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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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                                   FORM 10-KSB
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                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                     For fiscal year ended October 31, 1997

                         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)

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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: $24,075,922.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  on January 27,  1998 was  approximately  $24,186,000  based upon the
average reported  closing bid and asked price of such shares.  As of January 27,
1998, there were 38,665,632 shares outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:
  Proxy Statement from Annual Meeting of Shareholders dated September 24, 1997


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<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

<S>                                                                                <C>
PART I
         Item 1.      Business..................................................      3

         Item 2.      Properties................................................      9

         Item 3.      Legal Proceedings.........................................     10

         Item 4.      Submission of Matters to a Vote of Stockholders...........     10

PART II

         Item 5.      Market for Registrant's Common Equity
                           and Related Stockholder Matters......................     10

         Item 6.      Management Discussion and Analysis of Financial Condition
                           and Results of Operations............................     11

         Item 7.      Financial Statements......................................     13

         Item 8.      Changes in and Disagreements with Accountants
                           on Accounting and Financial Disclosure...............     13

PART III

         Item 9.      Directors and Executive Officers of the Registrant........     13

         Item 10.     Executive Compensation....................................     14

         Item 11.     Security Ownership of Certain Beneficial Owners 
                         and Management ........................................     15

         Item 12.     Certain Relationships and Related Transactions............     15

         Item 13.     Exhibits and Reports on Form 8-K..........................     15

</TABLE>

                   Special Note on Forward-Looking Statements

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

                                      -2-
<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.  On January  14,  1994,  the  Company  completed  a
reorganization  with Lyric  Development  Company,  Inc.  ("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 one of the largest hotel/casino in the state of Colorado.
As of January 27, 1998,  Creeker's and the Double Eagle,  combined,  account for
the Company a total of 915 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 234 slot machines,  two blackjack tables,
two bars, a restaurant  featuring  buffet-style meals, and entertainment  areas.
Creeker's  currently  employs  approximately  99 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 681 slot machines and five blackjack tables.
The facility also  includes a 100-seat  restaurant,  Lombard's Bar & Grill,  two
bars and a gift shop.

The Double Eagle Hotel & Casino is a modern,  state-of-the-art  hotel and casino
fashioned  after the grandeur of Las Vegas  casinos.  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  reminiscent  of the historic  structures  which  adorned the city of Cripple
Creek during the pre-World War I era while the interior presents 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 the southwest corner of Bennett Avenue and 5th Street, where Route 67
and Bennett  Avenue  intersect,  the Double Eagle provides  superior  access and
visibility  to  motorists  entering  and exiting the City of Cripple  Creek.  It
currently  employs  approximately  276 people and is open seven days a week. The
casino is open from 8:00 a.m. to 2:00 a.m. while the 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.
                                       -3-
<PAGE>
The Double Eagle appeals to higher  income  patrons  because of its  "Las-Vegas"
style casino atmosphere,  quality 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 Bar & Grill, and cash sweepstakes to
attract respective customers.

Management of the Double Eagle  continues to reinforce its  commitment to a high
growth strategy by improving its overall image and effectiveness through new and
innovative  marketing  programs,  a  redesigned  casino floor layout with higher
payback percentages,  the addition of poker tables, an amusement arcade, and the
introduction  of a VIP lounge for rated players.  In addition to free daily slot
tournaments and special events,  the Double Eagle hosts live  entertainment  and
music  acts at its new  piano  bar and  lounge.  Responding  to the needs of its
customers,  management  recently  changed the menu at Lombard's Bar & Grill. The
ambiance is less  formal,  while the new menu  features a greater  selection  of
popular items,  and a children's menu was added with service offered  throughout
the day.

Emphasis on Slot Play.  Responding to the increased  popularity of slot machines
over the past several years and recognizing  that most revenues are generated by
slot machines in a limited stakes market, the Company has focused its gaming mix
toward slot, keno, and video poker machines.  To maximize capacity  utilization,
management  chose to reduce the  number of slot  machines  at the Double  Eagle,
improving  the casino floor layout while  increasing  payout  percentages.  As a
result,  win per unit per day  increased by  approximately  by 27% to date.  The
Company  continues to monitor payout  percentages of its slot machines to ensure
that they remain competitive.

Increased  slot play is also  encouraged  through the use of the slot club.  The
"Winners Circle" slot club and the use of a computerized player tracking system,
which  monitors  the  wagering  of  its  members,   provides  the  Company  with
information  which  assists  management  in planning and directing its marketing
efforts  to its  customers.  As  members  of the  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 1997,
Creeker's  signed up nearly 7,000 members to the Winners Circle while the Double
Eagle  welcomed  38,000 new members to the club.  Currently,  Creeker's  and the
Double Eagle have a combined total of 67,000 members in their database.

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.
It is accessible via US Highway 24, a four-lane divided highway,  which connects
with the two-lane State Highway 67. Once a thriving town,  boasting a population
of over 50,000  persons  during the height of the gold rush,  Cripple  Creek was
later  reduced to a sleepy  ghost town  prior to the  introduction  of gaming in
1991.

Primarily a tourist town, with its Victorian-style architecture,  scenic vistas,
few  active  gold  mines,  and many  abandoned  mines  shafts  and caves left by
prospectors, Cripple Creek is now one of three venues for gaming in the State of
Colorado.  The other two are Black Hawk and Central City. Cripple Creek operated
approximately 34% of the gaming devices and generated 25% of the gaming revenues
reported by these three cities during the calendar year ended December 31, 1997.
                                      -4-
<PAGE>
The table below set forth  information  obtained  from the Colorado  Division of
Gaming regarding gaming revenue by market from calendar year 1994 through 1997.

<TABLE>
<CAPTION>
                            GAMING REVENUE BY MARKET

---------------------------------------------------------------------------------------------------------------------------
($ in Thousands)                1994          1995     %Change              1996    %Change             1997    % Change
---------------------------------------------------------------------------------------------------------------------------
<S>                          <C>           <C>            <C>           <C>            <C>          <C>             <C> 
Cripple Creek                $82,280       $94,029        14.3%         $102,873       9.4%         $107,959        5.0%
Central City                 $69,702       $94,468        35.5%          $88,870      (5.9%)         $87,714       (1.3%)
Black Hawk                  $173,703      $195,856        12.8%         $219,911      12.3%         $235,768        7.2%
---------------------------------------------------------------------------------------------------------------------------
</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.
The slot  machines  at  Creeker's  and the Double  Eagle are all  equipped  with
embedded bill validators which accept bill denominations of up to $100.

Although there are currently 21 casinos in Cripple Creek, 10 are small,  with an
average  of 86 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 which can offer
quality 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 dominant  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 in Colorado, 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 to ensure
customers  are  provided  a  congenial,   friendly,   safe,  and  service-driven
environment in which gaming becomes an exciting,  fun,  energetic  activity.  In
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
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  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.
                                      -5-
<PAGE>
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  currently   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 27, 1998,  the Company  employed  approximately  380 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 99 people work at Creeker's
Casino and 276 people work at the Double Eagle Hotel & Casino.  The balance work
at the Company's  corporate  offices. A standard package of employee benefits is
provided to all  full-time  employees  in addition to  on-the-job  training  and
advancement  opportunities.  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).  Cripple Creek averages
over 300 days of sunshine,  with moderate temperatures during the summer months,
averaging  around  70(degree) F. Annual rainfall is  approximately 16 1/2 inches
while  annual  snowfall  averages 68 1/4  inches,  mostly in early  Spring.  Its
business  base level (i.e.,  November  through May) is expected to remain fairly
constant, although inclement weather conditions during this period could have an
adverse effect on business activity.

                             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.

                                      -6-
<PAGE>
The  Colorado  Commission  is  empowered  to  issue  five  types of  gaming  and
gaming-related  licenses.  The failure or inability  of the  Company,  Creeker's
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,  Creeker's 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 Creeker's 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  Creeker's  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  Creeker's
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.
                                      -7-
<PAGE>
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,  Creeker's and the Double Eagle
may be sanctioned,  which may include the loss by the Company, Creeker's 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.
                                      -8-
<PAGE>
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,  Creeker's  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  Creeker's  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.

Creeker's  and the Double  Eagle must meet certain  architectural  requirements,
fire safety standards and standards for access for disabled  persons.  Creeker's
and the Double Eagle also must not exceed  certain  gaming square footage limits
as a total of each floor and the full  building.  Creeker's 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,
individuals  under the age of 21 years may not be present in  designated  gaming
areas  within  the  casino.  Creeker's  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.

                                      -8-

<PAGE>
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 Creeker's  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  both 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  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.
The Company  plans to relocate its  corporate  offices at the end of its current
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, and 125 feet of frontage on 3rd Street.

Double  Eagle  Hotel & Casino.  The Double  Eagle  Hotel & Casino is a six story
building  situated on a 28,000  square foot lot.  The hotel houses 158 rooms and
suites while the 45,000  square foot casino  offers 681 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 125 feet of frontage on 5th Street.  In addition,
the  Double  Eagle  owns a  six-acre  lot,  located  75 yards  southwest  of the
building,   used  for  employee  and  guest   parking.   The  lot   accommodates
approximately 400 automobiles.

Double Eagle Parking  Site.  Management  believes that an integral  component of
attracting  patrons in Cripple Creek is adequate,  nearby parking.  On September
26,  1997,  the  Company  acquired  control  of  fifteen  contiguous  city lots,
comprising  approximately 47,000 square feet (one city block),  located adjacent
to the Double Eagle in Cripple Creek.  This property is currently used for guest
parking, accommodating approximately 250 automobiles. The Company expects to use
the land in its expansion plans to build a six story parking garage,  which will
accommodate over 400 automobiles,  a convention  center, a health club facility,
and additional hotel rooms.

Creeker's Parking Site. On March 28, 1997, Creeker's,  Inc. exercised its option
to purchase three  contiguous city lots,  comprising  nearly 10,000 square feet,
located adjacent to Creeker's Casino in Cripple Creek. This property is used for
guest parking, accommodating approximately 40 automobiles.

Myers Avenue Site.  The Company  presently  owns a one-acre  parcel of property,
consisting of over 40,000  square feet of  undeveloped  land,  situated 80 yards
west of the Double Eagle 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.
                                      -9-
<PAGE>
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 24, 1997,
the stockholders considered and voted on the following items:

(i)  Four 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:
<TABLE>
<CAPTION>
                                                 Votes           Votes            Votes
                Nominees                        Cast For        Withheld        Abstained
    ------------------------------------      -------------     --------        ---------
<S>                                            <C>               <C>               <C>
    Rudy S. Saenz                              27,350,956        89,475            - 0 -
    Gilbert M. Sisneros                        27,350,956        89,475            - 0 -
    Michael S. Smith                           27,353,956        86,475            - 0 -
    Sam Halpern                                27,353,956        86,475            - 0 -
</TABLE>

(ii) To ratify the selection of Williams, Richey & Co. (now known as Richey, May
     & Co., P.C.) to serve as the Company's  independent auditors until the next
     annual meeting of stockholders:
<TABLE>
<CAPTION>
                                                 Votes            Votes          Votes
          Independent Auditors                  Cast For        Withheld        Abstained
    ------------------------------------       ----------       --------        --------  
<S>                                            <C>               <C>              <C>  
    Williams, Richey & Co.                     27,397,828        34,103           8,500
</TABLE>
                                     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, 1996:
                                                  High              Low
<S>                                              <C>              <C> 
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>

                                      -10-
<PAGE>
<TABLE>
<CAPTION>
Fiscal Year Ending October 31, 1997:
                                                  High             Low
<S>                                              <C>             <C> 
First Quarter.................................   $2 3/8          $1 1/4
Second Quarter ...............................   $2 3/8          $1 1/4
Third Quarter ................................   $2 1/8          $1 5/32
Fourth Quarter ...............................   $1 17/32        $1 1/16
</TABLE>

At October 31, 1997, the Company had  approximately 202 holders of record of its
voting common stock;  management  estimates  that the Company has  approximately
1,300 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

Prior to August 29, 1996 the Company's operations were substantially  limited to
those of Creeker's Casino in Cripple Creek, Colorado.  During the fourth quarter
of fiscal  1996,  the Company  opened the Double  Eagle Hotel & Casino,  also in
Cripple Creek. The changes in the operating  results for fiscal 1997 as compared
to fiscal 1996 are primarily the result of the opening of the Double Eagle.

The Company reported net operating revenues for fiscal 1997 of $24.1 million, an
increase of $13.5  million,  or 126.8% from the $10.6 million  recorded in 1996.
Generating  more than 80% of the total  revenues,  the Double Eagle's first year
operations  significantly  contributed to the increase. Total operating expenses
were $21.8  million for the fiscal year ended  October 31, 1997,  an increase of
$10.1  million or 86.3% from $11.7  million  for fiscal  1996.  Total  operating
expenses as a percentage of total revenues decreased to 90.6% during fiscal year
1997 from 110.3% during fiscal 1996.

Casino.  Fiscal 1997 casino  revenues  increased  $10.7 million,  up 110.8% from
fiscal 1996 casino revenues of $9.7 million to $20.4 million. Costs and expenses
of casino  operations  were $7.7 million for fiscal year ended October 31, 1997,
an increase of $4.8 million or 160.6% from $2.9 million for fiscal 1996.  Casino
costs and expenses as a percentage of casino revenues  increased to 37.8% during
fiscal year 1997 from 30.5% during fiscal 1996. The increase in casino costs and
expenses was primarily due to increased  gaming taxes and additional labor costs
associated with the opening of the Company's Double Eagle Hotel & Casino.

Hotel and Gift  Shop.  Revenues  from the hotel and gift shop  amounted  to $2.4
million  for fiscal year 1997,  up $1.9  million,  or 370.3%  from fiscal  1996.
Revenues from the Double Eagle's  158-room hotel operation  provided nearly $1.7
million of the  increase  with an occupancy  rate of 75.5%  during  fiscal 1997.
Management's  decision to reduce room rates during winter months was  successful
in attracting customers to the property.  Hotel and gift shop revenues accounted
for 9.9% of total  consolidated  revenues.  Costs and expenses of hotel and gift
shop  operations were $1.1 million for fiscal year 1997, an increase of $713,000
or 179.1% from $398,000 for fiscal 1996.  Hotel and gift shop costs and expenses
as a percentage of hotel and gift shop revenues decreased to 46.5% during fiscal
year 1997 from 78.4%  during  fiscal  1996.  The decrease in hotel and gift shop
costs and  expenses was a result of  management's  decision to reduce room rates
and  introduce  "no-frills"   accommodations  while  maintaining  the  level  of
hospitality and value the guests have come to expect.

Restaurant and Bar.  Restaurant and bar revenues improved by 231.2%, up $840,000
to $1.2  million in fiscal  year 1997,  net of  promotional  allowances  of $1.3
million  and  $385,000  in fiscal  1997 and 1996,  respectively.  Just over $1.0
million of the increase was provided by Lombard's  Bar & Grill.  Restaurant  and
bar costs and expenses as a percentage of restaurant and bar revenues  decreased
to 231.7% during fiscal year 1997 from 333.3% during fiscal 1996. The restaurant
and bar operations at Lombard's  contributed  100.0% to the increase in revenues
and  88.4% of the  increase  in costs  and  expenses  in  fiscal  year 1997 when
compared to fiscal 1996,  while the  restaurant  and bar operations at Creeker's
produced  flat  revenues  and  accounted  for 12.0% of the increase in costs and
expenses.
                                      -11-
<PAGE>
Marketing.  Marketing and promotional expenses were $2.2 million for fiscal year
ended  October 31, 1997, an increase of $1.4 million or 174.9% from $796,000 for
fiscal year 1996. Marketing expenses as a percentage of total revenues increased
slightly to 9.1% during  fiscal year 1997  compared to 7.5% during  fiscal 1996.
The  increase in  marketing  expenses is primarily  due to the  development  and
implementation   of  new  aggressive   advertising  and  promotional   campaigns
associated with the Double Eagle.

General  and  Administrative.  General  and  administrative  expenses  were $5.4
million  for fiscal year 1997,  an  increase of $2.4  million or 81.8% from $3.0
million for the fiscal year ended October 31, 1996.  General and  administrative
expenses as a percentage of total revenues decreased to 22.4% during fiscal year
1997 from 28.0% during fiscal 1996.  The increase in general and  administrative
expenses is  primarily  due to  increased  expenses at the Double  Eagle Hotel &
Casino of approximately  $2.8 million,  while overhead expenses at the Company's
corporate  offices decreased by approximately  $500,000 and remained  relatively
flat at Creeker's.

Depreciation.  Depreciation  was $2.6 million for the fiscal year ended  October
31,  1997,  an increase of $1.5  million or 142.9% from $1.1  million for fiscal
year 1996. The increase is primarily due to the depreciation expense incurred by
the Double Eagle.

Income from  Operations.  As a result of factors  discussed  above,  income from
operations  was $2.3  million for the fiscal year ended  October  31,  1997,  an
increase  of $3.4  million or 307.4%  from a loss of $(1.1)  million  for fiscal
1996. As a percentage of total  revenues,  income from  operations  increased to
9.4% during fiscal year 1997 from a loss of (10.3%) during fiscal 1996.

Interest  Expense.  Interest  expense was $5.2 million for fiscal year 1997,  an
increase  of $2.8  million or 114.6%  from $2.4  million  for fiscal  1996.  The
increase in interest expense is due to additional debt secured by the Company in
connection with the acquisition of land and as a result of restructured terms of
certain leases agreements.

Net Loss.  The net loss for the Company  was $(2.9)  million for the fiscal year
ended  October 31, 1997, a decrease of $(434,000) or 13.0% from a loss of $(3.3)
million in fiscal year 1996.

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, 1997 the Company  had cash and cash  equivalents  totaling  $1.9
million and $300,000  available under a revolving line of credit.  The revolving
line of credit requires interest payable monthly at the prime rate plus 1.5% and
is  secured  by a  second  deed of  trust  on  Creeker's  Casino.  There  was no
outstanding  balance  under  the line at  October  31,  1997.  Net cash  used by
operating  activities  for fiscal year 1997 was $(1.8)  million  compared to net
cash  provided of $2.5  million in fiscal 1996.  Net cash  provided by financing
activities  amounted to $2.1  million  compared to $19.8  million in fiscal year
1996.

In fiscal year 1997,  the Company  spent $1.5  million on capital  expenditures,
primarily  related to the  purchase of land for use as parking  facilities.  The
Company  anticipates  undertaking  several expansion  projects during the fiscal
year  ending   October  31,  1998,   which  will  require   additional   capital
expenditures.

The Company has  demonstrated  its ability to raise debt and equity capital,  as
needed, over the past five years and may seek to raise additional equity capital
in the future in order to finance  expansion  projects.  The Company  intends to
seek permanent  debt  financing in order to take out more expensive  debt. 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, 1997
to  meet  its  foreseeable   obligations  and  to  pursue  a  number  of  growth
opportunities.  Other than the proposed hotel room addition to Creeker's  Casino
and the expansion at the Double Eagle,  including the addition of hotel rooms, a
parking garage, a conference center, and health club facility,  all of which are
dependent  on  additional  financing,  most of the  Company's  near-term  growth
opportunities  are to a large  degree  discretionary  and are  not  expected  to
require  significant   investment  or  commitment  of  the  Company's  financial
resources.
                                      -12-
<PAGE>
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               42         President, Chief Executive Officer
                                          and Director                              January, 1992
Gilbert M. Sisneros         58         Vice President and Director                    March, 1995
Michael S. Smith            38         Secretary, General Counsel and Director      January, 1992
Farid E. Tannous            31         Treasurer and Chief Financial Officer       February, 1996
Sam Halpern                 52         Director                                     January, 1997
</TABLE>

Rudy S. Saenz is  founder,  President  and a  Director  of the  Company  and its
subsidiary Double Eagle Resorts, Inc., and its predecessors since January, 1992.
Mr. Saenz is responsible for crafting and implementing the Company's  aggressive
growth strategy and is a key contributor to its corporate development. From 1989
through 1992,  Mr. Saenz was employed in marketing and new business  development
at Hughes  Electronics.  Previously,  he was Member of Technical  Staff for five
years where he functioned as design  engineer at the Hughes  Technology  Center.
Rudy received a Bachelors of Science in Engineering  Physics from the University
of  California  at San  Diego in 1982 and  later  pursued  graduate  studies  in
electrical  engineering.  He also attended graduate school to study business and
economics at the University of Colorado at Boulder.

Gilbert M.  Sisneros  is Vice  President  and a Director  of the Company and its
subsidiary,  Double Eagle Resorts,  Inc. since March, 1995. Mr. Sisneros was one
of the  original  founders  of  Creeker's  Casino  in 1991 and,  as its  General
Manager,  has been instrumental in driving its success. He also acted as General
Manager for the Double Eagle Hotel & Casino during its first year of operations.
Prior to founding  Creeker's,  Mr.  Sisneros  was owner and  President  of Metro
Wholesale,  Inc., a food supply company in Colorado Springs since 1981.  Gilbert
studied business law at Weatherford  College in Texas and later studied business
and finance at Colorado Mountain College.

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 Member of Technical Staff in various  divisions
of Hughes  Electronics.  In June of 1994,  Farid  received an MBA in finance and
accounting from the University of Chicago  Graduate School of Business.  He also
holds  a  Masters  (1990)  and a  Bachelors  (1988)  of  Science  in  Electrical
Engineering from the University of Southern California.

Michael S. Smith is  Secretary,  General  Counsel  and a Director of the Company
since January, 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.  Michael  received a Bachelors of
Arts from Marquette University in 1981 and a Juris Doctor degree in 1984.

Sam Halpern  was elected as Director of the Company and has been  sitting on the
Board since January, 1997. Mr. Halpern is President of Indela Holdings, Inc. and
a managing member of Indela CamelSquare,  LLC and CamelSquare  Executive Suites.
He is also a principal trustee of the Gregory Halpern  Charitable  Trust.  Since
1990,  he has served as Director and Chief  Financial  Officer of a  diversified
family  investment  portfolio.  Sam is a graduate of the United States  Military
Academy at West Point.

                                      -13-
<PAGE>
Item 10.      Executive Compensation
<TABLE>
<CAPTION>
The table below sets forth  executive  compensation  for the period 1995 through
1997 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>                       
Rudy S. Saenz               10/31/97      $113,160          none            none              none             none 
President & CEO             10/31/96      $148,000        $220,000          none              none             none
                            10/31/95      $120,453          none            none              none             none
---------------------------------------------------------------------------------------------------------------------------
Gilbert M. Sisneros         10/31/97      $99,885           none            none              none             none
Vice President              10/31/96      $148,000        $220,000          none              none             none
                            10/31/95      $232,962          none            none              none             none
---------------------------------------------------------------------------------------------------------------------------
Michael S. Smith            10/31/97        none            none            none              none             none
Secretary &                 10/31/96        none            none            none              none             none
General Counsel             10/31/95        none            none            none              none             none
---------------------------------------------------------------------------------------------------------------------------
Farid E. Tannous            10/31/97      $77,658         $15,000           none              none             none
Treasurer & CFO             10/31/96      $48,462           none            none              none             none
---------------------------------------------------------------------------------------------------------------------------
</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, except for Mr.
Sam  Halpern,  function  in  a  full-time  capacity.  Mr.  Halpern  received  no
compensation for his services as director for the Company.
<TABLE>
<CAPTION>
The table below sets forth information concerning the exercise of options during
1997 along with the aggregate 1997 year-end  option  holdings of the officers of
the Company:

         AGGREGATED OPTION EXERCISES IN 1997 AND YEAR-END OPTION VALUES
                                  COMMON STOCK
--------------------------------------------------------------------------------------------------------------------
                                                                  Number of securities       Value of unexercised
                                                                  underlying options at           in-the-money
                          Shares Acquired           Value            October 31, 1997              options at
Name                        on Exercise           Realized     Exercisable/Unexercisable        October 31, 1997
--------------------------------------------------------------------------------------------------------------------
<S>                            <C>                 <C>                 <C>                          <C> 
Rudy S. Saenz none             none                 none                 210,000/0                  $26,250
Michael S. Smith               none                 none               45,000/60,000                 $3,750
Farid E. Tannous               none                 none               20,000/80,000                     $0
--------------------------------------------------------------------------------------------------------------------
</TABLE>
During the year, Messrs.  Rudy S. Saenz and Gilbert M. Sisneros each surrendered
options to purchase 250,000 shares of the Company's common stock at the exercise
price of $2.00 per share.
<TABLE>
<CAPTION>
The table below sets forth information  concerning grants of options during 1997
to the officers and key  employees of the Company  under a  Non-Qualified  Stock
Option Plan:
                      OPTION GRANTS OF 1997 - 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> 
Michael Beck                    100,000                          100%                 $2.00                  August, 2004
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
On May 30, 1997, the Company issued a warrant to Gemini  Ventures,  LLC,  giving
the holder the right to purchase  1,400,000 shares of the Company's common stock
at the exercise  price of $2.50 per share  expiring on May 30, 2002. The warrant
was issued in  connection  with the  conversion  of the Series One,  Convertible
Preferred Stock.

On October 31,  1997,  the  Company  issued a warrant to  Financial  Multi-Media
Group,  Inc.  giving  the  holder the right to  purchase  200,000  shares of the
Company's  common  stock at the  exercise  price of $2.00 per share  expiring on
October 31, 2002. The warrant was issued as partial  consideration  for investor
relations services rendered to the Company.

                                      -14-
<PAGE>
Item 11.      Security Ownership of Certain Beneficial Owners and Management

<TABLE>
<CAPTION>
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:

---------------------------------------------------------------------------------------------------------------
                            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               10,933,610               28.28%
                            Colorado Springs, CO 80905
---------------------------------------------------------------------------------------------------------------
Common                      Gilbert M. Sisneros
$0.001 par value            304 S. 8th Street, Suite 201               10,878,610               28.14%
                            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                      Sam Halpern                                 2,250,000                5.82%
$0.001 par value            4350 E. Camelback Rd., Suite F100
---------------------------------------------------------------------------------------------------------------
                            Phoenix, AZ 85018
Common                      All Officers and Directors                 24,064,720               62.24%
$0.001 par value            as a group (four persons)
---------------------------------------------------------------------------------------------------------------
Common                      Total shares issued/outstanding            38,665,632                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,  1997,  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  $72,000 during
fiscal  year 1997.  Mr.  Smith  received  no  compensation  for his  services as
director.

Item 13.      Exhibits and Reports on Form 8-K

None.

                                      -15-
<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 27th day of January,
1998.

                                        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 27, 1998                      /s/ Rudy S. Saenz
                                   --------------------
                                   Rudy S. Saenz
                                   President and Chief Executive Officer,
                                   Director

January 27, 1998                      /s/ Gilbert M. Sisneros
                                   --------------------------
                                   Gilbert M. Sisneros
                                   Vice President, Director

January 27, 1998                      /s/ Farid E. Tannous
                                   -----------------------
                                   Farid E. Tannous
                                   Treasurer and Chief Financial Officer

January 27, 1998                      /s/ Michael S. Smith
                                   -----------------------
                                   Michael S. Smith
                                   Secretary and General Counsel, Director

January 27, 1998                      /s/ Sam Halpern
                                   -----------------------
                                   Sam Halpern
                                   Director


                                      -16-
<PAGE>
                          COLORADO CASINO RESORTS, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


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

Consolidated Balance Sheets.........................................       F-3

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

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

Consolidated Statements of Cash Flows ..............................       F-7

Notes to Consolidated Financial Statements .........................       F-9



                                      F-1
<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, 1997 and 1996, and the related
consolidated statements of operations,  stockholders' equity, and cash flows for
the years ended October 31, 1997 and 1996.  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, 1997 and 1996,
and the  consolidated  results of their  operations and their cash flows for the
years ended  October 31, 1997 and 1996, in conformity  with  generally  accepted
accounting principles.


Richey, May & Co., P.C.

Denver, Colorado
December 17, 1997


                                      F-2
<PAGE>
                          COLORADO CASINO RESORTS, INC.
<TABLE>
<CAPTION>
                           CONSOLIDATED BALANCE SHEETS
                                   OCTOBER 31,


                        ASSETS                                    1997                     1996
                        ------                         ---------------------     -------------------
<S>                                                    <C>                       <C>       
 CURRENT ASSETS
       Cash and temporary investments                          $1,962,486               $2,828,994
       Inventory                                                  182,641                  251,662
       Advances to officers                                            --                  379,617
       Other current assets                                       567,678                  553,992
                                                       ---------------------     -------------------
             TOTAL CURRENT ASSETS                               2,712,805                4,014,265
                                                       ---------------------     -------------------

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

 LAND, BUILDING AND EQUIPMENT
       Land                                                    11,601,658                7,071,644
       Building                                                23,637,572               23,085,250
       Furniture and equipment                                  8,520,407               12,832,717
       Accumulated depreciation                                (3,259,534)              (1,520,102)
                                                       ---------------------     -------------------
            TOTAL LAND, BUILDING AND EQUIPMENT                 40,500,103               41,469,509
                                                       ---------------------     -------------------

 OTHER ASSETS
       Debt issue costs                                           593,675                  224,195
       Other                                                       64,301                   89,288
                                                       ---------------------     -------------------
            TOTAL OTHER ASSETS                                    657,976                  313,483
                                                       ---------------------     -------------------

 TOTAL ASSETS                                                 $48,375,854              $50,302,227
                                                       =====================     ===================

</TABLE>




                     [THIS SECTION INTENTIONALLY LEFT BLANK]





The  accompanying  notes are an integral  part of these  consolidated  financial
statements 
                                      F-3
<PAGE>
                          COLORADO CASINO RESORTS, INC.
<TABLE>
<CAPTION>
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                                   OCTOBER 31,



              LIABILITIES AND STOCKHOLDERS' EQUITY                        1997               1996
              ------------------------------------               ----------------   ----------------
<S>                                                              <C>                <C>     
CURRENT LIABILITIES
      Accounts payable                                                   $530,193          $649,895
      Accrued other expenses                                            1,296,994         3,248,414
      Interest payable, related parties                                   506,593         1,142,000
      Due to officers                                                      62,745                --
      Current portion, long-term debt, related party                           --         7,676,209
      Current portion, long-term debt                                   1,220,964         6,015,931
         Current portion, capital lease obligations                       630,425         1,535,656
                                                                 -----------------  -----------------
           TOTAL CURRENT LIABILITIES                                    4,247,914        20,268,105
                                                                 -----------------  -----------------

LONG-TERM DEBT, RELATED PARTY                                           7,879,324           412,125
LONG-TERM DEBT                                                         20,851,322         8,238,993
CONVERTIBLE DEBENTURES, RELATED PARTY                                   5,516,988         5,199,739
CONVERTIBLE DEBENTURES                                                         --         2,500,000
CAPITAL LEASE OBLIGATIONS                                               2,065,010         5,785,285
                                                                 -----------------  -----------------
           TOTAL LIABILITIES                                           40,560,558        42,404,247
                                                                 -----------------  -----------------

COMMITMENTS AND CONTINGENCIES (NOTE K)

STOCKHOLDERS' EQUITY
      Preferred convertible stock,  Series One, $10 par value,
           5,000,000 shares
           authorized, None and 250,000
           issued and outstanding, respectively                                --         2,500,000
      Common stock, $.001 par value, 100,000,000 shares
           authorized, 38,665,632 and 34,537,711 issued and
           outstanding, respectively                                       38,666            34,537
      Paid-in capital                                                  15,777,125        10,467,270
      Accumulated deficit                                              (8,000,495)       (5,103,827)
                                                                 -----------------  -----------------
           TOTAL STOCKHOLDERS' EQUITY                                   7,815,296         7,897,980
                                                                 -----------------  -----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $48,375,854       $50,302,227
                                                                 =================  =================
</TABLE>


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

                                       F-4
<PAGE>



                          COLORADO CASINO RESORTS, INC.
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENT OF OPERATIONS

                                                           Year Ended            Year Ended
                                                           October 31,           October 31,
                                                              1997                  1996
                                                       ----------------       ---------------
<S>                                                    <C>                    <C>       
REVENUE
         Casino                                            $20,412,260            $9,685,118
         Hotel and gift shop                                 2,388,498               507,825
         Restaurant and bar                                  1,202,791               363,200
         Other                                                  72,373                59,175
                                                       ----------------       ---------------
                  Total revenue                             24,075,922            10,615,318
                                                       ----------------       ---------------

EXPENSES
         Casino                                              7,708,363             2,957,923
         Hotel and gift shop                                 1,111,469               398,263
         Restaurant and bar                                  2,787,231             1,210,615
         Marketing                                           2,189,359               796,428
         General and administrative                          5,395,685             2,968,804
         Pre-opening costs                                          --             2,298,763
         Depreciation                                        2,616,877             1,077,368
                                                       ----------------       ---------------
                  Total expenses                            21,808,984            11,708,164
                                                       ----------------       ---------------

Income (Loss) From Operations                                2,266,938            (1,092,846)

NONOPERATING INCOME (EXPENSES)
         Interest income                                        11,371               173,942
         Interest expense                                   (5,174,977)           (2,411,857)
                                                       ----------------       ---------------

                  Total nonoperating income (expense)       (5,163,606)           (2,237,915)
                                                       ----------------       ---------------

NET LOSS                                                   $(2,896,668)          $(3,330,761)
                                                       ================       ===============

Net Loss Per Common Share                                    $(0.0791)             $(0.1035)
                                                       ================       ===============

Weighted Average Common Shares Outstanding                  36,606,794            32,170,990
                                                       ================       ===============
</TABLE>

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

                                       F-5
<PAGE>

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

            CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                      YEARS ENDED OCTOBER 31, 1997 AND 1996


                                            Preferred Stock           Common Stock                   
                                         ---------------------------------------------     Paid-in      Accumulated
                                          Shares      Amount        Shares    Amount       Capital        Deficit        Total   
                                         --------- ------------ ------------  --------    ----------    -----------   ----------
<S>                                      <C>       <C>          <C>           <C>        <C>          <C>            <C>        
 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                        --           --      614,770        614     1,124,386            --     1,125,000
    Preferred stock issued                350,000    3,150,000           --         --            --            --     3,150,000
    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, 
     preferred stock into debt           (400,000)  (4,000,000)          --         --            --            --    (4,000,000)
    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
    Conversion of Series One, 
     preferred stock into common stock   (250,000)  (2,500,000)   1,400,000      1,400     2,498,600            --          --
    Conversion of convertible 
     debentures into into common stock         --           --    2,627,921      2,629     2,661,355            --     2,663,984
    Common stock issued                        --           --      100,000        100       149,900            --       150,000
    Net loss                                   --           --           --         --            --    (2,896,668)   (2,896,668)
                                         --------- -------------------------  --------   -----------   ------------   ----------
 BALANCE, OCTOBER 31, 1997                   None        $None   38,665,632    $38,666   $15,777,125   $(8,000,495)   $7,815,296
                                         ========= ============ ============  ========   ===========   ============   ==========
</TABLE>

The  accompanying  notes are an integral  part of these  consolidated  financial
statements
                                                            
                                       F-6
<PAGE>
                          COLORADO CASINO RESORTS, INC.
<TABLE>
<CAPTION>
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                     Year Ended         Year Ended
                                                                     October 31,        October 31,
                                                                        1997               1996
                                                               -----------------     --------------
<S>                                                                <C>                 <C>         
 CASH FLOWS FROM OPERATING ACTIVITIES
     Net loss                                                      $(2,896,668)        $(3,330,761)
     Noncash items
         Depreciation and amortization                               2,616,877           1,077,368
         Amortization of debt issue costs                              611,520             600,939
         (Gain) loss on sale of fixed assets                            18,693             (14,467)
         Interest converted to debt or equity                          481,233             326,492
     (Increase) decrease in:
         Inventory                                                      69,021            (201,777)
         Other current assets                                          (13,686)           (466,107)
        Other assets                                                    24,987              41,497
     (Decrease) increase in:
         Accounts payable                                             (119,702)            596,920
         Interest payable, related parties                            (635,407)          1,142,000
         Accrued other expenses                                     (1,951,420)          2,722,928
                                                               -----------------     --------------
            Net cash provided (used) by operating activities        (1,794,552)          2,495,032
                                                               -----------------     --------------

 CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase/construction of land, building, and equipment         (1,542,242)        (21,058,919)
     Proceeds from sale of fixed assets                                     --              30,000
     Proceeds from matured investments                                      --             450,000
     Advances (to) from officers                                       379,617            (280,000)
                                                               -----------------     --------------
            Net cash used by investing activities                   (1,162,625)        (20,858,919)
                                                               -----------------     --------------
</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  financial
statements
                                              

                     [THIS SECTION INTENTIONALLY LEFT BLANK]





                                       F-7

<PAGE>
                          COLORADO CASINO RESORTS, INC.
<TABLE>
<CAPTION>
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                                                Year Ended          Year Ended
                                                                October 31,         October 31,
                                                                   1997                1996
                                                           -----------------    ----------------

<S>                                                        <C>                  <C>
 CASH FLOWS FROM FINANCING ACTIVITIES
     Advances from (to) officers                                    62,745               15,000
     Borrowings, long-term debt                                  3,468,828           10,040,000
     Borrowings, long-term debt, related party                          --            8,355,000
     Repayments, long-term debt                                 (1,231,894)            (842,130)
     Repayments, long-term debt, related party                    (209,010)          (1,000,000)
     Debt and stock issue costs                                         --           (1,025,134)
     Issuance of common stock                                           --            1,125,000
     Issuance of preferred stock                                        --            3,150,000
                                                           -----------------    ----------------
         Net cash provided by financing activities               2,090,669           19,817,736
                                                           -----------------    ----------------

 INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                                    (866,508)          1,453,849

 CASH AND CASH EQUIVALENTS, BEGINNING                            2,828,994            1,375,145
                                                           -----------------    ----------------

 CASH AND CASH EQUIVALENTS ENDING                               $1,962,486           $2,828,994
                                                           =================    ================

NONCASH INVESTING AND FINANCING ACTIVITIES
                 ACTIVITIES
 NONCASH INVESTING ANG FINANCING ACTIVITIES

     Common stock issued for debt                               $2,663,984           $1,912,430
                                                           =================    ================

     Common stock issued for property and services                $150,000                  $--
                                                           =================    ================

     Preferred stock converted to common stock                  $2,500,000           $3,150,000
                                                           =================    ================

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

     Land, building and equipment financed through debt         $3,970,555           $7,794,338
                                                           =================    ================

     Capital lease renegotiated to operating lease              $3,996,633                  $--
                                                           =================    ================
</TABLE>


The  accompanying  notes are an integral  part of these  consolidated  financial
statements
                                                                             
                                       F-8

<PAGE>
                          COLORADO CASINO RESORTS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



A.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization and Operations.  Colorado Casino Resorts,  Inc. (the Company),
     through its wholly owned  subsidiaries,  Creeker's,  Inc.  (Creeker's)  and
     Double Eagle Resorts, Inc. (Double Eagle), owns and operates a casino and a
     hotel/casino  in Cripple  Creek,  Colorado.  Creeker's  casino has 234 slot
     machines and two blackjack tables. As of October 31, 1997, the Double Eagle
     hotel/casino  has 158 hotel rooms,  617 slot  machines  and five  blackjack
     tables.  The  Double  Eagle  hotel  opened on July 27,  1996 and the casino
     opened on August 29,  1996.  The Company  considers  the  operation  of its
     casinos as a single business segment.

     The Company formed Double Eagle as a wholly owned subsidiary  during fiscal
     1996 and in August 1996  transferred  related assets and liabilities to the
     Double Eagle in the net amount of $15,315,296 in a tax-free exchange.

     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.

     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.

     During fiscal 1997,  the Colorado  Division of Gaming  revised  regulations
     that had required  casinos to be liable for the  progressive  base jackpots
     they have  established.  Accordingly,  the Company  reduced its progressive
     jackpot  liability  and increased its casino  revenues by  $1,099,399,  the
     amount of its  previously  accrued  base  jackpots,  during  the year ended
     October 31, 1997.

     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 Double
     Eagle and has a carrying  value of $4,504,970 at October 31, 1997 and 1996.
     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 market  value.  Land,  building  and
     equipment  are stated at cost,  subject to review for  impairment  whenever
     events or changes in circumstances indicate that the carrying amount of the
     asset may not be recoverable. Furniture and equipment are being depreciated
     over their  estimated  useful  lives of 5-7 years using  straight-line  and
     accelerated  methods.  Building and improvements are being depreciated over
     their estimated useful lives of 40 years on a straight-line basis. Building
     and improvements  include $1,301,049 of capitalized interest of which $None
     and  $1,241,199 was incurred for the years ended October 31, 1997 and 1996,
     respectively.

     Debt Issue Costs. Debt issue costs are being amortized over the life of the
     related loans using the effective interest method.

     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 $1,267,847 and $385,432,  for the years ended October 31,
     1997 and 1996, respectively.

                                       F-9
<PAGE>
A.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

     Advertising Expense. Advertising costs are expensed as incurred.

     Pre-opening  Costs.  Pre-opening 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.  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.

     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 $5,176,300 and $972,058,  for the years ended October 31, 1997,
     and  1996,  respectively.   The  Company's  cash  balances  with  financial
     institutions typically exceed FDIC insured limits.

     Recently  Issued  Accounting  Standards.  In February,  1997, the Financial
     Accounting  Standards Board (FASB) issued SFAS No.  128-Earnings Per Share.
     SFAS No. 128  establishes  standards for computing and presenting  earnings
     per share (EPS) and requires a dual presentation of basic and dilutive EPS.
     SFAS No. 128 is effective for financial statements issued for periods ended
     after December 15, 1997 and earlier adoption is not permitted. Basic EPS as
     calculated  in  accordance  with  SFAS  No.  128  would  not be  materially
     different from primary EPS as presented in these financial statements.

     In June 1997, the FASB issued SFAS No. 130-Reporting  Comprehensive Income.
     SFAS  No.  130  requires  the  reporting  and  display,  in a  full  set of
     general-purpose  financial  statements,  of all items that  required  to be
     recognized  under  accounting  standards  as  components  of  comprehensive
     income.  SFAS No. 130 is  effective  for  financial  statements  issued for
     periods beginning after December 15, 1997 and reclassification of financial
     statements for earlier  periods for comparative  purposes is required.  The
     adoption of SFAS No. 130 will not have a material impact on these financial
     statements.

     In June 1997, the FASB issued SFAS No. 131-Disclosures about Segments of an
     Enterprise.  SFAS No. 131  establishes  standards  for the way that  public
     companies report information about their operating  segments,  products and
     services,  geographic areas, and major customers. SFAS No. 131 is effective
     for periods  beginning after December 15, 1997 and requires  restatement of
     information  presented for prior periods. The adoption of SFAS No. 131 will
     not have a material impact on these financial statements.

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

B.   ADVANCES TO OFFICERS

     Officers  advanced  funds to the  Company in the amount of  $1,100,138  and
     $15,000, for the years ended October 31, 1997 and 1996,  respectively.  The
     Company  advanced funds to officers in the amount of $657,776 and $280,000,
     for the years ended  October 31, 1997 and 1996,  respectively.  Outstanding
     advances to (from)  officers  amounted to $(62,745) and $379,617 at October
     31, 1997 and 1996, respectively. Advances to officers are unsecured, due on
     demand and non-interest bearing.

                                      F-10
<PAGE>

<TABLE>
<CAPTION>

C.     LONG-TERM DEBT, RELATED PARTIES

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

                                                                                     1997              1996
                                                                                 ------------      -----------
<S>                                                                             <C>              <C>
        Notes payable,  stockholder,  dated November  1995-March 1996,  extended
        January 15, 1997,  interest at 14.10% per annum,  principal  due January
        28, 1999 or upon permanent financing, collateralized
        by Creeker's, Inc. common stock                                           $2,087,500        $2,087,500

        Notes  payable,  stockholder,  dated November  1995-March  1996 extended
        January 15, 1997,  interest at 20.10% per annum,  principal  due January
        28, 1999 or upon permanent financing, collateralized
        by Creeker's, Inc. common stock                                            5,267,500         5,267,500

        Note payable,  related limited partnership,  unsecured,  dated September
        1992,  payable in monthly  installments of $17,777 including interest at
        16% per annum, with a final payment due
        November 1, 1999                                                             524,324           733,334
                                                                                -------------     ------------
        Total long-term debt, related parties                                      7,879,324         8,088,334
        Less current portion                                                              --         7,676,209
                                                                                -------------     ------------
                                                                                  $7,879,324          $412,125
                                                                                =============     ============
</TABLE>
<TABLE>
<CAPTION>
     Total related party interest expense under all debt arrangements (including
     the convertible  debenture) amounted to $1,347,869 and $1,660,506,  for the
     years ended October 31, 1997, and 1996, respectively.

D.      LONG-TERM DEBT

        Long-term debt consists of the following at October 31,:
                                                                                     1997                 1996
                                                                                ------------           ----------
<S>                                                                             <C>               <C>  
        Note payable,  corporation,  dated April 1996,  amended  September 1997,
        payable  in  monthly  installments,  interest  payable at 12% per annum,
        remaining balance due November 15, 1998, collateralized by
        deed of trusts and personal property                                      $7,588,889        $5,540,000

        Note payable,  corporation,  redemption of preferred  stock,  unsecured,
        dated July 1996, interest payable at 18% per annum,
        principal due July 1999                                                    4,000,000         4,000,000

        Notes payable, corporation, unsecured, dated January-July 1997, interest
        payable at 18% per annum, principal due January-February
        1999                                                                       2,350,000             --

        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 30, 1999,  and every
        3.5 years  thereafter,  not to exceed 12% or be less than 4%,  remaining
        principal due November 2025,
        collateralized by deed of trust                                            2,042,272         2,055,484

        Note payable,  corporation,  dated September 1997, interest only payable
        quarterly at 9% per annum, with the principal balance due
        January  2003,  collateralized  by  deeds  of  trust  and  personal        1,730,853             --
        property

        Mortgage payable,  individual,  dated September 1995, payable in monthly
        installments of $7,875, including interest at 9% per
        annum, due August 31, 2000, collateralized by deed of trust                1,050,000         1,050,000

                                      F-11
<PAGE>
D.     LONG-TERM DEBT (Continued)
                                                                                       1997              1996
                                                                                ---------------      -----------
        Note  payable,  financial  institution,  assumed  June 1997,  payable in
        monthly  installments of $9,369,  including interest at prime plus 1.5%,
        (10% total rate at October 31, 1997), with remaining
        principal  balance due September  1999,  collateralized  by deed of          879,147               --
        trust

        Note  payable,  corporation,  dated  October  1995,  payable  in monthly
        installments  of $31,092  including  interest  at 11% per annum,  with a
        final payment due October 19, 1998, collateralized by gaming
        equipment                                                                    769,943           949,576

        Note payable,  financial institution,  dated September 26, 1997, payable
        in monthly  installments of $7,052 including interest at prime plus 1.5%
        (10% total rate at October 31, 1997), remaining
        principal due October 1, 2002, collateralized by deed of trust               650,000               --

        Mortgage payable,  individual,  dated October 1992 modified August 1995,
        payable in monthly installments of $3,400,  including interest at 8% per
        annum, with a final principal payment due
        November 2006, collateralized  by deed of trust                              262,715           285,070

        Notes  payable,  various  corporations,  dated March 1995, to July 1997,
        payable in aggregate monthly  installments of $31,269 including interest
        at 8% to 12.50% per annum, due May 1998 to June
        2000, collateralized by various equipment                                    748,467           374,794
                                                                                -------------     -------------
        Total long-term debt                                                      22,072,286        14,254,924
        Less current portion                                                       1,220,964         6,015,931
                                                                                -------------     -------------
                                                                                 $20,851,322        $8,238,993
                                                                                =============     =============
</TABLE>
        The $879,147 loan  agreement  with the financial  institution  restricts
        payment of related party loan principal until all amounts under the loan
        agreement have been repaid.
<TABLE>
<CAPTION>

        Future  maturities of long-term debt and  convertible  debentures are as
follows at October 31, 1997:

              Years Ended October 31,            Unrelated            Related Party              Total
             -------------------------      ------------------     ------------------     ------------------
<S>                                          <C>                    <C>                    <C>       
                       1998                         $1,220,964                    $--             $1,220,964
                       1999                         15,203,764             13,396,312             28,600,076
                       2000                          1,147,765                     --              1,147,765
                       2001                             72,406                     --                 72,406
                       2002                            597,128                     --                597,128
                    Thereafter                       3,830,259                     --              3,830,259
                                             ------------------     ------------------     ------------------
                                                   $22,072,286            $13,396,312            $35,468,598
                                             ==================     ==================     ==================
</TABLE>
        Creeker's, Inc. has a $300,000 revolving line of credit agreement with a
        financial institution dated September 26, 1997. The line of credit bears
        interest at prime plus 1.50% per annum,  maturing on October 1, 1998 and
        is collateralized by a deed of trust.

                                      F-12
<PAGE>
E.     CAPITAL LEASE OBLIGATIONS
<TABLE>
<CAPTION>
        Capital lease obligations consist of the following at October 31,:
                                                                                      1997               1996
                                                                                ----------------     ----------------
<S>                                                                             <C>               <C>
        Gaming  equipment  lease payable,  renegotiated,  imputed  interest
        accruing at 11.75% per annum with balance due November 1999                 $822,425        $4,892,735
        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  various  equipment  and  furniture  with  an
        approximate cost of $1,009,441 and a book value
        of $794,463                                                                  823,853         1,076,443

        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 are  collateralized  by  various
        equipment with an approximate cost of
        $748,523 and a book value of $614,869                                        546,458           744,140

        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 equipment with an
        approximate cost of $231,127 and a book value of $173,345                    142,557           220,837

        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  collateralized by telephone and
        audio equipment with an approximate cost of $215,660
        and a book value of $177,152                                                 180,589           213,906

        Various  equipment leases payable in aggregate  monthly  installments of
        $7,333  including  interest  imputed at 8.16% to 13.85%  per annum.  The
        leases expire May 1999 to July 2000 and are  collateralized by equipment
        with an approximate cost of $323,441 and a book value of
        $192,397                                                                     179,553           172,880
                                                                                -------------     ----------------
        Total lease obligations                                                    2,695,435            7,320,941
        Less current portion                                                         630,425            1,535,656
                                                                                =============     ================
                                                                                  $2,065,010           $5,785,285
                                                                                =============     ================
</TABLE>
<TABLE>
<CAPTION>

        Future minimum lease payments under the leases are as follows at October 31, 1997:


                Years Ended October 31,                                     Amount
                -----------------------                         -------------------
<S>                                                             <C>     
                          1998                                           $831,646
                          1999                                            805,033
                          2000                                          1,187,479
                          2001                                            297,499
                                                                -------------------
                                   Total future lease payments          3,121,657
                             Less amount representing interest            426,222
                                                                ===================
                                                                       $2,695,435
    </TABLE>
F.     CONVERTIBLE DEBENTURE, RELATED PARTY

        On August 18, 1994, the Company purchased real property, currently being
        held for future  development,  from a related  party in  exchange  for a
        convertible  debenture  in the  amount of  $4,500,000.  The  convertible
        debenture bears interest at 7.05% per annum,  with the principal balance
        and any accrued  interest due August 20, 1999 and is  collateralized  by
        deeds of trust on the related  property.  The  debenture is  convertible
        into 9,000,000 shares of Company common stock. The conversion  cannot be
        exercised  prior to November 1, 1999.  The balance  (including  interest
        added to principal) amounted to $5,516,988 and $5,199,739 at October 31,
        1997 and 1996, respectively.

                                      F-13
<PAGE>
G.     STOCK OPTIONS AND WARRANTS
<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, 1997
     and 1996:
                                                               Shares         Avg. Option Price
                                                       ----------------     -------------------------
<S>                                                   <C>                   <C>  
   Options Outstanding, October 31, 1995                       240,000               $1.00
            Granted                                            817,500               $2.00
            Surrendered                                             --                 --
                                                       ----------------
   Options Outstanding, October 31, 1996                     1,057,500               $1.77
            Granted                                            100,000               $2.00
            Surrendered                                       (585,000)              $2.00
                                                       ================
   Options Outstanding, October 31, 1997                       572,500               $1.58
                                                       ================
</TABLE>
        The Company  adopted the disclosure  requirements,  but not the optional
        recognition  requirements of recently issued SFAS No. 123-Accounting for
        Stock  Based  Compensation.  If the  Company  had  elected to  recognize
        compensation  expense  based upon the fair  value of the  options at the
        date of grant for awards  granted in fiscal 1997 and 1996 the  Company's
        net loss and  loss per  share  would  have  approximated  the pro  forma
        amounts below:
<TABLE>
<CAPTION>
                                                        October 31,            October 31,
                                                           1997                   1996
                                                    ===================    ===================
<S>                                                 <C>                    <C>         
   Pro forma net loss                                     $(2,916,668)           $(3,551,486)
                                                    ===================    ===================
   Pro forma net loss per share                              $(0.0797)              $(0.1104)
                                                    ===================    ===================
</TABLE>
<TABLE>
<CAPTION>
     The  weighted-average  fair value of each option granted in fiscal 1997 and
     1996  is   estimated   on  the  date  of  grant  using  the   Black-Scholes
     option-pricing model as follows:
                                                       October 31,           October 31,
  Assumptions                                              1997                 1996
  -----------                                        -----------------     ----------------
<S>                                                  <C>                  <C> 
     Risk-free interest rate                                     5.4%                 5.7%
                                                     =================     ================
     Life in years                                                  3                    3
                                                     =================     ================
     Volatility                                                   44%                  53%
                                                     =================     ================
     Dividend yield                                                0%                   0%
                                                     =================     ================
  Fair Value
     Stock options                                              $0.20                $0.27
                                                     =================     ================
</TABLE>
        In  connection  with  the  conversion  of the  Series  One,  Convertible
        Preferred  Stock into common stock the Company  granted  1,400,000 stock
        warrants.  Each warrant may be converted  into one share of common stock
        at a price of $2.50  through  May 30,  2002.  The Company  also  granted
        200,000  stock   warrants  to  a  corporation   that  provides  it  with
        professional services. The warrants may be converted into 200,000 shares
        of common stock at a price of $2.00 through October 31, 2002.
<TABLE>
<CAPTION>
        The following options and warrants are outstanding at October 31, 1997:

             Number of
           Shares Under           Exercise                                      Expiration
              Options               Price                Total                     Date
          ----------------     ----------------     ----------------     -------------------------
<S>       <C>                  <C>                  <C>                       <C> 
                   46,500           $2.00                   $93,000            August, 2000
                   66,500           $2.00                   133,000            August, 2001
                  306,500           $1.22                   373,000            August, 2002
                   66,500           $2.00                   133,000            August, 2003
                   66,500           $2.00                   133,000            August, 2004
                   20,000           $2.00                    40,000            August, 2005
          ================     ================     ================
                  572,500           $1.58                  $905,000
          ================     ================     ================
                                      F-14
<PAGE>
G.     STOCK OPTIONS AND WARRANTS (Continued)

             Number of
           Shares Under           Exercise                                      Expiration
              Options               Price                Total                     Date
          ----------------     ----------------     ----------------     -------------------------
                   30,000           $3.00                   $90,000             May, 1998
                   30,000           $3.00                    90,000           January, 2001
                1,400,000           $2.50                 3,500,000             May, 2002
                  200,000           $2.00                   400,000           October, 2002
         ----------------     ----------------     ----------------
                1,660,000           $2.50                $4,080,000
          ================     ================     ================

</TABLE>

        At  October  31,  1997  there  were  1,946,500  shares of  common  stock
exercisable under options and warrants at an average price of $2.27 per share.

H.     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 31,          October 31,
                                                                                  1997                 1996
                                                                        ---------------------    -----------------
<S>                                                                     <C>                      <C>     
 Deferred Tax Assets-
          Net operating loss carryforwards                                         $2,142,000             $875,000
          Cash basis tax assets                                                       482,000              809,000
          Capitalized construction carrying costs and other                           237,000              127,000
                                                                        ---------------------    -----------------
                                                                                    2,861,000            1,811,000
  Valuation Allowance                                                              (2,861,000)          (1,811,000)
                                                                        =====================    =================
  Net Deferred Tax Asset                                                                $None                $None
                                                                        =====================    =================
</TABLE>
                      The components of income tax expense are as follows:
<TABLE>
<CAPTION>
                                                                             Year Ended             Year Ended
                                                                             October 31,            October 31,
                                                                                1997                   1996
                                                                          ------------------     ------------------
<S>                                                                       <C>                    <C>         
  Deferred Federal Tax (Benefit)                                                   $(985,000)          $(1,100,000)
  Deferred State Tax (Benefit)                                                      (102,000)              (98,000)
  Valuation Allowance                                                              1,087,000             1,198,000
                                                                          ==================     ==================
          Income Tax Expense                                                           $None                 $None
                                                                          ==================     ==================

</TABLE>
  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:
<TABLE>
<CAPTION>

                                                                             Year Ended             Year Ended
                                                                             October 31,            October 31,
                                                                                1997                   1996
                                                                          ------------------     ------------------
<S>                                                                       <C>                    <C>         
  Federal tax at statutory rates                                                   $(985,000)        $(1,100,000)
  State tax, net of federal benefit                                                 (102,000)            (98,000)
  Adjustment of the valuation allowance                                            1,087,000           1,198,000
                                                                          ------------------     ------------------
          Income tax provision                                                         $None               $None
                                                                          ==================     ==================

</TABLE>
     At  October  31,  1997,  the  Company  has  estimated  net  operating  loss
carryforwards  of  approximately  $5,712,000  available to offset taxable income
through 2012.
                                      F-15
<PAGE>
I.        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, 1997 and 1996.

J.        CURRENT VULNERABILITY DUE TO CONCENTRATIONS

          The majority of the  Company's  revenues are from slot  machines.  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.

K.        COMMITMENTS AND CONTINGENCIES

          Leases.  The Company leases office space under a non-cancelable  lease
          agreement  which expires July,  1998.  Total rent expense  amounted to
          $28,308 and  $17,285  for the years  ended  October 31, 1997 and 1996,
          respectively.

          Double Eagle leases 586 slot machines under two operating  leases with
          aggregate  monthly  payments  of $24,102  expiring  November  1999 and
          November 2000.  Double Eagle may purchase the equipment for $1,043,289
          at the end of the lease terms.

          Future minimum lease payments are as follows:
<TABLE>
<CAPTION>
       Year Ended October 31,                   Amount
-------------------------------------       ---------------
<S>                                         <C>       
                1998                            $1,693,229
                1999                             1,693,229
                2000                               263,570
                                            ===============
                                                $3,650,028
                                            ===============
    
                                      F-16
</TABLE>