SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C.  20549
                                   
                              FORM 10-KSB

             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934
                For fiscal year ended October 31, 1996

                    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 [ ]

     Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B  is not  contained  herein,  and  will  not be  contained,  to the  best  of
registrant's   knowledge,   in  definitive   proxy  or  information   statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB [X]

     State  the   registrant's   revenues  for  its  most  recent  fiscal  year:
$10,615,318.

     The aggregate  market value of the voting stock held by  non-affiliates  of
the registrant on January 24, 1997 was approximately  $51,806,567 based upon the
average reported  closing bid and asked price of such shares.  As of January 24,
1997, there were 34,537,711 shares outstanding.

                 DOCUMENTS INCORPORATED BY REFERENCE:
  Proxy Statement from Annual Meeting of Shareholders dated September
                               19, 1996
                                   

                           Table of Contents
                                   
                                   
Part I

     Item 1.Business ..............................................     3

     Item 2.Properties ............................................    11

     Item 3.Legal Proceedings .....................................    12

     Item 4.Submission of Matters to a Vote of Stockholders .......    12


Part II

     Item 5.   Market for Registrant's Common Equity
               and Related Stockholder Matters.....................    13

     Item 6.   Management Discussion and Analysis of Financial Condition
               and Results of Operations...........................    13

     Item 7.   Financial Statements ...............................    16

     Item 8.   Changes in and Disagreements with Accountants
               on Accounting and Financial Disclosure..............    16


Part III

     Item 9.   Directors and Executive Officers of the Registrant      16

     Item 10.  Executive Compensation .............................    17

     Item 11.  Security Ownership of Certain Beneficial Owners 
               and Management .....................................    18

     Item 12.Certain Relationships and Related Transactions .......    19

     Item 13.Exhibits and Reports on Form 8-K .....................    19

<PAGE>

                                Part I

Item 1.     Business

General

     Colorado  Casino  Resorts,   Inc.  (the  "Company"  or  "CCRI"),   a  Texas
corporation,  is a  Colorado-based  casino and hotel  development  company which
presently  owns and  operates  casino and  hotel/casino  properties  in Southern
Colorado.

     Reorganization  and  Merger.  The current  structure  of the Company is the
result of a reorganization and merger effected by Airline of the Virgin Islands,
Inc. (originally  incorporated under the laws of the Virgin Islands on March 25,
1982 and  reincorporated  in the  state of Texas on March  15,  1993)  and Lyric
Development Company, Inc. ("Lyric").  On January 14, 1994, the Company completed
a  reorganization  with Lyric whereby the Company  issued  additional  shares of
common  stock  to  the  shareholders  of  Lyric  in  exchange  for  100%  of the
outstanding  common stock of Lyric.  The  Company's  early  operations  had been
devoted  primarily  to acquiring  land in Cripple  Creek,  Colorado,  for future
development,  identifying acquisition candidates,  obtaining financing,  raising
capital,  and initial land development  planning.  On March 15, 1995,  effective
with the merger of Creeker's,  Inc., an on-going casino  operation,  the Company
ceased to be a  development  stage  company.  The merger was  accounted for as a
pooling of interests. On March 29, 1995, the Company began trading in the NASDAQ
SmallCap Market under the symbol: CCRI.

     Casino  Properties.  Presently,  the Company  owns and  operates  Creeker's
Casino  ("Creeker's"),  and the Double Eagle Hotel & Casino (the "Double Eagle")
through its two  wholly-owned  subsidiaries,  Creeker's,  Inc.  and Double Eagle
Resorts,  Inc.,  respectively.  Both  properties  are located in Cripple  Creek,
Colorado,  with the Double Eagle being the largest  hotel/casino in the state of
Colorado.  Combined,  Creeker's  and the Double Eagle  account for the Company a
total of 980 slot, keno, and video poker machines,  seven blackjack tables, four
bars, two restaurants, a gift shop and a hotel with 158 rooms and suites.

     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 246 slot machines,  two blackjack tables,
two bars, a restaurant  featuring  buffet-style meals, and entertainment  areas.
Creeker's  currently  employs  approximately  90 people and is open seven days a
week from 8:00 a.m. to 2:00 a.m., as limited by Colorado gaming regulations.

     The Double  Eagle  Hotel & Casino.  Through  the new 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,  a
400-space parking lot with free valet parking and shuttle transportation,  and a
45,000- square foot casino offering 746 slot machines and five blackjack tables.
The facility also includes a 100-seat restaurant, Lombard's, two bars and a gift
shop.

     The Double  Eagle  Hotel & Casino was  designed  to be a modern,  state-of-
the-art  hotel and casino with the grandeur of Las Vegas in mind.  This facility
employs the latest in lodging and gaming network  systems for  reservations  and
hotel   guest   check-in,   player   tracking,   inter-linked   voice  and  data
communications,  and  computerized  ventilation  and environment  controls.  The
exterior  of  the  building  is  designed  to be  reminiscent  of  the  historic
structures  which  adorned the city of Cripple  Creek during the pre-World War I
era while the  interior is themed to present  the  glamour  and  splendor of the
"Roaring 20's." With its simulated stained glass barrel ceiling, elegant winding
staircases, and colorful three-dimensional casino signs, the Double Eagle offers
its guests a unique and unforgettable  gaming  experience.  Located on 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.   It  currently   employs
approximately 272 people and is open seven days a week. Its casino is limited to
open, by law, from 8:00 a.m. to 2:00 a.m. while its hotel is open 24 hours.

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  targets  middle  to  upper-income  customers  from  the  greater
Colorado  Springs area and surrounding  communities who prefer to make day trips
to Cripple Creek.  Because of its smaller size and "down-to- earth"  atmosphere,
Creeker's  appeals  to many  customers  who enjoy a cozier  environment  and the
personal touch offered by its friendly employees. Free pizza and a hearty buffet
served in its restaurant  further  heightens  Creeker's  attractiveness  to this
market segment.

     The Double  Eagle  appeals to higher  income  patrons  because of its "Las-
Vegas" style casino  atmosphere,  upscale hotel and restaurant  facilities and a
variety of special  events.  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.  In addition, the Company anticipates
that the planned  convention  facilities  at the Double  Eagle will  attract new
players by capturing meeting and small convention business for the Double Eagle.

     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  prize  give-aways  while  the  Double  Eagle  offers  discounted  and
complimentary hotel rooms,  complimentary dinners at Lombard's  Restaurant,  and
cash sweepstakes to attract respective customers.

     The  implementation of the "Winners Circle" slot club at both Creeker's and
the Double Eagle,  and the use of a player  tracking  system which  monitors the
wagering of its  customers,  provides  the Company  with an  important  tool for
understanding  its customer base.  Information  from the  computerized  tracking
system assists  management to plan and direct marketing efforts to its customers
in both market segments.

     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.  At  Creeker's,
management  chose to increase the number of slot machines to 234, while limiting
the number of table  games to two  blackjack  tables.  The same  philosophy  was
implemented  at the Double Eagle which has 746 slot machines and five  blackjack
tables.

     As members of the Winners  Circle,  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 Winners  Circle  based on their point totals
with various cash and gift prizes.  During fiscal year 1996, Creeker's signed up
11,000 members to the Winners Circle while the Double Eagle welcomed  14,000 new
members to the "club"  during the two months its casino was in operation  during
the fiscal year.

The Cripple Creek Market

     A small mountain town located  approximately 45 miles southwest of Colorado
Springs on the  western  boundary  of Pikes  Peak,  Cripple  Creek is a historic
mining town originally founded in the late 1800's following a large gold strike.
Primarily a tourist  town,  its  traffic is  heaviest  in the summer  months and
decreases to a low point in the winter months.

     Cripple  Creek is one of three  Colorado  historical  cities  where  casino
gaming is legal,  the others being Black Hawk and Central  City.  Cripple  Creek
operated approximately 35% of the gaming devices and generated 25% of the gaming
revenues for these three  cities  during the  calendar  year ended  December 31,
1996.

     The tables below set forth information  obtained from the Colorado Division
of Gaming  regarding  gaming  revenue by market from  calendar year 1993 through
1996.
<TABLE>
<CAPTION>

                       Gaming Revenue by Market
================================================================================
($  in  Thousands)  1993       1994      %Change    1995      %Change    1996   %  Change
--------------------------------------------------------------------------------
<S>             <C>        <C>         <C>        <C>          <C>    <C>          <C>
Cripple Creek   $ 68,736   $ 82,280     19.7%     $ 94,029     14.3   $102,873      9.4%
Central City    $ 78,964   $ 69,702    (11.7%)    $ 94,468     35.5%  $ 88,870     (5.9%)
Black Hawk ..   $112,140   $173,703     54.9%     $195,856     12.8%  $219,911     12.3%
</TABLE>

     Gaming in Colorado is "limited stakes," which restricts any single bet to a
maximum  of $5.00.  While this  limits the  revenue  potential  of table  games,
management believes that slot machine play, which accounts for over 94% of total
gaming revenues,  is currently impacted only marginally by the $5.00 limitation.
Management's  belief is also  based  upon the fact that a  majority  of the slot
machines of  Creeker's  Casino and all of the slot  machines of the Double Eagle
are equipped with embedded bill validators which accept bill denominations of up
to $100.

     Although  there are  currently 26 casinos in Cripple  Creek,  10 are small,
with an average of 115 gaming  devices.  In  addition,  until the opening of the
Double  Eagle,  there were only limited  overnight  accommodations  available in
Cripple  Creek.  Based on these and other  factors,  the Double  Eagle Hotel and
Casino  represents  management's  belief  that the  casinos  which  will be more
successful  and best able to take  advantage of the market  potential of Cripple
Creek will be the larger  casinos  that have  reached a  "critical  mass",  and,
ideally, can offer hotel accommodations.

     The Company faces competition from other casinos in Cripple Creek. Although
there can be no assurance that other casinos in Cripple Creek will not undertake
expansion  efforts  similar to those  initiated by the  Company,  or that large,
established gaming operators will not enter the market, management believes that
the timely opening of the Double Eagle has secured a lucrative  position for the
Company in the Cripple Creek gaming market.

Competition

     Intense competition  characterizes the Cripple Creek and Black Hawk/Central
City markets. A number of Colorado casinos have ceased operations and other have
filed for protection under Chapter 11 of the Bankruptcy Code. Other casinos have
closed  temporarily  or reduced their number of employees,  and many casinos may
not be operating profitably.

     The Company competes with several  established  casino  operators,  some of
which have  greater  financial  resources,  experience  and  expertise  than the
Company.  Because of the  intense  nature of this  competition,  there can be no
assurance that the Company's present  operations will not be adversely  affected
or that its proposed expansion activities will be undertaken or will prove to be
economically successful.

     Management  of the Company  believes  the Double  Eagle Hotel & Casino will
successfully  compete  in its  market  primarily  due to the  fact  that  it was
designed  to be a hotel  and  casino  from  the  ground  up  unlike  most  other
operations  which were converted to casinos from saloons and general stores.  In
addition,  management  of the casino has  developed  internal  programs with its
employees to ensure customers are provided a congenial,  friendly, safe, service
driven, relaxing environment in which gaming becomes an exciting, fun, energetic
activity.  In the  management's  opinion,  these  factors,  coupled  with unique
marketing  programs  specifically  directed  at active  customer  participation,
provides the basis on which the Double Eagle competes in its market area.

     From time to time, casino companies have publicly  expressed an interest in
pursuing  development or expansion in the Cripple Creek market.  It appears that
national,  regional, state and local competition for the casino gaming market in
general will be extremely high during the foreseeable  future,  as casino gaming
activities  expand in  traditional  gaming  states and in new  jurisdictions,  a
number of which have adopted or are considering gaming legislation.

     In addition, passage of the Indian Gaming Regulatory Act in 1988 has led to
rapid  increases in Native  American  gaming  operations,  and the Company's two
casinos may compete for customers with casinos located on Indian reservations in
far  southwestern  Colorado.  The Company expects many competitors to enter such
new jurisdictions that authorize gaming, some of whom may have greater financial
and other resources than the Company.  Such  proliferation of gaming  activities
could significantly and adversely affect the Company's business.  Although there
are no current  proposals  to expand  gaming  into other areas in  Colorado,  if
gaming is allowed in or near any  metropolitan  area, such as Colorado  Springs,
from which the Company draws  customers,  such  expansion  would have a material
adverse effect on the Company's business.

     Colorado law  requires  local voter  approval for any  expansion of limited
gaming. State and local public initiatives  regarding limited gaming in Colorado
are being actively pursued. Several cities within Colorado have active citizens'
lobbies, which in the past, were able to place limited gaming initiatives on the
November 1994 and 1996 statewide ballot. These initiatives failed by substantial
margins.  The 1996  initiative to permit limited  gaming in Trinidad,  Colorado,
located approximately 200 miles south of Cripple Creek, on the New Mexico border
was placed on the November 1996 ballot and also failed.  Future initiatives,  if
passed,  could  significantly  increase the  competition  for gaming  customers,
thereby  adversely  affecting  the Company's  current  business  activities.  In
addition,  the Company's  casinos in Colorado will compete with casinos in other
parts of the United States as legalized gambling continues to proliferate.

     The  Company is  actively  seeking to expand  its  casino  operations  into
jurisdictions  that have  legalized  or are  expected to legalize  gaming in the
future.  There can be no  assurance  that the  Company  will be able to identify
suitable casino projects in which to invest or will be able to complete any such
projects as scheduled or planned.  The Company's ability to complete and operate
new casino projects will be dependent on a number of factors,  many of which are
beyond its control,  including  identification of suitable partners (if needed),
negotiation  of  acceptable  terms,  securing the  required  local,  state,  (or
foreign) licenses,  permits and approvals,  voter and other political approvals,
and any other trends.  As a result,  there can be no assurance  that the Company
will be able to develop  its  current  casino  operations  beyond  the  Colorado
market. In addition, the Company may incur costs in connection with pursuing new
gaming  opportunities  that it cannot  recover  and may be required to expense a
portion of these  costs,  which may  negatively  affect the  Company's  reported
operating performance for the periods the costs are expensed.

Employees

     As of January 24, 1997, the Company employed  approximately  367 persons on
an equivalent full-time basis, including cashiers, dealers,  housekeepers,  food
and beverage service personnel, facilities maintenance staff, and accounting and
marketing  personnel.  Of this total,  approximately 90 people work at Creeker's
Casino and 272 people work at the Double Eagle Hotel & Casino.  The balance work
at the  corporate  offices.  None of the  Company's  employees  are covered by a
collective bargaining agreement and none are represented by labor unions.

Seasonality

     The  Company's  business is not  considered  to be seasonal,  however,  the
anticipated  highest levels of business activity (in Colorado) will occur during
the tourist  season (i.e.,  from May through  September).  Its base level (i.e.,
November  through May) is expected to remain fairly  constant  although  weather
conditions during this period could have a significant impact on business levels
in Colorado.

                        Governmental Regulation

     The  Company's  gaming  operations  are  subject  to  strict   governmental
regulations at federal,  state and local levels.  Statutes and  regulations  can
require the Company to meet various standards  relating to, among other matters,
business   licenses,   registration  of  employees,   floor  plans,   background
investigations of licensees and employees, historic preservation, building, fire
and  accessibility  requirements,  payment  of  gaming  taxes,  and  regulations
concerning  equipment,  machines,  tokens,  gaming  participants,  and ownership
interests.  Civil and  criminal  penalties  can be assessed  against the Company
and/or  its  officers  or  stockholders  to  the  extent  of  their   individual
participation in, or association with, a violation of any of the state and local
gaming  statutes  or  regulations.  Such  laws  and  regulations  apply  in  all
jurisdictions  within the United  States in which the Company  may do  business.
Management  believes that the Company is in compliance  with  applicable  gaming
regulations.

Colorado Gaming Regulations

     The State of  Colorado  created the  Division  of Gaming  (the  "Division")
within the Department of Revenue to license,  implement,  regulate and supervise
the  conduct  of  limited  gaming.  The  Director  of the  Division,  under  the
supervision of a five-member Colorado  Commission,  has been granted broad power
to ensure  compliance  with the gaming laws and regulations  adopted  thereunder
(the "Colorado Regulations").  The Director may inspect, without notice, impound
or remove any gaming device. He may examine and copy any licensee's records, may
investigate the background and conduct of licensees and their employees, and may
bring  disciplinary  actions against licensees and their employees.  He also may
conduct  detailed  background  investigations  of persons  who loan money to the
Company.

     The  Colorado  Commission  is  empowered  to issue five types of gaming and
gaming-related  licenses.  The failure or inability  of the  Company,  CreekerOs
Casino,  Double  Eagle Hotel & Casino or others  associated  with the Company to
maintain  necessary  gaming licenses will have a material  adverse effect on the
operations of the Company.  All persons  employed by the Company,  CreekerOs and
the Double Eagle and involved,  directly or indirectly,  in gaming operations in
Colorado  also are required to obtain a Colorado  gaming  license.  All licenses
must be renewed annually.

     As a  general  rule,  under  the  Colorado  Regulations,  it is a  criminal
violation  for any  person  to have a legal,  beneficial,  voting  or  equitable
interest, or right to receive profits, in more than three retail gaming licenses
in Colorado. The Commission has ruled that a person does not have an interest in
a licensee for purposes of the multiple-license  prohibition if: (i) such person
has less than a five percent (5%) interest in an  institutional  investor  which
has an  interest  in a publicly  traded  licensee  or  publicly  traded  company
affiliated  with a  licensee  (such as the  Company);  (ii) a person  has a five
percent (5%) or more financial  interest in an institutional  investor,  but the
institutional  investor has less than a five percent (5%) interest in a publicly
traded licensee or publicly traded company affiliated with a licensee;  (iii) an
institutional investor has less than a five percent (5%) financial interest in a
publicly traded licensee or publicly traded company  affiliated with a licensee;
(iv) an institutional  investor possesses securities in a fiduciary capacity for
another  person,  and does not exercise voting control over five percent (5%) or
more of the outstanding  voting securities of a publicly traded licensee or of a
publicly traded company  affiliated with a licensee;  (v) a registered broker or
dealer retains  possession of securities of a publicly  traded  licensee or of a
publicly  traded company  affiliated with a licensee for its customers in street
name or otherwise,  and exercises  voting rights for less than five percent (5%)
of the publicly  traded  licensee's  voting  securities or of a publicly  traded
company affiliated with a licensee; (vi) a registered broker or dealer acts as a
market maker for the stock of a publicly traded licensee or of a publicly traded
company  affiliated with a licensee and possesses a voting interest in less than
five percent (5%) of the stock of the publicly  traded licensee or of a publicly
traded  company  affiliated  with a licensee;  (vii) an  underwriter  is holding
securities  of a  publicly  traded  licensee  or of a  publicly  traded  company
affiliated with a licensee as part of an  underwriting  for no more than 90 days
if it exercises  voting rights of less than five percent (5%) of the outstanding
securities  of a  publicly  traded  licensee  or of a  publicly  traded  company
affiliated with a licensee; (viii) a stock clearinghouse holds voting securities
for third parties,  if it exercises voting rights with respect to less than five
percent (5%) of the outstanding securities of a publicly traded licensee or of a
publicly traded company  affiliated with a licensee;  or (ix) a person owns less
than five percent (5%) of the voting  securities of the publicly traded licensee
or publicly traded company affiliated with a licensee.  Hence, the Company's and
its  stockholders'  business  opportunities  in  Colorado  are  limited  to such
interests that comply with the statute and Commission's rule.

     In  addition,  pursuant to the Colorado  Regulations,  no  manufacturer  or
distributor of slot machines may have an interest in any casino operator,  allow
any of its officers to have such an  interest,  employ any person if such person
is employed by a casino operator,  or allow any casino operator or person with a
substantial  interest  therein  to  have  an  interest  in a  manufacturer's  or
distributor's  business.  The Commission has ruled that a person does not have a
"substantial  interest" if it directly or indirectly  has less than five percent
(5%) of such voting securities of a licensee.

     Under the Colorado  Regulations,  any person or entity having any direct or
indirect  interest in a gaming  licensee or an applicant  for a gaming  license,
including,  but not limited to, the Company and stockholders of the Company, may
be required to supply the  Colorado  Commission  with  substantial  information,
including,  but not  limited  to,  background  information,  source  of  funding
information,  a sworn  statement  that such  person or entity is not holding his
interest for any other party, and fingerprints. Such information,  investigation
and licensing as an "associated  person"  automatically  will be required of all
persons  (other than  certain  institutional  investors  discussed  below) which
directly or  indirectly  own ten  percent  (10%) or more of a direct or indirect
legal,  beneficial or voting interest in CreekerOs or the Double Eagle,  through
their ownership in the Company. Such persons must report their interest and file
appropriate  applications within 45 days after acquiring such interest.  Persons
directly or  indirectly  having a five percent (5%) or more  interest  (but less
than 10%) in  CreekerOs  or the Double  Eagle,  through  their  ownership in the
Company,  must report their interest to the Colorado  Commission within ten (10)
days after  acquiring  such  interest and may be required to provide  additional
information and to be found suitable. If certain institutional investors provide
certain information to the Colorado Commission,  such investors, at the Colorado
Commission's  discretion,  may be  permitted  to own up to 14.99%  of  CreekerOs
and/or the Double Eagle,  through their  ownership in the Company,  before being
required to be found suitable. All licensing and investigation fees will have to
be paid for by the person in question. The "associated person" investigation fee
currently is $37 per hour.

     The Colorado  Commission also has the right to request information from any
person directly or indirectly interested in, or employed by, a licensee,  and to
investigate the moral character,  honesty integrity, prior activities,  criminal
record, reputation, habits and associations of (i) all persons licensed pursuant
to  the  Colorado   Limited  Gaming  Act;  (ii)  all  officers,   directors  and
stockholders  of a licensed  privately  held  corporation;  (iii) all  officers,
directors  and  stockholders  holding  either  a five  percent  (5%) or  greater
interest or a controlling  interest in a licensed  publicly traded  corporation;
(iv) all general  partners and all limited  partners of a licensed  partnership;
(v) all  persons  which  have a  relationship  similar  to  that of an  officer,
director or  stockholder  of a  corporation  (such as members and  managers of a
limited  liability  company);  (vi) all persons  supplying  financing or loaning
money to any licensee  connected with the  establishment or operation of limited
gaming;  and (vii) all persons having a contract,  lease or ongoing financial or
business  arrangement  with  any  licensee,   where  such  contract,   lease  or
arrangement  relates  to  limited  gaming  operations,   equipment,  devices  or
premises.

     In addition, under the Colorado Regulations, every person who is a party to
a "gaming  contract" with an applicant for a license,  or with a licensee,  upon
the request of the Colorado Commission or the Director, promptly must provide to
the  Colorado  Commission  or Director  all  information  which may be requested
concerning:  financial history,  financial holdings,  real and personal property
ownership,  interests in other companies, criminal history, personal history and
associations,  character, reputation in the community, and all other information
which might be relevant to a determination whether a person would be suitable to
be  licensed by the  Colorado  Commission.  Failure to provide  all  information
requested  constitutes  sufficient  grounds  for the  Director  or the  Colorado
Commission to require a licensee or applicant to terminate its "gaming contract"
with any person who failed to provide the  information  requested.  In addition,
the  Director  or  the  Colorado  Commission  may  require  changes  in  "gaming
contracts" before an application is approved or participation in the contract is
allowed.  A "gaming  contract" is defined as an agreement in which a person does
business with or on the premises of a licensed entity.

     An  application  for licensure or  suitability  may be denied for any cause
deemed  reasonable by the Colorado  Commission or the Director,  as appropriate.
Specifically,  the Colorado  Commission  and the Director must deny a license to
any applicant who (i) fails to prove by clear and  convincing  evidence that the
applicant is  qualified;  (ii) fails to provide  information  and  documentation
requested;  (iii) has  been,  or has any  director,  officer,  general  partner,
stockholder,  limited  partner  or other  person who has a  financial  or equity
interest in the applicant who has been  convicted of certain  crimes,  including
gambling-  related  offenses,  theft by deception or crimes  involving  fraud or
misrepresentation,  is under current  prosecution  for such crimes,  is a career
offender  or a  member  or  associate  of a  career  offender  cartel,  or  is a
professional gambler; or (iv) has refused to cooperate with any state or federal
body investigating organized crime, official corruption or gaming offenses.

     If the Colorado Commission determines that a person or entity is unsuitable
to own  interests in the Company,  then the  Company,  CreekerOs  and the Double
Eagle may be  sanctioned,  which may include the loss by the Company,  CreekerOs
and the Double Eagle of their respective approvals and licenses.

     The  Colorado  Commission  does not need to  approve  in  advance  a public
offering of  securities,  but rather  requires a filing of notice and additional
documents  with regard to such public  offering  prior to such public  offering.
Under the regulations,  the Colorado Commission may, in its discretion,  require
additional  information and prior approval of such public offering. In addition,
the Colorado  Regulations prohibit a licensee or affiliated company thereof such
as the Company,  from paying  dividends,  interest or other  remuneration to any
unsuitable  person,  or  recognizing  the  exercise of any voting  rights by any
unsuitable  person.  Further,  the  regulations  require  anyone with a material
involvement  with a  licensee,  including  a  director  or  officer of a holding
company,  such as the Company,  to file for a finding of suitability if required
by the Colorado Commission.

     In  addition  to its  authority  to deny an  application  for a license  or
suitability,  the Colorado Commission has jurisdiction to disapprove a change in
corporate position of a licensee and may have such authority with respect to any
entity which is required to be found  suitable by the Colorado  Commission.  The
Colorado  Commission  has the power to require the  Company,  CreekerOs  and the
Double Eagle to suspend or dismiss managers,  officers,  directors and other key
employees  or  sever  relationships  with  other  persons  who  refuse  to  file
appropriate  applications or whom the authorities find unsuitable to act in such
capacities, and may have such power with respect to any entity which is required
to be found suitable.

     A person  or entity  may not sell,  lease,  purchase,  convey or  acquire a
controlling  interest in the Company  without the prior approval of the Colorado
Commission.  The Company may not sell any interest in  CreekerOs  and the Double
Eagle without the prior approval of the Colorado Commission.

     Under the Colorado  Regulations,  the Company may  repurchase the shares of
anyone found  unsuitable  at the lesser of the cash  equivalent  to the original
investment  in the  Company or the  current  market  price.  Under the  Colorado
Regulations,  the Company cannot make any distribution,  pay any remuneration or
recognize the vote of any unsuitable person.

     CreekerOs   and  the   Double   Eagle  must  meet   certain   architectural
requirements,  fire  safety  standards  and  standards  for access for  disabled
persons.  CreekerOs  and the Double  Eagle also must not exceed  certain  gaming
square footage limits as a total of each floor and the full building.  CreekerOs
and the Double  Eagle may operate  their  casinos only between 8:00 a.m. to 2:00
a.m., and may permit only individuals 21 years or older to gamble in the casino.
Furthermore,  as a result of new  regulations  effective  on  October  1,  1996,
individuals  under the 21 years may not be present in  designated  gaming  areas
within the casino.  CreekerOs  and the Double  Eagle may permit  slot  machines,
blackjack and poker, with a maximum single bet of $5.00.  However,  they may not
provide credit to its gaming patrons.

Gaming Taxes and Fees

     The  Colorado  Constitution  permits a gaming tax of up to 40% on  adjusted
gross gaming proceeds.  The Colorado  Commission has set a gaming tax rate of 2%
on adjusted gross gaming proceeds of up to and including $2 million,  4% over $2
million up to and including $4 million,  14% over $4 million up to and including
$5  million,  18% over $5 million up to and  including  $10  million  and 20% on
adjusted gross gaming proceeds in excess of $10 million. The Colorado Commission
also has imposed an annual  device fee of $75 per gaming  device.  The  Colorado
Commission  may  revise  the  gaming  tax rate and device fee from time to time.
Cripple Creek has imposed an annual device fee of $675 per gaming device for the
first 50 devices and $1,200 per gaming device thereafter and may revise the same
from time to time.

Colorado Liquor Regulations

     The sale of  alcoholic  beverages  is subject  to  licensing,  control  and
regulation  by the  Colorado  Liquor  Agencies.  All  persons  who  directly  or
indirectly  own 10% or more of  CreekerOs  Casino and the Double  Eagle  Hotel &
Casino,  through  their  ownership of the Company,  must file  applications  and
possibly be investigated by the Colorado  Liquor  Agencies.  The Liquor Agencies
also may investigate those persons who, directly or indirectly, loan money to or
have any financial interest in liquor licensees.  All licenses are revocable and
not transferable.  The Liquor Agencies have the full power to limit,  condition,
suspend or revoke any such license and any such  disciplinary  action could (and
revocation  would) have a material  adverse  effect upon the  operations  of the
Company.  The Double Eagle and Creeker's hold a retail gaming tavern license for
their casino and restaurant operations.  Accordingly, no person with an interest
in the Company can have an interest in a liquor  licensee  which holds  anything
other than a gaming tavern license,  and specifically cannot have an interest in
an entity which holds a hotel and restaurant liquor license.

Item 2.     Properties

     Corporate Offices.  The Company leases  approximately  2,700 square feet of
office space at 304 South Eight Street,  Suite 201, Colorado  Springs,  Colorado
from an  unaffiliated  party.  The term of the lease is until July 31, 1998 with
annual rental payments totaling $28,308 through July 31, 1997, and increasing to
$29,723 per year through the end of the term.

     Creeker's Casino. Creeker's Casino is a three story building which houses a
19,000 square foot casino with 234 slot and video devices, two blackjack tables,
two bars, a 110-seat restaurant, and areas for live entertainment.  Creeker's is
a corner property with 50 feet of frontage on Bennett  Avenue,  the major gaming
thoroughfare in Cripple Creek, Colorado, and 150 feet of frontage on 3rd Street.

     Double  Eagle  Hotel & Casino.  The Double  Eagle  Hotel & Casino six story
building  situated on a 24,750  square foot lot.  The hotel houses 158 rooms and
suites while the 45,000  square foot casino  offers 746 slot and video  devices,
five  blackjack  tables,  two bars, a 100-seat  restaurant,  and gift shop.  The
Double Eagle is the largest  single  property in Cripple  Creek with 225 feet of
frontage on Bennett Avenue and 110 feet of frontage on 5th Street.  In addition,
the Double Eagle owns a six-acre lot (the "Southern Boy" site), located 75 yards
southwest  of the  building,  used  for  employee  and  guest  parking.  The lot
accommodates approximately 400 vehicles.

     Myers  Avenue  Site.  The  Company  presently  owns a one  acre  parcel  of
property,  consisting of 40,705  square feet of land,  situated 80 yards west of
Creeker's Casino in Cripple Creek.  This property,  located on the corner of 4th
Street  and Myers  Avenue,  is  currently  zoned for  gaming  and is held by the
Company for future development.

Item 3.     Legal Proceedings

     Except non-material litigation incident to its ordinary course of business,
the  Company  is not a party to, and is not aware of any  threatened  litigation
which  could  have a  material  adverse  effect on its  business  or  results of
operations.

Item 4.     Submission of Matters to a Vote of Stockholders

     At the annual meeting of  stockholders of the Company held on September 19,
1996, the stockholders considered and voted on the following items:

          i) Three  persons  nominated by the Board of Directors for election as
     directors  to serve until the next annual  meeting of  stockholders  of the
     Company or until their  successors  have been duly  elected and  qualified,
     along with the voting  outcome which resulted in each nominee being elected
     (as a group) as a  director,  were as follows:  Votes Votes Votes  Nominees
     Cast For  Cast  Against  Abstained  Rudy S.  Saenz,  Gilbert  M.  Sisneros,
     29,268,415 5,000 0 and Michael S. Smith

          ii) Proposal to change the Company's  state of  incorporation  from Te
     xas to Colorado by means of a merger of the Company  into  Colorado  Casino
     Resorts,  Inc. II, a newly organized  Colorado  corporation wholly owned by
     the Company, was voted on and unanimously accepted.

          iii) To ratify the selection of Williams, Richey & Co. to serve as the
     Company's   independent   auditors   until  the  next  annual   meeting  of
     stockholders was voted on and unanimously accepted.

                                Part II

          Item 5.Market for Registrant's  Common Equity and Related  Stockholder
     Matters

     The common stock began trading in the NASDAQ  SmallCap  Market on March 29,
1995.  The  following  table  sets  forth  the low and high bid  price per share
quotations as reported on the NASDAQ SmallCap Market of the common stock for the
periods indicated.  These quotations reflect inter-dealer prices, without retail
mark up,  mark  down or  commission  and may not  necessarily  represent  actual
transactions. Actual prices may vary.
<TABLE>
<CAPTION>

Fiscal Year Ending October 31, 1995:
                                                       High      Low
<S>                                                    <C>       <C>
First Quarter (from March 29, 1995)..................  $3 3/4    $2 3/4
Second Quarter.......................................  $4 3/4    $2 3/8
Third Quarter........................................  $5 1/4    $3 5/8
Fourth Quarter.......................................  $5 1/8    $3 1/2

Fiscal Year Ending October 31, 1996:
                                                       High      Low
First Quarter........................................  $4 3/4    $4 3/8
Second Quarter.......................................  $4 5/8    $4 3/8
Third Quarter........................................  $2 5/8    $2 1/4
Fourth Quarter.......................................  $2 3/8    $2 3/16
</TABLE>

     At October 31, 1996, the Company had approximately 205 holders of record of
its voting common stock; management estimates that the Company has approximately
1,614 additional beneficial holders of its common stock held in names of brokers
and securities depositories.

     At the present time,  management of the Company intends to use any earnings
which  may be  generated  to  finance  the  growth  of the  Company's  business.
Accordingly,  the  Company  has  not  paid or  declared  cash  distributions  or
dividends on its common  stock and does not intend to pay cash  dividends in the
foreseeable future. Future payment of cash dividends rests within the discretion
of the Board of  Directors  and is based on the  Company's  earnings,  financial
condition, capital requirements and other factors.

     Item  6.Management  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations

Results of Operations

     During the fiscal year ended October 31, 1996,  the Company formed a wholly
owned subsidiary,  Double Eagle Resorts, Inc., to conduct business as the Double
Eagle Hotel & Casino in Cripple Creek,  Colorado.  Effective August 1, 1996, the
Company transferred assets and liabilities,  related to the Double Eagle, in the
net amount of $15,315,296 to the subsidiary in a tax-free exchange.  On July 27,
1996 the Company opened the hotel and Lombard's Restaurant (at the Double Eagle)
for business and,  upon  receiving  its gaming  license from the Colorado  State
Division of Gaming, opened the casino and bars on August 29, 1996. The Company's
results of operations  for 1996 include the activities of the Double Eagle Hotel
& Casino and Creeker's Casino.

     The Company reported net operating revenues for fiscal 1996 of $10,615,318,
an increase of $6,408,383,  or 152% from the $4,206,935 recorded in 1995. Of the
increase,  $3,947,536,  or 62% of the total  increase,  was  attributable to one
quarter of operations of the Double Eagle Hotel & Casino. Although,  income from
operations, net of pre- opening expenses, amounted to $1,205,917, representing a
1,194%  increase over the $93,200  reported in 1995, the Company  reported a net
loss of ($3,330,761) or ($0.1035) per share compared to a net loss of ($462,059)
or  ($0.0150)  per share in fiscal  year 1995.  Contributing  to the loss was an
increase  in  interest   expenses  of  $1,856,598  and  a  one-time  charge  for
pre-opening  expenses of $2,298,763,  both  associated with building and opening
the Double Eagle.

     Casino.  Fiscal 1996 casino  revenues  increased  $5,678,424,  up 142% from
fiscal  1995 casino  revenues of  $4,006,694  to  $9,685,118.  The two months of
operations  of the Double  Eagle casino  provided  $3,228,098  of the  increase.
Casino  costs and  expenses  increased  42% with the opening of the Double Eagle
from  $2,085,345 to $2,957,923 in fiscal 1996.  While the Double Eagle accounted
for 57% of the casino  revenue  growth,  it  accounted  for the entire  $872,578
increase in casino  expenses.  Creeker's casino revenues grew by over 61%, while
casino expenses remained  relatively flat with a 2% increase from fiscal 1995 to
fiscal 1996.  Management attributes this improvement to aggressive marketing and
successful promotions, implementation of the "Winners Circle" slot club, as well
as, the selection and addition of new gaming devices with bill validators. As of
October 31, 1996,  Creeker's  had 234 gaming  devices and two  blackjack  tables
while the Double Eagle had 746 gaming devices and five blackjack tables.

     Hotel and Gift  Shop.  Revenues  from the hotel and gift shop  amounted  to
$507,825,  representing  approximately 5% of total operating  revenues in fiscal
1996.  The 158-room hotel was open for three months while the gift shop was open
for one month during the fiscal year.  Hotel and gift shop  expenses of $398,263
constituted  78% of the  revenues,  due  primarily  to initial  inventories  and
start-up expenses.

     Restaurant  and  Bar.  Restaurant  and bar  revenues  improved  by 81%,  up
$162,959 to $363,200 in fiscal 1996, net of  promotional  allowances of $385,432
and $214,518 in fiscal 1996 and 1995,  respectively.  Just over  $130,000 of the
increase  was  provided  by three  months  of  operations  of the new  Lombard's
Restaurant,  located in the Double  Eagle.  Lombard's  is a  100-seat,  up-scale
restaurant serving made-to- order meals from its American-Continental menu. Food
and beverage  costs and expenses rose by 116%, up $650,773 to  $1,210,615,  with
restaurant  and bar  operations  at the Double Eagle  accounting  for 63% of the
increase.

     General and Administrative.  General and administrative  expenses increased
237%, up $2,648,073 to $3,765,232 for fiscal 1996.  Approximately  $672,104,  or
25% of the  increase,  was directly  attributable  to the new  operations at the
Double  Eagle.  Marketing  and  promotional  expenses of  $670,000 at  Creeker's
constituted another 25% of the total increase,  with the balance attributable to
increases in payroll and certain  overhead  costs at the  corporate  offices and
Creeker's.

     Depreciation.   Depreciation   expense   increased  207%,  up  $725,979  to
$1,077,368 for fiscal 1996,  with 72% of the increase,  approximately  $525,000,
primarily  due to  capital  spending  associated  with  the  Double  Eagle.  The
remaining increase of approximately  $200,000 is attributable to the addition of
new gaming devices at Creeker's.

     Interest  Expense.   Interest  expense,  net  of  interest  capitalized  of
$1,241,199,  increased $1,856,598, or 334% from fiscal 1995 to fiscal 1996. This
increase was  attributable to the Double Eagle  financing,  including  equipment
financing, higher consolidated debt levels, and higher interest rates.

     Pre-Opening  Expenses.  As a result of  opening  the Double  Eagle  Hotel &
Casino  in  fiscal  1996,  the  Company  recognized  $2,298,763  in  pre-opening
expenses. These charges had been incurred in connection with the development and
opening  of  that  property.  Approximately  $1,500,000,  or 65%  of  the  total
pre-opening  expenses,  is due  to the  initial  progressive  jackpot  liability
reserves,  while the  balance is  composed of the  pre-opening  payroll,  gaming
taxes, marketing costs and supplies.

Liquidity and Capital Resources

     The Company's  primary  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 October  31, 1996 the  Company  had cash and cash  equivalents  totaling
$2,828,994 and $1,000,000  available under a revolving line of credit. Cash flow
from operations for fiscal 1996 was  $2,495,032,  while cash flow from financing
activities totaled  $19,817,736.  Net cash used in the purchase and construction
of land,  building and  capitalized  expenditures  for property and equipment of
$21,058,919  was funded by the infusion of $18,375,000 in debt and $4,275,000 in
equity capital during fiscal 1996.

     Additionally, the Company entered into eight equipment financing agreements
to fund the  acquisition of gaming and  associated  equipment.  The  outstanding
balance  under  these  equipment  financing  agreements  at October 31, 1996 was
$7,320,941.  Under the terms of six  agreements,  repayments  of  principal  and
interest  are due in 36  monthly  installments,  while  two  agreements  require
repayments of principal and interest in 60 monthly  installments.  All equipment
financing   agreements  are  secured  by  the  equipment   financed  under  such
agreements. The obligations under the financing agreements are guaranteed by the
Company.

     The $1,000,000  revolving line of credit requires  interest payable monthly
at the prime rate plus 1% and contains  certain  financial and other  covenants.
These  covenants  require the Company to use the line of credit only to fund the
progressive  jackpot liabilities at the Double Eagle Hotel & Casino. The line of
credit is secured by a second  deed of trust on the  hotel/casino.  There was no
outstanding balance under the line at October 31, 1996.

     The Company has  demonstrated its ability to raise debt and equity capital,
as  needed,  over the past four  years and may seek to raise  additional  equity
capital in the future,  although  there are no present plans to do so.  However,
the Company  intends to seek  permanent debt financing in order to take out more
expensive construction debt.  Specifically,  the Company anticipates refinancing
its near-term obligations of approximately  $13,700,000 during the second fiscal
quarter.  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.

     Management believes that the Company has sufficient  financial resources at
October 31, 1996 to meet its  foreseeable  obligations and to pursue a number of
growth  opportunities.  Other than the proposed  addition of a 60-room  hotel to
Creeker's  Casino and  construction  of a  conference  center  within the Double
Eagle,  both  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.

     Item 7. Financial Statements

     The consolidated  financial  statements and  supplementary  data are as set
forth in "Index to Consolidated Financial Statements" on page F-1 hereof.

     Item 8. Changes in and  Disagreements  with  Accountants  on Accounting and
Financial Disclosure

None.
                               Part III

     Item 9. Directors and Executive Officers of the Registrant

     The  following  table sets forth  information  regarding  the  officers and
directors of the Company:
<TABLE>
<CAPTION>
Name                     Age           Positions Held               Since
----                     ---           --------------               -----
<S>                      <C>       <C>                            <C>
Rudy S. Saenz            41        President, Chief Executive       January 1992
                                   Officer and Director             

Gilbert M. Sisneros      57        Vice President and Director        March 1995

Michael S. Smith         37        Secretary, General Counsel       January 1993
                                   and Director                     

Farid E. Tannous         30        Treasurer and Chief Financial   February 1996 
                                   Officer                         
</TABLE>

     Rudy S. Saenz is President and a Director of the Company and its subsidiary
Double Eagle Resorts, Inc., and predecessors since 1992. From 1989 through 1992,
Mr.  Saenz was  employed in marketing  and new  business  development  at Hughes
Aircraft  Company.  Rudy received a Bachelors of Science in Engineering from the
University of California at San Diego in 1982.

     Gilbert M.  Sisneros is Vice  President and a Director of the Company since
1995. Mr. Sisneros had been owner and President of Creeker's,  Inc., a casino in
Cripple  Creek,  Colorado  since  1991.  From  1983 to 1991,  he was  owner  and
President of Metro Wholesale,  Inc., a food supply company in Colorado  Springs,
Colorado. Gilbert attended Leadville Community College in Leadville, Colorado.

     Michael S.  Smith is  Secretary,  General  Counsel  and a  Director  of the
Company since 1992. Mr. Smith has also been a self-employed  attorney in Denver,
Colorado  since 1992.  Prior to joining  the  Company,  he was an attorney  with
McKenna & Cueno from 1991 to  February,  1992.  He received a Bachelors  of Arts
from Marquette University in 1981 and a Juris Doctoris degree in 1984.

     Farid E. Tannous is Treasurer  and Chief  Financial  Officer of the Company
since  February,  1996.  Prior to joining  the  Company,  Mr.  Tannous  was Vice
President and Chief Financial Officer of Phoenix  Micro-Lite,  Inc., a privately
held start-up company in Los Angeles, California. Mr. Tannous was also owner and
President  of F.E.  Tannous & Company  Investment  Management  Group in  Beverly
Hills,  California  from July,  1994 to  February,  1996.  Previously,  he was a
Business  Analyst  with Hughes  Power  Products,  Inc.  and  engineer in various
divisions of Hughes Aircraft Company.  In June of 1994, Farid received an MBA in
finance and accounting  from the University of Chicago.  He also holds a Masters
(1990) and a  Bachelors  (1988) of Science in  Electrical  Engineering  from the
University of Southern California.

     Item 10. Executive Compensation
<TABLE>
<CAPTION>

     The table  below  sets forth  executive  compensation  for the period  1993
through 1996 to the officers of the Company:

                      Summary Compensation Table
================================================================================
Name and                 Fiscal         Annual           Annual  Other Annual  LTIP     All Other
Principal Position       Year End       Salary           Bonus   Compensation  Payouts Compensation
------------------       --------       ------           -----   ------------  --------------------
<S>                      <C>            <C>            <C>           <C>       <C>       <C>
Rudy S. Saenz            10/31/96       $148,000       $220,000      none      none      none
President & CEO          10/31/95       $120,453           none      none      none      none
                         10/31/94           none           none      none      none      none
                         10/31/93           none           none      none      none      none

Gilbert M. Sisneros      10/31/96       $148,000       $220,000      none      none      none
Vice President           10/31/95       $232,962           none      none      none      none
                         10/31/94        $26,000           none      none      none      none
                         10/31/93           none           none      none      none      none

Michael S. Smith         10/31/96           none           none      none      none      none
Secretary &              10/31/95           none           none      none      none      none
General Counsel          10/31/94           none           none      none      none      none
                         10/31/93           none           none      none      none      none

Farid E. Tannous         10/31/96        $48,462           none      none      none      none
Treasurer & CFO
</TABLE>

     Directors  of  the  Company  who  are   full-time   employees   receive  no
compensation  for their  services  as  directors.  All of the  directors  of the
Company are full-time employees.

     The table below sets forth  information  concerning the exercise of options
during  1996 along with the  aggregate  1996  year-end  option  holdings  of the
officers of the Company:
<TABLE>
<CAPTION>

    Aggregated Option Exercises in 1996 and Year-End Option Values
                             Common Stock
================================================================================
                                                  Number of securities   Value of unexercised
                                                  underlying options at       in-the-money
                     Shares Acquired   Value       October 31, 1996            options at
Name                  on Exercise    Realized  Exercisable/Unexercisable   October 31, 1996
----                    -----------   --------  -------------------------   ----------------
<S>                        <C>         <C>         <C>                         <C>
Rudy S. Saenz              none        none        140,000/320,000             $382,500
Gilbert M. Sisneros        none        none           0/250,000                 $93,750
Michael S. Smith           none        none          20,000/85,000              $69,375
Farid E. Tannous           none        none           0/100,000                 $37,500
</TABLE>
 
     The table below sets forth information  concerning grants of options during
1996 to the officers  and key  employees  of the Company  under a  Non-Qualified
Stock Option Plan:
<TABLE>
<CAPTION>

                      Option Grants of 1996 - Common Stock

                      Number of securities   Percent of total
                          underlying         options granted  Exercise      Expiration
Name                    options granted      to employees     Price            Date
----                    ---------------      ------------     -----            ----
<S>                           <C>               <C>           <C>        <C>
Rudy S. Saenz                 250,000           30.58%        $2.00        August, 2004
Gilbert M. Sisneros           250,000           30.58%        $2.00        August, 2004
Michael S. Smith               75,000            9.17%        $2.00        August, 2004
Farid E. Tannous              100,000           12.23%        $2.00      February, 2004
All key employees
   as a group                 142,500           17.43%        $2.00        August, 2004
</TABLE>

     On March 26, 1996,  the Company  made a  commitment  to issue a warrant for
30,000 shares  exercisable at $3.00 per share to a certain  investment  agent as
compensation for services rendered related to a $1.5 million private  placement.
As of October 31, 1996, the warrant had not been issued.

     On May 10, 1996,  the Company  issued a warrant for an aggregate  amount of
30,000  shares  exercisable  at $3.00  per share to  outside  legal  counsel  as
compensation  for legal services  rendered.  The warrant  entitles the holder to
exercise up to 20,000 shares during calendar 1996, and 10,000 shares in calendar
1997. The warrant expires two years from the date of issue.


Item 11.       Security Ownership of Certain Beneficial Owners and
Management

The  following  table sets forth information concerning  common  stock
ownership  by  beneficial  owners of  five  percent  or  more  of  the
Company's common stock and the officers and directors of the Company:
<TABLE>
<CAPTION>

                    Name and Address                   Amount of           Percent of
Title of Class      of Beneficial Owner           Beneficial Ownership       Class
--------------      -------------------           --------------------       -----
<S>                 <C>                               <C>                 <C>
Common              Rudy S. Saenz
$0.001 par value    304 S. 8th Street, Suite 201       11,883,610            34.41%
                    Colorado Springs, CO 80905

Common              Gilbert M. Sisneros
$0.001 par value    304 S. 8th Street, Suite 201       11,853,610            34.32%
                    Colorado Springs, CO 80905

Common              Michael S. Smith
$0.001 par value    304 S. 8th Street, Suite 201            2,500          Less than 1%
                    Colorado Springs, CO 80905

Common              All Officers and Directors         23,739,720            68.74%
$0.001 par value    as a group (three persons)

Common              Total shares issued/outstanding    34,537,711           100.00%
</TABLE>

Compliance with Section 16(a) of the Securities Exchange Act

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who beneficially own more than 10%
of its  outstanding  common  stock,  to file  with the SEC  initial  reports  of
ownership  and reports of changes in  ownership of common stock and other equity
securities of the Company.  Officers and  stockholders who own more than 10% are
required by SEC  regulation  to furnish  the Company  with copies of all Section
16(a) reports they file.

     To the  Company's  knowledge,  based solely on review of the copies of such
reports  furnished  to the  Company and  written  representations  that no other
reports  were  required,  during the fiscal  year ended  October 31,  1996,  all
Section 16(a) filing  requirements  applicable  to its  officers,  directors and
greater than 10% stockholders were satisfied.

     Item 12. Certain Relationships and Related Transactions

     Michael S. Smith,  Secretary  and General  Counsel of the Company,  did not
receive  a salary  from  the  Company  for the past  fiscal  year.  However,  in
consideration  for legal  services  rendered to the Company,  Mr. Smith received
$69,000  during fiscal year 1996.  Mr. Smith  received no  compensation  for his
services as director.

     On July 12, 1996, Mr. Willard F. Clarey resigned as officer and director of
the Company.  In  conjunction  with his  resignation,  Mr. Rudy S. Saenz and Mr.
Gilbert M. Sisneros  jointly acquired all of Mr. Clarey's equity interest in the
Company.

     Item 13. Exhibits and Reports on Form 8-K

     None.


<PAGE>

                                   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 24th day of
January, 1997.

                                        COLORADO CASINO RESORTS, INC.

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

                                           /s/ Farid E. Tannous
                                        Farid E. Tannous
                                        Treasurer and Chief Financial
                                        Officer
                                        (Principal Financial Officer)


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

January 24, 1997                           /s/ Rudy S. Saenz
                                        Rudy S. Saenz
                                        President and Chief Executive
                                        Officer, Director

January 24, 1997                           /s/ Gilbert M. Sisneros
                                        Gilbert M. Sisneros
                                        Vice President, Director

January 24, 1997                           /s/ Michael S. Smith
                                        Michael S. Smith
                                        Secretary and General Counsel,
                                        Director

January 24, 1997                           /s/ Farid E. Tannous
                                        Farid E. Tannous
                                        Treasurer and Chief Financial
Officer
<PAGE>

                  Colorado Casino Resorts, Inc.
                                
           Index to Consolidated Financial Statements


Independent Auditors's Report................................    F-2

Consolidated Balance Sheet as of October 31, 1996............    F-3

Consolidated Statements of Operations........................    F-5

Consolidated Statements of Shareholders' Equity..............    F-6

Consolidated Statements of Cash Flows .......................    F-8

Notes to Consolidated Financial Statements...................    F-10
<PAGE>

                 REPORT OF INDEPENDENT AUDITORS


To the Board of Directors
Colorado Casino Resorts, Inc.
Colorado Springs, Colorado

We  have audited the accompanying consolidated balance sheets  of
Colorado Casino Resorts, Inc. and Subsidiaries as of October  31,
1996  and  1995,  and  the  related  consolidated  statements  of
operations,  stockholders' equity, and cash flows for  the  years
ended  October  31,  1996 and 1995 and the ten-month  short  year
ended  October  31,  1994.  These financial  statements  are  the
responsibility of the Company's management. Our responsibility is
to  express an opinion on these financial statements based on our
audits.

We  conducted  our  audits in accordance with generally  accepted
auditing  standards. Those standards require  that  we  plan  and
perform  the audits 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 consolidated
financial   position  of  Colorado  Casino  Resorts,   Inc.   and
Subsidiaries   as  of  October  31,  1996  and  1995,   and   the
consolidated results of their operations and their cash flows for
the years ended October 31, 1996 and 1995 and the ten-month short
year  ended  October  31,  1994,  in  conformity  with  generally
accepted accounting principles.

As  discussed  in Note A, Colorado Casino Resorts,  Inc.,  merged
with  Creeker's, Inc., effective March 15, 1995, in a transaction
accounted   for  as  a  pooling  of  interests.   The   financial
statements for the ten months  ended October 31, 1994  have  been
restated to reflect the pooling of interests.


Williams, Richey & Co.

Denver, Colorado
December 19, 1996
<PAGE>
<TABLE>
<CAPTION>

                          COLORADO CASINO RESORTS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   OCTOBER 31,
                                  
                                                                
                  ASSETS                                         1996            1995
                  ------                                         ----            ----
<S>                                             <C>             <C>                                                           
CURRENT ASSETS
   Cash and temporary investments ....................   $  2,828,994    $  1,375,145
   Certificate of deposit, restricted ................           --           450,000
   Inventory .........................................        251,662          49,885
   Advances to officers ..............................        379,617         114,617
   Other current assets ..............................        553,992          87,885
                                                              -------          ------
          TOTAL CURRENT ASSETS .......................      4,014,265       2,077,532
                                                            ---------       ---------

REAL ESTATE HELD FOR FUTURE DEVELOPMENT ..............      4,504,970       4,504,970
                                                            ---------       ---------

LAND, BUILDING AND EQUIPMENT
   Land ..............................................      7,071,644       7,071,644
   Building ..........................................     23,085,250       1,625,154
   Furniture and equipment ...........................     12,832,717       2,244,529
   Construction in process ...........................           --         3,301,432
   Accumulated depreciation ..........................     (1,520,102)       (533,606)
                                                           ----------        -------- 

           TOTAL LAND, BUILDING AND EQUIPMENT ........     41,469,509      13,709,153
                                                           ----------      ----------

OTHER ASSETS
   Deposits, land and building option ................         25,000          25,000
   Other .............................................        288,483           8,176
                                                              -------           -----
           TOTAL OTHER ASSETS ........................        313,483          33,176
                                                              -------          ------

TOTAL ASSETS .........................................   $ 50,302,227    $ 20,324,831
                                                         ============    ============
<PAGE>


                    COLORADO CASINO RESORTS, INC .....
               CONSOLIDATED BALANCE SHEETS (CONTINUED)
                             OCTOBER 31,


   LIABILITIES AND STOCKHOLDERS' EQUITY ..............           1996            1995
   ---------------------------------------------------           ----            ----

CURRENT LIABILITIES
   Accounts payable ..................................   $    649,895    $     52,975
   Progressive jackpot liabilities ...................      1,995,388         263,788
   Accrued other expenses ............................      1,253,026         261,698
   Interest payable, related parties .................      1,142,000            --
   Note payable ......................................           --           500,000
   Current portion, long-term debt, related ..........      7,676,209          64,681
party
   Current portion, long-term debt ...................      6,015,931         279,794
  Current portion, capital lease .....................      1,535,656            --
                                                            ---------              
obligations
           TOTAL CURRENT LIABILITIES .................     20,268,105       1,422,936

LONG-TERM DEBT, RELATED PARTY ........................        412,125         665,603
LONG-TERM DEBT .......................................      8,238,993       4,318,684
CONVERTIBLE DEBENTURES, RELATED PARTY ................      5,199,739       4,876,297
CONVERTIBLE DEBENTURES ...............................      2,500,000            --
CAPITAL LEASE OBLIGATIONS ............................      5,785,285            --
                                                            ---------              
             TOTAL LIABILITIES .......................     42,404,247      11,283,520
                                                           ----------      ----------

COMMITMENTS AND CONTINGENCIES (NOTE N)

STOCKHOLDERS' EQUITY
    Preferred convertible stock, Series
One, $10 par value,
         5,000,000 shares authorized,
250,000 and 650,000
             issued and outstanding, .................      2,500,000       6,500,000
respectively
     Common stock, $.001 par value,
100,000,000 shares
          authorized, 34,537,711 and
30,845,000 issued and
         outstanding, respectively ...................         34,537          30,845
     Paid-in capital .................................     10,467,270       4,283,532
     Accumulated deficit .............................     (5,103,827)     (1,773,066)
                                                           ----------      ---------- 

           TOTAL STOCKHOLDERS' EQUITY ................      7,897,980       9,041,311
                                                            ---------       ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...........   $ 50,302,227    $ 20,324,831
                                                         ============    ============
</TABLE>
<TABLE>
<CAPTION>
                                          
                     COLORADO CASINO RESORTS, INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                                  
                                                              Ten-Months
                              Year Ended      Year Ended        Ended
                               October        October          October
                                 31,            31,              31,
                                1996           1995             1994
                                ----           ----             ----
<S>                         <C>             <C>             <C>
REVENUE
     Casino .............   $  9,685,118    $  4,006,694    $  1,485,985
     Hotel and gift shop         507,825            --              --
     Restaurant and bar .        363,200         188,698         172,544
     Miscellaneous ......         59,175          11,543            --
                                  ------          ------              
          Total revenue .     10,615,318       4,206,935       1,658,529
                              ----------       ---------       ---------

EXPENSES
     Casino .............      2,957,923       2,085,345       1,129,819
     Hotel and gift shop         398,263            --              --
     Restaurant and bar .      1,210,615         559,842         182,599
     General and ........      3,765,232       1,117,159         266,824
administrative
     Preopening costs ...      2,298,763            --              --
     Depreciation .......      1,077,368         351,389         108,506
                               ---------         -------         -------
          Total expenses      11,708,164       4,113,735       1,687,748
                              ----------       ---------       ---------
Income (Loss) From ......     (1,092,846)         93,200         (29,219)
Operations

NONOPERATING INCOME
(EXPENSES)
     Interest income ....        173,942            --              --
     Interest expense ...     (2,411,857)       (555,259)       (349,230)
                              ----------        --------        -------- 

          Total
nonoperating income
                              (2,237,915)       (555,259)       (349,230)
                              ----------        --------        -------- 
(expense)

NET LOSS ................   $ (3,330,761)   $   (462,059)   $   (378,449)
                            ============    ============    ============ 


Net Loss Per Common Share   $    (0.1035)   $    (0.0150)   $    (0.0135)
                            ============    ============    ============ 

Weighted Average Common       32,170,990      30,747,582      27,960,986
Shares Outstanding            ==========      ==========      ==========

</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                           COLORADO CASINO RESORTS, INC.
             CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                      YEARS ENDED OCTOBER 31, 1996 AND 1995
                        TEN MONTHS ENDED OCTOBER 31, 1994
                                        
                                     Preferred Stock             Common Stock             Paid-in       Accumulated      
                                    -------------------------------------------------
                                    Share         Amount        Shares        Amount       Capital        Deficit         Total
                                    -----         ------        ------        ------       -------        -------         -----
                                  s
<S>                                  <C>          <C>       <C>             <C>        <C>            <C>            <C> 
BALANCE, DECEMBER 31, 1993 .          --           $--      25,000,000      $ 25,000   $ 1,976,953    $  (762,160)   $ 1,239,793
Paid-In Capital, Debt ......          --            --            --            --         582,424           --          582,424
Converted to Equity
Issuance of Common Stock in
Exchange for
  Common Stock in Lyric ....          --            --       1,000,000         1,000        (1,000)          --             --
Development Co. ............

Common Stock Issued for Cash          --            --         500,000           500       249,500           --          250,000
at $0.50 Per Share

Common Stock Issued for ....          --            --         100,000           100        74,900           --           75,000
Services at $0.75 Per Share

Common Stock Issued for Cash          --            --       2,400,000         2,400       597,600          --           600,000
at $0.25 Per Share
                                                                                                      
Common Stock Issued for Cash          --            --          40,000            40        99,960           --          100,000
at $2.50 Per Share

Common Stock Issued for Cash          --            --       1,600,000         1,600       398,400           --          400,000
at $.25 Per Share

Net Loss ...................          --            --            --            --            --         (378,449)      (378,449)
                                                                                                         --------       -------- 

BALANCE, OCTOBER 31, 1994 ..          --            --      30,640,000        30,640     3,978,737     (1,140,609)     2,868,768
                 === ====                                   ==========        ======     =========     ==========      =========
</TABLE>
<TABLE>
<CAPTION>


                           COLORADO CASINO RESORTS, INC.
       CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
                      YEARS ENDED OCTOBER 31, 1996 AND 1995
                        TEN MONTHS ENDED OCTOBER 31, 1994

                                       Preferred Stock                Common Stock            Paid-in       Accumulated      
                                      -------------------------------------------------
                                      Shares        Amount         Shares         Amount      Capital         Deficit        Total
                                      ------        ------         ------         ------      -------         -------        -----
<S>                                 <C>           <C>           <C>              <C>         <C>      
Common Stock Options Exercised
at $1 Per
 Share .......................          --             --            5,000             5         4,995          --            5,000
Common Stock Issued at $1.50 .          --             --          200,000           200       299,800          --          300,000
Per Share
Preferred Stock Issued at $10        650,000      6,500,000           --            --            --            --        6,500,000
Per  Share
Distribution to Former S- ....          --             --             --            --            --        (170,398)      (170,398)
Corporation Stockholders
Net Loss .....................          --             --             --            --            --        (462,059)      (462,059)

                                    ------------------------------------------------------------------------------------------------
BALANCE, OCTOBER 31, 1995 ....       650,000      6,500,000     30,845,000        30,845     4,283,532    (1,773,066      9,041,311

Common Stock Issued at $2.03 .          --             --          614,770           614     1,124,386          --        1,125,000
Per Share
Preferred Stock Issued at $10        350,000       3,150,000          --            --            --            --        3,150,000
Per Share
Conversion of Series Two,
Preferred Stock
  into Common Stock ..........      (350,000)    (3,150,000)     2,056,308         2,057     3,147,943          --             --

Conversion of Convertible
Debentures into
  Common Stock ...............          --             --        1,021,633         1,021     1,911,409          --        1,912,430

Conversion of Series One, ....      (400,000)    (4,000,000)          --            --            --            --       (4,000,000)
Preferred Stock into Debt
Net Loss .....................          --             --             --            --            --      (3,330,761)    (3,330,761)

                                   -------------------------------------------------------------------------------------------------
BALANCE, OCTOBER 31, 1996 ....       250,000    $ 2,500,000     34,537,711   $    34,537   $10,467,270   $(5,103,827)   $ 7,897,980
                 === ====            =======    ===========     ==========   ===========   ===========   ===========    ===========
</TABLE>
<TABLE>
<CAPTION>
                         
                                  
                          COLORADO CASINO RESORTS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                          Ten Months
                                          Year Ended      Year Ended         Ended
                                           October          October         October
                                              31,             31,              31,
                                             1996            1995             1994
                                             ----            ----             ----
<S>                                     <C>             <C>             <C>
CASH FLOWS FROM OPERATING 
  ACTIVITIES
  Net loss ..........................   $ (3,330,761)   $   (462,059)   $   (378,449)
  Noncash items
      Depreciation and ..............      1,077,368         351,389         108,506
amortization
      Amortization of debt ..........        600,939            --              --
issue costs
      (Gain) loss on sale of ........        (14,467)         13,136            --
fixed assets
      Common stock for services .....           --              --            75,000
      Interest converted to .........        326,492         415,816          45,852
debt or equity
  (Increase) decrease in:
      Inventory .....................       (201,777)        (20,204)        (29,681)
      Other current assets ..........       (466,107)        (38,904)         (2,012)
    Other assets ....................         41,497            --              --
  (Decrease) increase in:
      Accounts payable ..............        596,920          27,025          21,391
      Interest payable, related .....      1,142,000            --              --
parties
      Accrued other expenses ........      2,722,928         226,367         159,181
                                           ---------         -------         -------
        Net cash provided (used)
        by operating activities .....      2,495,032         512,566            (212)
                                           ---------         -------            ---- 

CASH FLOWS FROM INVESTING
  ACTIVITIES
  Purchase/construction of
land,
    building, and equipment .........    (21,058,919)     (4,088,492)       (311,469)

  Proceeds from sale of fixed .......         30,000          29,100            --
assets
  Certificate of deposit, ...........        450,000        (450,000)           --
restricted
  Deposits, purchase options ........           --           (50,000)        (50,000)
  Advances to officers ..............       (280,000)        (94,617)        (20,000)
                                            --------         -------         ------- 
Net cash used by investing activities    (20,858,919)     (4,654,009)       (381,469)
                                         -----------      ----------        -------- 
</TABLE>
<PAGE>
<TABLE>
<CAPTION>


                   COLORADO CASINO RESORTS, INC.
         CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                                                                    
                                                                                    Ten
                                                    Year             Year          Months         
                                                   Ended            Ended          Ended
                                                  October          October        October
                                                     31,              31,            31,
                                                    1996             1995           1994
                                                    ----             ----           ----
<S>                                           <C>              <C>             <C>
CASH FLOWS FROM FINANCING
ACTIVITIES
  Advances from officers .................         15,000            --           435,000
  Repayments, advances from ..............           --          (120,000)       (480,633)
officers
  Borrowings, note payable ...............           --           500,000            --
  Repayments, note payable ...............       (500,000)        (93,000)           --
  Borrowings, long-term debt .............     10,040,000            --           405,000

  Borrowings, long-term debt, ............      8,355,000            --              --
related party
  Repayments, long-term debt .............       (342,130)     (2,046,957)       (644,997)

  Repayments, long-term debt, ............     (1,000,000)           --           (66,574)
related party
  Distributions, prior S-Corp ............           --          (170,398)           --
stockholders
  Debt and stock issue costs .............     (1,025,134)           --              --

  Issuance of common stock ...............      1,125,000         305,000       1,350,000
  Issuance of preferred stock ............      3,150,000       6,500,000            --
                                                ---------       ---------              
      Net cash provided by ...............     19,817,736       4,874,645         997,796
                                               ----------       ---------         -------
financing activities
INCREASE  IN CASH AND
      CASH EQUIVALENTS ...................      1,453,849         733,202         616,115

CASH AND CASH EQUIVALENTS, ...............      1,375,145         641,943          25,828
                                                ---------         -------          ------
BEGINNING

CASH AND CASH EQUIVALENTS ................   $  2,828,994    $  1,375,145    $    641,943
                                             ============    ============    ============
ENDING

NONCASH INVESTING AND FINANCING ACTIVITIES

  Common stock issued for debt ...........   $  1,912,430             $--    $    657,424
                                             ============             =      ============


  Common stock issued for ................            $--             $--    $     75,000
                                                      =               =      ============
property and services

  Preferred stock converted to ...........   $  3,150,000             $--             $--
                                             ============             =               =  
common stock

  Preferred stock converted to ...........   $  4,000,000             $--             $--
                                             ============             =               =  
debt

  Land, building and equipment
   financed through debt .................   $  7,794,338    $  4,262,717    $  4,856,651
                                             ============    ============    ============


  Debt, refinanced .......................            $--    $  1,180,919             $--
                                                      =      ============             =  
</TABLE>
<PAGE>
                               

A.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    Organization and Operations

     Colorado Casino Resorts,  Inc. (the Company or CCRI),  (formerly Airline of
the Virgin  Islands,  Inc.) was  originally  incorporated  under the laws of the
Virgin Islands on March 25, 1982, and was  reincorporated  in the state of Texas
on March 15,  1993.  On January 14,  1994,  the Company  completed a merger with
Lyric  Development  Company,  Inc.,  (Lyric)  whereby the Company  (which had no
assets  or  liabilities  and  1,000,000   shares  of  common  stock  issued  and
outstanding prior to the reorganization)  issued an additional  5,000,000 shares
of  common  stock  to the  stockholders  of Lyric  in  exchange  for 100% of the
outstanding  common stock of Lyric.  The transaction has been accounted for as a
recapitalization  of Lyric with Lyric's accumulated deficit and operations being
carried  forward.  During  the  year  ended  October  31,  1995,  Lyric  and its
subsidiaries  were liquidated into CCRI. During the year ended October 31, 1996,
CCRI filed to reincorporate in the state of Colorado.
    
     During the year ended October 31, 1996,  the Company  formed a wholly owned
subsidiary,  Double Eagle Resorts,  Inc.  Effective  August 1, 1996, the Company
transferred assets and liabilities,  related to the Double Eagle Hotel & Casino,
in the net amount of $15,315,296 to the subsidiary in a tax-free exchange.

     The  Company  through  its  wholly  owned  subsidiaries,   Creeker's,  Inc.
(Creeker's) and Double Eagle Resorts,  Inc.  (Double  Eagle),  own and operate a
casino and a hotel/casino in Cripple Creek,  Colorado.  Creeker's Casino has 234
slot machines and two blackjack tables. The Double Eagle's  hotel/casino has 158
hotel rooms, 746 slot machines and five blackjack tables. The Double Eagle hotel
opened on July 27, 1996 and the casino opened on August 29, 1996.

    Business Combination

     Effective  March 15,  1995,  the Company  issued  20,000,000  shares of its
common  stock in exchange  for all of the  outstanding  stock of  Creeker's in a
merger accounted for as a pooling of interests. Financial statements for periods
prior to the combination have been restated to reflect the pooling of interests.
Concurrent  with the merger,  Creeker's  became a subsidiary  of the Company and
conformed its fiscal year to that of the Company.  Creeker's  briefly operated a
casino at another location from late 1991 through  mid-1993.  The current casino
began operations in April, 1994.

     Included in  consolidated  results of operations for the year ended October
31, 1995, are the following results of the previously separate companies for the
period November 1, 1994 to April 30, 1995:
<TABLE>
<CAPTION>

                                      CCRI      Creeker's    Intercompany  Consolidated
<S>                             <C>           <C>           <C>            <C>
Revenue .....................   $    32,391   $ 1,596,108   $   (19,641)   $ 1,608,858

Net Income (Loss)               $  (558,831)  $   161,756   $        --    $  (397,075)
</TABLE>

     The  following  is a  reconciliation  of revenue  and  earnings  previously
reported  by the  Company  for the ten months  ended  October  31, 1994 with the
combined  amounts  currently  presented  in the  financial  statements  for that
period:
<TABLE>
<CAPTION>

                                 CCRI          Creeker's  Intercompany     Consolidated
<S>                       <C>                <C>            <C>            <C>
Revenue ..........        $     9,500        $ 1,649,029    $  --          $ 1,658,529

Net income  (loss)        $  (555,947)       $   177,498    $  --          $  (378,449)
</TABLE>

    Principles of Consolidation

     The accompanying  consolidated financial statements include the accounts of
the  Company's  wholly-owned  subsidiaries,  Creeker's  Inc.  and  Double  Eagle
Resorts,  Inc. All intercompany  balances and transactions have been eliminated.

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    Business Combination (Continued)

    Use of Estimates

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

    Certificate of Deposit, Restricted

     The  certificate  of  deposit  was  restricted  under a  letter  of  credit
agreement  with  the  City  of  Cripple  Creek  to  ensure   completion  of  the
hotel/casino  construction.   The  certificate  of  deposit  was  released  from
restriction upon completion of construction.

    Inventory

     Inventory  consists of food,  beverages,  gift shop items, and tokens/chips
and is recorded at the lower of cost (first-in, first- out method) or market.

   Real Estate Held For Future Development

     In August 1994, the Company  acquired the Myers Avenue property from a real
estate   partnership  (a  related  party   effective  with  the  acquisition  of
Creeker's). The property consists of 40,705 square feet of land located 80 yards
west of the Creeker's  casino parking lot and has a carrying value of $4,504,970
at October 31, 1996 and 1995.  The property  was  appraised  May 26,  1995,  for
$6,500,000 and is being held for future development.

    Land, Building and Equipment

     Real estate held for future development is recorded at the lower of cost or
fair value.

     Impairment of real estate or other long-lived assets is evaluated  whenever
there is an indication that there is (a) a significant decrease in market value,
(b) a significant  change in the extent or manner in which an asset is used, (c)
a significant  adverse change in legal factors or the business  climate,  (d) an
accumulation of costs  significantly in excess of the amount originally expected
to acquire or construct, or (e) a forecast that demonstrates continuing expected
losses  associated  with the asset. If the sum of the expected future cash flows
(undiscounted  and without interest charges) is less than the carrying amount of
the asset, an impairment loss is recognized.  During the years ended October 31,
1996 and 1995,  there were no  changes  in  condition  that  indicated  that the
carrying  amounts  of  real  estate  or  other  long-lived  assets  may  not  be
recoverable.

     Furniture and equipment are being  depreciated  over their estimated useful
lives using accelerated methods. Building and improvements are being depreciated
over their estimated useful lives on a straight-line  basis.  Building  includes
$1,301,049 of capitalized  interest of which $1,241,199 and $59,850 was incurred
for the years ended October 31, 1996 and 1995, respectively.  Land, building and
equipment used in operations consist of the following: A. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)

    Land, Building and Equipment (Continued)
<TABLE>
<CAPTION>

                              October       October      Estimated
                                31,           31,          Useful 
                                1996          1995         Life
                                ----          ----         ----
<S>                          <C>           <C>           <C>                                                        
Land .....................   $ 7,071,644   $ 7,071,644        --   
Buildings and improvements    23,085,250     1,752,059   39 Years
Gaming equipment .........     6,895,111     1,571,765   7 Years
Surveillance equipment ...       587,550        99,199   5 Years
Coin handling equipment ..       388,033        91,858   7 Years
Transportation equipment .        96,292          --     5 Years
Signs ....................       748,523          --     7 Years
Kitchen, bar and
  restaurant equipment ...       300,627        45,189   7 Years
Hotel furnishings ........     2,663,614          --     7 Years
Office, computer, audio ..     1,152,967       309,613   5-7 Years
    equipment
Construction in process ..          --       3,301,432        --
                                             ---------          
                              42,989,611    14,242,759        --
Less accumulated .........     1,520,102       533,606        --
                               ---------       -------          
    depreciation
                             $41,469,509   $13,709,153        --
                             ===========   ===========          
</TABLE>


   Debt Issue Costs

     Debt issue costs are being  amortized  over the life of the  related  loans
using  the  effective  interest  method.  Debt  issue  costs  of  $825,134  less
accumulated amortization of $600,939 are included in other assets at October 31,
1996.

    Stockholders' Equity

     Effective September 30, 1994, the stockholders of Creeker's  contributed as
additional  paid-in  capital,  debt and related interest payable owed to them by
Creeker's in the amount of $582,424.

     During the year ended October 31, 1995,  Creeker's  made  distributions  of
$170,398 to the former  S-Corporation  stockholders  to meet their estimated tax
obligations for taxable S-Corporation earnings passed through to them.

     The  Company  has  authorized  5,000,000  shares  of Series  One  preferred
convertible   non-voting  stock.  The  preferred  stock  will  be  automatically
converted into units upon the closing of the Company's  next public  offering of
common stock units,  provided such closing occurs within two years from the date
of issue of the  preferred  stock.  Said  units will be  identical  to the units
offered to the public and should  consist of at least one share of common  stock
and one redeemable common stock purchase warrant.

     The preferred stock will be convertible at a conversion rate of three units
for each amount of par value of  preferred  stock  equal to the  initial  public
offering price per unit. If the preferred stock is not  automatically  converted
within two years,  it may be converted,  at the option of the holder,  into four
units, with each unit consisting of one share of common stock and one redeemable
common stock purchase warrant.

     Each  warrant  obtained  on  optional  conversion  will  entitle the holder
thereof  to  purchase  one  share of Common  Stock  for a period of three  years
commencing  with the date of  optional  conversion  at a price of four  dollars.
During the exercise period of the warrants,  each warrant shall be redeemable by
the Company at a redemption price of $.10 per warrant upon 30 days prior written
notice to each warrant holder  provided,  however,  that the closing average bid
price of the Company's common stock, for a period of 20 consecutive trading days
prior to any such  call for  redemption,  shall  have  been  150% or more of the
effective exercise price of the warrants.

     The  Series  One  convertible  preferred  stockholders  are  entitled  to a
cumulative  annual  dividend  equal  to six  percent  of the  par  value  of the
preferred  stock.  Upon  either  an  automatic  or  optional  conversion  of the
preferred stock (as described



A.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     below)  all  cumulative  dividends  are  forfeited.   Cumulative  preferred
dividends  in  arrears at  October  31,  1996 and 1995,  would be  $179,270  and
$99,270, respectively.

     During the year ended October 31, 1996,  the Company  issued 350,000 shares
of Series Two, $10 Par Value,  Convertible  Preferred Stock, for $3,150,000 (net
of issuance costs). The Series Two, Preferred Stock was converted into 2,056,308
shares of common stock at 80% of the market price  (average  closing bid for the
five days prior to conversion) during the year ended October 31, 1996.

    Revenues

     Casino revenues are the net winnings from gaming  activities,  which is the
difference between gaming wins and losses.

    Promotional Allowances

     Bar and  restaurant  revenue does not include the retail amount of food and
beverage  provided  gratuitously  to customers,  which  amounted to $385,432 and
$214,518 for the years ended October 31, 1996 and 1995, respectively.

    Preopening Costs

     Preopening costs consist of those direct  incremental  costs incurred prior
to commencement of hotel/casino operations and are expensed as incurred.

    Income Taxes

     The Company and its  subsidiaries  file  consolidated  income tax  returns.
Creeker's  revoked its  S-Corporation  status effective January 1, 1995, filed a
short period return for the period January 1, 1995 to March 31, 1995 and filed a
consolidated  return with the Company effective for the period ended October 31,
1995.

     An income tax  provision  is  provided  for the tax effect of  transactions
reported in the financial statements.  The provision consists of taxes currently
due plus deferred taxes related to  differences  between the basis of assets and
liabilities for financial and income tax reporting. The deferred taxes represent
the future  tax return  consequences  of the  differences,  which will be either
taxable or deductible  when the related assets or  liabilities  are recovered or
settled. A valuation  allowance is provided for deferred tax assets not expected
to be realized.

    Net Loss Per Share

     Net loss per share is  computed by  dividing  the net loss by the  weighted
average  number of common shares  outstanding  during each period.  common stock
equivalents have been excluded since they are antidilutive. Cumulative preferred
dividends in arrears have been excluded from the net loss calculation since they
are forfeitable upon automatic or optional conversion to common stock.

    Statement of Cash Flows

     For purposes of the  statement  of cash flows,  the Company  considers  all
highly liquid investments with a maturity of three months or less to be cash and
cash  equivalents.  Total  interest  paid  amounted to $972,058,  $232,583,  and
$162,912,  for the years ended  October  31,  1996 and 1995,  and the ten months
ended October 31, 1994, respectively.

     The  Company  and  its  subsidiaries  maintain  cash  balances  at  several
financial  institutions  located in Colorado.  Accounts at each  institution are
insured by the Federal Deposit Insurance  Corporation up to $100,000. At October
31, 1996, the Company's uninsured cash balances total $1,531,834.

    Recently Issued Accounting Standards

     The Company anticipates adopting the disclosure  requirements,  but not the
optional  recognition  requirements  of recently  issued FAS 123  Accounting for
Stock-Based  Compensation  (effective for fiscal years  beginning after December
15, 1995) in fiscal 1997. Stock- based compensation expense will be continued to
be  recognized  in  accordance  with  APB 25  Accounting  for  Stock  Issued  to
Employees.  Proforma  disclosures of net income and earnings per share as though
the  recognition  requirements of the Standard had been adopted will be required
beginning  in  fiscal  1997.  A.  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
(CONTINUED)

    Reclassifications

     Certain  reclassifications  have  been  made to prior  years'  balances  to
conform to the current financial statement presentation.

B.  ADVANCES TO OFFICERS

     Advances to officers are  unsecured,  due on demand and bear interest at 2%
over the prime  rate.  Officers  advanced  funds to the Company in the amount of
$15,000,  $None, and $435,000 for the years ended October 31, 1996 and 1995, and
the ten months ended October 31, 1994. The Company advanced funds to officers in
the amount of $280,000,  $214,617,  and $500,633 for the years ended October 31,
1996 and 1995, and the ten months ended October 31, 1994.  Outstanding  advances
to  officers  amounted to  $379,617  and  $114,617 at October 31, 1996 and 1995,
respectively.

C.  NOTES PAYABLE

     Note payable  consisted of a unsecured  note  payable,  corporation,  dated
October,  1995 with  interest  payable at 20% per annum,  due on demand,  repaid
November, 1995.
  
     The  Company  has a  $1,000,000  revolving  line of credit with a financial
institution  under a loan  agreement  dated August 22, 1996  expiring  March 24,
1997,  with  interest  payable  monthly  at the prime  rate plus 1%. The line of
credit is secured by a second deed of trust on the  hotel/casino and may only be
used to  fund  the  Company's  progressive  jackpot  liabilities.  There  was no
outstanding balance under the line at October 31, 1996.

D.  LONG-TERM DEBT, RELATED PARTIES
<TABLE>
<CAPTION>

     Long-term debt, related parties consists of the following at October 31:

                                             1996        1995
                                             ----        ----
<S>                                   <C>             <C>
Notes payable, stockholder, dated
November, 1995-March, 1996, extended
April 12, 1996, interest at 14.10%
per annum, due January 15, 1997 or .   $2,087,500          $--
upon permanent financing,
collateralized by Creeker's, Inc. ..
common stock

Notes payable, stockholder, dated
November, 1995-March, 1996 extended
April 12, 1996, interest at 20.10%
per annum, due January 15, 1997 or .    5,267,500         --
upon permanent financing,
collateralized by Creeker's, Inc. ..
common stock

Note payable, related real estate
partnership, unsecured, dated
September, 1992, payable in monthly
installments of $17,777 including ..      733,334      730,284
                                          -------      -------
interest at 16% per annum, with a
final payment due November 1, 1997
                                        8,088,334      730,284

Less current portion ...............    7,676,209       64,681
                                        ---------       ------


                                       $  412,125   $  665,603
                                       ==========   ==========
</TABLE>
    
     Total related party interest expense under all debt arrangements (including
the convertible  debenture) amounted to $1,660,506,  $407,542,  and $133,207 for
the years ended  October 31, 1996 and 1995 and the ten months ended  October 31,
1994, respectively. E. LONG-TERM DEBT
<TABLE>
<CAPTION>

    Long-term debt consists of the following at October 31:

                                             1996          1995
                                             ----          ----
<S>                                     <C>           <C>
Mortgage payable, individual, dated
October, 1992 modified August, 1995,
payable in monthly installments of
$3,400, including interest at  8% per   $   285,070   $   298,022
annum, with a final principal payment
due November, 1999, collateralized
by deed of trust

Mortgage payable, individual, dated
September, 1995, payable in monthly
installments of $7,875, including ...     1,050,000     1,050,000
interest at 9% per annum, due August,
2000, collateralized by deed of trust

Mortgage payable individual, dated
October, 1995, currently payable in
monthly installments of $14,764
including interest at 8% per annum,
interest rate adjustable to prime
plus 2% on March, 1999, and every 3.5     2,055,484     2,066,704
years thereafter, not to exceed 12%
or be less than 4%, remaining
principal due November, 2025,
collateralized by deed of trust

Note payable, corporation, dated
April, 1996, extended December, 1996
payable in minimum monthly
installments of $46,166, interest ...     5,540,000          --
payable at 12% per annum, remaining
balance due April, 1997,
collateralized by deed of trusts and
personal property

Note payable, corporation, redemption
of preferred stock, unsecured, dated
July, 1996, interest payable at 18% .     4,000,000          --
per annum, principal and interest due
July, 1998

Note payable, corporation, dated
October, 1995, payable in monthly
installments of $31,092 including
interest at 11% per annum, with a ...       949,576     1,180,919
final payment due October, 1998,
collateralized by gaming equipment

Notes  payable, various corporations,
dated March , 1995 to July, 1996,
payable in aggregate monthly
installments of $18,550 including           374,794         2,833
                                            -------         -----
interest at 10.50% to 12% per annum,
due January 1997 to July, 1999,
collateralized by various equipment
                                         14,254,924     4,598,478
Less current portion ................     6,015,931       279,794
                                          ---------       -------
       

                                        $ 8,238,993   $ 4,318,684
                                        ===========   ===========
                                                
</TABLE>
                                                       
E.  LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
  
    Future maturities of long-term debt are as follows at October  31,
    1996:
  
    Years Ended       Unrelated   Related Party     Total
                       ---------   -------------     -----
    October 31, 
    ----------- 
<S>                 <C>           <C>           <C>              
      1997          $ 6,015,931   $ 7,676,209   $13,692,140
      1998            4,832,276       412,125     5,244,401
      1999              119,968          --         119,968
      2000            1,291,068          --       1,291,068
      2001               18,176          --          18,176
   Thereafter         1,977,505          --       1,977,505
                      ---------                   ---------

                    $14,254,924   $ 8,088,334   $22,343,258
                    ===========   ===========   ===========
</TABLE>

F. CAPITAL LEASE OBLIGATIONS

        Capital lease obligations consist of the following at  October
  31, 1996:
                                                        1996
    Gaming  equipment  lease  payable  in  monthly            
    installments  of  $136,894 including  interest            
    imputed at 11.75% per annum. The lease expires            
    in  November,  1999  and is collateralized  by    $4,892,735
    gaming  equipment with an approximate cost  of          
    $4,892,735 and a book value of $4,718,064.
                                                              
    Equipment    lease    payable    in    monthly            
    installments  of  $23,404  including  interest            
    imputed at 14.39% per annum. The lease expires            
    in  August,  2001  and  is  collateralized  by    1,076,443
    various equipment, furniture and fixtures with           
    an  approximate cost of $1,121,659 and a  book
    value of $1,038,014.
                                                              
    Equipment leases payable in aggregate  monthly            
    installments   totaling   $25,917    including            
    interest imputed at 8% and 12% per annum.  The            
    leases  expire in August to October, 1999  and     744,140
    are  collateralized by various equipment  with
    an  approximate cost of $748,523  and  a  book
    value of $717,574.
                                                              
    Equipment    lease    payable    in    monthly            
    installments  of  $7,369  including   interest            
    imputed  at 8.87% per annum. The lease expires            
    August, 1999 and is collateralized by computer     220,837
    equipment with an approximate cost of $231,127
    and a book value of $209,795.
                                                          
    Equipment leases payable in aggregate  monthly            
    installments    totaling   $4,909    including            
    interest imputed at 12% per annum. The  leases            
    expire   July  to  September,  2001  and   are     213,906
    collateralized   by   telephone   and    audio
    equipment with an approximate cost of $215,660
    and a book value of $204,877.
                                                              
    Equipment    lease    payable    in    monthly            
    installments  of  $1,273  including   interest            
    imputed at 13.85% per annum. The lease expires      33,709
    June,  1999  and  is collateralized  by  radio
    equipment with an approximate cost of  $37,200
    and a book value of $32,506.
F. CAPITAL LEASE OBLIGATIONS (CONTINUED)

                                                        1996
                                                        ----
    Vehicle  lease payable in monthly installments            
    of  $2,755 including interest imputed at 8.16%            
    per annum. The lease expires October, 1999 and      96,292
    is   collateralized  by   vehicles   with   an
    approximate cost of $96,292 and a  book  value
    of $91,477.
                                                              
    Equipment leases payable in aggregate  monthly            
    installments    totaling   $1,568    including            
    interest imputed at 12% per annum. The  leases            
    expire   May   to  October,   1999   and   are      42,879
    collateralized by computer equipment  with  an
    approximate cost of $48,003 and a  book  value
    of $45,603.
                                                              
    Total lease obligations                           7,320,941
                                                      
    Less current portion                              1,535,656
                                                      ---------
                                                      
                                                      $5,785,285
                                                      ==========
                                                  
<TABLE>
<CAPTION>

   Future  minimum lease payments under the leases are as  follows  at
   October 31, 1996:
  
           Years Ended October 31,           Amount
           -----------------------           ------
<S>                                        <C>
                     1997                  $2,471,500                                                    
                     1998                   2,471,500
                     1999                   2,140,666
                     2000                   1,585,384
                     2001                     301,830
                     ----                     -------
       Total future lease payments          8,970,880
       Less amount representing interest    1,649,939
                                            ---------
    
                                                     
                                           $7,320,941
                                           ==========
</TABLE>
                                              

G.  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  principle  balance and any accrued  interest  due
August 20, 1999 and is collateralized by deeds of trust on the related property.
The debenture is convertible  into 9,000,000 shares of Company common stock. The
conversion cannot be exercised prior to November 1, 1997. The balance (including
interest  added to principal)  amounted to $5,199,739  and $4,876,297 at October
31, 1996 and 1995, respectively. H. CONVERTIBLE DEBENTURES

     Convertible debentures consist of the following at October 31, 1996:

    10%   Convertible  Debenture,  dated  January,    
    1996,  interest payable quarterly in  arrears,    
    convertible in $10,000 increments  at  80%  of    
    the market price of the Company's common stock    
    for  the three business days prior to the date    $1,000,000
    of  the  holder's  election  to  convert,  any
    remaining  principal  balance  on  the   first
    anniversary  date  will automatically  convert
    into common stock in the same manner
                                                      
    10%  Convertible Debenture, dated March, 1996,    
    interest   payable   quarterly   in   arrears,    
    convertible  in  $50,000  increments  at   the    
    lesser of $4.50 per share or 80% of the market    
    price  of the Company's common stock  for  the    
    three  business days prior to the date of  the     1,500,000
                                                       ---------
    holder's  election to convert,  any  remaining
    principal  balance  on the second  anniversary
    date  will  automatically convert into  common
    stock  in the same manner
                                                      
                                                      $2,500,000
                                                      ==========

I.  STOCK OPTIONS
<TABLE>
<CAPTION>

   The  following  schedule details activity related  to  options  and
   warrants  to  officers and employees of the Company for  the  years
   ended  October 31, 1996 and 1995, and the ten months ended  October
   31, 1994:
      
                                        Shares     Option Price
<S>                                   <C>              <C>
    Options Outstanding, December 31,                    
    1993 and
         October 31, 1994               400,000         $1.00
         Exercised                       (5,000)        $1.00
         Surrendered                   (155,000)        $1.00
                                       -------- 
                                       
    Options Outstanding, October  31,   240,000         $1.00
    1995
         Granted                        817,500         $2.00
         Surrendered                   (240,000)        $1.00
                                       --------                                        
    Options Outstanding, October  31,   817,500         $2.00
     1996                               =======   
</TABLE>
<TABLE>
<CAPTION>
                                                    
    
     The following options and warrants are outstanding at October 31, 1996:

     Number                                   
       of
  Shares Under     Exercise                Expiration
     Options       Price      Total          Date
<S>               <C>    <C>           <C>
     170,500      $2.00      341,000    August, 2000
     165,500      $2.00      331,000    August, 2001
     165,500      $2.00      331,000    August, 2002
     165,500      $2.00      331,000    August, 2003
     150,500      $2.00      301,000    August, 2004
     -------      -----      -------         
     817,500      $2.00   $1,635,000          
     =======      =====   ==========          
           *                                  
    Warrants                                  
      30,000      $3.00      $90,000      May, 1998
      30,000 (1)  $3.00      $90,000     March, 2001
      60,000      $3.00     $180,000          
      ======      =====     ========          
<FN>
                                              
     (1) As of  October  31,  1996,  no  warrants  had been  issued  although  a
commitment  was made by the Company.  Total options and warrants  exercisable at
October 31, 1996 amounted to 20,000 shares for $3.00 per share.
</FN>
</TABLE>

  J.   INCOME TAXES
<TABLE>
<CAPTION>

    The tax effect of significant temporary differences and carrybacks
    which  gave  rise  to  the  Company's  deferred  tax  assets   and
    liabilities are as follows:
                                             October     October
                                               31,         31,
                                              1996        1995
                                              ----        ----
<S>                                      <C>           <C>
Deferred Tax Assets-                                    
    Net operating loss carryforwards        $875,000    $380,000
    Cash basis tax assets                    809,000     183,000
    Capitalized construction carrying        127,000      50,000
                                             -------      ------
    costs
                                           1,811,000     613,000
Valuation Allowance                       (1,811,000)   (613,000)
                                          ----------    -------- 
                                                
Net Deferred Tax Asset                       $ NONE      $ NONE
                                             ==          ==    
</TABLE>
<TABLE>
<CAPTION>

    The components of income tax expense are as follows:
                                                      
                               Year         Year      Ten Months
                               Ended        Ended       Ended
                              October     October      October
                                31,         31,          31,
                               1996         1995        1994
<S>                   <C>             <C>           <C>
Deferred Federal Tax  $(1,100,000)    $(233,100)    $(185,400)
    (Benefit)   

Deferred State Tax        (98,000)      (25,900)      (20,600)
    (Benefit)
Valuation Allowance     1,198,000       259,000       206,000
                        ---------       -------       -------
    Income Tax Expense    $ NONE       $ NONE         $ NONE
                          ==           ==             ==    
</TABLE>
<TABLE>
<CAPTION>

     The  provision  for  income  taxes  differs  from the  amount of income tax
determined  by applying the  applicable  statutory  federal and state income tax
rates as a result of the following differences:

                               Year         Year        Ended
                               Ended        Ende
                                             d
                              October     October      October
                                31,         31,          31,
                               1996         1995        1994
                               ----         ----        ----
<S>                       <C>            <C>           <C>
Federal tax at statutory  $(1,100,000)    $(157,100)    $(128,700)
    rates     
                  
State tax, net of federal     (98,000)      (15,900)      (13,300)
    benefit

(Tax) passed through to                           
    former S-Corporation           --       (86,000)      (64,000)
    stockholders
Adjustment of the valuation                           
     allowance              1,198,000       259,000       206,000
                            ---------       -------       -------
Income tax provision         $ NONE         $ NONE        $ NONE
                             ==             ==            ==    
</TABLE>

     At  October  31,  1996,  the  Company  has  estimated  net  operating  loss
carryforwards  of  approximately  $2,334,000  available to offset taxable income
through 2011.

K.  FAIR VALUE OF FINANCIAL INSTRUMENTS

     The carrying value of cash, temporary  investments,  short term receivables
and payables and long-term debt approximates  their fair value as of October 31,
1996 and 1995.

L.  CURRENT VULNERABILITY DUE TO CONCENTRATIONS

     The  majority of the  Company's  revenues  are from slot  machines  and the
majority  of the  Company's  customers  are  located  in the  Colorado  Springs,
Colorado  area.  The Company is  dependent on continued  Limited  Stakes  Gaming
regulations,  which allow  gaming only in the mountain  towns of Cripple  Creek,
Black Hawk and Central City, Colorado, to maintain its customer base. M. SEGMENT
INFORMATION

     The  Company's  two business  segments are the  operation of the  Creeker's
casino and the development and subsequent  operation of the Double Eagle Hotel &
Casino.  All  operations  are in Cripple  Creek,  Colorado.  Presented  below is
information concerning the Company's business segments.
<TABLE>
<CAPTION>


                                                     Ten Months
                      Year Ended     Year Ended        Ended
                      October 31,    October 31,    October 31,
                          1996           1995            1994
                          ----           ----            ----
<S>                    <C>             <C>             <C>
Revenue
    Creeker's Casino   $  6,667,782    $  4,162,300    $  1,649,029
    Double Eagle ...      3,947,536          44,635           9,500
                          ---------          ------           -----
                       $ 10,615,318    $  4,206,935    $  1,658,529
                       ============    ============    ============

    Operating income
    (loss)
    Creeker's Casino   $  2,126,460    $  1,095,013    $    235,112
    Double Eagle ...     (1,275,770)     (1,001,813)       (264,331)
    Corporate ......     (1,943,536)           --              --
                         ----------                              
                       $ (1,092,846)   $     93,200    $    (29,219)
                       ============    ============    ============ 


    Identifiable
    Assets
    Creeker's Casino   $  5,089,813    $  5,022,914    $  1,195,460
    Double Eagle ...     39,992,274      15,301,917       9,784,860
    Corporate ......      5,220,140            --              --
                          ---------                              
                       $ 50,302,227    $ 20,324,831    $ 10,980,320
                       ============    ============    ============
    Depreciation
    Creeker's Casino   $    532,070    $    329,566    $    101,499
    Double Eagle ...        526,660          21,823           7,007
        Corporate ..         18,638            --              --
                             ------                              
                       $  1,077,368    $    351,389    $    108,506
                       ============    ============    ============

    Capital
    Expenditures
    Creeker's Casino   $    391,939    $  3,885,548    $    589,446
    Double Eagle ...     28,444,479       4,541,660       4,580,167
    Corporate ......         16,839            --              --
                             ------                              
                       $ 28,853,257    $  8,427,208    $  5,169,613
                       ============    ============    ============
</TABLE>


N.  COMMITMENTS AND CONTINGENCIES

    Leases

     Creeker's  exercised  its option  under a lease to purchase its casino land
and building on October 31, 1995,  for  $2,500,000.  Total building rent expense
prior to exercising the option  amounted to $225,000,  and $133,335 for the year
ended October 31, 1995, and the ten months ended October 31, 1994.

     The Company  leases  office space under a  non-cancelable  lease  agreement
which expires July, 1998. Total rent expense amounted to $17,285,  $13,500,  and
$5,940 for the years ended  October 31, 1996 and 1995,  and the ten months ended
October 31, 1994.

N.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

   Leases (Continued)
<TABLE>
<CAPTION>

   Future minimum lease payments are as follows:

Year Ended October 31,     Amount
----------------------     ------
<S>                      <C>
        1997             $28,308
        1998              21,231
        ----              ------
                         $49,539
                         =======

</TABLE>

    Land Option

     Creeker's  continues  to have the  option,  under the  building  lease,  to
purchase  the  parking lot behind the  building  for  $750,000.  The Company may
exercise  the option at any time prior to the  expiration  of the  agreement  on
April 1, 1997.