the current fiscal year.

Note B:       Long Term Debt

During the nine months ended July 31, 1998, the Company made total repayments of
$11,812,729,  with $11,667,028 on long-term debt and capital leases and $145,701
on long-term debt, related party.

During the third quarter,  the Company received an  eighteen-month  extension of
the  maturity  dates on  promissory  notes held by two  lenders  totaling  $6.35
million. The maturity date of the set of notes held by the first lender, with an
aggregate face amount of $2.35 million,  were made coterminous and extended to a
new maturity  date of May 28, 2000;  and the maturity date of the note held by a
second lender, with the face amount of $4.0 million,  was extended from July 29,
1999 to October 29, 2000.

During the third quarter,  the Company  secured a $15 million  Revolving  Credit
Facility with Foothill Capital Corporation,  a subsidiary of Norwest Bank, which
bears  interest at the rate of Prime + 2% and expires on July 31, 2003.  At July
31, 1998, the Company had net borrowings under this Revolving Credit Facility of
$13.38  million,  principally to refinance  high-interest  mortgages and provide
general working capital. The Revolving Credit Facility is secured by first trust
deeds on real property of the Double  Eagle.  The Company has agreed to maintain
certain   financial  and   non-financial   covenants   customary   with  lending
arrangements  of this type.  The Company has  remained  in  compliance  with the
covenants throughout the term of the credit facility.

Note C:       Convertible Debenture, Related Party

On August 18, 1994, the Company  purchased real property,  currently  being held
for future  development,  from a related  party in  exchange  for a  convertible
debenture in the amount of $4,500,000.  The convertible debenture bears interest
at 7.05% per annum,  with the  principal  balance and any accrued  interest  due
August 20, 1999 and is collateralized by deeds of trust on the related property.
During the nine months  ended July 31,  1998,  $91,460 of accrued  interest  was
applied  against a related  party  liability,  reducing  the balance  (including
interest added to principal) to $5,425,528.

Note D:       Advances to/from Officers

During the nine months ended July 31, 1998,  the Company  advanced to officers a
total of  $458,990.  The  officers  repaid a total of  $658,990  to the  Company
leaving  balance of $None  remaining as a receivable  to the Company at July 31,
1998.

Note E:       Income Taxes

The Company has an estimated  deferred tax benefit of $1.79 million for the nine
months  ended  July 31,  1998  which  has  been  offset  in full by a  valuation
allowance due to the  availability of a net operating loss  carryforward at July
31, 1998.


                     [THIS SECTION INTENTIONALLY LEFT BLANK]


                                      -6-
<PAGE>
                  COLORADO CASINO RESORTS, INC. & SUBSIDIARIES


         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                           PLANS FOR FUTURE OPERATIONS

OVERVIEW AND PLAN OF OPERATION

Colorado Casino Resorts,  Inc., ("CCRI" and/or the "Company") is in the business
of developing  and  operating  casino and hotel resort  properties.  Through its
wholly owned subsidiaries,  Creeker's, Inc. and Double Eagle Resorts, Inc., CCRI
is the owner of  Creeker's  Casino  ("Creeker's")  and the Double  Eagle Hotel &
Casino (the "Double Eagle"), both located in Cripple Creek, Colorado.

During the nine months ended July 31, 1998,  the Company  reported net operating
revenues  of $16.61  million,  a decrease  of  $329,000 or -1.9% from the $16.94
million  reported  during the same  period in 1997.  The  decrease in revenue is
primarily  attributed to  management's  decision to increase slot machine payout
percentages  (reduce hold  percentages) at the Double Eagle in order to increase
slot  play.  As a  result,  the  Company  realized  a 15.3%  increase  in handle
(coin-in)  while  capturing  more than its fair  market  share of slot win.  The
Company  reported a net loss of $(4.54)  million,  or $(0.12) per share, for the
nine months ended July 31, 1998  compared to a net loss of $(3.68)  million,  or
$(0.10) per share,  reported  for the same period  last year.  EBITDA  (earnings
before interest taxes depreciation and amortization) totaled $1.39 million, down
$(869,000)  or -38.4%  lower  than the $2.26  million  reported  during the same
period last year, impacted primarily by the reduced hold percentages.

Although the Company's  business is not  considered to be seasonal,  the highest
levels of business  activity in Colorado  occur during the tourist season (i.e.,
from May through  September).  Its base level  (i.e.,  November  through May) is
fairly constant although  inclement weather  conditions during this period could
have an adverse effect on business levels in Colorado.

Business and Marketing Strategy

The  Company's  business  strategy is to offer casino gaming and a full range of
amenities in a friendly atmosphere that caters to middle and upper-middle income
customers. Incorporating the distinction between Creeker's Casino and the Double
Eagle Hotel & Casino in its marketing efforts, management believes it is able to
increase gaming activity at its respective casinos by attracting  customers from
two market segments.

Creeker's Casino

Creeker's Casino,  resembling a Victorian-style  historic  structure of the late
1800's,  is located at the corner of 3rd Street and Bennett Avenue in the center
of town. Creeker's offers its customers a friendly,  "down-to-earth"  atmosphere
in which to enjoy gaming  activities.  Within its 19,000-square  foot casino, it
offers 234 slot machines, two blackjack tables, two bars, a restaurant featuring
buffet-style meals, and entertainment areas.  Creeker's offers a "down-to-earth"
atmosphere which appeals to many  "day-trippers"  who enjoy a cozier environment
and the personal touch offered by its friendly employees.

Double Eagle Hotel & Casino

Through the Double Eagle Hotel & Casino, the Company established the first major
hotel and  casino  serving  the  greater  Colorado  Springs  area with a growing
population base,  approaching one million.  Unlike existing gaming facilities in
the Cripple  Creek area,  which offer  limited or no  overnight  accommodations,
inconvenient parking and few non-gaming amenities, the Double Eagle features 158
hotel rooms and suites, four parking lots with a total of 650 spaces, free valet
parking and shuttle transportation, and a 45,000-square foot casino offering 659
slot machines and five blackjack  tables.  The facility also includes a 100-seat
restaurant,  Lombard's  Bar & Grill,  two bars and a gift  shop.  Located on the
southwest  corner of Bennett  Avenue and 5th Street,  where Route 67 and Bennett
Avenue  intersect,  the Double Eagle provides  superior access and visibility to
motorists  entering  and  exiting  the City of Cripple  Creek.  With the largest
number of rooms and elegant suites in Cripple Creek,  free valet parking under a
covered  car port,  and an  exciting  and lively  atmosphere,  the Double  Eagle
attracts  customers who enjoy spending multiple days of gaming within a facility
which offers the hospitality and convenience of first-class accommodations.

                                      -7-
<PAGE>
Effective Marketing and Promotion.  The Company's marketing strategy has been to
aggressively  promote its two properties to customers in the  identified  market
segments.  Through the use of radio and print advertising,  promotional  coupons
and special events designed uniquely to address each market segment,  management
attracts players to its respective properties.  Promotional allowances,  such as
complimentary  rooms, food,  beverage and entertainment are used at both casinos
to reward and retain its customers. Specifically, Creeker's promotes coupons for
free bus  transportation,  discounts on buffet meals,  and cash and prizes while
the Double Eagle offers discounted and complimentary hotel rooms,  complimentary
dinners at Lombard's Bar & Grill,  and cash  sweepstakes  to attract  respective
customers.

As part of an aggressive marketing plan to attract gaming patrons and to capture
market share, the management of the Company increased the payout  percentages on
all gaming  devices at the Double  Eagle.  Although  the Company  experienced  a
-11.7%  reduction  in casino  slot win during the third  quarter  ended July 31,
1998,  the handle at the Double  Eagle  increased by 15.3% during the same three
months.  As a result,  in the month of July,  the Double Eagle was successful in
capturing more than its fair market share of casino revenues. Management expects
to implement a similar strategy at Creeker's Casino.

Management  continues to reinforce its  commitment to a high growth  strategy by
improving  its  overall  image  and  effectiveness  through  new and  innovative
marketing programs.  During the third quarter,  ZLR & Associates,  the Company's
marketing and advertising agency, introduced a new image and logo for the Double
Eagle.  A  comprehensive  advertising  and  marketing  plan was  assembled,  and
currently  being  implemented,  to include high exposure  advertising and direct
mail programs.  Player  development  through  database  management is also being
employed to increase return visits by rated players.

Emphasis on Slot Play.  Responding to the increased  popularity of slot machines
over the past several years and recognizing  that most revenues are generated by
slot machines in a limited stakes market, the Company has focused its gaming mix
toward slot, keno, and video poker machines.  To maximize capacity  utilization,
management  chose to reduce the  number of slot  machines  at the Double  Eagle,
improving the casino floor layout while increasing  payout  percentages.  During
the third quarter, management increased payout percentages of all gaming devices
at the Double Eagle by an average of 3%,  increasing  the number of jackpots won
by  players.  As a result,  the Company  realized  an  increase in handle  while
capturing  15%  market  share of slot  win.  Over time and in  conjunction  with
aggressive  marketing programs,  management expects to capture a larger share of
the Cripple  Creek  market as play  increases at the Double  Eagle.  The Company
continues to monitor payout percentages of its slot machines to ensure that they
remain competitive.

Increased  slot play is also  encouraged  through the use of the slot club.  The
slot club and the use of a computerized  player tracking system,  which monitors
the wagering of its members, provides the Company with information which assists
management in planning and directing its marketing efforts to its customers.  As
members of the slot club, patrons are encouraged to insert their frequent player
card into slot,  keno,  and video poker  machines while playing in the casino to
earn points.  Using the tracking  system to track wagering,  management  rewards
members of the slot club based on their point  totals with various cash and gift
prizes.

Customer  Service.  Management is placing greater  emphasis on customer  service
through extensive employee training and education  programs.  These programs are
designed to ensure customers are provided a friendly,  safe, and  service-driven
environment  in which  gaming  becomes a fun and exciting  activity.  During the
third quarter,  the Company retained Alliance,  Inc., a professional  consulting
firm to provide and implement  "quality  control" and customer  service training
programs.

Management  and  Key  Personnel.  The  Company  continues  to  make  significant
investments in key management and personnel  through benefits packages and bonus
programs.  Employee benefits, which include medical, dental and vision plans, in
addition to on-the-job  training and  advancement  opportunities  are offered to
attract and retain qualified individuals.

Future  Plans.  Management  believes  that an integral  component of  attracting
patrons in Cripple Creek is adequate,  nearby parking. The Company is proceeding
with its plans to construct a multi-level  parking garage,  which is expected to
accommodate  more than 400 automobiles,  directly  adjacent to the Double Eagle.
During the quarter,  the Company retained an architect to commence design of the
structure,  which  includes  provisions for a convention  facility,  kitchen and
health  spa on the  mezzanine  level.  This  building  will  be  connected,  via
sky-bridge,  directly  to the main  level of the  Double  Eagle  Hotel & Casino,
providing  patrons quick and  convenient  access from the parking  garage to the
property.  Construction  is expected to begin during the first quarter in Fiscal
1999 with completion slated for early Summer `99.

                                      -8-
<PAGE>
COMPANY REVENUE

The Company  reported net operating  revenues for the nine months ended July 31,
1998 of $16.61 million,  a decrease of $329,000 or -1.9% from the $16.94 million
reported  during the same period in 1997.  Casino  revenues  decreased by nearly
$833,000,  down -6.0% from the $13.79 million  recorded for the same  nine-month
period last year to $12.95  million in Fiscal 1998.  Revenues from the hotel and
gift shop also decreased -6.0% to $1.68 million from the $1.78 million  reported
for the nine months ended July 31, 1997.  However,  restaurant  and bar revenues
improved by 17.0%,  up almost  $228,000 to $1.57  million  from $1.34 during the
nine months of Fiscal 1998.

During the nine months,  the Company  reported over  $415,000 in other  revenues
primarily resulting from parking operations and the amusement arcade.

Acquisitions

There were no acquisitions of any significance during this quarter.

Sale of Stock

There was no sale of stock during this quarter.

Results of Operations


Quarter Ended July 31, 1998 Compared to Quarter Ended July 31, 1997

The Company reported net operating  revenues for the quarter ended July 31, 1998
of $6.60  million,  a decrease of  $758,000,  or -10.3%  from the $7.36  million
recorded in 1997.  Generating  approximately  75% of the total  revenues for the
quarter,  the Company's casino  operations  produced  revenues of $4.96 million,
down sharply by over $957,000 from the $5.91  million  reported  during the same
period last year.  Total  operating  expenses were $6.61 million for the quarter
ended July 31, 1998,  increasing by $138,000 from $6.47 million reported for the
same three months in 1997.  Total  operating  expenses as a percentage  of total
revenues  increased  to 100.2% from 88.0%  recorded in the same period of Fiscal
1997.

Casino. Casino revenues decreased by more than $957,000,  down -16.2% from $5.91
million  reported for the third  quarter in 1997 to nearly $4.96 million for the
same period in 1998. The reduction in casino  revenues was primarily a result of
management's  decision to increase pay-out  percentages on all gaming devices at
the Double Eagle.  The immediate  reduction in revenues is expected to be offset
by the increase in handle,  improving  revenues over the longer term.  Costs and
expenses of casino operations were $2.03 million for the three months ended July
31,  1998,  a decrease of nearly  $405,000 or -16.6% from $2.44  million for the
same period in Fiscal 1997.

During the third quarter,  the Company  completed the purchase of gaming devices
from IGT for the Double Eagle, which were previously under an operating lease. A
reduction in payroll  expense also  contributed to the net decrease in costs and
expenses.  Casino costs and expenses as a percentage of casino revenues remained
relatively  flat at 41.0% in 1998  compared  to 41.2%  during the same period in
1997.

Hotel and Gift  Shop.  Revenues  from the hotel and gift shop  amounted  to over
$771,000 for the third  quarter of 1998,  down -6.2% from the $822,000  reported
during the same period last year.  The decrease in revenue was  primarily due to
management's  decision  to  reduce  room  rates in order  to  increase  mid-week
occupancy  levels.  During the three months ended July 31, 1998,  hotel and gift
shop revenues  accounted  for 11.7% of total  consolidated  revenues.  Costs and
expenses of hotel and gift shop  operations  were  $272,000 for the  quarter,  a
decrease of nearly $94,000 or -25.6% from $366,000  reported in 1997.  Hotel and
gift shop costs and  expenses as a  percentage  of hotel and gift shop  revenues
decreased to 35.2% from 44.5% during the same period in 1997.

Restaurant  and Bar.  Restaurant  and bar  revenues  improved by 12.5%,  up over
$73,000 to  $663,000  for the  quarter  ended July 31,  1998.  The  increase  in
revenues  was  primarily  attributed  to  improved  sales of  items  on  revised
restaurant  and bar  menus.  Costs  and  expenses  of  restaurant  and bars were
$781,000  for the three  months  in 1998,  down -14%  compared  to the  $907,000
recorded for the same quarter in 1997.  Restaurant and bar costs and expenses as
a percentage  of  restaurant  and bar  revenues  decreased to 117.7% from 153.9%
during the same period in 1997.

                                      -9-
<PAGE>
Marketing/General  and Administrative.  Marketing and general and administrative
expenses were $3.01 million for the three months ended July 31, 1998, up sharply
by $1.03  million,  or 51.8% from $1.98 million  reported for the same period in
1997.  During the quarter,  and in  conjunction  with  management's  decision to
increase  pay-out  percentages on all Double Eagle gaming  devices,  the Company
increased  its  marketing  and  advertising  expenditures,   including  retainer
payments  and  related   expenses  made  to  ZLR  &   Associates.   General  and
administrative  expenses  increased as a result of a one-time charge of $135,639
to bad debt  expense  and an  increase in payroll  and  compensation  costs.  In
addition,  salaries and wages of the  parking/valet  department  employees  were
included in general and administrative during Fiscal 1998. Marketing and general
and administrative expenses as a percentage of total revenues increased to 45.6%
for the third quarter in 1998 from 26.9% for the same quarter in 1997.

Depreciation  and  Amortization.  Depreciation and amortization was $517,000 for
the three months  ended July 31,  1998, a decrease of nearly  $265,000 or -33.9%
from $781,000 for the same period in 1997. During the nine months ended July 31,
1998, the depreciation  and amortization  expense was lower compared to the same
period in Fiscal  1997  because  the lease  for  gaming  equipment  from IGT was
recorded as an  operating  lease  (off-balance  sheet  financing)  compared to a
capital lease in Fiscal 1998.

Income (Loss) from  Operations.  As a result of factors  discussed above, a loss
from  operations  of $(14,278) was reported for the quarter ended July 31, 1998,
an decrease of over  $(895,000)  from an income of $882,000  reported during the
same period in 1997. As a percentage  of total  revenues,  loss from  operations
decreased  to -0.2%  during the three months in Fiscal 1998 from a gain of 12.0%
during the same period in 1997.

Interest Expense.  Interest expense was $2.07 million for the quarter ended July
31, 1998, an increase of over $817,000 or 65.3% from $1.25 million  recorded for
the same period in 1997.  The net increase in interest  expense is primarily due
to a  one-time  expense  of  $608,826  to fully  amortize  debt  issue  costs in
connection  with a loan payoff,  and an  additional  note incurred in connection
with the purchase of the IGT gaming devices.

Net Loss. The net loss for the Company was $(2.08)  million for the three months
ended July 31,  1998,  an increase of more than  $(1.71)  million from a loss of
$(369,000) reported for the same quarter in 1997.

Nine Months Ended July 31, 1998 Compared to Nine Months Ended July 31, 1997

The Company  reported net operating  revenues for the nine months of Fiscal 1998
of $16.61  million,  a  decrease  of almost  $329,000,  or -1.9% from the $16.94
million recorded in 1997.  Generating  approximately  78% of the total revenues,
the Company's casino operations produced revenues of nearly $13.0 million,  down
nearly  $833,000  from the $13.8  million  reported  during the same period last
year.  Total  operating  expenses were $16.83  million for the nine months ended
July 31, 1998, remaining relatively flat compared to $16.75 million reported for
the same nine months in 1997. Total operating  expenses as a percentage of total
revenues  increased slightly to 101.3% from 98.9% recorded in the same period of
Fiscal 1997.

Casino.  Casino  revenues  decreased  nearly  $833,000,  down -6.0% from  $13.79
million  during the nine  months in 1997 to nearly  $13.0  million  for the same
period in 1998. This reduction was primarily a result of  management's  decision
in the third quarter to increase  pay-out  percentages  on all gaming devices at
the Double  Eagle.  The  reduction  in  revenues is expected to be offset by the
increase in handle,  which is anticipated  to increase  revenues over the longer
term.  Costs and expenses of casino  operations  were $6.04 million for the nine
months ended July 31,  1998, a decrease of $202,000 or -3.2% from $6.24  million
for the same  period in Fiscal  1997.  During  the third  quarter,  the  Company
completed the purchase of gaming  devices from IGT for the Double  Eagle,  which
were  previously  under an operating  lease. A reduction in payroll expense also
contributed to the net decrease in costs and expenses. Casino costs and expenses
as a percentage of casino revenues  increased to 46.6% in 1998 from 45.3% during
the same period in 1997.

Hotel and Gift  Shop.  Revenues  from the hotel and gift shop  amounted  to over
$1.68  million  for the nine months of 1998,  down -6.0% from the $1.78  million
reported during the same period last year. The decrease in revenue was primarily
due to management's  decision to reduce room rates in order to increase mid-week
and  off-season  occupancy  levels.  Hotel and gift shop revenues  accounted for
10.0% of total consolidated revenues.  Costs and expenses of hotel and gift shop
operations  

                                      -10-

<PAGE>
were over $801,000 for the nine months of 1998, a decrease of nearly
$224,000 or -21.8%  from $1.02  million  reported  in 1997.  Hotel and gift shop
costs and expenses as a percentage of hotel and gift shop revenues  decreased to
47.8% from 57.4% during the same period in 1997.

Restaurant  and Bar.  Restaurant and bar revenues  improved by 17.0%,  up nearly
$228,000 to $1.57 million for the nine months ended July 31, 1998.  The increase
in revenues  was  primarily  attributed  to  improved  sales of items on revised
restaurant and bar menus introduced during the third quarter. Costs and expenses
of  restaurant  and bars were $2.07  million for the nine  months in 1998,  down
slightly  compared to the $2.075  million  recorded in 1997.  Restaurant and bar
costs and expenses as a percentage of restaurant  and bar revenues  decreased to
132.2% from 155.0% during the same period in 1997.

Marketing/General  and Administrative.  Marketing and general and administrative
expenses  were  $6.31  million  for the nine  months  ended  July 31,  1998,  up
$970,000,  or 18.2% from $5.34  million  reported  for the same  period in 1997.
During  the third  quarter,  and in  conjunction  with an  aggressive  marketing
campaign,  the Company  increased its marketing  and  advertising  expenditures,
including  retainer  payments  and related  expenses  made to ZLR &  Associates.
General and administrative expenses increased as a result of a $135,639 one-time
write-down  of for bad debt expense and an increase in payroll and  compensation
costs.  Salaries  and  wages  of the  parking/valet  department  employees  were
included in general and administrative during Fiscal 1998. Marketing and general
and administrative expenses as a percentage of total revenues increased to 38.0%
for the nine months in 1998 from 31.5% for the same period in 1997.

Depreciation and  Amortization.  Depreciation and amortization was $1.61 million
for the nine months ended July 31,  1998, a decrease of over  $458,000 or -22.1%
from $2.07  million  for the same period in 1997.  During the nine months  ended
July 31, 1998, the depreciation  and amortization  expense was lower compared to
the same period in Fiscal 1997 because the lease for gaming  equipment  from IGT
was recorded as an operating lease (off-balance  sheet financing)  compared to a
capital lease in Fiscal 1998.


Income (Loss) from  Operations.  As a result of factors  discussed above, a loss
from  operations of  $(220,000)  was reported for the nine months ended July 31,
1998,  an decrease  of nearly  $(411,000)  from an income of  $190,000  reported
during the same period in 1997.  As a percentage  of total  revenues,  loss from
operations  decreased to -1.3% during the nine months in Fiscal 1998 from a gain
of 1.1% during the same period in 1997.

Interest  Expense.  Interest expense was $4.32 million for the nine months ended
July 31,  1998,  an  increase  of nearly  $457,000  or 11.8% from $3.87  million
recorded for the same period in 1997.  The net  increase in interest  expense is
primarily due to a one-time  expense of $608,826,  during the third quarter,  to
fully  amortize  debt  issue  costs in  connection  with a loan  payoff,  and an
additional  note  incurred  in  connection  with the  purchase of the IGT gaming
devices.

Net Loss.  The net loss for the Company was $(4.54)  million for the nine months
ended July 31, 1998, an increase of more than $(867,000) or 23.6% from a loss of
$(3.68) million reported in the nine months of 1997.


Liquidity and Capital Resources

The Company's  principal sources of liquidity and capital resources to date have
been cash flow from operations,  borrowings  under various credit  arrangements,
and equity capital from private placements.

At July 31,  1998,  the Company  had cash and cash  equivalents  totaling  $1.69
million and additional  liquidity under a $15 million  Revolving Credit Facility
("Bank  Revolver")  with  Foothill  Capital  Corporation,  Inc., a subsidiary of
Norwest  Bank.  Net cash used by  operating  activities  for the nine  months of
Fiscal 1998 was $(1.27)  million  compared  to $(1.63)  million  during the nine
months in Fiscal 1997. Net cash used by investing activities for the nine months
ended July 31, 1998 included property and equipment  additions of $3.92 million,
of which  $3.23  million  was used  for the  purchase  of  gaming  devices  from
International  Game Technology  (IGT).  The Company had net borrowings under its
Bank Revolver with Foothill Capital of $13.38 million,  principally to refinance
$10.20 million in  high-interest  mortgages and provide general working capital.
Net cash provided by financing  activities amounted to $4.92 million in the nine
months of 1998 compared to $3.42 million for the same period in 1997.

During the third  quarter,  the  Company  secured a $15 million  Bank  Revolver,
expiring on July 31, 2003,  which bears  interest at the rate of Prime + 2%. The
Bank  Revolver is secured by first  trust  deeds on real  property of the Double
Eagle.  The Company has agreed to maintain certain  financial and  non-financial
covenants  customary  with lending  arrangements  of this type.  The Company has
remained in  compliance  with the  covenants  throughout  the term of the credit
facility.

                                      -11-
<PAGE>
The Company has  demonstrated  its ability to raise debt and equity capital,  as
needed,  in the  past and may seek to raise  additional  equity  capital  in the
future in order to finance  expansion  projects.  The Company is proceeding with
its plans to seek permanent  debt financing in order to refinance  high-interest
debt and to undertake a capital  expenditure program to include the construction
of a parking  garage,  with a  convention  center and health spa, and to provide
additional  food  outlets at its Double  Eagle  property.  It is  expected  that
substantially  all of the assets of the two Cripple  Creek  properties  would be
pledged as security for  repayment  of the debt.  It is likely that the terms of
the debt  would  place  certain  restrictions  on the  Company's  ability to pay
dividends and incur  additional  debt, and would require the Company to maintain
certain  financial  ratios.  There can be no assurance that the financing can be
obtained on terms  acceptable  to the Company.  

Other than the proposed capital expenditure projects, all of which are dependent
on additional  financing,  most of the Company's near-term growth  opportunities
are to a large degree  discretionary and are not expected to require significant
investment or commitment of the Company's financial resources.

At July 31, 1998,  management believes that the Company has sufficient financial
resources,  from expected  operating cash flows together with borrowing capacity
under its credit facility, to meet its foreseeable obligations.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normally  recurring  accruals)  considered  necessary for a fair presentation
have been included.

Operating  results for the nine months  ended July 31, 1998 are not  necessarily
indicative  of the  results  that may be  expected  for the Fiscal  year  ending
October 31, 1998. For further information,  refer to the consolidated statements
and footnotes included in the Registrant's  annual report on Form 10-KSB for the
year ending October 31, 1997.


                                   **********

                                      -12-
<PAGE>
                  COLORADO CASINO RESORTS, INC. & SUBSIDIARIES


                                OTHER INFORMATION


PART II.        Other Information

Item 1.         Legal Proceedings

                The  Company is party to various  lawsuits  relating  to routine
                matters incidental to its business.  Management does not believe
                that the outcome of any such litigation, in aggregate, will have
                a material adverse effect on the Company.

Item 2.         Changes in Securities - None.

Item 3.         Defaults Upon Senior Securities - None.

Item 4.         Submission of Matters to Vote of Security Holders - None.

Item 5.         Other Information - None.

Item 6.         Exhibits and Reports - None.




                                      -13-
<PAGE>


                  COLORADO CASINO RESORTS, INC. & SUBSIDIARIES


                                   SIGNATURES

Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities  Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized this 14th day of September,
1998.


                                     COLORADO CASINO RESORTS, INC.

September 14, 1998          By:         /s/ Rudy S. Saenz
                                     --------------------------
                                     Rudy S. Saenz
                                     President and Chief Executive Officer,
                                     Director (Principal Executive Officer)



September 14, 1998                      /s/ Farid E. Tannous
                                     ---------------------------
                                     Farid E. Tannous
                                     Treasurer and Chief Financial Officer
                                     (Principal Financial Officer)